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Activision (ATVI) to Report Q2 Earnings: What's in Store?

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Activision Blizzard (ATVI - Free Report) is set to report second-quarter 2020 results on Aug 4.

For the to-be-reported quarter, the company expects non-GAAP revenues of $1.69 billion and earnings of 64 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $1.69 billion, which indicates an increase of 39.8% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for second-quarter earnings has increased a penny to 68 cents per share in the past 30 days. The projected figure suggests a surge of 79% from the year-ago quarter’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 31.3%.
 

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc price-eps-surprise | Activision Blizzard, Inc Quote

 

Let’s see how things have shaped up prior to this announcement.

 

Factors to Consider

Activision’s popular franchises, including Call of Duty, Overwatch, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga, are expected to have attracted coronavirus-induced home-confined gamers in the to-be-reported quarter.

Higher in-game spending is expected to have driven both net bookings and the top line of this Zacks currently Rank #3 company in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Activision expects net bookings of $1.68 billion for the second quarter.

Moreover, strong video game spending in the quarter bodes well for Activision. Per The Verge, which cited NPD data, the U.S. video game sales jumped 26% to $1.2 billion in June, highest since $1.3 billion reported in June 2009.

Notably, per NPD data, U.S. video game sales in May hit $977 million, up 52% year over year. For April, sales soared 73% year over year to $1.5 billion.

Activision’s popular franchises are expected to have significantly benefited from these solid sales. The Call of Duty franchise is one of the company’s major drivers. Call of Duty: Black Ops 4, Call of Duty: Warzone and Call of Duty: Modern Warfare have been huge successes.

Markedly, Call of Duty: Mobile, which has been developed in collaboration with Tencent’s (TCEHY - Free Report) Timi Studios, surpassed 250 million downloads, globally, within a span of eight months, surpassing Fortnite from Epic Games and PUBG Mobile from Tencent, per Sensor Tower data. The milestone also reflects tremendous popularity of the Call of Duty franchise.

However, Activision faces stiff competition from the likes of Take Two Interactive Software (TTWO - Free Report) , Nintendo and Electronic Arts (EA - Free Report) apart from Tencent and Epic Games.

Notably, Take Two’s Red Dead Redemption 2 and Borderlands 3 gained significant popularity. Moreover, Nintendo’s Animal Crossing: New Horizons gained substantial popularity within a short span of time.

Moreover, EA’s Apex Legends, NBA Live 20, Plants vs. Zombies and Star Wars Jedi: Fallen Order were also a huge rage.

Nevertheless, Activision’s strong portfolio of games is expected to have boosted monthly active user base in the to-be-reported quarter.

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