Microsoft Q1 2023: income and Windows down however Xbox and gadgets up

It’s a brand new monetary yr for Microsoft, and the Windows and Xbox maker has simply posted the primary quarter of its 2023 financial results today. Microsoft made $50.1 billion in income and a web revenue of $17.6 billion throughout Q1. Revenue is up 11 % however web revenue has decreased by 14 % — that means income are down at Microsoft this quarter.

While there have been indicators of PC declines earlier this yr, it’s clear this quarter that the PC could be very a lot in decline, and that has impacted Microsoft’s Windows outcomes. PC shipments skilled one other huge decline within the latest quarter — 15 %, according to IDC. Geopolitical tensions, inflation, and continued provide chain challenges are all contributing to PC gross sales points, alongside softer demand.

Microsoft’s Windows OEM income, the value PC producers pay Microsoft to place Windows on machines, fell 15 % in Q1, pushed by what Microsoft describes as a “continued deterioration in the PC market.”

Despite the challenges, IDC says cargo volumes “remain well above pre-pandemic levels,” so it’s not all doom and gloom for Windows and PCs simply but.

Microsoft’s Surface gadgets are nonetheless doing effectively, too. While there weren’t any huge new Surface launches in Q1, Surface income is up by 2 %. Microsoft now declares this as “devices revenue,” relatively than simply Surface, so it could embrace different income from non-Surface gadgets. Microsoft only recently introduced new Surface Pro 9, Surface Laptop 5, and Surface Studio 2 Plus gadgets, which can seemingly renew curiosity in Surface for Microsoft’s fiscal Q2 2023.

Microsoft’s different {hardware}, Xbox, is up this quarter. Hardware income elevated by 13 % alongside a 3 % dip in Xbox content material and providers income. Microsoft says this was pushed by “declines in first-party content and in third-party content, with lower engagement hours and higher monetization, particularly offset by growth in Xbox Game Pass subscriptions.” Overall, gaming income at Microsoft “grew slightly” yr over yr.

Microsoft as soon as once more hasn’t offered an replace on Xbox Game Pass subscribers this quarter after the service grew to 25 million in January following the vacation releases of Age of Empires IV, Forza Horizon 5, and Halo Infinite.

The European Commission has began reviewing Microsoft’s Activision deal and has set a November eighth provisional deadline. Microsoft isn’t sharing something extra on the deal and mentioned final month that it’s “progressing in line with the expected regulatory schedule and process, and we remain confident that the acquisition will close in fiscal year 2023.”