Activision Blizzard, Inc.'s (NASDAQ:ATVI) streak of crushing earnings expectations and its own guidance is still intact after a huge first quarter of 2017. Overwatch, once again, led the way, showing there's some longevity in last year's biggest hit for the company. 

As usual, engagement is key to watch, not just revenue and earnings. But on both fronts, Activision Blizzard seems to be performing about as well as investors could have expected. 

Man playing video games on a computer.

Image source: Getty Images.

Activision Blizzard, Inc. by the numbers

MetricQ1 2017Year-Over-Year GrowthPrior Guidance
GAAP net revenue $1,726 million 18.6% $1,550 million
GAAP EPS $0.56 124%  $0.25
Non-GAAP EPS $0.72 41.2%  $0.51

Data source: Activision Blizzard, Inc. Q1 2017 earnings release. 

I highlighted Activision Blizzard's guidance because this is another example of management exceeding the bar they set for themselves. In the second quarter, they're expecting GAAP revenue of $1,450 million and earnings of $0.15 per share.

Full-year 2017 GAAP revenue, guidance was also increased by $100 million, to $6,100 million, and the company's earnings-per-share outlook was increased by $0.16, to $0.72.

Highlights from Q1

The revenue and earnings figures don't really tell the whole story for Activision Blizzard, so here are a few highlights. 

  • Blizzard was the driver of the quarter, with revenue up 50% from a year ago, to $441 million, driven by Overwatch and World of Warcraft
  • Monthly active users fell 3 million at Activision, to 48 million. It was flat at Blizzard, at 41 million, and dropped 13 million, to 342 million, at King. 
  • Operating cash flow for the quarter was up 22%, to $411 million. 
  • Net debt declined from $3.01 billion to $1.17 billion and Activision Blizzard has $3.27 billion in cash on the balance sheet. 

Growth avenues are still emerging

Activision Blizzard's success in engaging players and launching digital content has led to even more growth opportunities in the future. In-game advertising was a big topic of discussion on the conference call, and management is slowly pushing this forward. And along with consumer products, the company is looking for ways to generate more revenue by leveraging existing content and engagement. Look for King's mobile games to be a platform where advertising is a big revenue generator long term. 

Management talked about "professionalizing e-sports," which is a novel concept in the gaming world. The company could effectively own the platform professional gamers use, drawing more users and viewers to e-sports. And beyond Call of Duty World League, management said it's launching Overwatch League as a way to reward players and deliver more content for other players to watch. 

Looking forward

Despite a lack of big new-product offerings in 2017, Activision Blizzard's financial results continue to be extremely strong. And with a solid base of games and growth opportunities from advertising, consumer products, and e-sports, the company has a lot of growth opportunities ahead. The start of 2017 was a good sign that this could be another great year for this gaming giant.

Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard. The Motley Fool has a disclosure policy.