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flag Xbox revenue fell 2% YoY, hurt by a 29% drop in hardware sales, though services grew slightly.

flag Microsoft's Xbox division saw a 2% year-over-year revenue decline to $5.51 billion in Q1 FY2026, driven by a 29% drop in hardware sales, primarily due to lower console demand and price increases. flag Revenue from content and services rose 1% to $5.5 billion, supported by growth in Game Pass subscriptions and third-party game sales, though first-party titles underperformed. flag The company continues shifting focus to software and services amid ongoing hardware struggles, with forecasts for continued declines in console sales and low-single-digit growth in services. flag Microsoft's broader cloud and business services remain strong, fueling overall revenue and profit growth.

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