It has been about a month since the last earnings report for Activision Blizzard, Inc . Shares have lost about 0.9% 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 drivers.

Activision 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.

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.

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.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -10.63% due to these changes.

VGM Scores

Currently, Activision Blizzard, Inc has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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.

Performance of an Industry Player

Activision Blizzard, Inc is part of the Zacks Toys - Games - Hobbies industry. Over the past month, Hasbro (HAS Quick QuoteHAS - Free Report) , a stock from the same industry, has gained 0.5%. The company reported its results for the quarter ended June 2022 more than a month ago.

Hasbro reported revenues of $1.34 billion in the last reported quarter, representing a year-over-year change of +1.3%. EPS of $1.15 for the same period compares with $1.05 a year ago.

Hasbro is expected to post earnings of $1.94 per share for the current quarter, representing a year-over-year change of -1%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.6%.

Hasbro has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.