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Microsoft FY24 Q1 Earnings - (Software up 13%, Hardware down 7%, Best Q1/Non-Holiday Quarter for Xbox)

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vixolus

vixolus

Prophet of Truth
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Sep 22, 2020
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c731b079f7a8f9995658a3a6777c5df4.png


Period of July-September. Seems strongly driven by Starfield.
They beat expectations with regards to content and services revenue and overall revenue growth.

Guidance from last quarter (FY23Q4):
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. Now, back to company guidance.
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Hardware continues to struggle a bit despite Starfield launching. Overall, the company beat expectations by around 13%, but this is just the gaming related synopsis.
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Will update with Q2 guidance and other information from the earnings call later.

edit: according to Welfare this is Microsoft's highest ever Q1 and non-holiday quarter.
Xbox's Q1 2024 (July to September) was the highest Q1 ever reported for the brand.

Q1 2024 did over $3.9B, which puts it at the same level as October to December 2017, and is now the highest non holiday quarter for Xbox
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carlosrso

carlosrso

Member
Oct 27, 2017
828
Ipatinga, Brazil
It seems that Xbox Series won't beat Xbox One. Will it be possible for microsoft to anticipate the next gen console to adress this early hardware slowdown?
 
stopmrdomino

stopmrdomino

Member
Jun 25, 2023
4,630
carlosrso said:
It seems that Xbox Series won't beat Xbox One. Will it be possible for microsoft to anticipate the next gen console to adress this early hardware slowdown?
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The problem has been, and continues to be, games. As more of the studios they've gobbled up begin to actually start releasing exclusive big Xbox titles, things will improve for them
 
Super

Super

Studied the Buster Sword
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Jan 29, 2022
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Xbox hardware being down 7% in a Starfield quarter is a real head scratcher.
 
CenaToon

CenaToon

Member
Oct 25, 2017
4,368
Give some back analgesic to gamepass for carrying alone the whole xbox brand lol.

Xbox hardware is dead weight.
 
OP
OP
vixolus

vixolus

Prophet of Truth
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Sep 22, 2020
55,747
HockeyBird said:
When I click the link, it brings me to the Q4 2023 transcript. At least that's what the headers at the top seem to indicate.
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I removed the link to avoid confusion. That was the source of the earnings transcript regarding guidance from the end of FY23 for this quarter.
 

Wingnut

Member
Jul 11, 2022
202
Well what is Microsoft expecting when releasing all games day one on pc.
I love my Xbox but more and more people I have the feeling switching to pc.
 

reksveks

Member
May 17, 2022
3,449
made 50 quid better on MS and against Google unfortunately already had spent that on the MGS collection
 

Fabs

Member
Aug 22, 2019
1,854
Finally starting to see units on shelves but not nearly at the PS5 level. Never seen the Black S yet. They're going to boom next quarter with ABK. They're starting to market the console again. A compelling cadence of releases and ABK into GP should end the gen fairly well and on a high note.

Day one PC releases will continue to be big for them. Young people are more and more on PC. Meet the market where it's at instead of trying to convince PS consumers to switch.
 

ElNino

Member
Nov 6, 2017
3,742
asmith906 said:
Feels like a lot of Starfield players got the game on pc. They didn't really do much promotion with bundling the game with the systems either.
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True, I'd guess a significant portion of the game sales are on PC. I have it on both, but also already have a few Xbox consoles so I certainly wasn't going to more hardware to play it.
 
808s & Villainy

808s & Villainy

Member
Oct 27, 2017
42,877
Super said:
Xbox hardware being down 7% in a Starfield quarter is a real head scratcher.
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asmith906 said:
Feels like a lot of Starfield players got the game on pc. They didn't really do much promotion with bundling the game with the systems either.
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HW down combined with software + services up leads me to believe
  • People still don't care about getting any of the Xbox SKUs
  • Starfield was purchased by PC and Xbox gamers
  • Starfield convinced existing PC and Xbox gamers to sub to Gamepass
 
Jack-O-Lantern

Jack-O-Lantern

Member
Oct 27, 2017
1,329
Wingnut said:
Well what is Microsoft expecting when releasing all games day one on pc.
I love my Xbox but more and more people I have the feeling switching to pc.
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Microsoft will be happy with both options

The paradigm has shifted. People still see consoles sold when is the revenue that counts. Xbox is now more than a box.
 
PianoBlack

PianoBlack

Member
May 24, 2018
6,723
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carlosrso said:
It is completing 3 years on the market. A 5-year cycle is not unseen in this industry, it is quite common actually (PS4 and Xbox One being the outliers)
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Huh? They've already said in legal filings for the ABK thing that next gen is anticipated to begin in 2028 (Sony said this also). So we have 5 years left.

IGN link

This was also re-confirmed with their leaked next gen plans last month.
 
ToddBonzalez

ToddBonzalez

The Pyramids? That's nothing compared to RDR2
Banned
Oct 27, 2017
15,530
Software and service revenue increases are solid, but the hardware decrease is strange. Thought Starfield would be a system seller. Seems like they're doing a good job of maintaining existing consumers/ecosystem, but not having success in bringing in new users.
 
St. Elmo's Fire

St. Elmo's Fire

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Jul 2, 2021
16,173
Xbox content and services revenue +13%, Xbox hardware -7%.
So pretty much what Microsoft wants.
 
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HockeyBird

Member
Oct 27, 2017
12,667
ToddBonzalez said:
Software and service revenue increases are solid, but the hardware decrease is strange. Thought Starfield would be a system seller. Seems like they're doing a good job of maintaining existing consumers/ecosystem, but not having success in bringing in new users.
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Starfield is a system seller but it's pushing against the lack of interest in the Xbox brand overall. It was enough to reverse YOY Xbox sales in September in the US and Canada but Europe still saw declines. If not for Starfield, the hardware declines would be even greater.
 

Laziness

Member
Apr 19, 2018
588
Super said:
Xbox hardware being down 7% in a Starfield quarter is a real head scratcher.
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Not really? This report looks like logical result of their strategy. They push software and GP subscriptions way more than Xbox hardware, thus more of the former and less of the latter in terms of revenue.

We would've seen the opposite had they stuck with their prior/Sony-Nin strategy and went "you can only play Starfield on Xbox Series consoles". But software would've probably been lower. Something's gotta give.
 
Patitoloco

Patitoloco

Banned
Oct 27, 2017
23,714
Hardware down is a really weird thing IMO, but Starfield really made a good dent in software sales.

Not this year I suppose but Q2(?) will start being super good for them with COD.
 
ElephantShell

ElephantShell

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Oct 25, 2017
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Services revenue exceeding expectations is the big one and something I'm sure people were curious about when Starfield didn't move that many consoles.

Xbox seems to be in really good shape thanks to GamePass if there was any doubt.
 
Dyle

Dyle

One Winged Slayer
The Fallen
Oct 25, 2017
30,106
Things are pretty rough when not even the release of their biggest game fails to stop hardware sales from continuing to slip.
 
OP
OP
vixolus

vixolus

Prophet of Truth
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Sep 22, 2020
55,747
RayCharlizard said:
Why? Hardware is a loss leader and they're able to increase gaming and services revenue without it. By putting Xbox on everything, you don't need to sell as many boxes with "Xbox" written on them. How is that not the end goal?
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Revenue in software increasing despite hardware going down is good, but their goal should be increasing both.
 
ToddBonzalez

ToddBonzalez

The Pyramids? That's nothing compared to RDR2
Banned
Oct 27, 2017
15,530
Laziness said:
Not really? This report looks like logical result of their strategy. They push software and GP subscriptions way more than Xbox hardware, thus more of the former and less of the latter in terms of revenue.

We would've seen the opposite had they stuck with their prior/Sony-Nin strategy and went "you can only play Starfield on Xbox Series consoles". But software would've probably been lower. Something's gotta give.
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Well yeah, but you need hardware to access the software and services. I know you can play on PC, but I assume there are alot of people that don't have gaming PCs, but might want to play Starfield and other Xbox exclusives. I am personally in that boat.
 
808s & Villainy

808s & Villainy

Member
Oct 27, 2017
42,877
RayCharlizard said:
Why? Hardware is a loss leader and they're able to increase gaming and services revenue without it. By putting Xbox on everything, you don't need to sell as many boxes with "Xbox" written on them. How is that not the end goal?
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According to who? Majority of Gamepass users are on Xbox, not PC. They need HW to support Gamepass. Like I said in my previous post, what this is pointing to is them convincing existing owners to sub to Gamepass, but if HW numbers keep dwindling eventually they're doing to reach a saturation point where Gamepass and sales won't be able to grow

It's currently working for them, given the relatively low GP adoption, but they need HW sales to maintain or it'll eventually eat into their ability to grow their services revenue
 
FarSight XR-20

FarSight XR-20

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Jan 4, 2018
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GP quarter update (although unsurprising for this one).

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
 
Windrunner

Windrunner

Sly
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Oct 25, 2017
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RayCharlizard said:
Why? Hardware is a loss leader and they're able to increase gaming and services revenue without it. By putting Xbox on everything, you don't need to sell as many boxes with "Xbox" written on them. How is that not the end goal?
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Because they want to increase both... how do you not understand this?

Tracking behind the Xbox One while the PS5 is storming ahead is disastrous.
 
poklane

poklane

Member
Oct 25, 2017
28,173
the Netherlands
RayCharlizard said:
Why? Hardware is a loss leader and they're able to increase gaming and services revenue without it. By putting Xbox on everything, you don't need to sell as many boxes with "Xbox" written on them. How is that not the end goal?
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Hardware going down means less people buying 3rd party content on Xbox from which Microsoft gets a cut. It also means less people to sell a Game Pass sub to, because at the end of the day someone who opts for a PlayStation or Switch instead is very unlikely to get a Game Pass sub for the streaming side of it.

Yeah, the overall revenue and software increases are good, but hardware going down during the 3rd year during the Starfield quarter? Yeah I don't see how that's good.
 
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