In the second quarter, Xbox experienced a 29% decline in hardware sales, while its Game Pass subscription service saw record growth

Microsoft announced its financial results for the second quarter of its fiscal year, noting a 7% decrease in overall gaming revenue and a 29% fall in hardware sales.

Financial Summary for Q4 2024:

• Total Revenue: $69.6 billion, reflecting a 12% increase compared to the previous year.
• Revenue from More Personal Computing (including Xbox): $14.7 billion.
• Operating Income: $31.7 billion, increasing by 10% year-on-year.
• Net Income: $24.1 billion, also up by 10% from last year.

Overall, Microsoft had a beneficial quarter, largely due to its Cloud offerings, which brought in $40.9 billion, marking a 21% rise from the previous year. The company's AI sector witnessed a remarkable 175% growth year-on-year, reaching an annual revenue rate exceeding $13 billion.

Despite the decline in gaming revenue, a 2% increase was seen in Xbox content and services, attributed to "stronger-than-expected performance" in Activision Blizzard titles, particularly with the release of Call of Duty Black Ops 6.

During the earnings discussion, Microsoft's CEO, Satya Nadella, mentioned that Xbox Game Pass achieved a record level of revenue for the quarter, with an over 30% increase in the PC subscriber count.

Nadella also stated that Xbox Cloud Gaming saw 140 million hours streamed during this period.

Furthermore, Indiana Jones and the Great Circle has attracted over four million players since its debut on December 9, 2024.

Nadella emphasized that Microsoft is on track to enhance the gaming segment's profitability by focusing on "higher margin content and platform services."

Looking forward, Microsoft anticipates Xbox content and services revenue to grow in the "low to mid-single digits" for the upcoming quarter, driven by first-party titles and Xbox Game Pass. However, a year-on-year drop in hardware revenue is expected.