Xbox Revenue Falls In Latest Microsoft Earnings Report
Microsoft reported its third-quarter fiscal year 2026 earnings on April 29, 2026, revealing a decline in Xbox revenue compared to the same period last year. Xbox content and services revenue declined approximately 5–6.6% year-over-year to $5.34 billion, down from $5.72 billion in Q3 FY25. More significantly, Xbox hardware revenue fell 33% in the quarter.
Microsoft attributed the content and services decline to the prior year’s strong first-party performance, particularly driven by the release of Avowed in early 2025. The company was in a transition period during Q3, with major releases like Indiana Jones and the Great Circle having launched in late 2024, and upcoming titles South of Midnight and DOOM: The Dark Ages still in development.
The earnings report marks the first quarterly results following significant leadership changes within the Xbox division. Phil Spencer, who led Xbox for over 15 years, retired in early 2026, with Asha Sharma taking over as head of the division in February. As Sharma only recently assumed the role, the earnings report does not yet reflect the impact of her leadership or the strategic initiatives she has begun implementing. Microsoft’s CEO indicated the company is “recommitting to our core fans” amid the revenue decline.