"Microsoft reported Wednesday that its Gaming revenue fell 9 percent, while Xbox content and services revenue decreased 5 percent in the second quarter for FY 2026. During its earnings call for the quarter ended December 31, the company said its overall revenue was up 17 percent driven by its Cloud business, but the Gaming division fell across different metrics. Xbox content and services revenue was below expectations and fell 5 percent year-on-year, Microsoft CFO Amy Hood confirmed during the earnings call."
"Microsoft Gaming revenue decreased 9 percent, while Xbox hardware revenue fell 32 percent. The company expects Xbox content and services revenue to decline in the mid-single digits in the third quarter, citing "strong content performance" from a year prior for comparison. The decline is expected to be partially offset by Xbox Game Pass growth, Microsoft said. The Xbox parent also expects hardware revenue to further decline year-over-year in Q3. The company did not report Xbox Game Pass growth for the quarter."
"The Xbox decline stood in contrast with Microsoft's overall business, which recorded $81.3 billion in revenue - a 17 percent increase year-on-year. The company's Q3 operating income was $38.3 billion. Microsoft Cloud revenue was $51.5 billion in the quarter, up 26 percent. Microsoft's personal computing business, which includes Windows OEM and Devices, Gaming, and Search and News Advertising, fell three percent."
Gaming revenue fell 9 percent year-over-year in Q2 FY2026, driven by weakness across Xbox metrics. Xbox content and services revenue declined 5 percent, attributed to a lack of first-party titles, while Xbox hardware revenue plunged 32 percent. Microsoft expects Xbox content and services revenue to decline mid-single digits in Q3 versus a strong prior-year comparison, with hardware revenue forecasted to decline further. Xbox Game Pass growth is expected to partially offset declines but growth figures were not reported for the quarter. Overall revenue rose 17 percent to $81.3 billion, led by Microsoft Cloud at $51.5 billion, up 26 percent.
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