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Activision Blizzard, Inc (ATVI) Down 0.6% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Activision Blizzard, Inc (ATVI). Shares have lost about 0.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Activision Blizzard, Inc due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Activision Q1 Earnings and Revenues Increase Y/Y

Activision Blizzard (ATVI) delivered non-GAAP earnings of $1.09 per share for first-quarter 2023, up 70.3% year over year. Consolidated revenues increased 34.8% year over year to $2.38 billion.

Total revenues increased 25.1% to $1.76 billion after adjusting for revenues from non-reportable segments, the net effect from the recognition of deferred revenues and the elimination of intersegment revenues.

First quarter growth was broad-based, with net bookings increasing year-over-year in Call of Duty, Candy Crush, Warcraft, Overwatch, and Diablo.

The Zacks Consensus Estimate for earnings and revenues was pegged at 58 cents per share and $1.81 billion, respectively.

For the quarter ended Mar 31, 2023, overall Monthly Active Users (MAUs) were 368 million, down 1.1% year over year.

Activision Blizzard’s net bookings jumped 25.3% year over year to $1.85 billion. In-game net bookings were $1.28 billion, up 27.5% year over year.

Activision Blizzard is in the process of being acquired by Microsoft. Microsoft will pay $95.00 per Activision share with the total transaction value being $68.7 billion. The transaction, expected to close in Microsoft’s fiscal year ending Jun 30, 2023, has been approved by the boards of Activision Blizzard and Microsoft.

Top-Line Details

Product sales (29.2% of revenues) amounted to $695 million, up 80.1% year over year. In-game subscriptions and other revenues (70.8% of revenues) increased 22.1% to $1.68 billion.

Based on distribution channels, Digital online revenues of $2.15 billion were up 35.7% from the year-ago quarter. Activision Blizzard reported retail channel sales of $104 million, which gained 22.4% year over year. Other revenues increased 29.8% year over year to $122 million.

Further, based on platforms, revenues from mobile and ancillary (40.1% of revenues) rose 18.5% year over year to $956 million. Revenues from consoles (26.8% of revenues) gained 32% year over year to $639 million. PC revenues (27.9% of revenues) increased 73.9% year over year to $666 million. Other revenues gained 29.8% year over year to $122 million.

On a geographic basis, revenues from the Americas (57.8% of revenues) improved 35.6% year over year to $1.37 billion. Europe, the Middle East and Africa revenues (29.3% of revenues) were up 32.6% year over year to $699 million. Revenues from the Asia Pacific (12.8% of revenues) jumped 36% year over year to $306 million.

Segment Details

Activision (32.9% of revenues) revenues rose 28% year over year to $580 million. The division had 98 million MAUs as of Mar 31, 2023, down 2% year over year. Call of Duty in-game net bookings on console and PC grew strongly year-over-year in the first quarter. Call of Duty Mobile net bookings also grew year-over-year, driven by enhancements to the player experience and live operations.

Blizzard (25.1% of revenues) revenues totaled $443 million, up 61.7% from the year-ago quarter’s levels. Blizzard had 27 million MAUs as of Mar 31, 2023, up 22.7% year over year, with each of Warcraft, Overwatch and Diablo contributing to growth.

Diablo Immortal on mobile and PC also contributed to Blizzard’s first quarter net bookings growth, with the game experiencing stable trends across engagement, retention and player investment. On mobile, Warcraft: Arclight Rumble, an action strategy game internally-developed at Blizzard, continues to progress well through regional testing.

King’s (41.9% of revenues) revenues of $739 million increased 8.4% year over year. MAUs were 243 million as of Mar 31, 2023, down 2.8% year over year. In-game net bookings increased 11% year-over-year, driven by the Candy Crush franchise.

The launch of the latest Candy Crush All Stars tournament, where players compete in Candy Crush Saga for a chance to appear in the live finals, drove incremental growth in installs and player investment at the end of the first quarter and into April.

Candy Crush payer numbers again grew year-over-year, and Candy Crush was the top-grossing game franchise in the U.S. app stores for the 23rd quarter in a row.

Operating Details

Product development expenses increased 16.2% year over year to $402 million. Sales & marketing expenses were up 10.3% year over year to $278 million.

Moreover, general & administrative expenses were $238 million, up 12.3% year over year.

Total costs & expenses on a non-GAAP basis increased 23.4% year over year to $1.43 billion in the reported quarter.

On a non-GAAP basis, operating income was $953 million, up 56.5% year over year.

Balance Sheet & Cash Flow

As of Mar 31, 2023, cash and cash equivalents were $9.2 billion compared with $7.1 billion as of Dec 31, 2023.

Long-term debt, as of Mar 31, 2023, was $3.61 billion, unchanged from the figure reported as of Dec 31, 2022.

Activision Blizzard generated $577 million in operating cash flow for the quarter as compared with $642 million for the first quarter of 2022.

Non-GAAP Free cash flow decreased 14% year over year to $540 million.

On a trailing 12-month basis, free cash flow decreased 5% to $2.04 billion.


Activision Blizzard expects second quarter GAAP revenue to grow at least 10%, net bookings to grow at least 30%, and total segment operating income to grow at least 40%, on a year-over-year basis.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Activision Blizzard, Inc has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Activision Blizzard, Inc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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