Microsoft has released their second quarterly earnings report for fiscal year 2018 and the company’s Xbox business is enjoying growth. This report covers the quarter that ended on December 31st of last year.

Revenues from software and services totaled $2.46 billion. This covers video game sales as well as subscriptions like Xbox Live Gold and Game Pass. This represents a 4% increase because digital game sales are becoming increasingly popular. Revenues from hardware sales were $1.46 billion. Hardware sales enjoyed a boost due to the launch of the Xbox One X console which Microsoft notes was the best-selling “premium” console of the last holiday shopping season.

“Gaming revenue increased $303 million or 8%, driven by higher revenue from Xbox hardware and Xbox software and services. Xbox hardware revenue increased 14%, primarily due to the launch of Xbox One X. Xbox software and services revenue increased 4%, primarily due to Xbox Live revenue growth, offset in part by a decrease in revenue from the prior year launch of video games,” the report noted.

Monthly active users of Xbox Live grew to 59 million over the last quarter. Minecraft and streaming platform Mixer reached record numbers of users during this time.

“Our new Xbox One X was the top selling premium console this holiday in the U.S., and we saw strong sales of the Xbox One S. We will continue to innovate in console to attract high value gamers who want immersive, 4K experiences, to build a broader subscription service with Game Pass, and to extend our services to all the devices in our customers’ lives across console, PC and mobile,” said Microsoft CEO Satya Nadella during an investor conference call. “Our decision to release exclusive game content on Xbox Game Pass simultaneous with global release increases the value of the subscription for members and our partners, and we are off to a good start.”

Amy Hood, Chief Financial Officer for Microsoft noted that the company expects to see similar revenue growth moving forward. Digital game revenue will provide an increasingly larger share of revenues in the future.

The Azure cloud platform enjoyed massive revenue growth of 98% while revenue from Surface products only saw a 1% increase in revenues.

Microsoft’s stock price is $95.65 per share as of this writing, up 0.64%. The tech giant’s market cap is currently over $737 billion.

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