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Activision Blizzard delivered non-GAAP earnings of 48 cents per share for second-quarter 2022, down 60% year over year due to a soft Call of Duty: Vanguard launch last fall and a slow year for the gaming industry so far as it deals with hardware supply chain issues affecting consoles, inflation and a lack of big hits.
Consolidated revenues plunged 28.4% year over year to $1.64 billion. Total revenues declined 15.2% to $1.57 billion after adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and the elimination of intersegment revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 39 cents per share and $1.53 billion, respectively.
For the quarter ended Jun 30, 2022, overall Monthly Active Users (MAUs) were 361 million, down 11.5% year over year.
Activision Blizzard’s net bookings declined 14.8% year over year to $1.63 billion. In-game net bookings were $1.19 billion, down 9.2% year over year.
Activision Blizzard is in the process of being acquired by Microsoft (MSFT - Free Report) . 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 Jun 30, 2023, has been approved by the boards of directors of Activision Blizzard and Microsoft.
Activision Blizzard, Inc Price, Consensus and EPS Surprise
Product sales (18.5% of revenues) amounted to $304 million, down 46.5% year over year. In-game, subscriptions and other revenues (81.5% of revenues) fell 22.5% to $1.34 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $65 million, which fell 52.6% year over year. Digital online revenues of $1.47 billion were down 27.2% from the year-ago quarter. Other revenues declined 21.1% year over year to $105 million.
Further, based on platforms, revenues from mobile and ancillary (50.5% of revenues) rose 4.5% year over year to $831 million. Revenues from consoles (22.9% of revenues) declined 49.2% year over year to $376 million. PC revenues (20.2% of revenues) plunged 47.1% year over year to $332 million. Other revenues declined 21.1% year over year to $105 million.
On a geographic basis, revenues from the Americas (59.7% of revenues) declined 27% year over year to $982 million. Europe, the Middle East and Africa revenues (28.6% of revenues) were down 32.4% year over year to $470 million. Revenues from the Asia Pacific (11.7% of revenues) decreased 24.7% year over year to $192 million.
Segment Details
Activision (31.1% of revenues) revenues dropped 37.9% year over year to $490 million. The division had 94 million MAUs as of Jun 30, 2022, down 26% year over year.
Blizzard (25.5% of revenues) revenues totaled $401 million, down 7.4% from the year-ago quarter’s levels. Blizzard had 27 million MAUs as of Jun 30, 2022, up 3.8% year over year.
During the second quarter, Blizzard division released Diablo Immortal, a new mobile entry in the action series. Activision’s Chinese partner NetEase Inc. delayed Diablo Immortal’s launch in the world’s biggest mobile app market by about a month, saying it needed additional time.
King’s (43.4% of revenues) revenues of $684 million increased 7.7% year over year. MAUs were 240 million as of Jun 30, 2022, down 5.9% year over year.
Operating Details
Product development expenses contracted 16.7% year over year to $264 million. Sales & marketing expenses were up 2.9% year over year to $249 million.
Moreover, general & administrative expenses were $196 million, up 14.6% year over year.
Total costs & expenses on a non-GAAP basis fell 6.9% year over year to $1.19 billion in the reported quarter.
On a non-GAAP basis, operating income was $453 million, down 55.5% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2022, cash and cash equivalents was $10.5 billion compared with $10.97 billion as of Mar 31, 2022.
Long-term debt, as of Jun 30, 2022, was $3.61 billion, unchanged from the figure reported as of Mar 31, 2022.
Operating cash flow decreased 49% year over year to $198 million. Free cash flow declined 57% year over year to $161 million.
On a trailing 12-month basis, free cash flow decreased 23% to $1.92 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
Activision’s shares have outperformed the Zacks Consumer Discretionary sector in the year-to-date period. The stock is up 20.3% against the sector’s decline of 31.3%.
Image: Shutterstock
Activision (ATVI) Q2 Earnings Beat Estimates, Revenues Decline
Activision Blizzard delivered non-GAAP earnings of 48 cents per share for second-quarter 2022, down 60% year over year due to a soft Call of Duty: Vanguard launch last fall and a slow year for the gaming industry so far as it deals with hardware supply chain issues affecting consoles, inflation and a lack of big hits.
Consolidated revenues plunged 28.4% year over year to $1.64 billion. Total revenues declined 15.2% to $1.57 billion after adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and the elimination of intersegment revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 39 cents per share and $1.53 billion, respectively.
For the quarter ended Jun 30, 2022, overall Monthly Active Users (MAUs) were 361 million, down 11.5% year over year.
Activision Blizzard’s net bookings declined 14.8% year over year to $1.63 billion. In-game net bookings were $1.19 billion, down 9.2% year over year.
Activision Blizzard is in the process of being acquired by Microsoft (MSFT - Free Report) . 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 Jun 30, 2023, has been approved by the boards of directors of Activision Blizzard and Microsoft.
Activision Blizzard, Inc Price, Consensus and EPS Surprise
Activision Blizzard, Inc price-consensus-eps-surprise-chart | Activision Blizzard, Inc Quote
Top-Line Details
Product sales (18.5% of revenues) amounted to $304 million, down 46.5% year over year. In-game, subscriptions and other revenues (81.5% of revenues) fell 22.5% to $1.34 billion.
Based on distribution channels, Activision Blizzard reported retail channel sales of $65 million, which fell 52.6% year over year. Digital online revenues of $1.47 billion were down 27.2% from the year-ago quarter. Other revenues declined 21.1% year over year to $105 million.
Further, based on platforms, revenues from mobile and ancillary (50.5% of revenues) rose 4.5% year over year to $831 million. Revenues from consoles (22.9% of revenues) declined 49.2% year over year to $376 million. PC revenues (20.2% of revenues) plunged 47.1% year over year to $332 million. Other revenues declined 21.1% year over year to $105 million.
On a geographic basis, revenues from the Americas (59.7% of revenues) declined 27% year over year to $982 million. Europe, the Middle East and Africa revenues (28.6% of revenues) were down 32.4% year over year to $470 million. Revenues from the Asia Pacific (11.7% of revenues) decreased 24.7% year over year to $192 million.
Segment Details
Activision (31.1% of revenues) revenues dropped 37.9% year over year to $490 million. The division had 94 million MAUs as of Jun 30, 2022, down 26% year over year.
Blizzard (25.5% of revenues) revenues totaled $401 million, down 7.4% from the year-ago quarter’s levels. Blizzard had 27 million MAUs as of Jun 30, 2022, up 3.8% year over year.
During the second quarter, Blizzard division released Diablo Immortal, a new mobile entry in the action series. Activision’s Chinese partner NetEase Inc. delayed Diablo Immortal’s launch in the world’s biggest mobile app market by about a month, saying it needed additional time.
King’s (43.4% of revenues) revenues of $684 million increased 7.7% year over year. MAUs were 240 million as of Jun 30, 2022, down 5.9% year over year.
Operating Details
Product development expenses contracted 16.7% year over year to $264 million. Sales & marketing expenses were up 2.9% year over year to $249 million.
Moreover, general & administrative expenses were $196 million, up 14.6% year over year.
Total costs & expenses on a non-GAAP basis fell 6.9% year over year to $1.19 billion in the reported quarter.
On a non-GAAP basis, operating income was $453 million, down 55.5% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2022, cash and cash equivalents was $10.5 billion compared with $10.97 billion as of Mar 31, 2022.
Long-term debt, as of Jun 30, 2022, was $3.61 billion, unchanged from the figure reported as of Mar 31, 2022.
Operating cash flow decreased 49% year over year to $198 million. Free cash flow declined 57% year over year to $161 million.
On a trailing 12-month basis, free cash flow decreased 23% to $1.92 billion.
Zacks Rank & Stocks to Consider
Activision Blizzard currently carries a Zacks Rank #3 (Hold).
Activision’s shares have outperformed the Zacks Consumer Discretionary sector in the year-to-date period. The stock is up 20.3% against the sector’s decline of 31.3%.
Some better-ranked stocks in the Consumer Discretionary sector include Sinclair Broadcast Group (SBGI - Free Report) and Nexstar Media Group (NXST - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sinclair Broadcast and Nexstar Media Group are scheduled to report their quarterly results on Aug 3 and Aug 4, respectively.
The Zacks Consensus Estimate for Sinclair Broadcast Group’s second-quarter 2022 loss is pegged at $3.35 per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for Nexstar Media Group’s second-quarter 2022 earnings is pegged at $5.46 per share, unchanged over the past 30 days.