This quarter marks Microsoft’s initial earnings report as a company valued at $3 trillion. It is also the first instance of the company disclosing a 61% revenue increase due to its purchase of the video game holding company. As a result, the profit has elevated gaming to become Microsoft’s third biggest business division, surpassing Windows.
Microsoft claims much of this growth is due to the acquisition, which is said to have added $2 billion of revenue in the second quarter of fiscal year 2024. However, The Verge reports that the cost of integration, transaction costs, and other costs of revenue all total $930 million, with an eventual operating loss of $440 million.
Xbox hardware has also grown by 3% year-over-year, according to Venture Beat. Overall, the tech company’s revenues grew by 18% to $62 billion, and its shares are up by 33%. That being said, Microsoft CFO Amy Hood admitted that “[Xbox] hardware revenue will decline year over year,” during the conference call. She added that she expects gaming revenue to grow in the low 40% region, with 45 points due to Activision Blizzard.
CEO Satya Nadella reiterated that the company had set a record for monthly active users on Xbox, PC, as well as mobile in this quarter. He explained, “we now have over 200 million monthly active users alone, inclusive of Activision Blizzard King.”
He noted the recent unveiling of new games and updates to its well-established franchises. Nadella also pointed out the company’s progress in cloud gaming, mentioning a 44% year-over-year increase in streaming hours.
Microsoft cuts jobs despite growth
It comes as Microsoft announced that it planned to lay off 1,900 staff across its gaming divisions, including employees at Activision Blizzard and Xbox. It amounts to around 8% of Microsoft’s total gaming workforce of 22,000.
Only last week, the company exceeded $3 trillion for the first time in its history, positioning it as the world’s second-largest company in terms of market value, following Apple Inc. Much of this has been due to its investment in AI, as investors rallied around its expansion into the area.
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