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Activision (ATVI) to Report Q4 Earnings: What's in Store?

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Activision Blizzard (ATVI - Free Report) is set to report fourth-quarter 2021 results on Feb 3.

For the to-be-reported quarter, the company expects non-GAAP revenues of $2.02 billion and earnings of $62 per share.

The Zacks Consensus Estimate for revenues is pegged at $2.79 billion, indicating a decline of 8.41% from the year-ago quarter’s reported figure.

The consensus mark for fourth-quarter earnings has moved southward by 3 cents at $1.31 per share in the past 30 days.

The company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 11.36%.

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

Activision Blizzard, Inc Price and EPS Surprise


Activision Blizzard, Inc Price and EPS Surprise

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


Factors to Consider

Activision is expected to have benefited from the popularity of its franchises, including Call of Duty (COD), Overwatch, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga, in the to-be-reported quarter.

The expanding user bases of COD, Hearthstone, World of Warcraft and King’s franchises are expected to have boosted in-games spending, thereby driving net bookings and the top line in the to-be-reported quarter.

Activision expects net bookings of $2.86 billion for the fourth quarter of 2021.

Steady video game spending in the quarter is expected to have benefited Activision. Per Venturebeat, which cited NPD data, consumer spending on video games increased 16% year over year in October but dropped 10% and 1% year over year in November and December, respectively.

A number of major game releases in the fourth quarter is expected to have increased active user growth. This is anticipated to boost the top line in the to-be-reported quarter.

In December, Activision announced the release of Fractured in Alterac Valley, the latest expansion of its hit card game Hearthstone, which features its 135 all-new collectible cards.

In November, Activision announced the global launch of its highly-anticipated first-person shooter game Call of Duty: Vanguard.

In October, Activision announced that Hearthstone Mercenaries, its new free-to-play game mode for its hit digital card game Hearthstone, is now available worldwide.

These new releases in the to-be-reported quarter is expected to have had a positive impact on the user engagement.

Moreover, the company completed the acquisition of Digital Legends, a Barcelona-based game developer. The acquisition added to Activision’s growing roster of wholly-owned, independent studio teams. The buyout is anticipated to support Activision’s development of an unannounced new mobile title within the Call of Duty franchise.

Intensifying competition from game publishers like Tencent (TCEHY - Free Report) , Roblox (RBLX - Free Report) and NetEase (NTES - Free Report) is expected to have hurt Activision’s top-line growth in the fourth quarter.

Tencent’s Honor of Kings and PUBG Mobile and Roblox’s Roblox were the first, third and seventh top-grossing games in terms of overall revenues in December, per Sensor Tower data. In terms of app store revenue, NetEase’s Fantasy Westward Journey and Harry Potter: Magic Awakened were the seventh and 10th top-grossing mobile games in December.

Activision has Zacks Rank #5 (Strong Sell) currently.

ATVI is down16% in the past year against the Zacks Toys - Games - Hobbies industry’s decline of 15% and the Consumer Discretionary sector’s fall of 20.9% in the past year.

You can see the complete list of Zacks #1 Rank stocks here.

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