IndustryGamers - Informing the Games Industry

Activision Beats Guidance with $1.04 Billion in Q2 Sales

Posted August 5, 2009 by James Brightman

While most companies have been posting disappointing fiscal results, leading publisher Activision Blizzard today reported that it beat its own guidance with total sales for the quarter ended June 30 of $1.04 billion and earnings per share of $0.15. The company had been expecting revenue of $1 billion and earnings per share of $0.10. 

Activision noted that it had three of the top-10 best-selling titles in the U.S. in June with Prototype, Guitar Hero World Tour and Wolverine, according to NPD data. Additionally, for the first six months of the calendar year, Activision had two of the top-five best-selling titles in North America and Europe with Guitar Hero World Tour and Call of Duty: World at War. The publisher grew its North American and European market share of the music/dance category 8 points to 53% as compared to the same period last year, according to data from NPD, Charttrack and Gfk.

"Since our merger one year ago, we have delivered better-than-expected financial performance for four consecutive quarters," boasted CEO Bobby Kotick. "Our second quarter overperformance was driven by Activision Publishing's Prototype, Transformers: Revenge of the Fallen, X-Men Origins: Wolverine and the Guitar Hero and Call of Duty franchises, as well as Blizzard Entertainment's World of Warcraft. During a challenging economic climate, Activision Blizzard grew its quarterly North American and European market share 2.8 points across all platforms to 12.7% from 9.9% for the previous year and was the #1 North American third-party console and handheld publisher for the quarter and first six months of the calendar year, according to the NPD Group, Charttrack and Gfk."

Kotick continued, "This fall, we will release our strongest video game slate based on some of the industry's most successful franchises, including Infinity Ward's Call of Duty: Modern Warfare 2, Guitar Hero 5, DJ Hero, Band Hero, Tony Hawk: RIDE and Bakugan Battle Brawlers. We are in a unique industry position to be able to invest in people, products and resources for the long term without compromising our short-term commitments of earnings growth and margin expansion."

"As we prepare for next year, we have moved the expected release dates for two games, Activision Publishing's Singularity and Blizzard Entertainment's StarCraft II, into 2010. However, we are increasing our calendar year earnings-per-share GAAP outlook and reaffirming our calendar year earnings-per-share non-GAAP outlook and still expect to deliver record non-GAAP operating margins. Although there is a great deal of economic uncertainty in the global marketplace, we remain focused on the opportunities afforded by our industry and will continue exploring potential new markets and business models that should enable us to continue expanding our operating margins."

On the conference call, Activision CFO Thomas Tippl noted that the company has an impressive $2.9 billion in cash and investments. For calendar 2009, partially because of the delays to Singularity and StarCraft II into 2010 and "lower market expectations," Activision Blizzard is now lowering its net revenue outlook from $4.3 billion to $4.05 billion. The company is increasing its earnings per share outlook to $0.26 from $0.24, however. The publisher said it "expects that lower revenues will be offset in part by the stronger-than-expected performance of a few of its higher margin titles, as well as online revenues, better than expected synergy savings, and a lower effective tax rate."  

James Brightman has been covering the games industry since 2003 and has been an avid gamer ever since the days of Atari and Intellivision. He was previously the EIC of GameDaily Biz.