Video game giant Activision Blizzard Inc ATVI made lots of headlines Wednesday with shares falling in response to an announcement that its pending acquisition by Microsoft Corporation MSFT was being blocked by regulators in the United Kingdom.
As shares sold off Wednesday, investors may have missed the other big headlines from the company with net bookings in the first quarter up 25% year-over-year and the company’s mobile segment seeing strong engagement.
Growth of Key Franchises: Activision Blizzard reported first-quarter net bookings of $1.86 billion, which were up 25% year-over-year. The total came in ahead of estimates from analysts of $1.79 billion according to data from Benzinga Pro.
In-game net bookings were $1.29 billion in the first quarter, compared to $1.01 billion in the first quarter of 2022.
The company reported 368 million monthly active users at the end of the quarter.
The first quarter saw Activision Blizzard’s key franchises including Call of Duty, Candy Crush, Warcraft, Overwatch and Diablo post strong results and net bookings.
“We reported a very strong Q1 that shows our focused strategy is working. While the macro environment remains unpredictable, each of our key properties — Call of Duty, Candy Crush, World of Warcraft, Overwatch and Diablo — grew revenue year-over-year, with total net bookings growing 25% year-over-year,” Activision Blizzard Senior Vice President of Investor Relations Chris Hickey told Benzinga.
Hickey went on to say that “By focusing our talented teams on these key intellectual properties, we’re able to engage more players more deeply and across more platforms.”
Activision segment revenue was up 28% year-over-year in the first quarter helped by the Call of Duty franchise. Blizzard segment revenue was up 62% year-over-year in the first quarter with strong in-game content revenue for Overwatch and World of Warcraft. King segment revenue saw revenue up 8% year-over-year led by Candy Crush.
Diablo IV launches on June 6 and is one of the most anticipated titles for the company with demand indicators seen as strong. A premium Call of Duty release is also planned for 2023 according to the release.
For the second quarter, Activision Blizzard is guiding for GAAP revenue to increase at least 10% year-over-year and net bookings to increase at least 30% year-over-year.
Activision Blizzard expects high-teen GAAP revenue growth year-over-year and high-single-digit year-over-year growth for net bookings for the full fiscal year 2023.
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Mobile Strength: One of the key areas of focus for Activision Blizzard has been growth through mobile games.
The company cited the strong results of Candy Crush, Call of Duty Mobile and Diablo Immortal as keys to the first quarter growth with mobile net bookings up double digits year-over-year.
“Mobile was our largest platform for revenue this quarter, led by the Candy Crush franchise, which continues to top the U.S. app store charts. Mobile is key to our growth strategy — we’ve already reimagined best-selling games like Call of Duty for the mobile experience and there’s more on the way,” Hickey told Benzinga.
Going forward, Activision Blizzard planned the launch of Call of Duty: Warzone Mobile for later this year.
King, which was acquired by Activision Blizzard in 2016, celebrated its 20th anniversary in the first quarter. The unit saw revenue up 8% year-over-year and in-game net bookings up 11% year-over-year.
Candy Crush was highlighted in the quarter with new content, features and events including an all-star tournament in March helping to boost engagement and installs.
The company said Candy Crush was the top-grossing game franchise in the U.S. app stores for the 23rd quarter in a row.
King acquired AI company Peltarion in June, which the company said is already starting to show benefits and could provide “meaningful financial benefits” in its first full year.
Merger Update: The big headline Wednesday was that the U.K. Competition and Markets Authority (CMA) blocked the proposed $69 billion acquisition of Activision Blizzard by Microsoft in the U.K.
Microsoft announced a planned acquisition of Activision Blizzard back in January 2022 that has faced several delays and regulatory hurdles. Under the terms of the deal, shareholders of Activision Blizzard will receive $95 per share.
“We remain confident that our deal with Microsoft benefits competition, consumers, and job creation in markets around the world, especially in the U.K. The CMA’s report today does not reflect these realities, and we will work aggressively with Microsoft to reverse it on appeal,” Kotick said.
Kotick told employees in a note that whether on their own or united with a company like Microsoft, Activision Blizzard is set up for success.
“We are one of the strongest companies in our industry, poised for continued growth, and building on our incredible IP.”
An Activision Blizzard spokesperson said, “The CMA’s report contradicts the ambitions of the U.K. to become an attractive country to build technology businesses.”
“Global innovators large and small will take note that — despite all its rhetoric — the U.K. is clearly closed for business.”
ATVI Price Action: Activision Blizzard shares are up 1% to $77.58 on Thursday after falling on Wednesday’s news. Shares have traded between $70.94 and $87.01 over the last 52 weeks.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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