Activision Blizzard posts solid results, looks to more content ahead
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Activision Blizzard (NASDAQ:ATVI) - headed through a lengthy process to be acquired by Microsoft (MSFT) - topped bookings expectations in the second quarter where it saw broad quarter-over-quarter gains in operating income.
GAAP revenues and earnings per share fell, and given some tough comparisons the company expects they will keep lagging 2021 totals for the rest of the year.
But operating income rose sequentially for each of its Activision, Blizzard and King segments, and the company expects a similar increase "modestly" in Q3 before returning to year-over-year growth in the fourth quarter.
CEO Bobby Kotick focused on functional moves: âOur acquisitions this past quarter of Proletariat and Peltarion further boost our development resources, including our artificial intelligence and machine learning capabilities. Even in a challenging economic environment, with so many companies announcing hiring freezes and layoffs, our development headcount grew 25% year-over-year as of the end of the second quarter."
The stock is barely reacting, -0.4% (and has been largely rangebound most of the year since the announcement of Microsoft's acquisition deal).
Along with the bookings beat, adjusted earnings were in line with expectations, Citi said, and it expected the stock wouldn't move much.
Benchmark noted the solid results and looked forward: There's a "significant" second-half game pipeline that should serve as catalysts for growth in the fiscal fourth quarter and into fiscal 2023, the firm says. It has a Buy rating and a $100 price target, implying 25% upside.
There's new content coming in the areas of Call of Duty, World of Warcraft and Overwatch, Kotick noted, and 2023 will bring Diablo IV.
MoffettNathanson recently upgraded Activision Blizzard (ATVI), noting it trading at about a 20% discount to the Microsoft offer.