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Activision (ATVI) Q4 Earnings Up Y/Y On Solid Top-Line Growth
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Activision Blizzard’s fourth-quarter 2020 non-GAAP earnings of 76 cents per share increased 22.6% year over year.
Consolidated revenues increased 21.5% year over year to $2.41 billion. Adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues climbed 11.5% to $2.81 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at $1.18 per share and $3.05 billion, respectively.
For the quarter ended Dec 31, 2020, overall Monthly Active Users (MAUs) were 397 million compared with 409 million as of Dec 31, 2019.
Activision Blizzard’s net bookings increased 12.7% year over year to $3.05 billion. Net bookings from digital channels were $2.34 billion, up 24.5% year over year.
Activision Blizzard, Inc Price, Consensus and EPS Surprise
Notably, in-game net bookings were $1.32 billion, up 22% year over year.
Top-Line Details
Product sales (35.9% of revenues) were $866 million, up 23.9% year over year. In-game, subscriptions and other revenues (64.1% of revenues) increased 20.2% to $1.55 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $234 million, down 24.5% year over year. However, digital online revenues of $1.87 billion were up 30.2% from the year-ago quarter. Moreover, other revenues increased 28.7% year over year to $305 million.
Further, on the basis of platforms, revenues from mobile and ancillary (29.3% of revenues) rose 11.7% year over year to $707 million. Additionally, PC revenues (23.2% of revenues) increased 7.7% year over year to $561 million. Moreover, revenues from console (34.8% of revenues) surged 41.2% year over year to $840 million.
On a geographic basis, revenues from the Americas (51.7% of revenues) soared 33.4% year over year to $1.25 billion. Europe, the Middle East and Africa revenues (37.7% of revenues) were up 27.6% year over year to $910 million. However, revenues from Asia Pacific (10.6% of revenues) decreased 24.3% year over year to $256 million.
Segment Details
Activision (58.9% of revenues) revenues increased 16.2% year over year to $1.66 billion. The division had 128 million MAUs as of Dec 31, 2020 unchanged year over year.
The segment’s top-line growth benefited from strong demand for Call of Duty (COD) franchise that grew by a double-digit percentage year-over-year. COD in-game net bookings on console and PC grew more than 50% year-over-year.
Moreover, the November launch of Call of Duty: Black Ops Cold War helped in attracting players. MAUs grew roughly 70% and time spent more than doubled.
Call of Duty Mobile net bookings grew double digits on a year-over-year basis. Late December, the game was launched in China, where it was an instant hit.
Blizzard (20.6% of revenues) revenues of $579 million decreased 2.7% from the year-ago quarter. Blizzard had 29 million MAUs as of Dec 31, 2020 compared with 32 million as of Dec 31, 2019.
World of Warcraft MAUs grew year over year for the sixth consecutive quarter. Net bookings for World of Warcraft grew sharply year over year, driven by strong sales of the Shadowlands expansion, subscriber growth, and high participation in value added services.
King’s (20.5% of revenues) revenues of $577 million increased 14.7% year over year. MAUs were 240 million as of Dec 31, 2020, compared with 249 million as of Dec 31, 2019.
In-game net bookings increased double-digit percentage year over year in the fourth quarter. In-game spending per player and double-digit year-over-year growth in in-game net bookings reflected continued popularity of the Candy Crush franchise. Candy Crush was once again the top-grossing franchise in the U.S. app stores.
The Farm Heroes and Bubble Witch franchises also grew net bookings year over year.
Operating Details
Product development expense increased 18.7% year over year to $336 million. General & administrative expenses were up 9.7% year over year to $193 million.
However, sales & marketing expenses were $338 million, down 0.3% year over year.
Total costs & expenses on a non-GAAP basis increased 19.4% year over year to $1.67 billion in the reported quarter.
On a non-GAAP basis, operating income was $747 million, up 26.4% year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2020, cash and cash equivalents were $8.65 billion compared with $7.42 billion as of Sep 30, 2020.
Long-term debt as of Dec 31, 2020 was $3.61 billion compared with $3.60 billion as Sep 30, 2020.
Operating cash flow increased 24% year over year to $1.14 billion. Free cash flow was up 27% year over year to $1.12 billion.
On a trailing 12-month basis, free cash flow increased 27% to $2.17 billion.
Guidance
For first-quarter 2021, Activision Blizzard expects non-GAAP revenues of $2 billion and earnings of 59 cents per share. Net bookings are expected to be $1.75 billion.
For 2021, Activision Blizzard anticipates non-GAAP revenues of $8.23 billion and earnings of $3.34 per share. Net bookings are expected to be $8.45 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
Take Two and Fox are set to report their quarterly results on Feb 8 and 9, respectively. TEGNA is scheduled to report the same on Mar 1.
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Activision (ATVI) Q4 Earnings Up Y/Y On Solid Top-Line Growth
Activision Blizzard’s fourth-quarter 2020 non-GAAP earnings of 76 cents per share increased 22.6% year over year.
Consolidated revenues increased 21.5% year over year to $2.41 billion. Adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues climbed 11.5% to $2.81 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at $1.18 per share and $3.05 billion, respectively.
For the quarter ended Dec 31, 2020, overall Monthly Active Users (MAUs) were 397 million compared with 409 million as of Dec 31, 2019.
Activision Blizzard’s net bookings increased 12.7% year over year to $3.05 billion. Net bookings from digital channels were $2.34 billion, up 24.5% 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 $1.32 billion, up 22% year over year.
Top-Line Details
Product sales (35.9% of revenues) were $866 million, up 23.9% year over year. In-game, subscriptions and other revenues (64.1% of revenues) increased 20.2% to $1.55 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $234 million, down 24.5% year over year. However, digital online revenues of $1.87 billion were up 30.2% from the year-ago quarter. Moreover, other revenues increased 28.7% year over year to $305 million.
Further, on the basis of platforms, revenues from mobile and ancillary (29.3% of revenues) rose 11.7% year over year to $707 million. Additionally, PC revenues (23.2% of revenues) increased 7.7% year over year to $561 million. Moreover, revenues from console (34.8% of revenues) surged 41.2% year over year to $840 million.
On a geographic basis, revenues from the Americas (51.7% of revenues) soared 33.4% year over year to $1.25 billion. Europe, the Middle East and Africa revenues (37.7% of revenues) were up 27.6% year over year to $910 million. However, revenues from Asia Pacific (10.6% of revenues) decreased 24.3% year over year to $256 million.
Segment Details
Activision (58.9% of revenues) revenues increased 16.2% year over year to $1.66 billion. The division had 128 million MAUs as of Dec 31, 2020 unchanged year over year.
The segment’s top-line growth benefited from strong demand for Call of Duty (COD) franchise that grew by a double-digit percentage year-over-year. COD in-game net bookings on console and PC grew more than 50% year-over-year.
Moreover, the November launch of Call of Duty: Black Ops Cold War helped in attracting players. MAUs grew roughly 70% and time spent more than doubled.
Call of Duty Mobile net bookings grew double digits on a year-over-year basis. Late December, the game was launched in China, where it was an instant hit.
Blizzard (20.6% of revenues) revenues of $579 million decreased 2.7% from the year-ago quarter. Blizzard had 29 million MAUs as of Dec 31, 2020 compared with 32 million as of Dec 31, 2019.
World of Warcraft MAUs grew year over year for the sixth consecutive quarter. Net bookings for World of Warcraft grew sharply year over year, driven by strong sales of the Shadowlands expansion, subscriber growth, and high participation in value added services.
King’s (20.5% of revenues) revenues of $577 million increased 14.7% year over year. MAUs were 240 million as of Dec 31, 2020, compared with 249 million as of Dec 31, 2019.
In-game net bookings increased double-digit percentage year over year in the fourth quarter. In-game spending per player and double-digit year-over-year growth in in-game net bookings reflected continued popularity of the Candy Crush franchise. Candy Crush was once again the top-grossing franchise in the U.S. app stores.
The Farm Heroes and Bubble Witch franchises also grew net bookings year over year.
Operating Details
Product development expense increased 18.7% year over year to $336 million. General & administrative expenses were up 9.7% year over year to $193 million.
However, sales & marketing expenses were $338 million, down 0.3% year over year.
Total costs & expenses on a non-GAAP basis increased 19.4% year over year to $1.67 billion in the reported quarter.
On a non-GAAP basis, operating income was $747 million, up 26.4% year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2020, cash and cash equivalents were $8.65 billion compared with $7.42 billion as of Sep 30, 2020.
Long-term debt as of Dec 31, 2020 was $3.61 billion compared with $3.60 billion as Sep 30, 2020.
Operating cash flow increased 24% year over year to $1.14 billion. Free cash flow was up 27% year over year to $1.12 billion.
On a trailing 12-month basis, free cash flow increased 27% to $2.17 billion.
Guidance
For first-quarter 2021, Activision Blizzard expects non-GAAP revenues of $2 billion and earnings of 59 cents per share. Net bookings are expected to be $1.75 billion.
For 2021, Activision Blizzard anticipates non-GAAP revenues of $8.23 billion and earnings of $3.34 per share. Net bookings are expected to be $8.45 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
TEGNA (TGNA - Free Report) , Take Two Interactive (TTWO - Free Report) and Fox Corporation (FOXA - Free Report) are some of the top-ranked stocks in the broader Consumer & Discretionary sector. While TEGNA sports a Zacks Rank #1 (Strong Buy), both Take Two and Fox carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Take Two and Fox are set to report their quarterly results on Feb 8 and 9, respectively. TEGNA is scheduled to report the same on Mar 1.
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The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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