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Activision (ATVI) Q3 Earnings, Revenues Fall Y/Y on Soft Demand
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Activision Blizzard delivered non-GAAP earnings of 68 cents per share for third-quarter 2022, down 23.6% year over year due to a slow year for the gaming industry so far. The industry has been dealing with hardware supply chain issues affecting consoles, inflation and lack of big hits.
Consolidated revenues declined 13.9% year over year to $1.78 billion. Total revenues declined 4% to $1.71 billion after adjusting for revenues from non-reportable segments, the net effect from the recognition of deferred revenues and the elimination of intersegment revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 51 cents per share and $1.70 billion, respectively.
For the quarter ended Sep 30, 2022, overall Monthly Active Users (MAUs) were 368 million, down 5.6% year over year.
Activision Blizzard’s net bookings declined 2.7% year over year to $1.82 billion. In-game net bookings were $1.35 billion, up 13.2% year over year.
Activision Blizzard is in the process of being acquired by Microsoft (MSFT - Free Report) . Microsoft will pay $95.00 per Activision share, with the total transaction value being $68.7 billion. The deal is expected to close in fiscal 2023.
The transaction, expected to close in Microsoft’s fiscal year ending Jun 30, 2023, has been approved by the boards of Activision Blizzard and Microsoft.
Activision Blizzard, Inc Price, Consensus and EPS Surprise
Product sales (13% of revenues) amounted to $231 million, down 45.4% year over year. In-game subscriptions and other revenues (87% of revenues) fell 5.8% to $1.55 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $25 million, which fell 63.8% year over year. Digital online revenues of $1.6 billion were down 13.3% from the year-ago quarter. Other revenues declined 21.1% year over year to $105 million.
Further, based on platforms, revenues from mobile and ancillary (50.5% of revenues) rose 4.5% year over year to $831 million. Revenues from consoles (22.9% of revenues) declined 49.2% year over year to $376 million. PC revenues (20.2% of revenues) plunged 47.1% year over year to $332 million. Other revenues improved 1.3% year over year to $151 million.
On a geographic basis, revenues from the Americas (56.1% of revenues) declined 14.3% year over year to $999 million. Europe, the Middle East and Africa revenues (27.9% of revenues) were down 19.5% year over year to $498 million. Revenues from the Asia Pacific (16% of revenues) remained flat year over year at $285 million.
Segment Details
Activision (28% of revenues) revenues dropped 25.1% year over year to $480 million. The division had 97 million MAUs as of Sep 30, 2022, down 18.5% year over year.
Blizzard (31.7% of revenues) revenues totaled $543 million, up 10.1% from the year-ago quarter’s levels. Blizzard had 31 million MAUs as of Sep 30, 2022, up 19.2% year over year.
King’s (40.3% of revenues) revenues of $692 million increased 6.1% year over year. MAUs were 240 million as of Sep 30, 2022, down 2% year over year.
Operating Details
Product development expenses contracted 19.5% year over year to $239 million. Sales & marketing expenses were up 15.3% year over year to $272 million.
Moreover, general & administrative expenses were $168 million, up 38.8% year over year.
Total costs & expenses on a non-GAAP basis remained flat year over year at $1.17 billion in the reported quarter.
On a non-GAAP basis, operating income was $605 million, down 32.3% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2022, cash and cash equivalents were $7.7 billion compared with $10.5 billion as of Jun 30, 2022.
Long-term debt, as of Sep 30, 2022, was $3.61 billion, unchanged from the figure reported as of Jun 30, 2022.
Operating cash flow decreased 51% year over year to $521 million. Free cash flow declined 51% year over year to $498 million.
On a trailing 12-month basis, free cash flow decreased 41% to $2.81 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
Activision’s shares have outperformed the Zacks Consumer Discretionary sector in the year-to-date period. The stock is up 6.9% against the sector’s decline of 8.9%.
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Activision (ATVI) Q3 Earnings, Revenues Fall Y/Y on Soft Demand
Activision Blizzard delivered non-GAAP earnings of 68 cents per share for third-quarter 2022, down 23.6% year over year due to a slow year for the gaming industry so far. The industry has been dealing with hardware supply chain issues affecting consoles, inflation and lack of big hits.
Consolidated revenues declined 13.9% year over year to $1.78 billion. Total revenues declined 4% to $1.71 billion after adjusting for revenues from non-reportable segments, the net effect from the recognition of deferred revenues and the elimination of intersegment revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 51 cents per share and $1.70 billion, respectively.
For the quarter ended Sep 30, 2022, overall Monthly Active Users (MAUs) were 368 million, down 5.6% year over year.
Activision Blizzard’s net bookings declined 2.7% year over year to $1.82 billion. In-game net bookings were $1.35 billion, up 13.2% year over year.
Activision Blizzard is in the process of being acquired by Microsoft (MSFT - Free Report) . Microsoft will pay $95.00 per Activision share, with the total transaction value being $68.7 billion. The deal is expected to close in fiscal 2023.
The transaction, expected to close in Microsoft’s fiscal year ending Jun 30, 2023, has been approved by the boards of Activision Blizzard and Microsoft.
Activision Blizzard, Inc Price, Consensus and EPS Surprise
Activision Blizzard, Inc price-consensus-eps-surprise-chart | Activision Blizzard, Inc Quote
Top-Line Details
Product sales (13% of revenues) amounted to $231 million, down 45.4% year over year. In-game subscriptions and other revenues (87% of revenues) fell 5.8% to $1.55 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $25 million, which fell 63.8% year over year. Digital online revenues of $1.6 billion were down 13.3% from the year-ago quarter. Other revenues declined 21.1% year over year to $105 million.
Further, based on platforms, revenues from mobile and ancillary (50.5% of revenues) rose 4.5% year over year to $831 million. Revenues from consoles (22.9% of revenues) declined 49.2% year over year to $376 million. PC revenues (20.2% of revenues) plunged 47.1% year over year to $332 million. Other revenues improved 1.3% year over year to $151 million.
On a geographic basis, revenues from the Americas (56.1% of revenues) declined 14.3% year over year to $999 million. Europe, the Middle East and Africa revenues (27.9% of revenues) were down 19.5% year over year to $498 million. Revenues from the Asia Pacific (16% of revenues) remained flat year over year at $285 million.
Segment Details
Activision (28% of revenues) revenues dropped 25.1% year over year to $480 million. The division had 97 million MAUs as of Sep 30, 2022, down 18.5% year over year.
Blizzard (31.7% of revenues) revenues totaled $543 million, up 10.1% from the year-ago quarter’s levels. Blizzard had 31 million MAUs as of Sep 30, 2022, up 19.2% year over year.
King’s (40.3% of revenues) revenues of $692 million increased 6.1% year over year. MAUs were 240 million as of Sep 30, 2022, down 2% year over year.
Operating Details
Product development expenses contracted 19.5% year over year to $239 million. Sales & marketing expenses were up 15.3% year over year to $272 million.
Moreover, general & administrative expenses were $168 million, up 38.8% year over year.
Total costs & expenses on a non-GAAP basis remained flat year over year at $1.17 billion in the reported quarter.
On a non-GAAP basis, operating income was $605 million, down 32.3% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2022, cash and cash equivalents were $7.7 billion compared with $10.5 billion as of Jun 30, 2022.
Long-term debt, as of Sep 30, 2022, was $3.61 billion, unchanged from the figure reported as of Jun 30, 2022.
Operating cash flow decreased 51% year over year to $521 million. Free cash flow declined 51% year over year to $498 million.
On a trailing 12-month basis, free cash flow decreased 41% to $2.81 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
Activision’s shares have outperformed the Zacks Consumer Discretionary sector in the year-to-date period. The stock is up 6.9% against the sector’s decline of 8.9%.
Some better-ranked stocks in the Consumer Discretionary sector include Target Hospitality (TH - Free Report) and DouYu International (DOYU - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Target Hospitality and DouYu International are scheduled to report their quarterly results on Nov 9 and Nov 21, respectively.
The Zacks Consensus Estimate for Target Hospitality’s third-quarter 2022 loss is pegged at 55 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for DOYU International’s third-quarter 2022 earnings is pegged at 1 cent per share, unchanged over the past 30 days.