Activision (ATVI) to Report Q3 Earnings: What's in Store?

Zacks Equity Research
·4-min read

Activision Blizzard ATVI is set to report third-quarter 2020 results on Oct 29.

For the to-be-reported quarter, the company expects non-GAAP revenues of $1.80 billion and earnings of 75 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $1.70 billion, indicating an increase of 39.7% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for third-quarter earnings has stayed at 64 cents per share in the past 30 days. The projected figure suggests a surge of 100% from the year-ago quarter’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 30.5%.
 

Activision Blizzard, Inc Price and EPS Surprise

 

Activision Blizzard, Inc Price and EPS Surprise
Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc price-eps-surprise | Activision Blizzard, Inc Quote

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

Activision’s popular franchises, including Call of Duty, Overwatch, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga are expected to have attracted coronavirus-induced home-confined gamers in the to-be-reported quarter.

Higher in-game spending is expected to have driven both net bookings and the top line of this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Activision expects net bookings of $1.65 billion for the third quarter.

Moreover, strong video game spending in the quarter bodes well for Activision. Per Venturebeat, which cited NPD data, the U.S. video game sales in July, August and September increased 32%, 37% and 10%, respectively.

Activision’s popular franchises are expected to have significantly benefited from these solid sales. The Call of Duty franchise is one of the company’s major drivers. Call of Duty: Black Ops 4, Call of Duty: Warzone and Call of Duty: Modern Warfare have been huge successes.

Markedly, Call of Duty: Mobile, which has been developed in collaboration with Tencent’s TCEHY Timi Studios, surpassed 250 million downloads, globally, within a span of eight months, surpassing Fortnite from Epic Games and PUBG Mobile from Tencent, per Sensor Tower data.

Additionally, the game witnessed strong sequential growth in engagement and player investment, as well as monthly seasonal-content addition in second-quarter 2020.

Moreover, launched on Mar 10, Call of Duty: Warzone attracted more than 75 million players as of Aug 4. These numbers are likely to have grown further thanks to the coronavirus pandemic that has kept people confined to their homes.

Furthermore, the success of World of Warcraft Classic indicates a strong portfolio.

However, Activision faces stiff competition from the likes of Take Two Interactive Software TTWO, Nintendo and Electronic Arts EA apart from Tencent and Epic Games.

Notably, Take Two’s Red Dead Redemption 2 and Borderlands 3 gained significant popularity. Moreover, Nintendo’s Animal Crossing: New Horizons gained substantial popularity within a short span of time.

Moreover, EA’s Apex Legends, NBA Live 20, Plants vs. Zombies and Star Wars Jedi: Fallen Order were also a huge rage.

Nevertheless, Activision’s strong portfolio of games is expected to have boosted monthly active user base in the to-be-reported quarter.

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