Bullish options flow was detected in ATVI stock on November 13, 2019.
The bullish options flow in ATVI stock is the result of Activisions Q3 beat on November 7, 2019.
On November 7, 2019, Activision Blizzard (ATVI) reported better-than-expected earnings and net bookings for the third quarter, with the game maker recording 36M monthly active users for its Activision-developed products, 33M MAUs for its Blizzard products, and 247M MAUs for its King products. The company said it “exceeded” its Q3 outlook driven by better-than-expected performance for “Call of Duty” in-game content and “World of Warcraft,” as well as “favorable” cost timing. Looking ahead, Activision Blizzard provided a conservative guidance for the fourth quarter and fiscal 2019, though the company said on its quarterly earnings call that “Call of Duty: Modern Warfare” is already off to an “exceptional” start following its release last month, while monetization for “Call of Duty Mobile” is already experiencing a “strong start.”
“Our third quarter results exceeded our prior outlook for both revenue and earnings per share,” said Bobby Kotick, Chief Executive Officer of Activision Blizzard. “Recent launches have enabled significant growth in the size of our audiences for our Call of Duty® and World of Warcraft® franchises. As we introduce mobile and free-to-play games based on our franchises we believe we can increase audience size, engagement and monetization across our wholly owned franchises. With a strong content pipeline and momentum in mobile, esports and advertising, we are confident we will remain a leader in connecting and engaging the world through epic entertainment.”
For the quarter ended September 30, 2019, Activision Blizzard’s net revenues presented in accordance with GAAP were $1.28 billion, as compared with $1.51 billion for the third quarter of 2018. GAAP net revenues from digital channels were $1.01 billion. GAAP operating margin was 19%. GAAP earnings per diluted share were $0.26, as compared with $0.34 for the third quarter of 2018.
For the quarter ended September 30, 2019, on a non-GAAP basis, Activision Blizzard’s operating margin was 27% and earnings per diluted share were $0.38, as compared with $0.42 for the third quarter of 2018.
For the quarter ended September 30, 2019, operating cash flow was $309 million. For the trailing twelve-month period, operating cash flow was $1.91 billion.
Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results.
For the quarter ended September 30, 2019, Activision Blizzard’s net bookingsB were $1.21 billion, compared with $1.66 billion for the third quarter of 2018. Net bookingsB from digital channels were $0.98 billion, as compared with $1.44 billion for the third quarter of 2018. In-game net bookingsC were $0.71 billion. Overall Activision Blizzard Monthly Active Users (MAUs)D were 316 million.
Selected Business Highlights
Activision Blizzard exceeded its third quarter outlook, driven by better-than-expected performance for Call of Duty in-game and World of Warcraft, as well as favorable cost timing. The company started the fourth quarter with successful launches for Call of Duty®: Mobile and Call of Duty®: Modern Warfare, and achieved important milestones for several other franchises. Activision Blizzard is intent on building on this momentum as the company invests in the fourth quarter to maximize the potential of its franchises in 2020 and beyond.
- In the third quarter of 2019:
- Activision had 36 million MAUsD.
- Call of Duty®: Black Ops 4 reach and net bookings from in-game items grew sharply versus Call of Duty®: WWII in the third quarter of 2018.
- The October 1, 2019, launch of Call of Duty: Mobile saw over 100 million downloads in its first month, reaching the top of the mobile app download charts in over 150 countries and regions, with a 4.9-star rating in the U.S. iOS store.
- On October 25, 2019, Call of Duty: Modern Warfare launched and became the top-selling new premium game release of the year. In its first week, sell-through units grew a high-teen percentage versus Call of Duty: Black Ops 4, with strong console growth and PC units on Battle.net® reaching new highs.
- In the third quarter of 2019:
- Blizzard had 33 million MAUsD.
- World of Warcraft® Classic drove the biggest quarterly increase to subscription plans in franchise history, in both the West and East.
- The Overwatch League™ concluded with a sell-out crowd of over 11,000 fans watching the San Francisco Shock defeat the Vancouver Titans in the Grand Finals at the Wells Fargo Center in Philadelphia in September. Season Two average minute audience grew 18% year-over-year.
- At BlizzCon on November 1, 2019, Blizzard revealed some of the exciting content in its pipeline:
- Hearthstone®’s Descent of Dragons™ expansion, set for release in the fourth quarter of 2019, and the new Battlegrounds auto-battler mode, which is already in early access and enters open beta on November 12, 2019,
- World of Warcraft’s next expansion, Shadowlands, set to launch in 2020,
- Overwatch® 2, the next major installment for the franchise, and
- Diablo® IV, the highly-anticipated sequel to the genre-defining franchise.
- In the third quarter of 2019:
- King had 247 million MAUsD.
- Candy Crush™ franchise mobile reach grew year-over-year, driven by the addition of Candy Crush Friends Saga™ which launched in October 2018.
- Candy Crush was once again the top-grossing franchise in the U.S. mobile app stores.
- Advertising continued to grow profitably, with net bookings almost doubling year-over-year.
Needham analyst Laura Martin raised her price target on Activision Blizzard to $62 and kept her Buy rating after its Q3 earnings beat. Despite the below-consensus outlook for Q4, the analyst maintains a positive view on its eSports category as Overwatch League billionaire owners of its teams have positive influence on business decisions and given the company’s “significant hidden asset value” in moving its hit games to mobile devices.
Stephens analyst Jeff Cohen backed an Overweight rating and $65 price target on Activision Blizzard after the company’s “strong” third quarter earnings report. Cohen said that management’s commentary was “positive” around the impact of “World of Warcraft Classic,” the launch of “Call of Duty Mobile,” and the launch of “Call of Duty: Modern Warfare.” Due to the “impressive” signs of franchise re-invigoration at “Warcraft” and “Call of Duty” as well as the multiyear pipeline for Blizzard laid out at BlizzCon, the analyst said he expects long-term holders will be buyers on any weakness related to the “conservative” fourth quarter guidance.