Activision Blizzard Profit, Revenue Metric Jump--Update
August 04 2016 - 6:47PM
Dow Jones News
By Sarah E. Needleman
Activision Blizzard Inc. said a key revenue measure more than
doubled in the latest quarter, with a superhero-themed videogame
driving strong performance in a period when major rivals
stumbled.
Activision Blizzard said revenue adjusted to account for factors
including deferred sales of online services rose to $1.61 billion
in the quarter that ended June 30 from $759 million in the year-ago
period. Wall Street had expected $1.46 billion, according to
Thomson Reuters. The company attributed the rise in part to the
success of "Overwatch," released in late May.
Adjusted per-share profit rose to 54 cents from a profit of 13
cents a year ago. Analysts had expected an adjusted 42 cents a
share.
Activision Blizzard also raised its outlook for the fiscal year.
It now expects revenue of about $6.4 billion and profit of about
$1.83 a share, after adjusting to account for factors including
deferred sales of online services.
The company, which didn't put out a major release a year ago,
benefited from the industry's shift to digital downloads and away
from games printed on disks. Newly acquired King Digital
Entertainment also contributed to adjusted revenue in the quarter,
though the "Candy Crush Saga" developer's monthly active users fell
13% to 409 million from the first quarter, which it blamed on
seasonal trends and launch timing.
Shares of Activision Blizzard, which had gained nearly 60% over
the past year, rose 1.4% in after-hours trading to $41.40.
Activision Blizzard, focused on building its new division
dedicated to so-called e-sports, said viewership of competitions in
the first half of the year involving its popular "Call of Duty"
franchise increased sharply. The company in June began publishing
live e-sports programming on Facebook Inc. through Major League
Gaming, a producer and broadcaster of videogame competitions it
acquired December.
Meanwhile, smaller competitor Take-Two Software Interactive Inc.
said its fiscal-first-quarter revenue adjusted for deferred sales
fell 26% from a year earlier to $272.6 million. Analysts had
expected adjusted revenue of $259.42 million, according to Thomson
Reuters. It also reported an adjusted loss of 34 cents a share,
compared with a profit of 31 cents a year ago. Analysts had
expected an adjusted loss of 30 cents a share.
Take-Two shares, up nearly 30% over the past year through
Thursday's close, rose more than 3% after hours.
Take-Two said it benefited a year ago from the launch of the
personal-computer version of "Grand Theft Auto V," the latest game
in its best-known series. Take-Two also put out a team-based game
in May with a cast of superhero characters, called "Battleborn."
But in an interview, Chief Executive Strauss Zelnick said
"Battleborn" wasn't a big hit. "The performance has been below our
expectations," he said.
Thursday's results come after Electronic Arts Inc. this week
reported a decline in adjusted quarterly revenue and profit.
Videogame companies and many analysts who cover them prefer
adjusted measures, which take into account revenue earned up front
from the sale of online-enabled games sold in a period. U.S.
accounting rules, though, require the companies to defer revenue
from online-enabled games for however long they think players will
use those services -- typically six to nine months. The game
companies are now starting to shift away from reporting the
adjusted figures in response to stricter guidelines issued by
Securities and Exchange Commission over the use of metrics that
don't comply with generally accepted accounting principles, or
GAAP.
On a GAAP basis, Activision Blizzard said net income fell to
$127 million from $212 million a year ago. Revenue rose to $1.57
billion from $1.04 billion -- measures that included sales deferred
from previous periods, and excluded deferred revenue from the
latest quarter.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
August 04, 2016 18:32 ET (22:32 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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