What you need to know
- Microsoft has detailed its FY21 Q2 earnings, reporting $43.1 billion company-wide revenue, with a 51% uptick in gaming revenue.
- It follows the launch of its latest Xbox Series X and Xbox Series S consoles, which saw hardware revenue climb 86% year-over-year.
- Xbox software and services also grew 40% annually, attributed to its first-party and third-party games lineup, alongside Xbox Game Pass subscriptions.
Microsoft has unveiled its second-quarter earnings for its 2021 fiscal year, reporting revenue once again on the rise to $43.1 billion. That also couples with continued success for its gaming properties, pushing total revenue up 51% year-over-year, and steady growth across the fundamentals of its Xbox brand.
It attributes its gaming successes to various factors, but spotlighting the recent launch of its new Xbox Series X and Xbox Series S consoles. It contributed to hardware revenue near-doubling with an 86% surge, as it scrambles to meet demand with its latest generation consoles. The two new devices launched back in November, with tight availability expected to continue over the coming months, and throttling its early shipments. Xbox CFO at Microsoft, Tim Stuart, previously commented that Xbox Series X|S shortages were expected to continue until at least April 2021.
Content and services saw an uptick this quarter, which includes Xbox software and subscriptions, also rising 40% year-over-year. Microsoft pins this on "strength" from third-party and first-party titles, as well as its Xbox Game Pass memberships. While Microsoft has previously talked about both Xbox Live Gold and Xbox Game Pass numbers, it hadn't provided context for this quarter.
It contrasts the downward slump witnessed this time last year, where overall gaming revenue fell 21% at the tail end of the Xbox One generation. Xbox content and services also decreased 11% over that same period, as Xbox Series X and Xbox Series S loomed.
It comes as Xbox services and subscriptions remain increasingly vital to its gaming portfolio, with the growth of its Xbox Game Pass membership a newfound focus for the company. That saw Microsoft outline plans to double the price of its Xbox Live Gold service last Friday, which it later reverted amid widespread criticism. It was a move assumed to increase Xbox Game Pass Ultimate adoption, its all-inclusive tier bundling Xbox Game Pass on Xbox and PC, EA Play, and Xbox cloud gaming into a single package.
Microsoft, like other gaming platform holders, continues to see success throughout the COVID-19 pandemic, with stay-at-home orders pushing more towards digital entertainment. It saw the company report "all-time record engagement" throughout 2020, with the new consoles only further bolstering investment in its ecosystems.
Double-digital year-over-year growth was expected this quarter, following the launch of two next-generation consoles and the preceding downward trend in the latter months of Xbox One. But it sees Microsoft well-positioned for the new round of consoles, as production scales up to meet demand in a historical era.