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Category: Stock Market and Activision Blizzard
Date: 7 February 2020 Stock Price: $60.26 We take a look at the 4th quarter earnings report of their 2019 fiscal year interactive entertainment company Activision Blizzard, owners of Call of Duty, Candy Crush and World of Warcraft
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About Activision Blizzard Inc.
Activision Blizzard, Inc., a member of the Fortune 500 and S&P 500, is a leading standalone interactive entertainment company. We delight hundreds of millions of monthly active users around the world through franchises including Activision's Call of Duty®, Spyro™, and Crash™, Blizzard Entertainment's World of Warcraft®, Overwatch®, Hearthstone®, Diablo®, StarCraft®, and Heroes of the Storm®, and King's Candy Crush™, Bubble Witch™, and Farm Heroes™. The company is one of the Fortune "100 Best Companies To Work For®." Headquartered in Santa Monica, California, Activision Blizzard has operations throughout the world. More information about Activision Blizzard and its products can be found on the company's
Overview of Activision Blizzard's 4th quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
Segmental Revenues for Activision Blizzard Inc. for 4th quarter 2019
Segmental Operating Income for Activision Blizzard Inc. for 4th quarter 2019
Operating margins for the various segments of Activision Blizzard for 4th quarter 2019
- Total net revenues: $1.986 billion (down from $2.381 billion for the same quarter of the previous year)
- Total net revenues decreased by -16.5% over the last 12 months
- Total costs and expenses: $1.532 billion (down from $1.687 billion for the same quarter of the previous year)
- Total costs and expenses decreased by -9.2% over the last 12 months
- Net income: $525 million (down from $685 million for the same quarter of the previous year)
- Weighted average common shares outstanding 768 million (up from 763 million shares for the same quarter of the previous year)
- Diluted earnings per common share $0.68 (down from $0.89 for the same quarter of the previous year)
- PE ratio of Activision Blizzard: 30.9
- Cash and cash equivalents $5.794 billion
- Cash and cash equivalents per share: $7.54
- Cash and cash equivalents makes up 12.5% of Activision Blizzards current market capital
- Cash and cash equivalents makes up 29.1% of Activision Blizzards total assets
- Accounts receivable, net: $848 million
- Accounts receivable makes up 4.2% of the group's total assets
- Goodwill in Activision Blizzard: $9.764 billion
- Goodwill per share: $12.71
- Goodwill makes up 49.2% of Activision Blizzard's total assets
- Total shareholders’ equity in Activision Blizzard: $12.805 billion
- Total shareholders equity per share: $16.67
- Activision Blizzard is trading at 3.61 times its stockholders equity which is within the expected range of between 2 and 4 time that most firms tend to trade at.
Segmental Revenues for Activision Blizzard Inc. for 4th quarter 2019
- Activision: $1.426 billion
- Blizzard: $595 million
- King: $503 million
Segmental Operating Income for Activision Blizzard Inc. for 4th quarter 2019
- Activision: $696 million
- Blizzard: $260 million
- King: $197 million
Operating margins for the various segments of Activision Blizzard for 4th quarter 2019
- Activision: 48.8%
- Blizzard: 43.6%
- King: 39.1%
Activision Blizzard's management commentary on their 4th quarter 2019 earnings report
SANTA MONICA, Calif.--(BUSINESS WIRE)--Feb. 6, 2020-- Activision Blizzard, Inc. (Nasdaq: ATVI) today announced fourth-quarter and full year 2019 results.
“Our fourth quarter results exceeded our prior outlook for both revenue and earnings per share,” said Bobby Kotick, Chief Executive Officer of Activision Blizzard. “Our recent Call of Duty® success illustrates the scale of our growth potential, as we expanded the community to more players in more countries on more platforms than ever before. With our strong content pipeline across our franchises and momentum in mobile, esports, and advertising, we look forward to continuing to delight our players, fans and stakeholders in 2020 and beyond.”
“Our fourth quarter results exceeded our prior outlook for both revenue and earnings per share,” said Bobby Kotick, Chief Executive Officer of Activision Blizzard. “Our recent Call of Duty® success illustrates the scale of our growth potential, as we expanded the community to more players in more countries on more platforms than ever before. With our strong content pipeline across our franchises and momentum in mobile, esports, and advertising, we look forward to continuing to delight our players, fans and stakeholders in 2020 and beyond.”
Activision
The image below shows the company outlook for Activision for their first quarter 2020 and full fiscal 2020
- Activision had 128 million MAUsD.
- Call of Duty® Mobile installs exceeded 150 million, with the game reaching the top of the download charts in more than 150 countries and regions, and ending the fourth quarter in the top-15 grossing games in U.S. app stores.2
- Call of Duty®: Modern Warfare®unit sell-through increased by a double-digit percentage versus Call of Duty®: Black Ops 4, with growth across both PC and console. PC sell-through on Battle.net grew 50% year-over-year. Modern Warfare saw strong growth in full-game downloads with console digital mix at nearly 50%. In-game net bookingsC grew by a double-digit percentage versus Black Ops 4.
- In 2019, Call of Duty again generated more upfront console sales than any other franchise worldwide, a feat accomplished for 10 of the last 11 years.1
- In January, the Call of Duty LeagueTM debuted with 12 city-based teams competing at its launch weekend in Minnesota. The league launched with deeply experienced team owners, high profile sponsors, and streaming distribution through YouTube, Activision Blizzard’s new broadcasting partner for esports leagues and events.
- Blizzard had 32 million MAUsD.
- World of Warcraft® exited 2019 with an active player community3 more than twice the size of its Q2-ending level.
- Hearthstone® launched the Descent of DragonsTM expansion and rolled out the new Battlegrounds game mode in the fourth quarter, which drove sequential growth in engagement. Net bookingsB also grew sequentially for the franchise.
- Overwatch®launched on the Nintendo Switch, further expanding a community that has surpassed 50 million players globally since launch.
- In February, the Overwatch LeagueTM will return with 20 established teams from around the world competing in a homestand format with matches broadcast live on YouTube.
- King had 249 million MAUsD.
- Candy Crush SagaTM mobile reach grew year-over-year and it was the top-grossing title in the U.S. app stores.4
- Candy CrushTM was once again the top-grossing franchise in the U.S. mobile app stores in the fourth quarter and 2019.4
- Advertising net bookingsB grew over 80% year-over-year in the fourth quarter, and exceeded $150 million dollars in 2019.
The image below shows the company outlook for Activision for their first quarter 2020 and full fiscal 2020
Activision Blizzard's (NASDAQ: ATVI) stock price history
The image below, obtained from Google shows the stock price history of Activision Blizzard over the last 5 years. And while its been a mostly upward trend in the stock price of the group there was a significant decline towards the end of 2018, largely brought on by China delaying the release of new games in their markets. 5 years ago the stock of Activision Blizzard was trading at around $23 a stock and its currently trading at $60.26. That's a very healthy return of 162% provided to Activision Blizzard stockholders over the last 5 years.
The stock of Activision Blizzard is trading at closer to its 52 week high of $61.90 than it is to its 52 week low of $39.85 which to us is an indication that the short term sentiment and momentum of Activision Blizzard's stock is positive at this point in time
The stock of Activision Blizzard is trading at closer to its 52 week high of $61.90 than it is to its 52 week low of $39.85 which to us is an indication that the short term sentiment and momentum of Activision Blizzard's stock is positive at this point in time
Recent coverage of Activision Blizzard
The extract below covers the latest earnings report of Activision Blizzard as obtained from TheStreet.com
Shares of video game maker Activision Blizzard (ATVI) - Get Report climbed 2.5% after hours after the company reported fourth quarter earnings and revenue ahead of estimates, as well as healthy guidance. The company reported earnings of $1.23 per share on revenue of $2.71 billion. Analysts were expecting Activision to report earnings of $1.19 per share on revenue of $2.67 billion.
The company’s Call of Duty first-person shooting game was once again the crown jewel of the holiday season, generating more upfront console sales than any other franchise worldwide. That is the tenth time in the last 11 years Call of Duty achieved that status. “Our fourth quarter results exceeded our prior outlook for both revenue and earnings per share,” said CEO Bobby Kotick. “Our recent Call of Duty success illustrates the scale of our growth potential, as we expanded the community to more players in more countries on more platforms than ever before.”
For the first quarter, the company said it expects to earn 66 cents per share on revenue of $1.64 billion. Analysts are expecting the company to report earnings 39 cents per share on revenue of $1.35 billion.
Read the full article here
Shares of video game maker Activision Blizzard (ATVI) - Get Report climbed 2.5% after hours after the company reported fourth quarter earnings and revenue ahead of estimates, as well as healthy guidance. The company reported earnings of $1.23 per share on revenue of $2.71 billion. Analysts were expecting Activision to report earnings of $1.19 per share on revenue of $2.67 billion.
The company’s Call of Duty first-person shooting game was once again the crown jewel of the holiday season, generating more upfront console sales than any other franchise worldwide. That is the tenth time in the last 11 years Call of Duty achieved that status. “Our fourth quarter results exceeded our prior outlook for both revenue and earnings per share,” said CEO Bobby Kotick. “Our recent Call of Duty success illustrates the scale of our growth potential, as we expanded the community to more players in more countries on more platforms than ever before.”
For the first quarter, the company said it expects to earn 66 cents per share on revenue of $1.64 billion. Analysts are expecting the company to report earnings 39 cents per share on revenue of $1.35 billion.
Read the full article here
Activision Blizzard's (NASDAQ: ATVI) latest stock valuation
Based on Activision Blizzard's latest earnings report and the fiscal guidance what do we value the group's stock at? Based on reported earnings and the fiscal guidance provided our valuation models provides a target (full value) price for Activision Blizzard of $49.70 (up slightly from our 3rd quarter 2019 earnings report valuation of Activision Blizzard). We therefore believe the stock of Activision Blizzard is overvalued.
We usually recommend that long term fundamental or value investors enter a stock at least 10% below our target (full value) price which in this case is $49.70. We therefore believe a good entry point into Activision Blizzard stock is at $44.80 or below. We expect the stock of Activision to pull back from its current levels to levels closer to our target price (full value price) in coming weeks and months.
We usually recommend that long term fundamental or value investors enter a stock at least 10% below our target (full value) price which in this case is $49.70. We therefore believe a good entry point into Activision Blizzard stock is at $44.80 or below. We expect the stock of Activision to pull back from its current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release of Activision Blizzard
It is expected that Activision Blizzard's 1st quarter 2020 earnings report will be released in early May 2020