Xbox CEO Asha Sharma has offered a positive outlook for the company's future, despite a challenging fiscal year that saw continued declines in both content and hardware revenue. The company's Q4 2026 fiscal report, filed with the SEC, revealed a $1.7 billion, or 7%, decrease in overall revenue. This downturn was primarily attributed to a 5% drop in Xbox content and services revenue and a significant 29% decline in hardware revenue, stemming from lower console sales volumes.
Microsoft's Chief Financial Officer, Amy Hood, noted during a shareholder meeting that content and services revenue decreased by 10% compared to the previous year, which had benefited from strong first-party game releases. Furthermore, operating expenses saw an increase of 8%, driven by research and development investments and impairment charges, leading to a 14% decrease in operating income. Operating margins also fell year over year to 21%.
Hood projected further revenue declines in the mid-single digits for Xbox content and services, with hardware revenue also expected to decrease year over year. These financial figures emerged amidst recent restructuring and layoffs within the Xbox division, leading to player concern on social media regarding the business's stability.
Addressing these concerns, Sharma posted a statement on X, formerly Twitter. She highlighted that over 200 million new players joined Xbox and its games in FY26, emphasizing that the business has not yet grown in alignment with its audience. "We need to close that gap by investing in what players value," Sharma stated. "That will take time, but we expect to return to growth by the end of FY27."
Microsoft CEO Satya Nadella corroborated this sentiment during the earnings call, asserting that the company is making necessary strategic decisions across its content portfolio, platform, and operations to reset the business for long-term growth. Nadella expressed confidence in Xbox's intellectual property and studio talent to drive this resurgence. This financial period follows EA's quarterly report, which indicated substantial growth, partly due to the success of Battlefield 6 in 2025.