Activision Blizzard beats the street, raises guidance
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Activision Blizzard beats the street, raises guidance

World leading video game developer and producer, Activision Blizzard, reported quarterly earnings at the end of last week, demonstrating a strong underlying business that is benefiting from more successful monetization. The company reported earnings per share of 60¢ against analysts’ expectations of 49¢, and revenue for the quarter of $1.90 billion against consensus estimates of $1.74 billion. These results are most impressive when considered against the report’s sole negative: a 20% drop in monthly active users against the same period last year.

Activision Blizzard’s share price has risen by 75% in 2017 so far

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SOURCE: Yahoo Finance

This decline in players is almost entirely confined to the company’s mobile gaming segment, King. King is the developer behind Candy Crush Saga, which it released five years ago, and was acquired by Activision Blizzard last year. In the third quarter of 2017, it saw 100 million fewer monthly active users than it did in the third quarter of 2016. Nonetheless, King joined the company’s two other studios (Activision, and Blizzard) in posting multi-million dollar revenue beats against analysts’ expectations – a sign that Activision Blizzard’s monetization efforts are paying off.

The company raised its guidance on the back of these strong figures, and now expects earnings per share of $2.08 on revenue of $6.68 billion for the full year. This is an upgrade from its previous guidance of earnings per share of $1.94 on revenue of $6.40 billion.

The company’s CEO, Bob Kotick, was eager to discuss the future on a conference call with analysts last week. He was particularly focused on eSports – one of the most hyped trends in video gaming – and the company’s plans to dominate the nascent industry. Discussing Activision’s new Overwatch league, he said:

"We're building the League for the long term, and in our view, the opportunity rivals what you see in professional sports from a lot of perspectives but starting with the demographics of the audience. The first season is really about building a solid foundation."

Disclosure

Dominion holds Activision Blizzard in its Global Trends Ecommerce Fund.


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