In its latest financial report, Microsoft has revealed that the Xbox division saw a 10 percent drop in revenue over the last fiscal quarter alone. This reveal comes in light of sweeping layoffs having taken place across the entire division. While not too many details about the dip in revenue have been revealed, the company has noted that the losses were across content and services under the Xbox brand.
Xbox isn’t the only part of the company facing losses, however, as the company has also reported that its Windows OEM and Devices division saw revenue go down by 7 percent.
When it comes to the company as a whole, however, Microsoft has reported an 18 percent increase in revenue over the course of FY26’s fourth quarter, amounting to around $90 billion. This growth has been linked to business like Microsoft 365 and Azure and other cloud services, all of which saw considerable growth across the board. The latter’s growth amounted to 43 percent when compared to the previous quarter.
In a statement, Microsoft CEO and chairman Satya Nadella praised the Azure division for having passed the $100 billion mark for revenue, as well as Microsoft 365 Copilot for getting more than 30 million paid users.
“We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results. This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation.”
CFO Amy Hood highlighted the fact that Microsoft Cloud has made $59.3 billion this quarter, which is up by 27 percent year-over-year. When it comes to losses, however, the company noted that it was impacted by “several discrete items”, including a gain of $3.2 billion from its investment in AI company Anthropic and “lower-than-expected expenses related to the Voluntary Retirement Program” offered to Xbox employees.
Xbox CEO Asha Sharma announced layoffs across the division earlier this month, confirming that approximately 1,600 jobs were affected. She also revealed that there are more planned cuts over the fiscal year, affecting another 1,600 roles.
“I know this is painful. These changes will directly affect people who have poured their creativity into building Xbox,” she said in a statement. “Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved Xbox. Today’s decisions do not reflect their talent or dedication.”
As part of the layoffs, Xbox has also divested itself of four studios: Compulsion Games, Double Fine Productions, Undead Labs, and Ninja Theory. While the latter two have been acquired by other companies, the former two have gone fully independent.
Following its split from Xbox, Double Fine announced that it had to undergo its own set of layoffs, with studio founder Tim Schafer confirming that 23 employees were affected. “Only the survival of our studio would ever make us consider such a painful action,” he said in a statement.
