Activision Blizzard (ATVI) is scheduled to report second-quarter earnings on Thursday after the market closes, and it'll be an important report for investors. The stock is down 31% over the past year as consumer preferences have changed and engagement hasn't been as strong as investors hoped. Shareholders shouldn't have big hopes for the second quarter because there weren't any blockbuster releases, but the company's strategy to engage customers should be showing progress. 

Here's what management expects and what investors should be watching. 

Video game keyboard and mouse.

Image source: Getty Images.

Activision Blizzard's measure of success

The first measure to look at is performance versus the guidance given on May 2. Here are the highlights of what management expects for the quarter. 

Metric GAAP Non-GAAP
Revenue $1.32 billion  $1.32 billion
Operating margin 16% 26% 
Earnings per share $0.21  $0.35 

Data source: Activision Blizzard Q1 2019 earnings release. Learn about GAAP here. Non-GAAP = adjusted.

What about engagement?

One metric investors and management always focus on is engagement, as measured by monthly active users (MAUs). In the first quarter, Activision had 41 million MAUs, Blizzard had 32 million, and King had 272 million. 

Engagement was down for Activision and Blizzard in the first quarter, so that will be a big focus for investors. The challenge is, there weren't any major game releases in the second quarter, so the business is relying on engagement in existing games. This is where we'll see if popular games like Fortnite are still pulling customers away from Activision Blizzard's most popular titles. 

Is esports having a big impact? 

Esports has gotten a lot of attention from investors and the media, but it's had very little tangible impact on Activision Blizzard's bottom line outside of the sale of teams. With the Overwatch League in full swing, investors will want to hear that there's beginning to be a revenue boost, both from the leagues and from game sales. 

The revenue from esports has to be shared with teams, so there may be a challenge generating significant revenue from this business, even if there's a lot of interest in the company's products from consumers and advertisers. 

New games and updates on the horizon

This was always going to be a transition year for Activision Blizzard as it invests in games with more mobile play and more live action for gamers. The company is lagging many competitors like Fortnite and Apex Legends, which offer the engaging live play that has become so popular. But management is investing to update the product lineup and compete more effectively. Look for more detail on when these updates will be released and what they'll include.