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Video game maker Activision Blizzard (ATVI) did well last quarter. Really well. In fact, it wouldn’t be hyperbole to say the company did outstanding, trouncing revenue estimates and unveiling a stock buyback plan that stoked any ATVI stock holders who weren’t impressed by last quarter’s sales. Activision Blizzard announced a solid increase in its dividend payment as well.

The specifics: For the quarter ending in December, Activision Blizzard earned an operating profit of 65 cents per share, up from 25 cents per share of ATVI stock in the same quarter a year earlier. Deferred earnings and the acquisition of King Digital Entertainment, however, blurred the figure’s importance. Revenue, which is the more important arbiter in this case, grew 49% on a year-over-year basis, reaching $2.45 billion versus expectations of $2.36 billion. Overall net income soared from $159 million in Q4 of 2015 to $254 million in the fourth quarter of last year.
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Activision Blizzard Inc



The robust revenue tally was spurred by solid sales from the new Overwatch series, and despite disappointing results from the newest installment of its iconic Call of Duty franchise.

ATVI Stock Jumps on Buyback, Dividend Plan

While Q4 was mostly a fiscal success, the crux of Friday’s post-earnings 17% surge stemmed from the company’s improved dividend and stock-buyback plan.


The annual dividend, which grew to 26 cents per share of ATVI in 2016, was upped to 30 cents per share for 2017, payable in March. The payout has grown every year since Activision began paying it in 2010.

The board of directors also authorized a $1 billion stock-buyback program, with an expiration date of February of 2019. The company is not required to use all or any of the authorization, but were it to use all of the funding, it could take a decent-sized chunk of the float out of circulation.
Activision Blizzard, Inc. (ATVI) Stock Soars on Revenue Growth, Buybacks© Provided by InvestorPlace Activision Blizzard, Inc. (ATVI) Stock Soars on Revenue Growth, Buybacks

Activision Blizzard currently sports a market cap of $35 billion.

The company is also taking aim at $500 million worth of its current debt, and has paid $139 million of it off since the end of the fourth quarter. It ended the quarter with $4.89 billion in long-term debt, which cost it $43 million in interest payments during Q4.

Looking Ahead for Activision Blizzard

The purchase of King and more deferred earnings in the future still obfuscate the company’s actual health, as measured by earnings.

Nevertheless, looking ahead, ATVI stock anticipates earning 25 cents per share for the quarter currently underway, versus analyst estimates for a profit of 31 cents per share of ATVI. The company earned 23 cents in the first quarter of 2016.

On a full-year basis, analysts collectively expect Activision to earn $2.03 per share of ATVI on revenue of $6.7 billion, versus the company’s expectation for a profit of $1.70. Activision Blizzard earned $1.28 per share (GAAP), or $2.18 on a non-GAAP basis, on $6.6 billion in sales for 2016.

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Audience Reach

Activision Blizzard had 447 million Monthly Active Users (MAUs)A in the quarter.

Blizzard had its highest annual MAUsA in 2016 at 36 million, up 37% from 2015 and up 87% since 2014. Additionally, Blizzard achieved record fourth-quarter MAUsA of 41 million. Overwatch became Blizzard's fastest game ever to reach over 25 million players globally. The title broke the previouslaunch year record for unit sales set by Diablo® III in 2012 and received 55 "Game of the Year" awards. World of Warcraft® MAUsA grew 10% in 2016 and over 20% year-over-year in the fourth quarter on the back of the successful third-quarter launch of the expansion, Legion™. Also, Hearthstone®had its highest annual MAUsA in 2016, growing more than 20%, in part due to the fourth-quarter expansion, Mean Streets of Gadgetzan™.

Activision had the biggest online player community in its history in 2016, with annual MAUsA of 50 million for the year, up 3% from 2015 and up 23% since 2014. Fourth-quarter MAUsA were 51 million. Call of Duty® was the number one console franchise globally in 2016, and in North America for the 8th year in a row.1 Life-to-date on current-generation consoles, the Call of Dutyfranchise had 3 of the top 10 games.1

On October 28, 2016, Activision Blizzard Studios, in partnership with Netflix, debuted Skylanders™ Academy, a new TV series celebrating the beloved kids franchise. The second season will be delivered in 2017, and a third season has been ordered by Netflix.

King had 405 million MAUsA for the year and 355 million MAUsA for the quarter, both of which were down year-over-year, but with better per user engagement and investment. King had two of the top 10 highest-grossing titles in the U.S. mobile app stores for the thirteenth quarter in a row.2

Deep Engagement

In 2016, consumers spent approximately 43 billion hours playing and watching Activision Blizzard content, on par with Netflix and over one-and-a-half times Snapchat.

Blizzard's fourth-quarter play time surpassed the previous record set in the third quarter. Overwatch had its second and third seasonal events, Halloween Terror and Winter Wonderland, each one driving new records for engagement with the game. World of Warcraft saw an increase in total play time for the quarter, surpassing the Q3 expansion launch quarter and all non-launch quarters in the last four years.

King's time spent per daily active user is now 34 minutes a day, up quarter-over-quarter and year-over-year.

In 2016, Activision Blizzard's esports network, Major League Gaming, extended its viewer reach on social platforms like Facebook and Instagram by 50% year-over-year.3

In 2016, Activision hosted a successful Call of Duty World League season, which had a $3.5 million prize pool across 16 hosted events. The 2016 season had 120 million video views and more than twice the time spent viewing compared to last year's season.

In November, Blizzard held its 10th BlizzCon® with over 25 thousand attendees, over 10 million people around the world tuning in to the event and a record number of pay-per-view tickets sold through DirecTV. Blizzard also announced the formation of the Overwatch League™ at BlizzCon.

Player Investment

Activision Blizzard revenues from in-game content reached a record $3.6 billion in 2016, more than double the $1.6 billion in 2015. Excluding King, revenues from in-game content grew 30% year-over-year.
Blizzard had record levels of quarterly and full-year in-game revenues, driven by World of Warcraft in-game content and continued strength of Overwatch customization items.

Activision had record levels of Q4 and full-year in-game revenues. Call of Duty: Black Ops III add-on revenues outperformed Season Pass and à la carte map packs combined, even with record Season Pass participation.

King's fourth-quarter gross bookings per paying user increased quarter-over-quarter and year-over-year to record levels. The Candy Crush™ franchise continued its momentum, with increased mobile gross bookings for the quarter and the year compared with 2015


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