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

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Activision Blizzard ATVI is set to report fourth-quarter 2019 results on Feb 6.

For the to-be-reported quarter, the company expects non-GAAP revenues of $1.81 billion and earnings of 43 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $2.67 billion, which indicates a decline of 5.7% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for fourth-quarter earnings has declined by a penny to $1.20 per share in the past 30 days. The projected figure suggests a decline of 7% from the year-ago quarter’s reported figure.

Notably, the company has trailing four-quarter positive earnings surprise of 24.5%, on average. It earnings beat the Zacks Consensus Estimate in three of the last four quarters and were in line in one.

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

Strong popularity of Activision’s franchises like Call of Duty, Overwatch and Hearthstone is expected to have boosted in-games spending. This is likely to have driven net bookings and the top line in the fourth quarter.  

The company expects net bookings of $2.65 billion for fourth-quarter 2019.

Notably, Blizzard division released its latest Hearthstone expansion Descent of Dragons and a free standalone auto-battler experience — Hearthstone: Battlegrounds — during the quarter. This is expected to have boosted Hearthstone’s user growth in the to be reported quarter.

Additionally, Call of Duty: Modern Warfare was launched during the quarter to huge commercial and critical success. Per Activision, the game topped more than $600 million in sales within the first three days of its release. Moreover, the game has more total players and total hours played than any Call of Duty opening release in the last six years.

Call of Duty Mobile’s launch during the quarter also received positive response from users, with the game surpassing 35 million downloads within four days of release.

Activision also launched the Season One Battle Pass for Call of Duty: Modern Warfare along with other free content, which is expected to have driven franchise user growth during the quarter.

Further, World of Warcraft Classic drove record subscription growth during the third quarter and this trend is expected to have continued in the to-be-reported quarter.

Another division, King, continued to deliver innovative features across its portfolio that is likely to have boosted user engagement in the fourth quarter.

Moreover, the launch of Overwatch Legendary Edition for the Nintendo’s NTDOY Switch is expected to have contributed to fourth-quarter top line.
However, intensifying competition in the video game space from the likes of Electronic Arts (EA - Free Report) , Take-Two Interactive TTWO and Zynga is likely to have made a negative impact on fourth-quarter revenues.

Additionally, higher operating expenses, particularly selling & marketing, are likely to have kept margins under pressure.

Zacks Rank

Activision Blizzard currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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