Activision Blizzard reported earnings that blew past the expectations of Wall Street analysts during its slow summer quarter.
The earnings for the fiscal second quarter ended June 30 are closely followed, as Activision Blizzard is the largest independent video game publisher in the U.S., and its results are a bellwether for the $91 billion global game industry (based on Newzoo’s estimates).
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Analysts had also expected third fiscal quarter earnings of 7 cents a share on revenue of $650 million for the quarter ending Sept. 30. In after-hours trading, Activision Blizzard’s stock trades were halted.
“Our strategic focus on expanding our franchise portfolio with captivating and original new intellectual property, innovating on new platforms, and expanding into new geographies is reflected in our results,” said Bobby Kotick, the chief executive of the Santa Monica, Calif.-based company, in a statement. “We outperformed our Q2 targets and last year’s results on revenues, digital growth, and earnings per share. These strong results and the excitement for our future games have driven us to raise our full-year outlook.
“Our audience size and the total amount of time people spend with our franchises continue to grow. In the second quarter, our monthly active users grew by 35 percent year-over-year, and the time our communities spent playing our games grew by 25 percent year-over-year.”
Michael Pachter, an analyst at Wedbush Securities, said in a research note before the earnings release that the second quarter had a difficult comparison to a year ago, when the company benefited from the release of The Amazing Spider-Man 2 in 2014.
But he noted that the quarter probably benefited from the release of Blizzard Entertainment’s free-to-play multiplayer strategy game, Heroes of the Storm (and two new heroes for players to buy), which had more than 9 million players in its closed beta test, as well as the second expansion for the online multiplayer shooter Destiny, House of Wolves. Pachter had also expected momentum from the digital card batter Hearthstone: Heroes of Warcraft, a free-to-play game on PCs and mobile that saw the launch of a new playmode, the casual-focused Tavern Brawl, during this quarter along with $10 character skins.
The stock market values Activision Blizzard at $18.7 billion. This fall, the company will release Destiny: The Taken King expansion, Guitar Hero Live, Transformers: Devastation, and Tony Hawk’s Pro Skater 5 as well as its usual Skylanders and Call of Duty games. Blizzard is expected to launch StarCraft II: Legacy of the Void in the fourth quarter or the first quarter of 2016. It’s also releasing the next expansion for Hearthstone in the third quarter, with a $50 preorder package — something new for the card battler.
In the previous quarter, Activision Blizzard also beat analysts’ forecasts with earnings per share of 16 cents and revenue of $703 million. But it had forecast revenue and profit for the second quarter that was below analysts’ estimates, partially because of the rising U.S. dollar. During that last call, Kotick said that the company had 150 million active users play the company’s games for more than 12 billion hours.
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In the previous quarter, Activision Blizzard had said that earnings per share for the full year would be $1.20 and revenue would be $4.43 billion. Today, the company said it expects 2015 full-year revenue of $4.6 billion and earnings per share of $1.30.
Activision expects third quarter revenue of $930 million and earnings per share of 14 cents.
Blizzard Entertainment’s Hearthstone: Heroes of Warcraft, Heroes of the Storm, and Activision Publishing’s Destiny combined now have more than 70 million registered players and over $1.25 billion in non-GAAP revenues life-to-date.
Destiny now has over 2 billion hours of gameplay since launch, which amounts to an average 100 hours of gameplay for each of Destiny’s over 20 million registered players.
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But Blizzard’s flagship game, World of Warcraft, slipped a bit to 5.6 million paying subscribers. The game has a big expansion coming later this year. Blizzard is expected to announce it this week at the Gamescom event in Cologne, Germany, later this week.