It has been about a month since the last earnings report for Activision Blizzard, Inc . Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Activision Blizzard, Inc due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Activision Q1 Earnings Up Y/Y on Solid Top-Line Growth
Activision Blizzard’s first-quarter 2021 non-GAAP earnings of 98 cents per share increased 28.9% year over year.
Consolidated revenues increased 27.2% year over year to $2.27 billion. Adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues climbed 35% to $1.98 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at 69 cents per share and $1.75 billion, respectively.
For the quarter ended Mar 31, 2021, overall Monthly Active Users (MAUs) were 435 million compared with 407 million as of Mar 31, 2020.
Activision Blizzard’s net bookings increased 35.7% year over year to $2.06 billion. Notably, in-game net bookings were $1.34 billion, up 40.5% year over year.
In-game net bookings on console and PC grew more than 60% year over year in the first quarter and the first two seasons of Black Ops Cold War and Warzone content were both in the top three seasons in Call of Duty history for in-game net bookings.
Top-Line Details
Product sales (29.7% of revenues) were $675 million, up 24.3% year over year. In-game, subscriptions and other revenues (70.3% of revenues) increased 28.5% to $1.60 billion.
Based on distribution channels, Activision Blizzard reported digital online revenues of $2 billion, up 39.2% year over year. However, retail channel sales of $149 million were down 32.6% from the year-ago quarter. Moreover, other revenues decreased 4.8% year over year to $120 million.
Further, on the basis of platforms, revenues from mobile and ancillary (32.3% of revenues) rose 28.8% year over year to $734 million. Additionally, PC revenues (27.3% of revenues) increased 24.9% year over year to $622 million. Moreover, revenues from console (35.1% of revenues) surged 34.5% year over year to $799 million.
On a geographic basis, revenues from the Americas (57.5% of revenues) soared 37.9% year over year to $1.30 billion. Europe, the Middle East and Africa revenues (32.1% of revenues) were up 29.2% year over year to $731 million. However, revenues from Asia Pacific (10.4% of revenues) decreased 13.5% year over year to $237 million.
Activision (44.9% of revenues) revenues increased 71.7% year over year to $891 million. The division had 150 million MAUs as of Mar 31, 2021 up 47.1% year over year.
The segment’s top-line growth was driven by Call of Duty: Black Ops Cold War and Warzone in-game revenues, strong premium sales, and Call of Duty Mobile.
Moreover, Call of Duty franchise MAUs increased sequentially and grew over 40% year over year in the first quarter.
Markedly, Call of Duty in-game net bookings on console and PC grew more than 60% year over year. The first two seasons of Black Ops Cold War and Warzone content were both in the top-three seasons in Call of Duty history for in-game net bookings.
Blizzard (24.4% of revenues) revenues of $483 million increased 6.9% from the year-ago quarter driven by strong growth in the Warcraft franchise, especially World of Warcraft’s Shadowlands. Blizzard had 27 million MAUs as of Mar 31, 2021, which decreased 15.6% year over year.
King’s (30.7% of revenues) revenues of $609 million increased 22.3% year over year. MAUs were 258 million as of Mar 31, 2021, which declined 5.5% year over year.
Candy Crush in-game net bookings witnessed solid increase year over year. The game was once again the top grossing franchise in the U.S. app stores during first-quarter 2021.
In-game net bookings for Farm Heroes, King’s second-largest franchise, also grew sharply year over year.
Crash Bandicoot: On The Run! launched on Mar 25 has seen over 30 million downloads to-date.
King delivered 70% year-over-year growth in advertising net bookings in the first quarter, with significant increases across both direct brand advertisers and partner networks.
Product development expense increased 46.5% year over year to $337 million. General & administrative expenses were up 9.9% year over year to $156 million.
However, sales & marketing expenses were $232 million, down 1.7% year over year.
Total costs & expenses on a non-GAAP basis increased 20.1% year over year to $1.29 billion in the reported quarter.
On a non-GAAP basis, operating income was $981 million, up 38% year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2021, cash and cash equivalents were $9.28 billion compared with $8.65 billion as of Dec 31, 2020.
Long-term debt as of Mar 31, 2021 was $3.60 billion compared with $3.61 billion as Dec 31, 2020.
Operating cash flow soared 470% year over year to $844 million. Free cash flow surged 537.2% year over year to $822 million.
On a trailing 12-month basis, free cash flow increased 103% to $2.86 billion.
Guidance
For second-quarter 2021, Activision Blizzard expects non-GAAP revenues of $2.13 billion and earnings of 91 cents per share. Net bookings are expected to be $1.85 billion.
For 2021, Activision Blizzard anticipates non-GAAP revenues of $8.37 billion and earnings of $3.42 per share. Net bookings are expected to be $8.60 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Activision Blizzard, Inc has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Activision Blizzard, Inc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Activision Blizzard, Inc (ATVI) Up 5.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Activision Blizzard, Inc . Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Activision Blizzard, Inc due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Activision Q1 Earnings Up Y/Y on Solid Top-Line Growth
Activision Blizzard’s first-quarter 2021 non-GAAP earnings of 98 cents per share increased 28.9% year over year.
Consolidated revenues increased 27.2% year over year to $2.27 billion. Adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues climbed 35% to $1.98 billion.
The Zacks Consensus Estimate for earnings and revenues was pegged at 69 cents per share and $1.75 billion, respectively.
For the quarter ended Mar 31, 2021, overall Monthly Active Users (MAUs) were 435 million compared with 407 million as of Mar 31, 2020.
Activision Blizzard’s net bookings increased 35.7% year over year to $2.06 billion. Notably, in-game net bookings were $1.34 billion, up 40.5% year over year.
In-game net bookings on console and PC grew more than 60% year over year in the first quarter and the first two seasons of Black Ops Cold War and Warzone content were both in the top three seasons in Call of Duty history for in-game net bookings.
Top-Line Details
Product sales (29.7% of revenues) were $675 million, up 24.3% year over year. In-game, subscriptions and other revenues (70.3% of revenues) increased 28.5% to $1.60 billion.
Based on distribution channels, Activision Blizzard reported digital online revenues of $2 billion, up 39.2% year over year. However, retail channel sales of $149 million were down 32.6% from the year-ago quarter. Moreover, other revenues decreased 4.8% year over year to $120 million.
Further, on the basis of platforms, revenues from mobile and ancillary (32.3% of revenues) rose 28.8% year over year to $734 million. Additionally, PC revenues (27.3% of revenues) increased 24.9% year over year to $622 million. Moreover, revenues from console (35.1% of revenues) surged 34.5% year over year to $799 million.
On a geographic basis, revenues from the Americas (57.5% of revenues) soared 37.9% year over year to $1.30 billion. Europe, the Middle East and Africa revenues (32.1% of revenues) were up 29.2% year over year to $731 million. However, revenues from Asia Pacific (10.4% of revenues) decreased 13.5% year over year to $237 million.
Activision (44.9% of revenues) revenues increased 71.7% year over year to $891 million. The division had 150 million MAUs as of Mar 31, 2021 up 47.1% year over year.
The segment’s top-line growth was driven by Call of Duty: Black Ops Cold War and Warzone in-game revenues, strong premium sales, and Call of Duty Mobile.
Moreover, Call of Duty franchise MAUs increased sequentially and grew over 40% year over year in the first quarter.
Markedly, Call of Duty in-game net bookings on console and PC grew more than 60% year over year. The first two seasons of Black Ops Cold War and Warzone content were both in the top-three seasons in Call of Duty history for in-game net bookings.
Blizzard (24.4% of revenues) revenues of $483 million increased 6.9% from the year-ago quarter driven by strong growth in the Warcraft franchise, especially World of Warcraft’s Shadowlands. Blizzard had 27 million MAUs as of Mar 31, 2021, which decreased 15.6% year over year.
King’s (30.7% of revenues) revenues of $609 million increased 22.3% year over year. MAUs were 258 million as of Mar 31, 2021, which declined 5.5% year over year.
Candy Crush in-game net bookings witnessed solid increase year over year. The game was once again the top grossing franchise in the U.S. app stores during first-quarter 2021.
In-game net bookings for Farm Heroes, King’s second-largest franchise, also grew sharply year over year.
Crash Bandicoot: On The Run! launched on Mar 25 has seen over 30 million downloads to-date.
King delivered 70% year-over-year growth in advertising net bookings in the first quarter, with significant increases across both direct brand advertisers and partner networks.
Product development expense increased 46.5% year over year to $337 million. General & administrative expenses were up 9.9% year over year to $156 million.
However, sales & marketing expenses were $232 million, down 1.7% year over year.
Total costs & expenses on a non-GAAP basis increased 20.1% year over year to $1.29 billion in the reported quarter.
On a non-GAAP basis, operating income was $981 million, up 38% year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2021, cash and cash equivalents were $9.28 billion compared with $8.65 billion as of Dec 31, 2020.
Long-term debt as of Mar 31, 2021 was $3.60 billion compared with $3.61 billion as Dec 31, 2020.
Operating cash flow soared 470% year over year to $844 million. Free cash flow surged 537.2% year over year to $822 million.
On a trailing 12-month basis, free cash flow increased 103% to $2.86 billion.
Guidance
For second-quarter 2021, Activision Blizzard expects non-GAAP revenues of $2.13 billion and earnings of 91 cents per share. Net bookings are expected to be $1.85 billion.
For 2021, Activision Blizzard anticipates non-GAAP revenues of $8.37 billion and earnings of $3.42 per share. Net bookings are expected to be $8.60 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Activision Blizzard, Inc has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Activision Blizzard, Inc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.