Microsoft's first quarter of fiscal 2027 is out, and Xbox posted $5.38 billion in revenue for July through September, a small step back before Modern Warfare 4 and the holiday rush hit.
Microsoft just dropped its results for the quarter that ended September 30, 2026, the first quarter of its 2027 fiscal year.
Xbox revenue came in at $5.379 billion, down from $5.508 billion in the same quarter last year, a drop of about 2%. Microsoft says Xbox content and services revenue, which covers game sales, Game Pass and other spending, fell 2% (down 1% in constant currency). Xbox sits in Microsoft’s new Devices and Consumer segment, which made $15.5 billion, down 3%. Microsoft recast last year’s numbers to match its new segment setup announced in September.
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Company wide, Microsoft posted $92.3 billion in revenue, up 19%, and said results beat expectations. The earnings call with Satya Nadella and Amy Hood starts at 5:30 PM ET today, where more Xbox detail could come out.
OnPoint’s take: A 2% dip is not the end of the world, fam. Look at the calendar. This quarter closed September 30, so none of Modern Warfare 4’s launch on October 23 is in here, and neither is the holiday season. Xbox still pulled in over $5 billion in a quarter without a giant Call of Duty release counted. The real test is next quarter, when MW4 and the holiday push land on the books. That’s the number we’re watching. It is what it is, but the setup for Xbox looks strong.
Sources
- Microsoft Investor Relations: Microsoft Announces First Quarter Results (FY27 Q1)
- The Earnings Correspondent on X: MSFT earnings are out
Update (6:05 PM ET): On Microsoft’s earnings call, CFO Amy Hood said the company expects Xbox content and services revenue to grow “mid to high single digits” next quarter, while Xbox hardware revenue is expected to decline again, per The Verge’s Tom Warren. CEO Satya Nadella said, “We remain focused on building great games and reaching players wherever they choose to play across console, PC, and mobile and cloud,” and pointed to a record quarter for Minecraft and the largest beta in World of Warcraft history.
OnPoint’s take on the update: That’s the number we were waiting on, and it points up. Microsoft is guiding Xbox content and services back to growth for the quarter that includes Modern Warfare 4 and the holidays. Hardware sliding again is not a shock this late in the generation. Games and services are where Xbox makes its money, and that line is about to climb. Let’s go.
Update sources
- Tom Warren on X: Amy Hood on next quarter Xbox guidance
- Tom Warren on X: Satya Nadella on gaming and Xbox
Update (6:25 PM ET): Microsoft also explained what drove the dip. On the analyst call, Microsoft said the year-over-year drop in Xbox content and services came from lower third-party game sales and lower Xbox Game Pass revenue, partly offset by growth in first-party content sales, per GamesBeat’s Dean Takahashi.
OnPoint’s take on the update: Read that again. Xbox’s own games grew. The studios Microsoft built and bought are selling more, and that is the engine for everything coming next, MW4 included. The Game Pass and third-party dips are worth watching, but with first-party up and Microsoft guiding content and services back to growth next quarter, the trend is pointing the right way.
Update sources
- GamesBeat: Xbox content and services revenue decreased 2% in September quarter
- Dean Takahashi on X: Microsoft on what drove the Xbox drop
Image: Microsoft / OnPoint 4 Gamers
Next quarter has MW4 and the holidays. Where does Xbox revenue land?
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