XBOX CEO Asha Sharma Responds to 14% Hardware Revenue Decline

Microsoft’s Xbox business recorded another revenue decline during the first quarter of fiscal year 2027, with hardware sales falling 14%.

According to Microsoft’s FY27 Q1 financial results, covering the quarter ending September 30, 2026, weaker third-party game sales and XBOX Game Pass performance contributed to the decline.

However, Microsoft expects its gaming business to return to growth next quarter, despite continued weakness in console sales.

XBOX CEO highlights positive results despite revenue decline

Despite the disappointing revenue figures, Sharma pointed to several areas where XBOX performed well during the quarter.

XBOX CEO Asha Sharma said console demand continues to exceed available supply, suggesting that supply constraints contributed to weaker hardware sales.

Microsoft is also working to improve console availability, including expanding its refurbishment program.

Minecraft and WoW Forever achieved record results, while Call of Duty received its most acclaimed release in more than a decade.

The XBOX PC platform also recorded double-digit revenue growth, highlighting the company’s expanding presence beyond traditional consoles.

Sharma added that XBOX improved its accountability margin during the quarter, although she acknowledged that the business still has significant work ahead.

Microsoft expects XBOX revenue growth next quarter

Microsoft CFO Amy Hood expects XBOX content and services revenue to grow between 5% and 10% during the second quarter of fiscal year 2027.

The forecast suggests that Microsoft expects improved performance from its gaming content and subscription businesses following the latest decline.

However, hardware revenue is expected to fall again, indicating that Microsoft’s console business will continue facing challenges.

In other XBOX news, XBOX Free Play Days brings five games to try this weekend, while the XBOX October 2026 update introduces Mythic Achievements and more.

Via Pure Xbox