Activision Blizzard, Inc. (NASDAQ: ATVI), an American video game holding company, stock fell over 3.5% on August 3rd, 2018 (as of 12:29 PM GMT-4; Source: google finance) as they issued weaker-than-expected third-quarter outlook. For the third quarter, analysts expect adjusted earnings of 66 cents a share on net bookings of $1.88 billion. The company expects third-quarter adjusted earnings of 37 cents a share on net bookings of $1.61 billion. The lower current-quarter forecast was primarily because the year-ago period was boosted by the success of “Destiny 2”. The game brought in around $450 million a year ago. Further, the company expects 2018 adjusted profit of $2.58 per share and revenue of $7.48 billion, while the Street was expecting a profit of $2.60 per share and revenue of $7.52 billion.
On the other hand, the company has reported second-quarter net income of $402 million, compared with $243 million, in the year-ago period. Further, the growth in the second quarter is driven by the massive success of games from the “battle royale” genre such as “Fortnite” and “PlayerUnknown’s Battlegrounds”. ATVI is also tapping into the rising popularity of e-sports through its Overwatch league and recently signed a multi-year agreement with ESPN and Disney XD for live coverage of the league.
ATVI in the second quarter of FY 18 has reported the adjusted earnings per share of 62 cents, beating the analysts’ estimates for the adjusted earnings per share of 35 cents. The company had reported 2.3 percent fall in the adjusted revenue to $1.39 billion in the second quarter of FY 18, beating the analysts’ estimates for revenue of $1.38 billion. For the second quarter, ATVI’s net bookings fell to $1.38 billion, as compared with $1.42 billion for the second quarter of 2017. Net bookings from digital channels were $1.20 billion, as compared with $1.28 billion for the second quarter of 2017.
Moreover, ATVI has planned to release “Call of Duty: Black Ops 4” as well as “World of Warcraft: Battle for Azeroth” and “Destiny 2: Forsaken” in the second half of the year. As per ATVI, the pre-orders are strong. Meanwhile, Rivals Electronic Arts (EA.O) and Take Two Interactive Software (TTWO.O) have also lined up a clutch of games such as “FIFA 19”, “NBA 2K 19”, “Red Dead Redemption 2” and “Battlefield V” to be released in the second half of 2018.
ATVI has paid a cash dividend of $0.34 per common share, which is up 13% year-over-year. The cash payments had totaled $259 million. The Board of Directors has authorized a debt paydown of up to $1.8 billion during 2018, and the company expects to utilize the full authorization in the third quarter.