Activision Blizzard (ATVI) Tops Q1 EPS by 20c, Offers FY20 Outlook

Activision Blizzard (NASDAQ: ATVI) reported Q1 EPS of $0.58, $0.20 better than the analyst estimate of $0.38. Revenue for the quarter came in at $1.52 billion versus the consensus estimate of $1.32 billion.

Company Outlook

Our business exhibited accelerating momentum entering the second quarter from the dual tailwinds of strong execution in the Call of Duty franchise following last year’s increased investment, and increased engagement as people turned to our interactive content as they sheltered at home. The full extent of the impact of the COVID-19 pandemic on our business, operations, and financial results will depend on numerous evolving factors that we are not able to fully predict at this time. While there are risks related to global economic weakness, rising unemployment, pressures on the retail channel, pricing and other potential factors, we also see many positive opportunities for our operating performance this year, including the potential for continued heightened engagement in our content well beyond the second quarter. We have aimed to be prudent in our guidance to account for these effects, and we believe there is potential for overperformance if these risks do not materialize.

Regarding product development, the majority of our employees are currently working from home, which while adding complexity to some areas of the game development process, has not currently changed our plans for our key content releases this year.

Since we provided our initial guidance in February, the strengthening dollar has resulted in an additional FX headwind to full year net bookings of approximately $100 million. Further, the strengthening dollar and lower interest income from the current interest rate environment represent an additional headwind to full-year GAAP and non-GAAP EPS of approximately $0.08 versus our prior outlook. Nonetheless, with strong momentum across the business we are raising our outlook for net revenues and EPS for the year, more than passing through the Q1 earnings outperformance despite these headwinds.

Net bookingsB are expected to be $6.9 billion for 2020 and $1.675 billion for the second quarter of 2020.

For earnings history and earnings-related data on Activision Blizzard (ATVI) click here.

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