Xbox Game Pass records almost $5 billion in annual revenue

Microsoft has revealed that the Xbox Game Pass garnered almost $5 billion in annual revenue in FY25. The firm also said it has 500 million active users across several gaming platforms and devices.

The tech company reported that Azure has seen an 18% surge in revenue last quarter, reaching $76.4 billion. Microsoft also saw a 23% increase in operating income up to $34.3 billion, driven largely by growth across all workloads.

Microsoft earnings beat Wall Street forecasts

$MSFT | Microsoft is 6.5% after-hours.

🔹 EPS: $3.65 vs. $3.37 est. ✅
🔹 Revenue: $76.44B vs. $73.86B est. ✅

Key takeaways:
🔸 Intelligent Cloud revenue: 26% YoY
🔸 Azure/Cloud services: 39% YoY
🔸 Productivity revenue: 16% YoY pic.twitter.com/4ugcbz973z

— CMG Venture Group (@CmgVenture) July 30, 2025

Microsoft’s fiscal fourth quarter earnings also beat Wall Street forecasts, making it the fifth quarter in a row that it has beaten those expectations. The company expected a 14% increase in capital expenditure for the next fiscal year to $100 billion from the previous year. 

The tech firm shares also hit a near record of $513, a 22% surge since the start of the year. After its earnings call on Wednesday, Microsoft saw its stock price skyrocket by more than 7%.

“Growth mindset has served us well over the last decade – the everyday practice of being a learn-it-all, not a know-it-all. It has reshaped our culture and helped us lead with greater humility and empathy. We need to keep that.”

–Satya Nadella, CEO at Microsoft.

Microsoft attributed some of its success to being a third-party publisher on PlayStation. Data from Circana analyst Mat Piscatella revealed that Microsoft published most of PlayStation’s top-selling games in the U.S. in Q2. 

Those games include The Elder Scrolls 4 Oblivion Remastered, Doom: The Dark Ages, Forza Horizon 5, and Minecraft. Forza Horizon 5 topped as the highest-selling game on PS5 this year, selling over 3 million copies.

The tech firm’s growth also came at a time when it had laid off 9,000 workers. Microsoft argued that the job cuts were necessary to position it and its teams for success in the industry. Xbox CEO Phil Spencer also mentioned that the layoffs were necessary to ensure the company endures success.

The job cuts also affected Microsoft’s gaming divisions, including Rare’s Everwild, The Initiative’s Perfect Dark reboot, and a new ZeniMax MMORPG game. According to reports, the tech firm laid off 200 employees from Candy Crush developer King, replacing them with AI tools they helped to build.

Microsoft shifts focus to Cloud and AI

AI adoption is increasing—and its capabilities are accelerating fast. Can you afford to fall behind? Explore expert insights to navigate the AI platform shift. https://t.co/pEGreqQWWV pic.twitter.com/E2XRZeAlAV

— Microsoft Cloud (@MSCloud) May 1, 2025

Nadella mentioned that Cloud and AI are the driving forces of business transformation across every industry and sector. The tech company reported $46,7 billion in cloud revenue, up 27%. He also stated last week that AI is at the heart of the firm, adding that Microsoft’s three business priorities are security, quality, and AI transformation.

During the company’s earnings call, Nadella revealed that Microsoft Cloud surpassed $168 billion in annual revenue, up 23%. He said the firm is building a flurry of comprehensive AI products and tech stack at a massive scale for its over 25,000 customers.

Nadella confirmed that the company is thriving as it doubles down on the importance of AI. He also believes that the era of AI requires building tools that empower everyone to create their own tools.

Dan Inves, a financial analyst at Wedbush, said that it was a slam-dunk quarter for Microsoft as the company continues to capitalize on the AI revolution in the sector. He also believes the tech company could top $4 trillion in market value and $5 trillion in market value over the next 18 months.

Microsoft’s CEO mentioned that the company is transforming from a software factory to an intelligence engine. He hopes the initiative will help empower every person and organization to build whatever they need.

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