On August 3, video game company Activision Blizzard (NASDAQ:$ATVI) will post second-quarter results. In the last quarter, the Santa Monica-based company brought in a positive earnings surprise of 68.75%. Impressively, in each of the last four quarters, Activision Blizzard delivered positive earnings surprises, with an average beat of 28.56%.
Further, in the last reported quarter, Activision Blizzard’s revenues – which include deferrals – came in at $1.196 billion. That said, in regards to a year-over-year basis, the company’s revenues – including deferrals – were down roughly 18%.
Moving forward, we can see that Activision Blizzard shares have registered impressive growth in the past year. The ATVI stock brought in a return of 54.2%, compared with the sector’s gain of 38.9%.
For Q2, the company forecasts GAAP revenues of $1.425 billion and EPS of $0.15. In terms of a non-GAAP basis, it is likely that revenues and earnings will come in at around $1.425 billion and $0.38 per share. Deferral revenues, on the other hand, are forecast to be around negative $225 million.
What Should You Consider?
Many speculate that an increase in digital revenues and continued strength – in titles like Call of Duty – should help to cushion earnings in Q2. Last quarter, Activision Blizzard brought out other in-game content for World of Warcraft, Hearthstone and the Overwatch Uprising event. With these games, and the launch of Heroes of the Storm 2.0, analysts believe Thursday’s results will be affected positively. Moreover, the King Digital acquisition is thought to continue increasing growth.
By now, most people are aware of the fact that Activision Blizzard is working towards the goal of becoming a media entertainment behemoth. However, higher adoption of free games and competition from other gaming companies will continue to act as near-term headwinds.
Overall, anyone interested in application software should keep an eye out for today’s results.
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