A month has gone by since the last earnings report for Activision Blizzard, Inc . Shares have added about 4.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Activision Q4 Earnings Fall, Call of Duty Steers Sales
Activision Blizzard delivered non-GAAP earnings of 78 cents per share for fourth-quarter 2022, down 22.8% year over year. Consolidated revenues increased 7.9% year over year to $2.3 billion.
Total revenues increased 49.2% to $3.37 billion after adjusting for revenues from non-reportable segments, the net effect from the recognition of deferred revenues and the elimination of intersegment revenues.
A string of launches in October and November, including Call of Duty: Modern Warfare II, Warzone 2.0 and World of Warcraft: Dragonflight helped the company’s top-line growth in the fourth quarter.
The Zacks Consensus Estimate for earnings and revenues was pegged at $1.51 per share and $3.22 billion, respectively.
For the quarter ended Dec 31, 2022, overall Monthly Active Users (MAUs) were 389 million, up 4.9% year over year.
Activision Blizzard’s net bookings jumped 43.4% year over year to $3.56 billion. In-game net bookings were $1.81 billion, up 46.5% year over year.
Activision Blizzard is in the process of being acquired by Microsoft. Microsoft will pay $95.00 per Activision share with the total transaction value being $68.7 billion.
The transaction, expected to close in Microsoft’s fiscal year ending Jun 30, 2023, has been approved by the boards of Activision Blizzard and Microsoft.
Top-Line Details
Product sales (30.9% of revenues) amounted to $721 million, up 11.8% year over year. In-game subscriptions and other revenues (69.1% of revenues) increased 6.3% to $1.61 billion.
Based on distribution channels, Digital online revenues of $1.96 billion were up 10.4% from the year-ago quarter. Activision Blizzard reported retail channel sales of $114 million, which fell 8.8% year over year. Other revenues declined 1.2% year over year to $255 million.
Further, based on platforms, revenues from mobile and ancillary (40.6% of revenues) rose 13.8% year over year to $948 million. Revenues from consoles (23.9% of revenues) declined 3.1% year over year to $558 million. PC revenues (24.6% of revenues) increased 15.5% year over year to $573 million. Other revenues declined 1.2% year over year to $255 million.
On a geographic basis, revenues from the Americas (51.9% of revenues) improved 8.9% year over year to $1.21 billion. Europe, the Middle East and Africa revenues (31.8% of revenues) were down 1.2% year over year to $742 million. Revenues from the Asia Pacific (16.3% of revenues) jumped 27% year over year to $381 million.
Segment Details
Activision (54.9% of revenues) revenues jumped 60% year over year to $1.85 billion. The division had 111 million MAUs as of Dec 31, 2022, up 3.7% year over year. During the fourth quarter, Activision saw its Call of Duty: Modern Warfare II game deliver the highest opening-quarter sell through in the history of the gaming franchise. The game crossed the $1 billion mark within 10 days of its late-October launch.
Blizzard (23.5% of revenues) revenues totaled $794 million, up 89.5% from the year-ago quarter’s levels. Blizzard had 45 million MAUs as of Dec 31, 2022, up 87.5% year over year. Blizzard reported its highest quarter net bookings to date, thanks to growth in its Warcraft game and in Overwatch and Diablo.
In the last three months of 2022, Overwatch 2 pulled in more than $100 million in net bookings. Warcraft and Diablo also each pulled in more than $100 million in net bookings in fourth-quarter.
King’s (21.6% of revenues) revenues of $727 million increased 6.3% year over year. MAUs were 233 million as of Dec 31, 2022, down 2.9% year over year.
Operating Details
Product development expenses jumped 127.3% year over year to $400 million. Sales & marketing expenses were up 48.1% year over year to $400 million.
Moreover, general & administrative expenses were $231 million, up 120% year over year.
Total costs & expenses on a non-GAAP basis increased 47.1% year over year to $1.76 billion in the reported quarter.
On a non-GAAP basis, operating income was $569 million, down 40.9% year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents were $7.1 billion compared with $7.7 billion as of Sep 30, 2022.
Long-term debt, as of Dec 31, 2022, was $3.61 billion, unchanged from the figure reported as of Sep 30, 2022.
Activision Blizzard generated $1.12 billion in operating cash flow for the quarter as compared with $661 million for the fourth quarter of 2021.
Non-GAAP Free cash flow jumped 72% year over year to $1.09 billion.
On a trailing 12-month basis, free cash flow decreased 9% to $2.12 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 -20.43% 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. Charting a somewhat similar path, 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 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 4.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Activision Blizzard, Inc . Shares have added about 4.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Activision Q4 Earnings Fall, Call of Duty Steers Sales
Activision Blizzard delivered non-GAAP earnings of 78 cents per share for fourth-quarter 2022, down 22.8% year over year. Consolidated revenues increased 7.9% year over year to $2.3 billion.
Total revenues increased 49.2% to $3.37 billion after adjusting for revenues from non-reportable segments, the net effect from the recognition of deferred revenues and the elimination of intersegment revenues.
A string of launches in October and November, including Call of Duty: Modern Warfare II, Warzone 2.0 and World of Warcraft: Dragonflight helped the company’s top-line growth in the fourth quarter.
The Zacks Consensus Estimate for earnings and revenues was pegged at $1.51 per share and $3.22 billion, respectively.
For the quarter ended Dec 31, 2022, overall Monthly Active Users (MAUs) were 389 million, up 4.9% year over year.
Activision Blizzard’s net bookings jumped 43.4% year over year to $3.56 billion. In-game net bookings were $1.81 billion, up 46.5% year over year.
Activision Blizzard is in the process of being acquired by Microsoft. Microsoft will pay $95.00 per Activision share with the total transaction value being $68.7 billion.
The transaction, expected to close in Microsoft’s fiscal year ending Jun 30, 2023, has been approved by the boards of Activision Blizzard and Microsoft.
Top-Line Details
Product sales (30.9% of revenues) amounted to $721 million, up 11.8% year over year. In-game subscriptions and other revenues (69.1% of revenues) increased 6.3% to $1.61 billion.
Based on distribution channels, Digital online revenues of $1.96 billion were up 10.4% from the year-ago quarter. Activision Blizzard reported retail channel sales of $114 million, which fell 8.8% year over year. Other revenues declined 1.2% year over year to $255 million.
Further, based on platforms, revenues from mobile and ancillary (40.6% of revenues) rose 13.8% year over year to $948 million. Revenues from consoles (23.9% of revenues) declined 3.1% year over year to $558 million. PC revenues (24.6% of revenues) increased 15.5% year over year to $573 million. Other revenues declined 1.2% year over year to $255 million.
On a geographic basis, revenues from the Americas (51.9% of revenues) improved 8.9% year over year to $1.21 billion. Europe, the Middle East and Africa revenues (31.8% of revenues) were down 1.2% year over year to $742 million. Revenues from the Asia Pacific (16.3% of revenues) jumped 27% year over year to $381 million.
Segment Details
Activision (54.9% of revenues) revenues jumped 60% year over year to $1.85 billion. The division had 111 million MAUs as of Dec 31, 2022, up 3.7% year over year. During the fourth quarter, Activision saw its Call of Duty: Modern Warfare II game deliver the highest opening-quarter sell through in the history of the gaming franchise. The game crossed the $1 billion mark within 10 days of its late-October launch.
Blizzard (23.5% of revenues) revenues totaled $794 million, up 89.5% from the year-ago quarter’s levels. Blizzard had 45 million MAUs as of Dec 31, 2022, up 87.5% year over year. Blizzard reported its highest quarter net bookings to date, thanks to growth in its Warcraft game and in Overwatch and Diablo.
In the last three months of 2022, Overwatch 2 pulled in more than $100 million in net bookings. Warcraft and Diablo also each pulled in more than $100 million in net bookings in fourth-quarter.
King’s (21.6% of revenues) revenues of $727 million increased 6.3% year over year. MAUs were 233 million as of Dec 31, 2022, down 2.9% year over year.
Operating Details
Product development expenses jumped 127.3% year over year to $400 million. Sales & marketing expenses were up 48.1% year over year to $400 million.
Moreover, general & administrative expenses were $231 million, up 120% year over year.
Total costs & expenses on a non-GAAP basis increased 47.1% year over year to $1.76 billion in the reported quarter.
On a non-GAAP basis, operating income was $569 million, down 40.9% year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents were $7.1 billion compared with $7.7 billion as of Sep 30, 2022.
Long-term debt, as of Dec 31, 2022, was $3.61 billion, unchanged from the figure reported as of Sep 30, 2022.
Activision Blizzard generated $1.12 billion in operating cash flow for the quarter as compared with $661 million for the fourth quarter of 2021.
Non-GAAP Free cash flow jumped 72% year over year to $1.09 billion.
On a trailing 12-month basis, free cash flow decreased 9% to $2.12 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 -20.43% 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. Charting a somewhat similar path, 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 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.