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

Activision Blizzard ATVI is set to report its third-quarter 2022 results on Nov 7.

The Zacks Consensus Estimate for revenues is pegged at $1.70 billion, indicating a decline of 9.4% from the year-ago quarter’s reported figure.

The consensus mark for third-quarter earnings has declined 1.92% to 51 cents per share in the past 30 days.

The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and missed in the remaining two. Activision has a trailing four-quarter negative earnings surprise of 10.97% on average.

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

Factors to Consider

Activision’s third-quarter 2022 performance is expected to have benefited from strengthen its game portfolio of popular franchises including Call of Duty, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga in the to-be-reported quarter. The franchises have seen new releases and expansion packs, which is expected to have added to the company’s top line.

New releases and expansion packs in the to-be reported quarter including World of Warcraft: Wrath of Lich King are likely to have aided active user growth in the to-be reported quarter.

This Zacks Rank #3 (Hold) company also expanded its digital card game Hearthstone with the launch of Murder at Castle Nathria, which contained drama and mystery, and new types of cards. This seemed to have gained traction with users as it brought a new experience of style and energy to the whimsical world of Hearthstone. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

However, lack of major gaming releases and pipelines are expected to hurt revenues in the to-be reported quarter.

The decline in video game spending due to the resumption of work from office and outdoor entertainment in the quarter is expected to have affected Activision’s top-line growth. Per VentureBeat, which cited the NPD data, consumer spending on video games was down 9%, 5% and 4% year over year in July, August and September, respectively.

Intensifying competition from game publishers like Take-Two Interactive TTWO and Electronic Arts EA is also expected to have hurt Activision’s top line in the third quarter.

In the third quarter, Take-Two launched Rollerdrome, a third-person action shooter. The company’s 2K and Visual Concepts also launched NBA 2K23, the next offering from its industry-leading NBA series.

Electronic Arts launched Madden NFL 23, which unveiled brand new game-play features. It also announced the formation of a brand new studio known as Ridgeline Games, which will be focused on creating a new narrative campaign set in the Battlefield universe, a component that has been lacking in recent entries.

 

Activision Blizzard, Inc Price and EPS Surprise

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

Major Developments in 3Q 2022

In a letter on Sep 1, the CEO of Activision confirmed that its acquisition deal with Microsoft MSFT had received approvals from a couple of countries and regulators and had entered the second phase of review within the UK as well. The Competition and Markets Authority in the United Kingdom have shown concerns that the deal would hurt rivals by restricting their access to Activision Blizzard games.

On Jul 1, Activision acquired the Boston, MA-based studio, Proletariat to better serve players in the online role-playing game, World of Warcraft.

On Jul 11 Activision also launched the first-of-its-kind talent training program called Level Up U, which prepares non-industry professionals and develops industry professionals to become full-time game developers. This has allowed Activision to integrate such trained individuals as employees into the company, thereby adding to the quality of its human resource.


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