Xbox Revenue Sees Significant Decline of $1.7 Billion, with Hardware Sales Dropping 29% Year-over-Year

Microsoft's latest financial report reveals a 7% decline in Xbox revenue for the full year and a 10% drop in the fourth quarter. Although growth in Game Pass partially offset the annual decline, hardware revenue plummeted 29% due to reduced console sales. Key highlights for the quarter ending June 30, 2026, include: $90 billion in revenue, up 18% year-over-year, and $35.8 billion in net income, up 31% year-over-year. Microsoft CEO Satya Nadella described the Q4 results as a 'very strong close to a record fiscal year.' The company's goals moving forward include empowering individuals with AI and enabling organizations to build their own continuous learning loops. Microsoft's overall revenue was driven by its Cloud segment, which increased 27% to $59.3 billion. The 4% revenue decrease in the More Personal Computing segment was attributed to a 10% drop in Xbox content and services. Hardware revenue declined 13% and is projected to decrease further year-over-year. For its full-year results, Microsoft posted an 18% increase in total revenue of $331.8 billion. Following the release of its fourth-quarter and full-year results, the company undertook layoffs affecting 4,800 roles, resulting in a 2.1% cut to its global workforce. Nadella stated, 'We are making the necessary decisions required across our content portfolio, platform, and operations to reset the business for long-term growth.' The company plans to return the business to growth in fiscal 2027, with 1,600 positions at Xbox impacted and further reductions planned throughout FY27, totaling 3,200 roles.