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Activision (ATVI) Q2 Earnings & Revenues Beat on Coronavirus Push
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Activision Blizzard’s second-quarter 2020 non-GAAP earnings of 81 cents per share jumped 52.8% year over year.
Consolidated revenues surged 74.4% year over year to $2 billion. Adjusting for net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues jumped 38.4% to $1.93 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at 68 cents per share and $1.69 billion, respectively.
For the quarter ended Jun 30, 2020, overall Monthly Active Users (MAUs) were 428 million compared with 327 million as of Jun 30, 2019.
Activision Blizzard’s net bookings increased 72.2% year over year to $2.08 billion. Net bookings from digital channels were $1.82 billion, up 80.2% year over year.
Activision Blizzard, Inc Price, Consensus and EPS Surprise
Notably, in-game net bookings were $1.37 billion, up 76.6% year over year.
Top-Line Details
Product sales (27.6% of revenues) were $533 million, up 48.5% year over year. Subscription, licensing and other revenues (72.4% of revenues) increased 35% to $1.40 billion.
Based on distribution channels, Activision Blizzard reported retail-channel sales of $168 million, down 13% year over year. However, digital online revenues of $1.59 billion were up 46.5% from the year-ago quarter. Other revenues improved 48% year over year to $173 million.
Further, on the basis of platforms, revenues from mobile and ancillary (32.2% of revenues) rose 21.7% year over year to $622 million. Additionally, PC revenues (24.9% of revenues) jumped 33.5% year over year to $482 million. Moreover, revenues from console (33.9% of revenues) surged 61% year over year to $655 million.
On a geographic basis, revenues from the Americas (57.6% of revenues) increased 45.5% year over year to $1.11 billion. Europe, the Middle East and Africa revenues (31.8% of revenues) were up 34% year over year to $615 million. Moreover, revenues from the Asia Pacific (10.6% of revenues) increased 18.5% year over year to $205 million.
Segment Details
Activision (49.5% of revenues) revenues surged 270.5% year over year to $993 million. The division had 125 million MAUs as of Jun 30, 2020 compared with 37 million as of Jun 30, 2019.
Call of Duty: Warzone has reached more than 75 million players to date. Further, Call of Duty in-game net bookings more than doubled sequentially and were almost five times higher year over year, creating a new quarterly record.
Call of Duty Mobile witnessed strong sequential growth in engagement and player investment, as well as monthly seasonal-content addition in the quarter under review.
Blizzard (23% of revenues) revenues of $461 million increased 20.1% from the year-ago quarter. Blizzard had 32 million MAUs as of Jun 30, 2020, unchanged year over year.
World of Warcraft’s reach and engagement increased sequentially, as shelter-at-home conditions further boosted the franchise’s strong trajectory.
Additionally, Overwatch engagement grew year over year, including among returning players during the quarter.
King’s (27.6% of revenues) revenues of $553 million increased 10.8% year over year. MAUs were 271 million as of Jun 30, 2020, compared with 258 million as of Jun 30, 2019.
Candy Crush franchise MAUs grew by a double-digit percentage year over year. Candy Crush was once again the top-grossing franchise in the U.S. mobile app stores.
Advertising net bookings grew year over year in the second quarter.
Operating Details
Product development expense increased 22.8% year over year to $280 million. Sales & marketing expenses were $236 million, up 25.5% year over year.
However, general & administrative expenses decreased 3.2% year over year to $149 million.
Total costs & expenses on a non-GAAP basis increased 17.6% year over year to $1.12 billion in the reported quarter.
On a non-GAAP basis, operating income was $811 million, up 83.1% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2020, cash and cash equivalents were $6.34 billion compared with $5.91 billion as of Mar 31, 2020.
Long-term debt as of Jun 30, 2020, was $2.68 billion, flat sequentially.
Operating cash flow surged 399% year over year to $768 million. Free cash flow jumped 494% year over year to $755 million.
On a trailing-12 month basis, free cash flow increased 17% to $2.04 billion.
Guidance
For third-quarter 2020, Activision Blizzard expects non-GAAP revenues of $1.80 billion and earnings of 75 cents per share. Net bookings are expected to be $1.65 billion.
For 2020, Activision Blizzard anticipates non-GAAP revenues of $7.28 billion (up from previous guidance of $6.80 billion) and earnings of $2.87 per share (up from previous guidance of $2.62). Net bookings are expected to be $7.63 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
While both Vista Outdoor and LiveXLive Media are set to report quarterly results on Aug 6, TEGNA is scheduled to report on Aug 10.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Activision (ATVI) Q2 Earnings & Revenues Beat on Coronavirus Push
Activision Blizzard’s second-quarter 2020 non-GAAP earnings of 81 cents per share jumped 52.8% year over year.
Consolidated revenues surged 74.4% year over year to $2 billion. Adjusting for net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues jumped 38.4% to $1.93 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at 68 cents per share and $1.69 billion, respectively.
For the quarter ended Jun 30, 2020, overall Monthly Active Users (MAUs) were 428 million compared with 327 million as of Jun 30, 2019.
Activision Blizzard’s net bookings increased 72.2% year over year to $2.08 billion. Net bookings from digital channels were $1.82 billion, up 80.2% year over year.
Activision Blizzard, Inc Price, Consensus and EPS Surprise
Activision Blizzard, Inc price-consensus-eps-surprise-chart | Activision Blizzard, Inc Quote
Notably, in-game net bookings were $1.37 billion, up 76.6% year over year.
Top-Line Details
Product sales (27.6% of revenues) were $533 million, up 48.5% year over year. Subscription, licensing and other revenues (72.4% of revenues) increased 35% to $1.40 billion.
Based on distribution channels, Activision Blizzard reported retail-channel sales of $168 million, down 13% year over year. However, digital online revenues of $1.59 billion were up 46.5% from the year-ago quarter. Other revenues improved 48% year over year to $173 million.
Further, on the basis of platforms, revenues from mobile and ancillary (32.2% of revenues) rose 21.7% year over year to $622 million. Additionally, PC revenues (24.9% of revenues) jumped 33.5% year over year to $482 million. Moreover, revenues from console (33.9% of revenues) surged 61% year over year to $655 million.
On a geographic basis, revenues from the Americas (57.6% of revenues) increased 45.5% year over year to $1.11 billion. Europe, the Middle East and Africa revenues (31.8% of revenues) were up 34% year over year to $615 million. Moreover, revenues from the Asia Pacific (10.6% of revenues) increased 18.5% year over year to $205 million.
Segment Details
Activision (49.5% of revenues) revenues surged 270.5% year over year to $993 million. The division had 125 million MAUs as of Jun 30, 2020 compared with 37 million as of Jun 30, 2019.
Call of Duty: Warzone has reached more than 75 million players to date. Further, Call of Duty in-game net bookings more than doubled sequentially and were almost five times higher year over year, creating a new quarterly record.
Call of Duty Mobile witnessed strong sequential growth in engagement and player investment, as well as monthly seasonal-content addition in the quarter under review.
Blizzard (23% of revenues) revenues of $461 million increased 20.1% from the year-ago quarter. Blizzard had 32 million MAUs as of Jun 30, 2020, unchanged year over year.
World of Warcraft’s reach and engagement increased sequentially, as shelter-at-home conditions further boosted the franchise’s strong trajectory.
Additionally, Overwatch engagement grew year over year, including among returning players during the quarter.
King’s (27.6% of revenues) revenues of $553 million increased 10.8% year over year. MAUs were 271 million as of Jun 30, 2020, compared with 258 million as of Jun 30, 2019.
Candy Crush franchise MAUs grew by a double-digit percentage year over year. Candy Crush was once again the top-grossing franchise in the U.S. mobile app stores.
Advertising net bookings grew year over year in the second quarter.
Operating Details
Product development expense increased 22.8% year over year to $280 million. Sales & marketing expenses were $236 million, up 25.5% year over year.
However, general & administrative expenses decreased 3.2% year over year to $149 million.
Total costs & expenses on a non-GAAP basis increased 17.6% year over year to $1.12 billion in the reported quarter.
On a non-GAAP basis, operating income was $811 million, up 83.1% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2020, cash and cash equivalents were $6.34 billion compared with $5.91 billion as of Mar 31, 2020.
Long-term debt as of Jun 30, 2020, was $2.68 billion, flat sequentially.
Operating cash flow surged 399% year over year to $768 million. Free cash flow jumped 494% year over year to $755 million.
On a trailing-12 month basis, free cash flow increased 17% to $2.04 billion.
Guidance
For third-quarter 2020, Activision Blizzard expects non-GAAP revenues of $1.80 billion and earnings of 75 cents per share. Net bookings are expected to be $1.65 billion.
For 2020, Activision Blizzard anticipates non-GAAP revenues of $7.28 billion (up from previous guidance of $6.80 billion) and earnings of $2.87 per share (up from previous guidance of $2.62). Net bookings are expected to be $7.63 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
Vista Outdoor (VSTO - Free Report) , LiveXLive Media and TEGNA (TGNA - Free Report) are some better-ranked stocks in the broader consumer & discretionary sector. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While both Vista Outdoor and LiveXLive Media are set to report quarterly results on Aug 6, TEGNA is scheduled to report on Aug 10.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>