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Activision (ATVI) to Report Q2 Earnings: What's in Store?

Activision Blizzard ATVI is set to report second-quarter 2021 results on Aug 3.

For the to-be-reported quarter, the company expects non-GAAP revenues of $2.13 billion and earnings of 91 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $1.89 billion, indicating a decrease of 9.08% from the year-ago quarter’s reported figure.

The consensus mark for second-quarter earnings has moved up 1.3% to 76 cents per share in the past 30 days.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average being 19.4%.
 
Let’s see how things have shaped up prior to this announcement.

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc Price and EPS Surprise

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

Factors to Consider

Activision is expected to have benefited from the popularity of its franchises, including Call of Duty (COD), Overwatch, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga, in the to-be-reported quarter.

However, lack of major game releases and updates in the to-be-reported quarter is expected to have hurt active user growth, thereby affecting the top line in the to-be reported quarter. Moreover, increasing expenses toward game development and marketing are expected to have kept margins under pressure.

Nonetheless, an expanding user base of COD, Hearthstone, World of Warcraft and King’s franchises is expected to have boosted in-games spending, thereby driving net bookings and the top line of this Zacks Rank #3 (Hold) company in the to-be reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Activision expects net bookings of $1.85 billion for the second quarter of 2021. The growing popularity of Call of Duty: Black Ops Cold War, a sequel to the original Call of Duty: Black Ops game, is expected to have attracted gamers in the to-be-reported quarter.

In the second quarter, the company launched the latest expansion to World of Warcraft named World of Warcraft Expansion: Burning Crusade Classic. Players already in the game can choose to move their characters to the Burning Crusade Classic or continue playing the Wow Classic original content in the Classic Era realms with an added option to play in both eras using the optional character cloning service.

Moreover, steady video game spending in the quarter is expected to have benefited Activision. Per Venturebeat, which cited NPD data, despite a slight dip of 2% in U.S. video game sales in April, consumer spend on video games increased 3% and 5% year over year in May and June, respectively.

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

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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