Activision Blizzard Earnings: What to Watch

By Sarah E. Needleman Features Dow Jones Newswires

Activision Blizzard Inc. reports first-quarter results after the close of trading Thursday. Shares of the Call of Duty publisher are up nearly 44% since the start of the year, driven by optimism over the rising tide of digital sales in the industry. Here are the key points to watch:

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EARNINGS FORECAST: Activision is expected to report a profit of 21 cents a share, according to S&P Global Market Intelligence, down from 23 cents a year earlier. The numbers exclude certain items Wall Street and the company don't consider a regular part of doing business. A year ago, Activision reported per-share net of 45 cents.

REVENUE FORECAST: Adjusted revenue is expected climb 20% to $1.09 billion, according to S&P Global Market Intelligence, from $908 million a year earlier. Under U.S. accounting rules, videogame companies defer some revenue from certain online-enabled games. Total revenue a year ago was $1.46 billion.

WHAT TO WATCH:

-- EXTRA! EXTRA!: With no blockbuster releases in the quarter, as was the case a year ago, a key metric will be revenue from extra content delivered for older games. "Overwatch," a team-based shooter for consoles and PCs, was likely the quarter's biggest contributor, analysts say. Activision said the game, which launched last May, saw its player base top 30 million. Analysts also peg "Hearthstone" as a top driver of in-game spending. Activision on Monday said the three-year-old strategy game for PCs and mobile devices has more than 70 million players.

-- QUIETER 'CALL OF DUTY': Call of Duty is Activision's biggest franchise, yet one game not expected to show hefty post-launch sales is last year's "Infinite Warfare." The shooter game wasn't as popular as previous installments, Activision has said, as some fans were turned off by its change of setting to outer space. Analysts are upbeat about the next chapter in the venerable series, which will take place during World War II, just like original game from 2003. A reveal trailer released last week got more than 14 millions views on YouTube, with about 900,000 thumbs-up ratings and 80,000 thumbs down -- a stark reversal from last year's reaction.

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-- FULL KING QUARTER: Activision completed its $5.9 billion acquisition of King in late February 2016, so last year the "Candy Crush Saga" creator only contributed to five weeks of its new owner's first quarter. This year, King contributed to Activision's entire first quarter. The company was the No. 3 U.S. mobile-app publisher by revenue in the January-through-March period, according to analytics firm Sensor Tower Inc. (Supercell Oy, the company behind "Clash of Clans," was No. 2 and Machine Zone Inc., which makes "Game of War: Fire Age," was No. 1.), Analysts will be listening on the earnings call for an update on King's new advertising strategy and more details about the new Call of Duty mobile game it is making.

-- PLANNING FOR FALL: No major releases are on deck for the current quarter, making it an eventual tough comparison to last year, when "Overwatch" launched. Activision's next big game is expected to be a sequel to the science-fiction shooter "Destiny" slated for release Sept. 8. Analysts will be listening for guidance on how results will stack up. Activision also this fall is expected to launch a league of professional "Overwatch" teams, which Morgan Stanley estimates could yield $70 million in 2017 revenue. Analysts will be looking for insight into the initiative's progress, as the company hasn't yet reported the sale of any city-based teams.

(END) Dow Jones Newswires

May 04, 2017 08:14 ET (12:14 GMT)