Activision Blizzard 1st-quarter results jump, surpassing Wall Street expectations

Activision 1Q profit up, shoots past expectations

NEW YORK — Continued strong sales of “Call of Duty” and a steady stream of revenue from “World of Warcraft” subscribers helped double Activision Blizzard Inc.’s first-quarter net income.

The results easily surpassed Wall Street’s expectations, and the company’s shares gained in after-hours trading, after closing lower in what turned out to be one of the most turbulent days in Wall Street history. Activision’s outlook for the current quarter, however, was below estimates.

Activision said Thursday that it earned $381 million, or 30 cents per share, in the January-March quarter, up from $189 million, or 14 cents per share, in the same period a year earlier.

Revenue rose 33 percent to $1.31 billion, from $981 million.

Using the measures comparable with analysts’ expectations, Activision’s adjusted earnings were 9 cents per share. Analysts had expected just 4 cents, according to Thomson Reuters.

The company’s adjusted results exclude one-time charges and account for deferred revenue on games whose online components reap sales over an extended period. On that basis, revenue slid 1 percent to $714 million, from $724 million. But it surpassed Wall Street’s expectations of $570 million.

Activision, which is based in Santa Monica, Calif., has been able to weather the economic downturn better than other video game makers because of stellar “Call of Duty” sales and because it can rely on revenue from more than 11.5 million “World of Warcraft” players who pay monthly subscriber fees to play the game online.

CEO Bobby Kotick called the quarter a blowout and said in an interview that the company benefited from getting more than 60 percent of its revenue from online subscriptions and other digital content.

“One of the reasons we had so much overperformance is that we are not as dependent on the vagaries of the console market as our competitors,” he said.

Activision raised its full-year earnings outlook slightly. But for the current quarter, it issued an outlook below Wall Street’s expectations. The company is expecting net income of 11 cents per share on revenue of $925 million.

On an adjusted basis, it forecast earnings of 4 cents per share on revenue of $700 million. That is below expectations of a net income of 9 cents per share on revenue of $797 million.

The company had raised its guidance last month and said then that some of the first quarter’s operating costs got pushed into the second. That helped boost first-quarter results, but put a dent in the current period.

That said, the first half of the year tends to be slow for video game companies, which make the bulk of their money during the holidays. Lazard Capital Markets analyst Colin Sebastian expects more than 80 percent of Activision’s earnings to come in the second half. Beyond that, he added, the company’s management is very cautious when issuing guidance.

French conglomerate Vivendi SA is majority owner of Activision.

Shares gained 26 cents, or 2.5 percent, to $10.75 in extended trading after the release of results. Earlier, it closed down 26 cents at $10.49.