Activision Blizzard misses on earnings, sees user decline in Q4

David Becker/Getty Images Entertainment

Activision Blizzard (NASDAQ:ATVI) is just making penny moves after hours following its fourth-quarter earnings report - a print whose importance has faded a bit in the context of Microsoft's (NASDAQ:MSFT) huge deal to acquire the videogame maker.

It missed consensus, though, with bookings falling 18.4% year-over-year to $2.49 billion - below the low end of analyst estimates - and adjusted EPS fell short as well at $1.25.

Its King mobile unit outperformed expectations with $684 million in bookings. But Activision ($1.16 billion) and Blizzard ($419 million) each disappointed.

Given the Microsoft deal, Activision Blizzard isn't issuing guidance or any earnings presentation, or holding any call.

In-game net bookings declined as well, to $1.24 billion from $1.32 billion.

Users declined, however, to 371 million from last quarter's 390 million (Activision down to 107 million from 119 million; Blizzard down to 24 million from 26 million; and King down to 240 million from 245 million).

“As we look to the future, with Microsoft’s scale and resources, we will be better equipped to grow existing franchises, launch new potential franchises and unlock the rich library of games we have assembled over 40 years," said CEO Bobby Kotick.

In other tidbits, the company noted that Call of Duty net bookings on console and PC declined year-over-year, "reflecting lower premium sales for Call of Duty: Vanguard versus the year-ago title and lower engagement in Call of Duty: Warzone.

Call of Duty: Mobile net bookings grew year-over-year in the fourth quarter, however, driven by continued contribution from the game in China.

Comments

[omdguy]

I didn't read their ER, but the user numbers being lower would make sense since many people take the latter part of December off and are gaming (if they are gamers of course). I know I was online gaming much less I'm Jan than I was in December....

[Et20]

Lower subscriber figures and yet on other articles we have discussions over anti trust.

[Stomp!]

With all the sh!t that was going on at ATVI, and it had been
like this for quite a while, i think that the creativity and enthousiasm
levels of the employees was next to nonexistent .

But with a good "cleanup" and the backing and guidance of MSFT,
things will go from bad to great , it's just a question of time.

[r Negoro]

I tried diablo 2 res, it had a lot of issues bro.
1 glaring issue was the lack of inventory space. Which is totally noob of such a huge company.

[omdguy]

@r Negoro

Sorry, can you elaborate on your poat? Not sure what 'laxk of inventory space' is referring to..

[thatswhatshesaid]

Shouldn’t this be down 25% just Iike Facebook? 🤠

[auto44]

@thatswhatshesaid Not with MSFT offer on the table. When the bed broke.Haha.

[riddix]

Looking forward to Diablo4 and Overwatch 2!

[careful investor 1]

Last year everyone was home hiding. It's unfair to compare earnings.

[ChiefKings]

You have to understand Microsoft is also paying for the IP. Imagine Warcraft tv series, starcraft tv series, and diablo movies etc. This is a solid deal and I don't think MSFT is holding the bag. If you're an ATVI investor you get 3 Billion for a breakup fee. Doesn't sound like a bad deal considering how much ATVI can do with 3 Billion cash.

[ContyC]

@ChiefKings The TV series inspired from Warcraft or Starcraft could be awesome. They could slso resurrect the Warcraft movie with more sequels.

However, I doubt any of this will happen. Blizzard has been neglected at Activision, and I don’t think Microsoft will care more about it.

[Orangejulius]

Definitely weak results with Vanguard being viewed negatively in general. Both EA's Battlefield 2042 and ATVI's CoD Vanguard missed the mark last year.

Besides Diablo 2 Res, there hasn't been a big Blizzard release.

Obviously all that matters now is the acquisition goes through. If not, the 3B breakoff fee makes all this worth it. Either way, Kotick needs to go.

[Soto1]

Not too surprising. Some of their franchises are very stagnant at this point.

[1GMD]

The deal will get done.

[RonAFGreve]

Since the shares are now pegged to 95 for a bit over a year it doesn't matter (my long term options were bust anyway :-( ).

[Eformula]

ya too much competition lol....games are the big money maker but there are so many apps, many competition.

[polymath ryan]

call if duty has been plagued with bugs and cheaters. they need to resolve these issues to bring those gamers back and make everyone happy.

[Stomp!]

@polymath ryan Your right, its ashame COD was a great game
early on, but now with the cheaters and the bugs , i simply stopped
playing and uninstalled from my PC, im playing Destiny 2 and having
a blast !!!

[marcoyolo]

This is get woke go broke mixed with supply chain. This earnings is a statement on Call of Duty Vanguard. It did not drum up the same excitement as prior releases. In addition, supply chain has hindered console sales which has probably cut into new game buyers as well.

[MDavid]

I think most analysts were forecasting some weakness, but none this bad that I can tell.
I know there’s a $3B breakup fee if MSFT bails on the buyout, but does anyone know if they still get the $3B if the FTC shuts the deal down?

[marcoyolo]

@MDavid a weak earnings statement would actually help the deal go through. if a business is softening that would undermine the idea its a monopoly of any kind.

[MDavid]

@marcoyolo I agree. I’m just trying to understand the worst-case scenario, which will help me determine my position size. ATVI getting the $3B if the FTC destroys the deal is a nicer outcome than them getting nothing.

[Bruce Bohannon]

@MDavid Is a $3B question that I can only speculate... Who else would be entitled to it besides ATVI? Conversely, Attorney's are Extremely Competent and they probably covered this completely to save the Money if things outside of either party's Control occurs.

[GR Value]

Their games are so-so, and there's too much competition out there. MSFT will probably be able to utilize and improve them, but still... would probably be bad for consumers to let MSFT acquire anything else at this point. They've been a growing monopoly since the 80s. There has to be a balance between our core interest in the US (exports etc) and also monopolistic behavior.

[RonAFGreve]

@GR Value I don't know, there are so many game studios, if $MSFT raises prices the smaller ones have a higher chance of succeeding and if they lower them it is better for their customers. Either way the consumer wins, capitalism just works.

[Scotts Miracle-Gro Sucks]

time to add while we wait

[Scotts Miracle-Gro Sucks]

cash money!

[Bruce Bohannon]

Nice Balance Sheet.