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Video game publisher Activision Blizzard reported better than expected second quarter earnings and guided its full year 2020 guidance. $ATVI saw growth from World of Warcraft Classic and core games include Overwatch, Call of Duty, and Candy Crush mobile games


Activision Blizzard NASDAQ: ATVI · Reported Earnings After Close Tuesday

$0.75 Beat $0.59 EPS and $1.93 Billion Beat $1.69 Billion forecast in revenue 

Earnings

Activision Blizzard for the quarter ended June 30, 2020 earned $0.75 per share versus $0.59 expected on revenue of $1.93 billion versus $1.69 billion expected as compiled by Bloomberg. Gaming has seen a massive boost from the stay at home orders since Covid19 in engagement and revenue.

Activision Blizzard, Inc. NASDAQ: ATVI

Market Reaction After hours 85.00 −1.45 (-1.68%)

Highlights

  • Console sales revenue was highest for the company at $655 million for the quarter
  • Mobile revenue, which came in at $622 million.
  • PC revenue was $482 million,
  • Revenue from the firm’s distribution business and eSports leagues topping out at $173 million.
  • Blizzard’s “World of Warcraft,” which is now nearly 16 years old, saw engagement and reach increase sequentially for the quarter
  •  “Overwatch”, which launched in 2016, saw a year-over-year increase in engagement.
  • Activision Blizzard’s King mobile business, which saw year-over-year increases in monthly active users for its “Candy Crush” franchise and, surprisingly given the current economic climate, a year-over-year increase in advertising net bookings.
  • The company, however, noted a slowdown in engagement for its mobile games in the latter half of the quarter.

Standouts for Activision Blizzard included its wildly popular “Call of Duty: Warzone,” a free-to-play game available on the PlayStation 4, Xbox One, and PC; “World of Warcraft,” a massively-multiplayer role playing game for PC; and the smartphone game “Candy Crush.” - Bloomberg

Take-Two Interactive (TTWO) reported its earnings on Monday, saw a 54% increase in revenue to a record $831.3 million for fiscal Q1 2020 period.  Microsoft (MSFT) reported that its Xbox business saw a massive 64% year-over-year jump in revenue, with Xbox hardware revenue up 49%. Electronic Arts reported last week with 78% increase in bookings and huge increases in both FIFA and Madden game engagement.

ATVI Earnings Q2 20

Outlook

Activision Blizzard significantly revised its forward-looking upwards, from $6.8 billion to $7.3 billion. Gaming has seen a massive boost in engagement and revenue due to lock-down orders put in place as a result of the ongoing coronavirus pandemic.

Gaming has many components, investors and gamemakers alike realize its games aren't always winning this battle, hence the stock price volatity in this sector. The earnings call focusrf on the launch and plans of Call of Duty: Black Ops 4 and an update on the health of the gaming industry. Fortnite has shaken the whole industry up with it's off the charts success. Given you an only play so many games the sucking up of gaming hours by Fortnite has affected all the competing gaming companies. When you are playing Fortnite you are not playing Activision Blizzard titles like Call of Duty and World of Warcraft or mobile games from King. The question is how much, and for how long? 

Activision Blizzard launched a new mobile game, Diablo Immortal at BlizzCon 2018 that was not popular with gaming fans. Diablo Immortal is a brand new Diablo title, a franchise traditionally beloved by diehard PC gamers. The new title is an online mobile game that attempts to bring the Diablo universe onto your smartphone. Mobile games are the most profitable segments for ATVI, so the move is rational but not one that resonates well with the hard car gamers.

Activision Diablo Immortal

Bobby Kotick the CEO of Activision said last year, “We believe we’re seeing some impact across certain franchises, primarily on engagement, including players that seem to be splitting some of their time between our games and trying something new.”

There will be a percentage of new gamers because of Fortnite but how many existing gamers from that top 10 went to Fortnite?

Source: ATVI, TradersCommunity, alphastreet, Bloomberg

From The TradersCommunity Research Desk

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