Microsoft says its revenue dropped by 7% in its Q2 2025 earnings while Xbox hardware sales dropped by 29%

Xbox Series X (Image credit: Future)

Microsoft's FY25 Q2 results reveal a 7% revenue decline for its gaming division
Xbox hardware also saw a 29% revenue drop
Microsoft says Indiana Jones and the Great Circle has "already been played by more than four million people"

Microsoft's gaming division experienced a 7% revenue decline during its second fiscal quarter.

According to the earnings release FY25 Q2 results, for the quarter ending December 31, 2024, Microsoft's revenue amounted to $69.6 billion and increased by 12%, and also saw a 29% drop in revenue for its Xbox hardware.

Meanwhile, Xbox's content and services revenue increased 2% which was attributed to the growth of Xbox Game Pass, according to Satya Nadella, chairman and chief executive officer of Microsoft.

Speaking on the Q2 earnings call (VGC) Nadella said, "We’re focused on improving the profitability of the business in order to position it for long-term growth driven by higher margin content and platform services, and we are delivering on this plan."

"We also continued to see strong momentum for Xbox Cloud Gaming, with a record 140 million hours streamed this quarter," Nadella added.

"All up, Game Pass set a new quarterly record for revenue and grew its PC subscriber base by over 30% as we focus on driving fully paid subscribers".

It was also mentioned that Call of Duty: Black Ops 6 proved to be a success due to its record-breaking launch month and that Indiana Jones and the Great Circle has "already been played by more than four million people" since its launch on December 9 for Xbox Series X, Xbox Series S, and PC.