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Activision (ATVI) to Report Q4 Earnings: What's in Store?

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Zacks Equity Research
·3 min read
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Activision Blizzard ATVI is set to report fourth-quarter 2020 results on Feb 4.

For the to-be-reported quarter, the company expects non-GAAP revenues of $2 billion and earnings of 63 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $2.82 billion, indicating an increase of 4.3% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for fourth-quarter earnings has stayed at $1.18 per share in the past 30 days. The projected figure suggests a decline of 4.1% from the year-ago quarter’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 26.2%.

Electronic Arts Inc. Price and EPS Surprise

Electronic Arts Inc. Price and EPS Surprise
Electronic Arts Inc. Price and EPS Surprise

Electronic Arts Inc. price-eps-surprise | Electronic Arts Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

Activision’s popular franchises, including Call of Duty (COD), Overwatch, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga are expected to have attracted coronavirus-induced home-confined gamers in the to-be-reported quarter.

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

Activision expects net bookings of $2.73 billion for the fourth quarter.

In Dec 2020, Activision revealed that the COD franchise’s net bookings have surpassed $3 billion over the past year. Call of Duty: Mobile, developed in collaboration with Tencent TCEHY, has played an important part in driving user base. Markedly, since its launch in October 2019, the title has been the highest-grossing new game in app stores in the United States and has generated over $480 million in player spending during its first year.

Further, Blizzard Entertainment’s World of Warcraft: Shadowlands become the fastest-selling PC game. In mid-November, Activision announced the availability of Call of Duty: Black Ops Cold War, a sequel to the original Call of Duty: Black Ops game.

Moreover, strong video game spending in the quarter bodes well for Activision. Per Venturebeat, which cited NPD data, the U.S. video game sales in October, November and December increased 14%, 35% and 25%, respectively.

However, Activision faces stiffcompetition from the likes of Take Two Interactive Software TTWO, Nintendo 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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