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With a memorable race dating back five years, it was inevitable that Activision Blizzard (NASDAQ: ATVI) would pause for a breath. During the recent market adjustment, the stock sold its gains of 30% compared to the beginning of this year, leaving it unchanged for 2018. Investors were counting on the recent launch of Call of Duty: Black Ops 4 to revive the rise of society, but users in decline and renewed fears about Epic Games Fortnite the phenomenon seems to be wreaking havoc.
For the third quarter, Activision reported a business turnover of $ 1.51 billion, down 7% over the previous year. Net orders of $ 1.66 billion are analysts' consensus estimates, but exceed management's guidance of $ 1.49 billion. Adjusted earnings per share of $ 0.52 also exceeded expectations of $ 0.50.
"Call of Duty: Black Ops 4: Blackout" from Activision. Image source: Activision.
Stagnant growth
|
Metric |
Q3 2018 |
Q3 2017 |
YOY Change |
|---|---|---|---|
|
Net revenue |
$ 1.51 billion |
$ 1.62 billion |
(7%) |
|
Net reservations |
$ 1.66 billion |
$ 1.9 billion |
(13%) |
|
Operating product |
$ 265 million |
$ 257 million |
3% |
|
Earnings per share |
$ 0.34 |
$ 0.16 |
112% |
Data Source: Third Quarter Financial Report of Activision Blizzard. YOY = from one year to the next.
Activision suffered stable sales down, which frightened investors. Revenue from digital channels was $ 1.28 billion, down 4% from a year ago, while net bookings of digital networks dropped 2% to $ 1.44 billion of dollars. If there was good news, Activision was able to control its costs, which contributed to the end result, spending having decreased by 8% compared to the previous year.
Other business metrics
Activision has boasted of a deep commitment, claiming that players were clocking a record 52 minutes a day in Activision, Blizzard and King matches during the quarter.
Boosting the company's dynamic esport, Activision announced that the Overwatch League had sold the rights of six other teams in September, with buy-ins significantly outpacing those of the initial batch. This brings the total squad to 20 teams for the coming season.
The company had 345 million monthly active users during the quarter, spread across its various segments. King, the home of the very popular Candy Crush Saga series of mobile games, reported 262 million UAM. Blizzard Entertainment, which hosts the World of Warcraft franchise, amounted to 37 million MAU, while the Activision segment, the seat of the Call of Duty franchise, accounted for 46 million UAMs.
It is important to note that, aside from management's statements, this is the third consecutive quarterly loss of MAU, which rose from 385 million euros in the fourth quarter of 2017 to 345 million euros. Euros in the third quarter of 2018, a decrease of 12% compared to the previous year. The fall of users began shortly after the publication of Epic Games, a private company. Fortnite Battle Royale, end of September 2017. The game of survival in the last person has quickly become a global phenomenon. Leaders of all major game publishers have been talking in low voices for months, wondering if the free game could siphon the time and money of players from traditional console titles. While many believe FortniteThe results of Activision and the steady decline of its monthly users will certainly revive the debate.
"Activision Blizzard's third quarter results exceeded our previous outlook, as we continue to entertain a broad audience, engender a deep commitment, and attract significant public investment in our franchises," he said. said Bobby Kotick, president and CEO of Activision Blizzard.
Look to the front
Investors were simply not impressed by Activision's forecast for the upcoming fourth quarter. The company expects a turnover of $ 3.05 billion, up 15% from the previous year, and lower than the consensus estimated by analysts, which was $ 3.06. The earnings estimate was also disappointing, with Activision boasting an adjusted earnings per share of $ 1.06 per share, well below the $ 1.34 expected by analysts.
Investors were seeking assurances that Activision's growth would resume, but no action had taken place and the stock was sold up to 12% on Friday after the report. The combination of interest-free guidelines and the continued decline of MAUs sends some shareholders out. It remains to be seen whether there is a temporary situation or whether Activision has a long term problem to solve. Until investors have been clarified, the company will likely remain under pressure.
Danny Vena holds shares in Activision Blizzard. Motley Fool owns shares and recommends Activision Blizzard. Motley Fool has a disclosure policy.
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