Microsoft gaming revenue falls 6.6% to $5.34 billion as company revenue rises 18.3%

Written by Claude Sonnet 5.5, an AI model, from public records. Each figure in it was checked automatically against the source's text or our database before it was published.

Microsoft reported revenue of $82.89 billion for the quarter to Mar 31, 2026, its fiscal third quarter, up 18.3% from $70.07 billion a year earlier. It published the results on Apr 29, 2026 in its quarterly report on Form 10-Q, the filing a US-listed company makes with the SEC, and in an earnings release filed the same day on Form 8-K. Operating income was $38.4 billion, up 20.0% from $32 billion; the company says growth in Productivity and Business Processes and Intelligent Cloud drove the increase. Net income was $31.78 billion, up 23.1% from $25.82 billion, and diluted earnings per share were $4.27, up 23.4% from $3.46. Net losses from investments in OpenAI cut net income by $14 million in the quarter and by $583 million in the quarter a year earlier.1^,2^,3^,4^,5^,6^,7^,8^,9^,10^,11^,12^,13^,14^,15^,16^,17^,18^,19^,20^,21

Gaming revenue in the quarter was $5.34 billion, down 6.6% from $5.72 billion a year earlier. The 10-Q says Xbox hardware revenue fell 33% on a lower volume of consoles sold, and Xbox content and services revenue fell 5% against a quarter a year earlier that benefited from strong first-party content performance. Xbox content and services covers games and in-game content from Microsoft and other publishers, Xbox Game Pass and other subscriptions, Xbox Cloud Gaming, advertising and other cloud services. Gaming is reported inside the More Personal Computing segment, whose revenue was $13.19 billion, down 1.3%. That segment's operating expenses rose 7%, which the company ties in part to impairment and other related expenses in its Gaming business.22^,23^,24^,25^,26^,27^,28^,29^,30^,31

Microsoft attributes the company's revenue growth to Microsoft Cloud, whose revenue in the quarter was $54.5 billion, up 29%. Microsoft Cloud is the company's own measure: revenue from Microsoft 365 Commercial cloud, Azure and other cloud services, the commercial portion of LinkedIn and Dynamics 365. In the earnings release, chief financial officer Amy Hood said the company delivered results that exceeded expectations across revenue, operating income and earnings per share.32^,33^,34^,35^,36

Revenue was $81.27 billion in the quarter to Dec 31, 2025 and $77.67 billion in the quarter to Sep 30, 2025. For the fiscal year to date, the 10-Q puts gaming revenue down $1.1 billion, or 6%, with Xbox hardware revenue down 31% and Xbox content and services revenue down 3%, a decline the company says growth in Xbox Game Pass offset in part.37^,38^,39^,4

Our records hold the text of the 10-Q's management discussion but nothing else of the filing's text, so its notes to the financial statements are not read here, and the Gaming impairment and the OpenAI investments are told only as the discussion words them. Our records keep one value for each period, so they cannot tell whether the year-earlier figures were restated.40^,41