MS is expecting its Q1 2024 fiscal revenue will likely decline ,GP growth had stalled on the console side

Microsoft just posted the fourth and final quarter of its 2023 fiscal financial results. The software maker made $56.2 billion in revenue and a net income of $20.1 billion during Q4. Revenue is up 8 percent, and net income has increased by 20 percent. As expected, Windows and devices revenue has been hit hard again this quarter, but Xbox has rebounded somewhat — at least on the content side. Microsoft’s cloud, office, and server businesses continue to make up for a weaker PC market.

Microsoft’s entire fiscal 2023 hasn’t been great for its Windows and devices revenue compared to fiscal 2022. Windows OEM revenue, the price that PC manufacturers pay Microsoft to put Windows on laptops and PCs, has dropped significantly for the entire fiscal year, or four quarters in a row. In Q4, that means Windows OEM revenue fell by 12 percent, which Microsoft says was “primarily driven by the PC market.”

Research firmIDC blames“macroeconomic headwinds, weak demand from both the consumer and commercial sectors, and a shift in IT budgets” for six consecutive quarters of contraction in the PC market. Lower shipments of laptops and PCs have also hit Microsoft’s devices revenues again. Devices at Microsoft includes HoloLens, PC accessories, and Surface devices. Overall devices revenue has dropped by 20 percent in Q4, and Microsoft CFO Amy Hood warned on an earnings call today that next quarter will be worse.

Microsoft is expecting its Q1 2024 fiscal devices revenue will likely decline in the “mid 30s,” thanks to the overall PC market and “adjustments we made in our portfolio with an increased focus on our higher margin premium products.” Microsoft revealed earlier this year that its mice, keyboards, and webcams are being discontinued in favor of premium Surface accessories.

Microsoft also makes Xbox devices, which are separated from its other hardware. Xbox hardware revenue has dropped 13 percent in Q4, so it’s likely that Microsoft continues to suffer with hardware supplies and softer demand for its Xbox Series S / X consoles. Or it could be related to Microsoft’s long-term strategy and balancing the costs of hardware against content and cloud potential.

Xbox content and services revenue, which includes Xbox Game Pass, is up 5 percent, though. Overall gaming revenue is also up just 1 percent. This suggests that Xbox Game Pass has grown year over year, despite Microsoft still not providing updated subscriber numbers. Microsoft had expected low- to mid-teens for Xbox content and services revenue, so just 5 percent is a miss here. Microsoft CFO Amy Hood blamed the miss on “weakness in first-party and third-party content performance,” in an earnings call today.

Microsoft said Xbox Game Pass had grown to 25 million subscribers in January 2022, but we haven’t had an update for more than 18 months now. Microsoft Gaming CEO Phil Spencer did reveal in October that Xbox Game Pass growth had stalled on the console side of the service, though. Microsoft has been making a bigger effort with PC Game Pass growth instead, with PC Game Pass launching in 40 new markets earlier this year.

Microsoft CEO Satya Nadella didn’t offer any update on Xbox Game Pass subscriber numbers during an earnings call with investors today, either. Nadella did reveal that Microsoft set fourth quarter highs for Xbox monthly active users and record fourth quarter engagement across Xbox Game Pass, but without numbers this doesn’t really tell us much.

Microsoft CFO Amy Hood offered up some guidance for what to expect from the company’s Q1 2024 fiscal gaming performance. Xbox content and services should be up in the “mid to high single digits,” with overall gaming revenue expected to be up “mid single digits.” Hood didn’t offer up any guidance on Xbox hardware revenues in Q1 2024 fiscal, though.

Microsoft also recently adjusted its Xbox Game Pass pricing. Xbox Game Pass Ultimate has moved from $14.99 per month to $16.99 (€14.99 / £12.99). The base Xbox Game Pass for Console pricing has also been increased from $9.99 a month to $10.99 (€10.99 / £8.99). Microsoft has not changed its PC Game Pass pricing, though.

Microsoft also announced plans to end its Xbox Game Pass Friends & Family plan in August. The plan had spread to eight countries, but Microsoft acknowledged this was a “preview program” all along and will cease to exist on August 15th. There’s no sign if it will return at a later date.

A new Xbox Game Pass Core subscription will be available in September priced at $9.99 per month to replace Xbox Live Gold. It features multiplayer online gaming and a new small catalog of more than 25 games — including Gears 5, Forza Horizon 4, and Psychonauts 2.

Microsoft had been hoping to have finalized its Activision Blizzard acquisition by the end of its Q4 fiscal 2023, but the deal deadline has been extended until October 18th. “We continue to work through the regulatory approval process and remain confident about getting the deal done,” said Nadella during Microsoft’s earnings call.

Microsoft and Activision agreed to extend the deadline to allow both companies to negotiate with UK regulators on a change to the transaction that will allow the deal to close. The UK’s Competition and Markets Authority (CMA) blocked the deal over cloud concerns in April, just a day after Microsoft’s Q3 2023 earnings report. The EU went on to approve the deal with a key cloud gaming remedy in place.

https://www.theverge.com/2023/7/25/23807075/microsoft-q4-2023-earnings-revenue-profits-windows-xbox-gaming-surface

Hopefully the things will turn around for the xbox division once the buyout goes thru in OCT.

Thank god for the PC gamers to save GP.

Very concerning

IB4 people say concerned, concerned, concerning😏

Too late.😂

But there is a concern.😎

There is much concern indeed.

You know its bad for Lems when they resort to passive aggressive comments 😂

@daredevils2k: So they’re forecasting 30 billion in revenue instead of 50?

Keep posting them “ms is doomed” posts bud, they’re great for a laugh.

Cry more😕

@hardwenzen: Aw, someone’s desperate for attention again.

Nothing to play on your ps5 then?

You already know that every Sony Professional owns a gaming rig. I have choice, something you've never seen in your whole life. I'll be playing Baldur's Gate 3 today, a game that is not even coming to your system because your S is holding the gaming industry back.🤣

@hardwenzen: Balders gate is not coming to Xbox.

You heard it from lemwenzen himself folks.

Your last gen system sold as current gen is holding your X back. This is how dumb MS engineers are.

Lems better start spending some money…Buy some games. Buy a controller. Y’all get a new color controller every week, yet the DualSense is selling like hotcakes. Buy some DLC. Something… Xbox multiplied the userbase many times over for 1% growth… 1%…

@hardwenzen: You seem bothered about this. Is the lack of Sony games getting to you?

More Xbox doom and gloom. What else is new lol

yep, Xbox is both a monopoly and doomed at the same time.. #cowlogic

I am not bothered, i am worried for you. No games since 2018, and now your garbage S is holding back the 12tflops, which was the whole selling point of the X. Its pathetic.

@hardwenzen: And yet you’re the one bringing up problems with a console neither of us have.

Oh, and I’d be more than willing to compare the list of games I’ve played on xsx with yours.

You up for that lemwenzen?

I guess not releasing any good games has been a bad strategy 🤷🏻‍♂️

Have already shown you my playtime of D4, which is much longer now than it was when i posted it. In one game alone i have more than you in everything on your X, but yet again, you're moving the goal post. I don't care how many more hours i spent in one game than you in a bunch of shovelware rented off of GP. What's important is that the S is ruining your X, and you're not smart enough to see it.

I am most concern about Xbox 😁

how on earth will the mulit-Trillion dollar company survive?.. 🥺

@hardwenzen: D4? Pretty decent Xbox game, buts let’s try and stay on topic. No games since 2018 was your claim, but you want to wriggle out of comparing the insane amount of gaming I’ve done with the insanely small amount of joy you’ve squeezed out of your ps5.

Even when multiplats launch, you don’t get them on ps5….so I’m pretty confident the claim of no games since 2018 applies to you - not me.

But again, I’ll gladly post screen shots of what I’ve played …. Are you in?

Hard to think the quarter that will see the ABK acquisition plus the release of Starfield will see a total revenue decline. Not quite sure if they do expect a decline are they talking about Q1 2024 compared to Q1 2023 or Q4 2023. Hard to imagine it'd be hard to beat Q1 2023 as it was such a dry year last year. Perhaps they're being overly modest in an attempt to set lower bonus targets. Net income definitely expected to decline when they pay $69B for ABK but on balance sheet it'll likely balance out in the assets.

Starfield is getting closer,you smell sony fan persons fear 💩

Was D4 made by MS? Acquiring devs ain't gonna help you release quality title, bud🤡

The whole of the Xbox brand hasn't seen a single game in a very long time. Its all about renting shovelware for $10-15 a month now. Who needs quality games like what Sony releases when you can rent 50 shovelware titles per month, spend 1-2 on each, and call it gaming.

MS chose quantity over quality, and this is just sad.

Starfield and Forza plus the holiday sales will get those numbers back up. Gamepass hasn't gotten anything 1st party with a wide appeal since Halo Infinite and Forza Horizon 5 in late 2021. I am legit shocked they had a 2 year gap like that when they are trying to grow their sub service and sell more consoles. Just a baffling thing.

Concerned we all are. Worry, we must.

@hardwenzen: Good old lemwenzen, says I've played 1 game more than your entire library, gets called out and asked to compare games and says stop moving the goal posts.

Could you get any more stupid 🤦‍♂️🤦‍♂️🤦‍♂️

This goes to your ass as well, bro. You two lems combined have less hours played than me in a single game🤣Casual boomers🤡

@hardwenzen: Really? Then why haven’t you shown us your gaming history?

Lmao….you play more Xbox games than Sony games. You don’t buy Sony’s exclusives, and you buy most games on your PC.

@hardwenzen: But I don't own a donkey.

And when you're ready to compare, let me know, until then, well you know the drill by now, talk to the 🖐

Xbox games? We're in 2023, there is no such thing as an Xbox game since 2018. Already told you this on so many occasions, but you're still ignoring facts. But i am glad you're worried about which game i play and on what system🤡🤡🤡🤡🤡

Cringe. I will be playing BG3 in a couple of thousands of hours when it finishes downloading, while you're still waiting on Remnant2. pathetic.

honestly those 1% growth probably existing users on the $1 promotion plan resubbing for full amount. its likely why no new numbers for users when pre 2022 xbox was pretty agressive in telling everyone how many joined.

Going by this forum, Xbox has been doomed since about 2004.

i sense much Fear in this thread..

Fear leads to Uncertainty, Uncertainty leads to Doubt, Doubt leads to .. .. ..

.. .. FUD...

@hardwenzen: Nah bud, you’re worrying about me having no games since 2018 but don’t seem to want to compare.

Simple self ownage really.

Everyone knows these are the typical copium posts from cows over the AB deal, Starfield, ES6 not coming to PS, PS1 games now being on Xbox, FF XIV coming to Xbox (and SE recommitting to support), etc.

Is this some kind of a sick joke, dabear?

@dabear: Guess so. That’s why lemwenzen is relegated to playing Xbox games on his PC, and ranting at Sony about the lack of games for his ps5.

@Antwan3K said:

@theam0g said:

Concerned we all are. Worry, we must.

Freaking hilarious.😂

LOL. No - you cows are on full damage control mode.

1. I have two reasons to be anticipating Starfield: playing it, and watching the cow meltdown because they can't
2. I have two reasons to be looking forward the the AB deal closing: Playing CoD on Game Pass, and watching the cow meltdown over people like me playing CoD on Game Pass.
3. I have two reasons to be anticipating FF XIV on Xbox: playing it, and watching the cow meltdown over me playing it on Xbox

Full. On. Damage Control. 100% Copium

Eh, it's not the most surprising thing. If you had to pick which of the big three would be in that boat, it be easy to pick Xbox.

They have all the money in the world, and increasingly a large amount of IP. But that does not equate to efficient, successful management of the businesses which their peers do better.

1- You already knew that us, Cows, we all own gaming rigs. Every single one of us, if we wanted to, we would play ER, and at much better performance than you can ever dream off of.
2- Starfield is a PC exclusive as i've been saying for a while. 30fps on consoles makes that version completely irrelevant.
3- We have been playing FF14 for 15 years, wake up.

So you need to stop making your own reality, and just accept facts.

1. For 18 years, I have heard cows say "I can play that on PC"
2. Your second point is just... dumb
3. It doesn't matter how long you have been playing it, Sony Ponies are melting down over it coming to Xbox.

Looks like Sega is going to have to buy Microsoft now.... unfortunate.

It'll never happen, but I'd like to see them forced to sell off various assets like their recently-acquired ABK, Rare, Asobo, etc in order to stay afloat.

Then, dissatisfied with being bought and sold like slaves, the talented developers at various studios depart and open up their own independent studios and start making good games with aggressively anti-corporate, anti-MTX practices.

Like I said...never will happen. But a guy can dream...

Yes I am very concerned about this trillion-dollar company's profits. It's all very, very, very, very concerning. They might soon be worth only hundreds of billions of dollars!

Yes, quite concerned.

No wonder they're pushing the 'No Console Required' angle with Samsung TV's, I think Digital Foundry may be right when they say Microsoft is looking to exit the console industry.