A month has gone by since the last earnings report for Activision Blizzard, Inc . Shares have lost about 0% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Activision Blizzard, Inc due for a breakout? 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 catalysts.
Activision Q1 Earnings Lag Estimates, Revenues Decline
Activision Blizzard’s delivered non-GAAP earnings of 64 cents per share in first-quarter 2022, down 34.7% year over year.
Consolidated revenues plunged 28.9% year over year to $1.41 billion. Total revenues declined 22.3% to $1.77 billion after adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 73 cents per share and $1.80 billion, respectively.
For the quarter ended Mar 31, 2022, overall Monthly Active Users (MAUs) were 372 million, down 14.5% year over year.
Activision Blizzard’s net bookings declined 28.3% year over year to $1.48 billion. In-game net bookings were $1.01 billion, down 24.7% year over year.
On Jan 18, Microsoft announced plans to acquire Activision Blizzard. Microsoft will pay $95.00 per Activision share, with the total transaction value being worth $68.7 billion. The deal is expected to close in fiscal 2023.
The transaction, which is expected to close in Microsoft’s fiscal year ending June 30, 2023, has been approved by the boards of directors of Activision Blizzard and Microsoft.
Top-Line Details
Product sales (21.8% of revenues) amounted to $386 million, down 42.8% year over year. In-game, subscriptions and other revenues (78.2% of revenues) fell 13.6% to $1.38 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $85 million fell 43% year over year. Digital online revenues of $1.59 billion were down 20.8% from the year-ago quarter. Other revenues declined 21.7% year over year to $94 million.
Further, based on platforms, revenues from mobile and ancillary (45.6% of revenues) rose 9.9% year over year to $807 million. PC revenues (21.7% of revenues) plunged 38.4% year over year to $383 million. Revenues from consoles (27.4% of revenues) declined 39.4% year over year to $484 million. Other revenues declined 21.7% year over year to $94 million.
On a geographic basis, revenues from the Americas (57.5% of revenues) declined 22.3% year over year to $1.02 billion. Europe, the Middle East and Africa revenues (29.8% of revenues) were down 27.9% year over year to $527 million. Revenues from the Asia Pacific (12.7% of revenues) decreased 5.1% year over year to $225 million.
Segment Details
Activision (32.2% of revenues) revenues dropped 49.2% year over year to $453 million. The division had 100 million MAUs as of Mar 31, 2022, compared with 150 million as of Mar 30, 2021.
Blizzard (19.4% of revenues) revenues totaled $274 million, down 43.3% from the year-ago quarter’s levels. Blizzard had 22 million MAUs as of Mar 31, 2022, compared with 27 million as of Mar 31, 2021.
King’s (30.3% of revenues) revenues of $682 million increased 12% year over year. MAUs were 250 million as of Mar 31, 2022, compared with 258 million as of Mar 31, 2021.
Operating Details
Product development expenses contracted 13.1% year over year to $293 million. Sales & marketing expenses were up 2.2% year over year to $237 million.
Moreover, general & administrative expenses were $156 million, unchanged year-over-year.
Total costs & expenses on a non-GAAP basis fell 10.4% year over year to $1.16 billion in the reported quarter.
On a non-GAAP basis, operating income was $609 million, down 37.9% year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash and cash equivalents were $10.97 billion compared with $10.42 billion as of Dec 31, 2021.
Long-term debt as of Mar 31, 2022, was $3.61 billion, unchanged from the figure reported as of Dec 31, 2021.
Operating cash flow decreased 24% year over year to $642 million. Free cash flow declined 24% year over year to $627 million.
On a trailing 12-month basis, free cash flow decreased 25% to $2.14 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -39.19% due to these changes.
VGM Scores
Currently, Activision Blizzard, Inc has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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. It's no surprise Activision Blizzard, Inc has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Activision Blizzard, Inc (ATVI) Down 0% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Activision Blizzard, Inc . Shares have lost about 0% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Activision Blizzard, Inc due for a breakout? 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 catalysts.
Activision Q1 Earnings Lag Estimates, Revenues Decline
Activision Blizzard’s delivered non-GAAP earnings of 64 cents per share in first-quarter 2022, down 34.7% year over year.
Consolidated revenues plunged 28.9% year over year to $1.41 billion. Total revenues declined 22.3% to $1.77 billion after adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 73 cents per share and $1.80 billion, respectively.
For the quarter ended Mar 31, 2022, overall Monthly Active Users (MAUs) were 372 million, down 14.5% year over year.
Activision Blizzard’s net bookings declined 28.3% year over year to $1.48 billion. In-game net bookings were $1.01 billion, down 24.7% year over year.
On Jan 18, Microsoft announced plans to acquire Activision Blizzard. Microsoft will pay $95.00 per Activision share, with the total transaction value being worth $68.7 billion. The deal is expected to close in fiscal 2023.
The transaction, which is expected to close in Microsoft’s fiscal year ending June 30, 2023, has been approved by the boards of directors of Activision Blizzard and Microsoft.
Top-Line Details
Product sales (21.8% of revenues) amounted to $386 million, down 42.8% year over year. In-game, subscriptions and other revenues (78.2% of revenues) fell 13.6% to $1.38 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $85 million fell 43% year over year. Digital online revenues of $1.59 billion were down 20.8% from the year-ago quarter. Other revenues declined 21.7% year over year to $94 million.
Further, based on platforms, revenues from mobile and ancillary (45.6% of revenues) rose 9.9% year over year to $807 million. PC revenues (21.7% of revenues) plunged 38.4% year over year to $383 million. Revenues from consoles (27.4% of revenues) declined 39.4% year over year to $484 million. Other revenues declined 21.7% year over year to $94 million.
On a geographic basis, revenues from the Americas (57.5% of revenues) declined 22.3% year over year to $1.02 billion. Europe, the Middle East and Africa revenues (29.8% of revenues) were down 27.9% year over year to $527 million. Revenues from the Asia Pacific (12.7% of revenues) decreased 5.1% year over year to $225 million.
Segment Details
Activision (32.2% of revenues) revenues dropped 49.2% year over year to $453 million. The division had 100 million MAUs as of Mar 31, 2022, compared with 150 million as of Mar 30, 2021.
Blizzard (19.4% of revenues) revenues totaled $274 million, down 43.3% from the year-ago quarter’s levels. Blizzard had 22 million MAUs as of Mar 31, 2022, compared with 27 million as of Mar 31, 2021.
King’s (30.3% of revenues) revenues of $682 million increased 12% year over year. MAUs were 250 million as of Mar 31, 2022, compared with 258 million as of Mar 31, 2021.
Operating Details
Product development expenses contracted 13.1% year over year to $293 million. Sales & marketing expenses were up 2.2% year over year to $237 million.
Moreover, general & administrative expenses were $156 million, unchanged year-over-year.
Total costs & expenses on a non-GAAP basis fell 10.4% year over year to $1.16 billion in the reported quarter.
On a non-GAAP basis, operating income was $609 million, down 37.9% year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash and cash equivalents were $10.97 billion compared with $10.42 billion as of Dec 31, 2021.
Long-term debt as of Mar 31, 2022, was $3.61 billion, unchanged from the figure reported as of Dec 31, 2021.
Operating cash flow decreased 24% year over year to $642 million. Free cash flow declined 24% year over year to $627 million.
On a trailing 12-month basis, free cash flow decreased 25% to $2.14 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -39.19% due to these changes.
VGM Scores
Currently, Activision Blizzard, Inc has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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. It's no surprise Activision Blizzard, Inc has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.