Xbox revenue fell 2% year over year in Microsoft’s fiscal first quarter of 2027, reaching $5.379 billion for the three months ended September 30. Microsoft’s earnings release shows a smaller decline than the 10% drop recorded in the previous quarter, according to Xbox executive Asha Sharma.
Xbox generated $5.508 billion during the same period last year, putting its latest revenue approximately $129 million lower. Content and services revenue declined 2%, or 1% in constant currency, suggesting the business is moving closer to stabilisation.
The figures come as Microsoft reported total quarterly revenue of $92.3 billion, up 19% year over year. Azure revenue grew 48% to $33.2 billion, while the Devices and Consumer segment, which now includes Xbox under Microsoft’s fiscal 2027 reporting structure, generated $15.5 billion, down 3%.
Microsoft did not provide specific commentary on Xbox in its earnings release. Sharma addressed the results in a post on X, highlighting performance across the gaming business and pointing to several major releases.
“In Q1, XBOX revenue declined 2% YoY, compared with a 10% decline a quarter ago, while our accountability margin improved,” Sharma wrote. She also credited Minecraft and WoW Forever with setting records, described Call of Duty as having “its most acclaimed release in more than a decade,” and said PC platform revenue “grew double digits.”
Console availability remains a challenge for the division. “Console sales remain constrained by supply, with more demand than consoles available,” Sharma said. She added that Xbox is “working to get more consoles into players’ hands, including through our expanded refurbishment program.”
Sharma concluded her assessment by saying, “We’re making progress, with a lot more work ahead.”
Microsoft’s earnings release did not provide a separate breakdown of console hardware revenue, leaving the financial contribution of Xbox hardware unclear. The company said it would provide forward-looking guidance during its earnings call.
