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Xbox + Microsoft FY24 Q1 Results: Total Gaming +9%, Content and Services +13% (1st Party and Game Pass growth) Hardware -7% | Next Q guidance +45-50%

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Gaming revenue increased $309 million or 9% driven by growth in Xbox content and services. Xbox content and services revenue increased 13% driven by growth in first-party content and Xbox Game Pass. Xbox hardware revenue decreased 7% driven by lower volume of consoles sold, offset in part by higher price of consoles sold.


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Microsoft Overview
  • Revenue was $56.5 billion and increased 13% (up 12% in constant currency)
  • Operating income was $26.9 billion and increased 25% (up 24% in constant currency)
  • Net income was $22.3 billion and increased 27% (up 26% in constant currency)
  • Diluted earnings per share was $2.99 and increased 27% (up 26% in constant currency)

Microsoft guidance for Xbox next quarter;

Total: mid to high 40's growth
Content and Services: mid to high 50's growth

What that results in

Total: ~$7B (2022 was $4,758,000,000. Growth is between 1.45x and 1.5x)
Content and Services: ~$5.3B (2022 was ~$3,380,000,000. Growth is between 1.55x and 1.6x)
This would leave hardware with $1.7B which is the most of any holiday quarter this gen (Current peak is ~$1,587,000,000 in 2021)

 
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Overall revenue and content and service growth seems fine/decent. Hardware issues still a problem for console side of the business.

Overall though MS shareholders going to be happy, expected EPS beaten by almost 13% ($2.99 vs $2.65 expected). Shares up over 5% out of hours.
 
As expected, with a big launch (Starfield) software and gamepass revenue would go up. HW continue to be a problem.

Overall for Microsoft was a stellar quarter.
 
Knee-jerk reaction warning!


If Microsoft isn't able to see growth in there hardware after both the launch of Starfield last quarter AND the fact that last year was plagued by supply chain issues, I don't see Microsoft making much headway with their hardware between now and the end of the generation.
 
I would have expected much larger increases on the software and gamepass side given the release of starfield , last year there was nothing at this time... But at least they have increased, and with the Activision acquisition these two aspects will improve more in the coming months, although it remains to be seen how much and whether they fall within the forecast. The problem in any case remains the hardware, and it is a fairly serious problem. It is not normal that in the month of Xbox's flagship exclusive game, hardware sales are lower than last year.
 
biglo25 said:
Amy Hood Next Quarter expectation: And in gaming, we expect revenue growth in the mid-single digits. We expect Xbox content and services revenue growth in the mid- to high single digits, driven by first-party and third-party content, as well as Xbox Game Pass.
Click to expand...
Looks like they are not counting ABK.
 
Ok, I believe they should be happy with these results especially with software growing.

But damn, their revenue and income are crazy. 3 months with 22b in pure profits is crazy.
 
Josh5890 said:
Knee-jerk reaction warning!


If Microsoft isn't able to see growth in there hardware after both the launch of Starfield last quarter AND the fact that last year was plagued by supply chain issues, I don't see Microsoft making much headway with their hardware between now and the end of the generation.
Click to expand...

The SKU strat and ill advised Series S this gen may have doomed them. But we have 5 more years to watch it play out in slo-mo.

there is still ps5 pro impact (could be good or bad) and mid gen refresh etc to play out. Perhaps they can retrench around the X and get the price down. But they will have to survive the Pro potentially taking the X power crown and quite a few factors there. I for one am not certain PS5 Pro is a certainty to release regardless if it was planned at one point. And we just wont know until late next year. And the pricing is a big thing.

Every generation is a complete reset. Despite many disagreeing.
 
GodlyTrident said:
Ok, I believe they should be happy with these results especially with software growing.

But damn, their revenue and income are crazy. 3 months with 22b in pure profits is crazy.
Click to expand...


People in stocks mostly divide the S&P 500 into the S&P 493 (little growth) and 7 (huge growth). MSFT is one of the 7 driving almost all growth the past few years with aapl, nvda, tesla, meta, google, and amzn.

Seems like a bit of a bubble TBH. but thats not new.
 
GP quarter update

September 2020: 15M subscribers
Q1 2021 "continued momentum"
Q2 2021: growth
January 2021: 18M subscribers
Q3 2021: growth
Q4 2021: growth
Q1 2022: growth
Q2 2022: growth
January 2022: 25M subscribers
Q3 2022: growth
Q4 2022: growth
Q1 2023: growth
October 2022: PC Game Pass +159% YoY
Q2 2023: growth ("new highs")
Q3 2023: growth
April 2023: +40 countries for PC Game Pass (86 overall)
Q4 2023: growth
Q1 2024: growth
 
biglo25 said:
Amy Hood Next Quarter expectation: And in gaming, we expect revenue growth in the mid-single digits. We expect Xbox content and services revenue growth in the mid- to high single digits, driven by first-party and third-party content, as well as Xbox Game Pass.
Click to expand...
This was the guidance from FY23Q4 into FY24Q1.
 
Have to wonder if Microsoft eventually copies Sony and has their AAA games hit PC a year or two after console and hit Game Pass a year after release as well.

The Xbox Series is just selling pretty badly despite being sold at a pretty huge loss.
 
Vault-Tec said:
GP quarter update

September 2020: 15M subscribers
Q1 2021 "continued momentum"
Q2 2021: growth
January 2021: 18M subscribers
Q3 2021: growth
Q4 2021: growth
Q1 2022: growth
Q2 2022: growth
January 2022: 25M subscribers
Q3 2022: growth
Q4 2022: growth
Q1 2023: growth
October 2022: PC Game Pass +159% YoY
Q2 2023: growth ("new highs")
Q3 2023: growth
April 2023: +40 countries for PC Game Pass (86 overall)
Q4 2023: growth
Q1 2024: growth
Click to expand...

Considering the lack of first party content in 2022, that is pretty impressive.
 
Concurseiro do Futuro said:
Hardware down only 7% is not that bad, with poor Xbox Series X stock.
Click to expand...

Series X stock was already resolved in May or June, said by Spencer. Problem was XSS which was frontloaded everywhere and even with heavy discount sales were low
 
Xbox top 10 quarters

Oct-Dec 2021$5,442,000,000
Oct-Dec 2020$5,031,000,000
Oct-Dec 2022$4,758,000,000
Oct-Dec 2018$4,232,000,000
Oct-Dec 2017$3,920,000,000
Jul-Sep 2023$3,919,000,000
Jan-Mar 2022$3,740,000,000
Oct-Dec 2015$3,721,000,000
Apr-Jun 2021$3,714,000,000
Oct-Dec 2016$3,617,000,000
 
ItWasMeantToBe19 said:
Have to wonder if Microsoft eventually copies Sony and has their AAA games hit PC a year or two after console and hit Game Pass a year after release as well.

The Xbox Series is just selling pretty badly despite being sold at a pretty huge loss.
Click to expand...
No. They make way more money/margins off selling directly to consumers via steam/software than by selling consoles and hoping you spend more than the subsidy and then some.
Jin+Jang said:
Series X stock was already resolved in May or June, said by Spencer. Problem was XSS which was frontloaded everywhere and even with heavy discount sales were low
Click to expand...
He said that in June, but stock didn't really start improving at least for the X until probably Aug or beyond.
 
Cobalt said:
At a certain point they're going to need consistent hardware growth to grow gampeass. PC gamers love steam too much.
Click to expand...
They should work with Valve (or buy the company if Gabe agrees to sell) to allow gamepass to be integrated to Steam.

I think more PC gamers would be interested in subscribe if they don't need to play through Microsoft Store.
 
Cobalt said:
At a certain point they're going to need consistent hardware growth to grow gampeass. PC gamers love steam too much.
Click to expand...

This is true in the medium to long term. But for the time being PC Gamepass can pick up some of the slack when it comes to Gamepass growth in the near future as they add more locations/bulk up their PC offerings.

Hardware growth that will spill into Gamepass growth will depend on their success or failure in delivering constant 1st party software from 2024 on. It's in their hands to deliver the software that people want so that people actually go and buy their machine.
 
They beat their expectations so not sure how to take it but slightly +ve. Will be interesting to see what they say in the today's call.
 
When was the last time the hardware was up in those report ?

EDIT : one year ago it seems (+ 13%)
 
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allan-bh said:
They should work with Valve (or buy the company if Gabe agrees to sell) to allow gamepass to be integrated to Steam.

I think more PC gamers would be interested in subscribe if they don't need to play through Microsoft Store.
Click to expand...
This would only happen once their first party output is consistent enough and they are no longer meeting growth expectations within the PCGP/Xbox App itself. Their goal is a successful owned platform/store. Not just sheer numbers at this time. An Xbox Game Pass Core for Steam only doesn't seem enticing at all.
 
allan-bh said:
They should work with Valve (or buy the company if Gabe agrees to sell) to allow gamepass to be integrated to Steam.
Click to expand...
Nah, they would lose too much money on that (and their own ecosystem will be damaged too). I don't see them doing that at all.
 
If Microsoft doesn't care that much about console sales, why are they selling a console at a loss of hundreds of dollars per system (at least in 2020) and why are they spending so much on R&D for new consoles.
 
allan-bh said:
I don't think is diminishing but keeping a similar pace of Xbox One, with isn't remarkable, but also not a doom scenario.
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It just proves that console market is not growing. Depending on PS5 results this quarter will can definitely confirm them (granted Switch is a wildcard all the time).
 
Josh5890 said:
Knee-jerk reaction warning!


If Microsoft isn't able to see growth in there hardware after both the launch of Starfield last quarter AND the fact that last year was plagued by supply chain issues, I don't see Microsoft making much headway with their hardware between now and the end of the generation.
Click to expand...
To be fair, they benefited from the supply chain issues. When the PS5 was hard to find, they had the Series S as the only available option for next gen on the market.
Welfare said:
Xbox top 10 quarters

Oct-Dec 2021$5,442,000,000
Oct-Dec 2020$5,031,000,000
Oct-Dec 2022$4,758,000,000
Oct-Dec 2018$4,232,000,000
Oct-Dec 2017$3,920,000,000
Jul-Sep 2023$3,919,000,000
Jan-Mar 2022$3,740,000,000
Oct-Dec 2015$3,721,000,000
Apr-Jun 2021$3,714,000,000
Oct-Dec 2016$3,617,000,000
Click to expand...
Biggest non-Holiday quarter then, great result. Starfield was indeed very big, a shame it coulent drive more hardware tho.
 
ItWasMeantToBe19 said:
If Microsoft doesn't care that much about console sales, why are they selling a console at a loss of hundreds of dollars per system (at least in 2020) and why are they spending so much on R&D for new consoles.
Click to expand...
Console Xbox remains being the major factor to drive revenue for their game business.
 
Welfare said:
Xbox top 10 quarters

Oct-Dec 2021$5,442,000,000
Oct-Dec 2020$5,031,000,000
Oct-Dec 2022$4,758,000,000
Oct-Dec 2018$4,232,000,000
Oct-Dec 2017$3,920,000,000
Jul-Sep 2023$3,919,000,000
Jan-Mar 2022$3,740,000,000
Oct-Dec 2015$3,721,000,000
Apr-Jun 2021$3,714,000,000
Oct-Dec 2016$3,617,000,000
Click to expand...
What do you think for the total units shipped this quarter? 1.8 million?
 
Basically what we have seen in the sales reports, very strong performance for Starfield, but lack of impact from the game in hadware sales, wich are prety bad.
 
allan-bh said:
I don't think is diminishing but keeping a similar pace of Xbox One, with isn't remarkable, but also not a doom scenario.
Click to expand...

But that isn’t very good either since the Xbox One era is collectively seen as a dork age from the Xbox brand and nearly got it killed off until Phil stepped in.

After all the mistakes done in the One generation that the Series mostly fixed only for them to do about the same would be pretty meh.

Granted, I think the biggest issue are the games. Xbox One overall had a better library for the first two or three years on an undesirable console. The Series is desirable, but it doesn’t have the software to back it. This year alone, only Hi-Fi Rush was a home run for new games and Halo seems to be digging itself out of its hole. Redfall flopped both critically and commercially, Starfield is good but not the masterpiece everyone expected with BG3 just eating its lunch and coming out in a year with so many 90+ games, and Forza Motorsport missed the mark. Which honestly shock me since Turn 10 is usually constant and reliable.
 
Butzke said:
Series is tracking behind One, a console considered a big flop, while spending billions on hardware and software.
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I don't know if is in fact tracking behind, but more or less is close based on estimates.

I wouldn't call Xbox One a big flop, 58 million is respectable. It was disappointing looking at 360 performance.
 
Can someone help me to understand how is Microsoft account the billions spent in acqusitions for the gaming division?

Of course the ACTI one is not yet in, but the other ones.
 
sixsilum said:
Basically what we have seen in the sales reports, very strong performance for Starfield, but lack of impact from the game in hadware sales, wich are prety bad.
Click to expand...
With them releasing games on PC day 1 it is close to impossible to grow their numbers in Europe for example and other markets outside of USA (and Latin America).

Shezard said:
Can someone help me to understand how is Microsoft account the billions spent in acqusitions for the gaming division?
Click to expand...
I don't think they do. ABK will be an interesting case (as they provide Linkedin numbers independently), but the spent money is the investment from the cash. So they don't really bother with that much. They literally made more billions while the deal was in a regulatory purgatory. Two quarters between CMA block and approval brought them around 50b in pure profits.
 
allan-bh said:
I don't know if is in fact tracking behind, but more or less is close based on estimates.

I wouldn't call Xbox One a big flop, 58 million is respectable. It was disappointing looking at 360 performance.
Click to expand...

The thing is Phil and others from MS called the Xbox One a flop despite it selling 53 million, nearly kill the Xbox brand, and Phil said it was the worst generation to lose since everyone was building their digital library. Which feels like a poor excuse because as bad as the Xbox One was, it wasn’t the Wii U.
 
FY 24 Q1 expectations vs actual:

FY24 Q1ExpectationsActual
HW Rev(-10 to +5)%-8%
C&S Rev+(5-9)%+12%
Total Rev+5%+8%

FY 23 Q4 expectations vs actual:

FY23 Q4ExpectationsActual
C&S Rev+(10-15)%+5%
Total Rev+5%+1%

Bit better than the dire expectations they had for this quarter but its clear Starfield has not been a good system seller.
Hardware, in what is usually a console's peak year, seems to be down both revenue and unit wise. Makes one think how XBS will fare for the rest of this generation if the biggest card could not stop the bleeding.

In terms of GamePass, its a bit more tricky:
  • CS revenue increased by ~$364M
  • If we assume Starfield sold 2-3M, then thats $185-255M of B2P revenue (1.5M early access)
  • Which leaves $110-180M for GP
    • We know ARPU in GP is ~$10
    • ~1.1-1.8M GP subs added
In reality, we need to know how 3rd P TRX grew or contracted to get a closer estimate on just Starfields effect. We should get this from Playstation's Q.
 
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allan-bh said:
I don't know if is in fact tracking behind, but more or less is close based on estimates.

I wouldn't call Xbox One a big flop, 58 million is respectable. It was disappointing looking at 360 performance.
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Xb360 carried a bad Xbox One to some degree.
Xb One hinders a better Xbox Series to some degree.

I think that we can agree on.
From a pure "offering" perspective, Xbox Series should do better than Xbox One. But it doesn't.


At least there is the overall Microsoft Operating Income and Net Profits.
Those are extremely good as always.
 
RDragon said:
The thing is Phil and others from MS called the Xbox One a flop despite it selling 53 million, nearly kill the Xbox brand, and Phil said it was the worst generation to lose since everyone was building their digital library. Which feels like a poor excuse because as bad as the Xbox One was, it wasn’t the Wii U.
Click to expand...


Neither a N64 nor a GameCube
It probably was a matter of ROI?
 
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