Xbox + Microsoft FY25 Q1 Results: Total +43%, Content and Services +61%, Hardware -29%

[Welfare]

Earnings Call link: https://www.microsoft.com/en-us/Investor/events/FY-2025/earnings-fy-2025-q1

Microsoft Overview

• Revenue was $65.6 billion and increased 16%
• Operating income was $30.6 billion and increased 14%
• Net income was $24.7 billion and increased 11% (up 10% in constant currency)
• Diluted earnings per share was $3.30 and increased 10%

Xbox content and services revenue increased 61% driven by 53 points of net impact from the Activision acquisition

Xbox hardware revenue decreased 29% driven by lower volume of consoles sold

Below graph is my creation using calculated results for C&S and hardware

FY25 Q1 - Press Releases - Investor Relations - Microsoft

 

[Copilot]

Xbox C&S revenue grew 61%. That's alot.

They must investing hard on ABK to still be losing money.

 

[GodlyTrident]

Gaming revenue numbers are crazy. I wonder what numbers will they have next quarter with COD...

 

[Kenka]

Freaking hell, Microsoft...

They are probably making more money than ExxonMobil and SaudiAramco.

 

[Copilot]

Xbox division revenue should be ~U$5.6B based on last year Q1 Welfare's numbers.

Content & Services - ~U$5.1B.
Hardware - ~U$0.5B.

 

[Brazilian77]

Freaking hell, Microsoft...

They are probably making more money than ExxonMobil and SaudiAramco.

I will be actually surprised if that is true. Beating SaudiAramco on profits is probably almost impossible. Unfortunately I do not know of a way to know for sure whether any company comes close to them

 

[master94ga]

Very good numbers, they did better than the guidance that was:

Xbox revenue to growth mid 30's, with 40 points net impact from ABK

Content and Services to grow in the low to mid 50's, driven by net impact from ABK

Hardware decline YOY

 

[vixolus]

What's with the Press Releasing saying

• · Xbox content and services revenue increased 61% driven by 58 points of net impact from the Activision acquisition

FY24 Q4 - Press Releases - Investor Relations - Microsoft

while the PPT says 53 points of net impact?

 

[master94ga]

Do we have next quarter guidance?

 

[vixolus]

Do we have next quarter guidance?

They will mention that in the web cast soon

 

[reksveks]

Do we have next quarter guidance?

yeah, that comes in the call

 

[GamingCJ]

Microsoft Overview

• Revenue was $65.6 billion and increased 16%
• Operating income was $30.6 billion and increased 14%
• Net income was $24.7 billion and increased 11% (up 10% in constant currency)
• Diluted earnings per share was $3.30 and increased 10%

Xbox content and services revenue increased 61% driven by 53 points of net impact from the Activision acquisition

FY25 Q1 - Press Releases - Investor Relations - Microsoft

In which category fall Xbox controllers and other accessories?

 

[GodlyTrident]

Microsoft Overview

• Revenue was $65.6 billion and increased 16%
• Operating income was $30.6 billion and increased 14%
• Net income was $24.7 billion and increased 11% (up 10% in constant currency)
• Diluted earnings per share was $3.30 and increased 10%

Xbox content and services revenue increased 61% driven by 53 points of net impact from the Activision acquisition

Xbox hardware revenue decreased 29% driven by lower volume of consoles sold

Below graph is my creation using calculated results for C&S and hardware

FY25 Q1 - Press Releases - Investor Relations - Microsoft

do you by chance have PS chart?

 

[vixolus]

In which category fall Xbox controllers and other accessories?

hardware

 

[Welfare]

Earnings call link here: https://www.microsoft.com/en-us/Investor/events/FY-2025/earnings-fy-2025-q1 (live in 2 minutes)

In which category fall Xbox controllers and other accessories?

Hardware

 

[vixolus]

Earnings Call

Per Satya:

• 1 year since close of ABK.
• We are focused on business positioned for long term growth by higher margin C&S.
• See transformation by diversifying how to access content.
• New records of Monthly Active Users in the quarter as more players than ever across devices and Xbox platform.
• Game Pass for Q1 record for total revenue and average revenue per subscriber.
• IP across studios never stronger.
• Call of Duty Black Ops 6 biggest COD release ever.
  • Setting record for D1 players and Game Pass subscriber adds on launch day.
• unit sales on PlayStation and Steam sales also up 60% YoY.
• "This speaks to our strategy of meeting gamers where they are by enabling them to access games on the screen they spend their time on."

unclear if that 60% YoY is overall for unit sales on PS/Steam or just BO6 specifically.

 

[The Hunter]

pretty much the same situation as last 3 quarters.. saved by Activision acquisition.
From the next quarter on, things get tough, it will be hard for Xbox to grow

Post automatically merged: Oct 30, 2024

Earnings Call

Per Satya:

• "This speaks to our strategy of meeting gamers where they are by enabling them to access games on the screen they spend their time on."

Publishing games everywhere will be critical for Xbox to grow from next quarter onward

 

[Welfare]

From the call, Xbox revenue was ahead of expectations due to stronger than expected performance in 1st and 3rd party content, as well as consoles.

 

[vixolus]

Amy on More Personal Computing:

• Results above expectations driven by Gaming and Search
  • Driven by stronger 1P, 3P, and Console performance
• 61% C&S revenue impacted by 53% Activision
• Strong execution in margin improvement in Gaming and Search offset by sales mix shift to those businesses.

 

[Copilot]

pretty much the same situation as last 3 quarters.. saved by Activision acquisition.
From the next quarter on, things get tough, it will be hard for Xbox to grow

Post automatically merged: Oct 30, 2024

Publishing games everywhere will be critical for Xbox to grow from next quarter onward

Launching like 20 games for Switch 2 should do the work.

About their margins growing, should be because of cut production costs and less discounts on hardware.

 

[vixolus]

Amy Hood on outlook for Gaming:

• Growth in operating margins from the prioritization work across Gaming, Search and Devices
• Revenue decline high single digits due to Hardware
• C&S growth to be relatively flat
• Most game pass subscriber adds ever seen on a launch day due to CODBO6
• Mentioned something about Black Ops 6 vs MWIII money being different due to being on Game Pass and being online

 

[The Hunter]

Amy Hood on outlook for Gaming:

• Revenue decline high single digits due to Hardware
• C&S growth to be relatively flat
• Most game pass subscriber adds ever seen on a launch day due to CODBO6
• Mentioned something about Black Ops 6 vs MWIII money being different due to being on Game Pass and being online

As i said, from next quarter things get complicated for Xbox division. They will have to accelerate ports to PS5-Switch and/or raise Gamepass prices again if they want to have substantial and steady growth in the short term

 

[awng782]

Breaking: Microsoft CEO says Black Ops 6 is the biggest Call of Duty release ever

Black Ops 6 set records for number of players on launch day and amount of new Game Pass subscriber in a single day

Microsoft CEO says sales on PlayStation and Steam were up 60% compared to MWIII

Unsurprisingly, Black Ops 6 had a gigantic launch.

 

[vixolus]

As i said, from next quarter things get complicated for Xbox division. They will have to accelerate ports to PS5-Switch and/or raise Gamepass prices again if they want to have substantial and steady growth in the short term

revenue going down a bit while they increase their margins seems to be their plan though

 

[JMECH2000]

...or release more 1st party content which can sell on Steam. Which given they have a lot of big launches next year including Indy PS5, Doom Dark Ages, Fable and presumably Forza Horizon 6...

As i said, from next quarter things get complicated for Xbox division. They will have to accelerate ports to PS5-Switch and/or raise Gamepass prices again if they want to have substantial and steady growth in the short term

ETA: to be clear, I don't care and would actually prefer if they ported everything everywhere ASAP. I want more people playing Halo and Gears so I get more content. But they just have a couple of options after a dry couple years for XGS.

 

[Luminoth 4545]

For hardware -29% is a softer decline then their previous quarters, i have it at around 1.2 million shipped for this quarter.

 

[seb]

Amy Hood on outlook for Gaming:

• Growth in operating margins from the prioritization work across Gaming, Search and Devices
• Revenue decline high single digits due to Hardware
• C&S growth to be relatively flat
• Most game pass subscriber adds ever seen on a launch day due to CODBO6
• Mentioned something about Black Ops 6 vs MWIII money being different due to being on Game Pass and being online

If next quarter has COD + Indy + Flight Sim + Stalker, what is it that make them expect flat C&S?

 

[GamingCJ]

If next quarter has COD + Indy + Flight Sim + Stalker, what is it that make them expect flat C&S?

BO6 being on GP

 

[JMECH2000]

If next quarter has COD + Indy + Flight Sim + Stalker, what is it that make them expect flat C&S?

Could be they don't expect third parties to deliver...Fortnite OG + other modes launched last November/December.

 

[enpleinjour]

FY24 Q1	FY25 Q1 (CC adjusted)
Total	3.92	5.60
HW	0.756	0.537 (-29%)
C&S (inc ATVI)	3.16	5.1
Xbox C&S	3.16	3.41 (8% growth)
ATVI	--,---/--,-- (Net/GAAP Rev)	1.69

From the EA report it looks like College Football did $500-600M gross, assuming the usual PS:XB sales ratio, $200-250M on XB which would contribute the majority of that C&S increase.

FY24 Q2	FY25 Q2 Guidance
Total	7.06	6.42-6.56
HW	1.39	1-1.15
C&S (inc ATVI)	5.41	5.41

Xbox hardware continues to be down by ~30%. With ASPs increasing due to X:S mix, safe to say unit sales are down ~30%.
Guidance shows holiday sales are also likely to be down by 20-30% from basically an already all time low 2023 holiday sales.

I have 6-6.5M shipment for XBS in 2023 so that would mean XBS is on track to ship ~5M in 2024.

The software side is hard to make sense:

• CS is flat despite B06 being bigger than MW3, the release of IJ+FS24 and a 20% price hike to GamePass
• I can't remember any big games going on Xbox last Oct-Dec to change things much either
• So that must mean:
  • GP B06 XB cannibilisation + ecosystem decline = $ of B06 PS/PC increase + IJ Rev + FS24 Rev + 20% price hike revenue

 

[Ronin]

Those holidays sales are crazy low.

This gotta be wrong..

 

[Mr Swine]

For hardware -29% is a softer decline then their previous quarters, i have it at around 1.2 million shipped for this quarter.

So Xbox Series consoles are atm around 32 million worldwide? How does that compare to 360 and one at the same timeframe?

 

[salesguy]

Earnings Call

Per Satya:

• 1 year since close of ABK.
• We are focused on business positioned for long term growth by higher margin C&S.
• See transformation by diversifying how to access content.
• New records of Monthly Active Users in the quarter as more players than ever across devices and Xbox platform.
• Game Pass for Q1 record for total revenue and average revenue per subscriber.
• IP across studios never stronger.
• Call of Duty Black Ops 6 biggest COD release ever.
  • Setting record for D1 players and Game Pass subscriber adds on launch day.
• unit sales on PlayStation and Steam sales also up 60% YoY.
• "This speaks to our strategy of meeting gamers where they are by enabling them to access games on the screen they spend their time on."

unclear if that 60% YoY is overall for unit sales on PS/Steam or just BO6 specifically.

and indictment of gamepass imo that they have to say "up 60% on our competitors".

i just think gamepass does not fit gaming. i dont know if ms can ever realize it though. their execs will be too proud and stubborn, and they'll probably just cancel xbox if they decided gp isn't going to work rather than change course.

what i hope to see that is realistic, is a slow erosion. pay more to play early with early access special editions, that sort of thing. which has already happened.

sure bo6 drew most ever new gp subs. duh. without context that's meaningless.

I have 6-6.5M shipment for XBS in 2023 so that would mean XBS is on track to ship ~5M in 2024.

By Luminoth's estimate they're already at 2.8 with holiday outstanding. With looks like it should be at least 3m. So 5.8 as a low estimate. The only way they could do 5 would be ship 2.2 in Q4, which so far has been 3.1, 4.3, 3.5, 3.4. A decline all the way to 2.2 is very unlikely.

anyways stock is down 3.17% after hrs as i type. so nothing devastating but a slightly negative reaction to this quarter from the street.

 

[AHA-Lambda]

I keep saying it I know but with numbers like these and the moves that have been made recently I still don’t understand why MS are bothering with new hw (unless it is something very different like PC as some rumour)

 

[Luminoth 4545]

So Xbox Series consoles are atm around 32 million worldwide? How does that compare to 360 and one at the same timeframe?

After 16 quarters i estimate the Xbox One was at 36 million and we have official numbers for X360 (below) and it was at 33.6 million after 16 quarters.

 

[GamingCJ]

By Luminoth's estimate they're already at 2.8 with holiday outstanding. With looks like it should be at least 3m. So 5.8 as a low estimate. The only way they could do 5 would be ship 2.2 in Q4, which so far has been 3.1, 4.3, 3.5, 3.4. A decline all the way to 2.2 is very unlikely.

anyways stock is down 3.17% after hrs as i type. so nothing devastating but a slightly negative reaction to this quarter from the street.

Xbox console shipments won't come anywhere near 3m next quarter. They shipped 3.5m Xbox last holiday with ~1.4bn revenue.
Now thex forecast less than $1bn HW revenue while improving margins (so no deep discounts).
Expect 2-2.5m Xbox shipped next quarter, resulting in 5m Xboxes for CY 2024. That's a catastrophic number for a 4th year of the gen, basically indicating MS lowkey killing off Xbox consoles

 

[GodlyTrident]

I keep saying it I know but with numbers like these and the moves that have been made recently I still don’t understand why MS are bothering with new hw (unless it is something very different like PC as some rumour)

To maintain the userbase and not to be bound to specific platform holders. The current Xbox userbase is spread across Xbox One, Xbox Series and future Xbox consoles. We know that PS5/PS4 split is 50/50 basically so for Xbox it won't be that different. So even if sold 30m Series X, it just means that we have potentially another 15m of people using Xbox One just to play EA games and Fortnite.

The future Xbox consoles won't sell at loss too so it won't be a money pit. Plus with their integration with Windows they are getting more input for windows os and stuff. There are reasons to have hardware.

 

[JMECH2000]

FY24 Q1	FY25 Q1 (CC adjusted)
Total	3.92	5.60
HW	0.756	0.537 (-29%)
C&S (inc ATVI)	3.16	5.1
Xbox C&S	3.16	3.41 (8% growth)
ATVI	--,---/--,-- (Net/GAAP Rev)	1.69

From the EA report it looks like College Football did $500-600M gross, assuming the usual PS:XB sales ratio, $200-250M on XB which would contribute the majority of that C&S increase.

FY24 Q2	FY25 Q2 Guidance
Total	7.06	6.42-6.56
HW	1.39	1-1.15
C&S (inc ATVI)	5.41	5.41

Xbox hardware continues to be down by ~30%. With ASPs increasing due to X:S mix, safe to say unit sales are down ~30%.
Guidance shows holiday sales are also likely to be down by 20-30% from basically an already all time low 2023 holiday sales.

I have 6-6.5M shipment for XBS in 2023 so that would mean XBS is on track to ship ~5M in 2024.

The software side is hard to make sense:

• CS is flat despite B06 being bigger than MW3, the release of IJ+FS24 and a 20% price hike to GamePass
• I can't remember any big games going on Xbox last Oct-Dec to change things much either
• So that must mean:
  • GP B06 XB cannibilisation + ecosystem decline = $ of B06 PS/PC increase + IJ Rev + FS24 Rev + 20% price hike revenue

To maintain the userbase and not to be bound to specific platform holders. The current Xbox userbase is spread across Xbox One, Xbox Series and future Xbox consoles. We know that PS5/PS4 split is 50/50 basically so for Xbox it won't be that different. So even if sold 30m Series X, it just means that we have potentially another 15m of people using Xbox One just to play EA games and Fortnite.

The future Xbox consoles won't sell at loss too so it won't be a money pit. Plus with their integration with Windows they are getting more input for windows os and stuff. There are reasons to have hardware.

Yeah, plus just because something is a mature market with limited growth doesn't mean it's worth exiting. If a solid chunk of your revenue comes from people in your ecosystem and that requires hardware...why wouldn't you keep assembling largely off the shelf machines that you subsidize less and less (see no price cuts this gen). If people don't upgrade but keep spending (which we know they are since console MAUs are alltime highs), then you actually are margin positive vs. selling them a subsidized machine.

Same story for Playstation.

 

[GodlyTrident]

Yeah, plus just because something is a mature market with limited growth doesn't mean it's worth exiting. If a solid chunk of your revenue comes from people in your ecosystem and that requires hardware...why wouldn't you keep assembling largely off the shelf machines that you subsidize less and less (see no price cuts this gen). If people don't upgrade but keep spending (which we know they are since console MAUs are alltime highs), then you actually are margin positive vs. selling them a subsidized machine.

Yeah, plus if potentially people from Xbox One era might upgrade to PC or the next Xbox skipping all Xbox Series era that is a relatively loss leading system.

They still have surface devices despite having tons of vendors and standalone pcs. They are not against hardware per se.

 

[JMECH2000]

Yeah, plus if potentially people from Xbox One era might upgrade to PC or the next Xbox skipping all Xbox Series era that is a relatively loss leading system.

They still have surface devices despite having tons of vendors and standalone pcs. They are not against hardware per se.

Agreed -- but I also think that there's a high likelihood that as more lifestyle games (see College Football this year) and landmark releases (GTA6 first and foremost) drop last gen, you'll see a greater shift to new hardware.

The one risk to this occuring is Switch 2. If a Switch 2 is truly just a PS4, we may not see meaningful abandonment for another couple years or so.

ETA: I guess technically the other risk is if PS and XB ship handhelds that also are much closer to an XBONE than a Series S which is...almost certainly the case.

 

[GodlyTrident]

The one risk to this occuring is Switch 2. If a Switch 2 is truly just a PS4, we may not see meaningful abandonment for another couple years or so.

There is no way to have stronger than PS4 handheld hardware - even modern handheld like ROG and Xbox are not that powerful at all (weaker than Series S) due to power limit.

Switch 2 is a risk though - I agree - due to potentially eating the marketshare of other consoles if more third party games come to Switch 2. Plus we have to see how fast people migrate from Switch 1 to Switch 2. Granted the Switch 1 gen was really really long so people might be willing to do that more.

Future devices will bet heavily on NPUs.

 

[Bernd Lauert]

FY24 Q1	FY25 Q1 (CC adjusted)
Total	3.92	5.60
HW	0.756	0.537 (-29%)
C&S (inc ATVI)	3.16	5.1
Xbox C&S	3.16	3.41 (8% growth)
ATVI	--,---/--,-- (Net/GAAP Rev)	1.69

From the EA report it looks like College Football did $500-600M gross, assuming the usual PS:XB sales ratio, $200-250M on XB which would contribute the majority of that C&S increase.

FY24 Q2	FY25 Q2 Guidance
Total	7.06	6.42-6.56
HW	1.39	1-1.15
C&S (inc ATVI)	5.41	5.41

Xbox hardware continues to be down by ~30%. With ASPs increasing due to X:S mix, safe to say unit sales are down ~30%.
Guidance shows holiday sales are also likely to be down by 20-30% from basically an already all time low 2023 holiday sales.

I have 6-6.5M shipment for XBS in 2023 so that would mean XBS is on track to ship ~5M in 2024.

The software side is hard to make sense:

• CS is flat despite B06 being bigger than MW3, the release of IJ+FS24 and a 20% price hike to GamePass
• I can't remember any big games going on Xbox last Oct-Dec to change things much either
• So that must mean:
  • GP B06 XB cannibilisation + ecosystem decline = $ of B06 PS/PC increase + IJ Rev + FS24 Rev + 20% price hike revenue

Analysing future quarters as if they already happened is a bit weird. I'd be very surprised if C&S stay truly flat. There's also the D4 expansion for Q2, in addition to the games you mentioned.

 

[JMECH2000]

There is no way to have stronger than PS4 handheld hardware - even modern handheld like ROG and Xbox are not that powerful at all (weaker than Series S) due to power limit.

Switch 2 is a risk though - I agree - due to potentially eating the marketshare of other consoles if more third party games come to Switch 2. Plus we have to see how fast people migrate from Switch 1 to Switch 2. Granted the Switch 1 gen was really really long so people might be willing to do that more.

Future devices will bet heavily on NPUs.

I agree that it's extremely unlikely a handheld will be stronger than PS4 in any time soon. I just didn't want people to get mad at me for doubting Nintendo or some other platform, .

I don't know if Switch 2 is much of a ecosystem shift play. Digital libraries are a pretty good locking in approach. Nintendo's definitely got a shot.

 

[My Tulpa]

Xbox is more successful this gen than any other gen.

Microsoft did extremely well pivoting in a world where primarily 3rd party gaming consoles can only survive going forward by being more and more of an agnostic platform service and multi platform publisher.

Sony earlier this year was very open about their troubles with their margins and that they need to change the way they approach hardware. Their pivot has been slower and more flat footed, but they are getting there.

Nintendo is primarily a 1st party ecosystem so they are just on another planet lol

 

[salesguy]

Yeah, plus just because something is a mature market with limited growth doesn't mean it's worth exiting. If a solid chunk of your revenue comes from people in your ecosystem and that requires hardware...why wouldn't you keep assembling largely off the shelf machines that you subsidize less and less (see no price cuts this gen). If people don't upgrade but keep spending (which we know they are since console MAUs are alltime highs), then you actually are margin positive vs. selling them a subsidized machine.

Same story for Playstation.

xbox/ps was subsidized heavily though, per phil Spenser comment about 100-200 per unit some time into the generation.

xbox guys once said something about aiming for hardware to be revenue neutral for the entire gen. essentially you lose $ first, hope to eventually profit per hardware late in the gen, and overall break even on hardware for the gen. I have no idea if it's still the case I kinda doubt it. This was said around 360 era IIRC.

The overall console ecosystems will be profitable.

It's interesting when you consider the reason all this hardware subsidizing goes on is because hardware power is so important. If you dont do it your competitor will beat you. You can make a weaker, profitable Xbox or PS easily enough, it will get trounced.

Excluding Nintendo as always, They play a different game.

A new front in subsidizing, or i guess profitability for the whole endeavor, is pay online.

Theres been some rumors of an xbox handheld next gen. I would love to see it. I dont care that I doubt it's viability, I just want a cool toy. I wonder if they would do a fixed spec though, like PSP or Vita, or more a ROG Ally, movable PC spec type thing. So many questions.

Anyway MSFT dropped 5.62% today so far. was a very volatile day for tech though. The market was down (SP 500 -1.72%) and big tech tends to move in unison. Nvidia was down 4.70%.

 

[JMECH2000]

xbox/ps was subsidized heavily though, per phil Spenser comment about 100-200 per unit some time into the generation.

xbox guys once said something about aiming for hardware to be revenue neutral for the entire gen. essentially you lose $ first, hope to eventually profit per hardware late in the gen, and overall break even on hardware for the gen. I have no idea if it's still the case I kinda doubt it. This was said around 360 era IIRC.

The overall console ecosystems will be profitable.

It's interesting when you consider the reason all this hardware subsidizing goes on is because hardware power is so important. If you dont do it your competitor will beat you. You can make a weaker, profitable Xbox or PS easily enough, it will get trounced.

Excluding Nintendo as always, They play a different game.

A new front in subsidizing, or i guess profitability for the whole endeavor, is pay online.

Theres been some rumors of an xbox handheld next gen. I would love to see it. I dont care that I doubt it's viability, I just want a cool toy. I wonder if they would do a fixed spec though, like PSP or Vita, or more a ROG Ally, movable PC spec type thing. So many questions.

Anyway MSFT dropped 5.62% today so far. was a very volatile day for tech though. The market was down (SP 500 -1.72%) and big tech tends to move in unison. Nvidia was down 4.70%.

The subsidies of the Xbox Series prove my point.

The decline seems entirely due to cloud computing forecast next quarter (as much as anyone can ascribe market movements to anything)

 

[Lelouch0612]

Next quarter will be decisive for Xbox, early start for CoD is promising but we'll how it will translate over the quarter.

 

[reksveks]

Theres been some rumors of an xbox handheld next gen. I would love to see it. I dont care that I doubt it's viability, I just want a cool toy. I wonder if they would do a fixed spec though, like PSP or Vita, or more a ROG Ally, movable PC spec type thing. So many questions.

I have a feeling and maybe a hope that it isn't a fixed spec but movable PC spec. I think there is cons to both decisions (obviously) but think more pro's to having flexibility.

Re it's viablity, yeah, it's a tough market and does obviously depend on their expectations. How worries is MS about SteamOS is currently unknown.