Xbox closed its fourth quarter of fiscal year 2026 with concerning results. According to Eurogamer, the division recorded a 10% drop in content and services revenue, while hardware revenue fell even more sharply, declining 13%. The quarter totaled US$4.983 billion, the lowest since Q1 2024.
The poor performance comes after Microsoft announced 3,200 job cuts at Xbox, described as the company's most significant restructure in the division's history. During the earnings call, CEO Satya Nadella said the company is making "necessary decisions" to "reset the business for long-term growth," as reported by GamesRadar.
Despite Xbox attracting 200 million new players throughout the fiscal year, according to CEO Asha Sharma, this was insufficient to offset the revenue decline. Sharma acknowledged that "our business did not grow with our audience" and committed to "closing that gap" by the end of fiscal year 2027. The quarter saw releases including Call of Duty: Black Ops 7, Forza Horizon 6, and The Outer Worlds 2, along with ongoing support for evergreen titles like Minecraft.
For the full fiscal year 2026, Xbox revenue declined by approximately US$1.66 billion compared to the prior period. Microsoft, however, continued substantial share buybacks, spending US$4.579 billion in the quarter and over US$22 billion throughout the entire fiscal year.
