Microsoft has released its earnings report for the fourth quarter of the 2026 fiscal year, ending June 30, 2026. Total Xbox revenue dropped to $4.98 billion for the quarter, falling from $5.53 billion during the same period a year ago. This marks the fourth straight quarter that overall Xbox revenue has declined.
Quick Facts
- Total Xbox revenue for Q4 2026: $4.98 billion (down from $5.53 billion year-on-year).
- Xbox content and services revenue: Down 10 percent year-on-year.
- Xbox hardware revenue: Down 13 percent year-on-year.
- Fiscal year 2026 total Xbox revenue: $21.79 billion (down seven percent).
Xbox Content and Services Revenue Decline
For the quarter ending June 30, 2026, Xbox content and services revenue decreased 10 percent compared to the same period a year prior. Despite this drop, the performance came in slightly better than corporate forecasts, which had anticipated a decline in the low teens between -11 percent and -13 percent. Microsoft noted that the comparison is affected by the previous year's figures, which "benefited from strong first-party content performance."
For the full 2026 fiscal year, Xbox content and services revenue decreased by five percent year-on-year.
Why Is Xbox Hardware Revenue Falling in 2026?
Xbox hardware revenue dropped 13 percent year-on-year for the quarter, matching internal forecasts for a decline. Hardware sales face headwinds following consecutive console price increases enacted by Microsoft on May 1, 2025, and a second US increase on October 3, 2025. A further price increase is scheduled for August 1.
Across the entire 2026 fiscal year, total Xbox revenue decreased by seven percent to $21.79 billion. Meanwhile, Microsoft's broader company performance for the quarter remained strong, with total company revenue up 18 percent year-over-year to $90.0 billion and net income on a GAAP basis up 31 percent to $35.8 billion.