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Activision (ATVI) to Report Q1 Earnings: What's in Store?
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Activision Blizzard is set to report first-quarter 2020 results on May 5.
For the to-be-reported quarter, the company expects non-GAAP revenues of $1.64 billion and earnings of 66 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $1.31 billion, which indicates an increase of 4.1% from the year-ago quarter’s reported figure.
Moreover, the consensus mark for first-quarter earnings has remained steady at 38 cents per share in the past 30 days. The projected figure suggests an increase of 52% from the year-ago quarter’s reported figure.
Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 25.1%.
Let’s see how things have shaped up prior to this announcement.
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 first quarter.
The company expects net bookings of $1.28 billion for first-quarter 2020.
Notably, Blizzard division released its latest Hearthstone expansion Descent of Dragons and a solo adventure battler experience — Galakrond’s Awakening — during the quarter. This is expected to have boosted Hearthstone’s user growth in the to-be-reported quarter.
Additionally, Activision released free-to-play and free-for-everyone Call of Duty: Warzone available worldwide on PS4, Xbox One, and PC during the quarter, which is expected to have boosted user addition amid coronavirus-led lockdown.
Call of Duty: Modern Warfare Season Two content was launched during the quarter, followed by Call of Duty: Modern Warfare 2 Campaign Remastered on PS 4, both of which are expected to have driven franchise user growth during the quarter.
Moreover, Blizzard division released its new real-time strategy game Warcraft III: Reforged, combining the original Warcraft III: Reign of Chaos and its award-winning expansion, The Frozen Throne, which is expected to have contributed to the company’s top line in the to-be-reported quarter.
Moreover, the launch of Overwatch League’s first-of-its-kind authentic player kit for e-sports in collaboration with designer Jeff Staple, wherein each of the 20 Overwatch League teams competed with their own unique home and away kits during the 2020 season, launched on Feb 8, is expected to have boosted active user engagement during coronavirus-led quarantine and contributed to the first-quarter top line.
Another division, King continued to deliver innovative features across its portfolio that is likely to have boosted user engagement in the first quarter.
However, intensifying competition in the video game space from the likes of Electronic Arts, Take-Two Interactive, and Zynga is likely to have made a negative impact on first-quarter revenues.
Additionally, higher operating expenses, particularly selling & marketing, are likely to have kept margins under pressure.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Activision Blizzard has an Earnings ESP of -0.52% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Shopify Inc. (SHOP - Free Report) has an Earnings ESP of +5.85% and a Zacks Rank #2.
Mattel, Inc. (MAT - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Shutterstock
Activision (ATVI) to Report Q1 Earnings: What's in Store?
Activision Blizzard is set to report first-quarter 2020 results on May 5.
For the to-be-reported quarter, the company expects non-GAAP revenues of $1.64 billion and earnings of 66 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $1.31 billion, which indicates an increase of 4.1% from the year-ago quarter’s reported figure.
Moreover, the consensus mark for first-quarter earnings has remained steady at 38 cents per share in the past 30 days. The projected figure suggests an increase of 52% from the year-ago quarter’s reported figure.
Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 25.1%.
Let’s see how things have shaped up prior to this announcement.
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 first quarter.
The company expects net bookings of $1.28 billion for first-quarter 2020.
Activision Blizzard, Inc Price and EPS Surprise
Activision Blizzard, Inc price-eps-surprise | Activision Blizzard, Inc Quote
Notably, Blizzard division released its latest Hearthstone expansion Descent of Dragons and a solo adventure battler experience — Galakrond’s Awakening — during the quarter. This is expected to have boosted Hearthstone’s user growth in the to-be-reported quarter.
Additionally, Activision released free-to-play and free-for-everyone Call of Duty: Warzone available worldwide on PS4, Xbox One, and PC during the quarter, which is expected to have boosted user addition amid coronavirus-led lockdown.
Call of Duty: Modern Warfare Season Two content was launched during the quarter, followed by Call of Duty: Modern Warfare 2 Campaign Remastered on PS 4, both of which are expected to have driven franchise user growth during the quarter.
Moreover, Blizzard division released its new real-time strategy game Warcraft III: Reforged, combining the original Warcraft III: Reign of Chaos and its award-winning expansion, The Frozen Throne, which is expected to have contributed to the company’s top line in the to-be-reported quarter.
Moreover, the launch of Overwatch League’s first-of-its-kind authentic player kit for e-sports in collaboration with designer Jeff Staple, wherein each of the 20 Overwatch League teams competed with their own unique home and away kits during the 2020 season, launched on Feb 8, is expected to have boosted active user engagement during coronavirus-led quarantine and contributed to the first-quarter top line.
Another division, King continued to deliver innovative features across its portfolio that is likely to have boosted user engagement in the first quarter.
However, intensifying competition in the video game space from the likes of Electronic Arts, Take-Two Interactive, and Zynga is likely to have made a negative impact on first-quarter revenues.
Additionally, higher operating expenses, particularly selling & marketing, are likely to have kept margins under pressure.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Activision Blizzard has an Earnings ESP of -0.52% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Etsy, Inc. (ETSY - Free Report) has an Earnings ESP of +8.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify Inc. (SHOP - Free Report) has an Earnings ESP of +5.85% and a Zacks Rank #2.
Mattel, Inc. (MAT - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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