Xbox CEO Sarah Bond has acknowledged that revenue has fallen despite an increase in the user base.

According to Microsoft's annual report (Form 10-K) filed with the U.S. Securities and Exchange Commission (SEC), Xbox revenue for fiscal year 2026 fell by $1.7 billion, a 7% decrease year-over-year. Content and services revenue declined by 5%, while hardware revenue dropped 29% due to lower console sales.

CEO Bond posted a statement on her X account on the 29th (local time) following the earnings release. "While over 200 million new users discovered Xbox and our games in FY2026, the business did not grow at the same pace as our user base," she stated. "We must close that gap by investing in what players value. It will take time, but we expect to return to growth by the end of fiscal year 2027."

Microsoft CEO Satya Nadella also pointed to the same timeline during the earnings call. "We are making the necessary decisions across our content portfolio, platform, and operations to return the business to a long-term growth trajectory," Nadella said. "We have industry-leading IP and talented studios around the world, and we will combine these strengths to return the business to growth in fiscal year 2027."

The outlook for the next quarter remains negative. Microsoft CFO Amy Hood stated that content and services revenue is expected to decline by a mid-single-digit percentage, with hardware revenue also projected to fall year-over-year. She added that fourth-quarter content and services revenue decreased by 10% compared to the same period last year, which had benefited from strong first-party performance.

Earlier this month, Xbox announced a reorganization that included cutting 3200 jobs and spinning off four studios. Following the release of these earnings figures, users expressed concerns about the business outlook, prompting CEO Bond's statement that same day.