Microsoft has released its fiscal Q3 2026 earnings, revealing a continued decline for the Xbox division. While the company as a whole saw an 18% increase in revenue to $82.9 billion, the gaming sector continues to struggle with console sales and overall engagement growth.
These results mark the first major financial report since Asha Sharma took the helm as CEO of Xbox. While Sharma has recently promoted a more “affordable, personal, and open” vision for the brand, analysts note that these figures primarily reflect the momentum of the previous administration rather than her new strategic shifts.
The division is currently navigating its third straight quarter of falling revenue. The trend began with a dip in the October 2025 report and continued through January 2026.
Asha Sharma addressed the results on social media, acknowledging that while the business has seen progress in margins, “player and revenue growth has not yet met our ambition.” She emphasized that the team is now focused on “earning every player today and into the future.”
Microsoft CEO Satya Nadella also commented during the earnings call, stating that the company is performing the “foundational work required to win back fans.” This includes recent strategic pivots, such as:
The road ahead remains difficult. Microsoft CFO Amy Hood projected that Xbox revenue will continue to decline in the fourth fiscal quarter (ending June 30). Hardware revenue is expected to drop further, while content and services are predicted to decline in the “low-teens,” partly due to the lower revenue generated by the now-cheaper Game Pass tiers.
Amanda Torati is a linguist and postgraduate researcher who specializes in the intersection of storytelling and interactive media. With a deep fascination for the gaming ecosystem, she focuses on deconstructing game narratives and technical trends to make them accessible to players of all levels. At ABWaves Game, Amanda combines her academic background with in-depth research to deliver reviews and guides that are both precise and engaging, ensuring readers stay informed in a fast-paced digital world.
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