The video game industry remained in growth mode through the first quarter, and Activision Blizzard's (ATVI) latest earnings results didn't disappoint. Revenue and adjusted earnings per share came in better than management's prior outlook, as players continue to remain highly engaged with its largest franchises, especially Call of Duty.

Management's comments during the first-quarter earnings call show a business firmly on offense with plenty of growth opportunities still ahead. Let's take a closer look at four comments made in the latest Activision Blizzard earnings call and what they might mean for investors.

Screenshot of gameplay from Call of Duty Black Ops Cold War video game.

Image source: Activision Blizzard.

1. Call of Duty still clicking

Our Call of Duty free-to-play Warzone and mobile experiences have transformed the franchise, more than tripling the number of monthly players over the last two years and adding over $1 billion of operating income to Activision segment results last year.
-- Chief Operating Officer Daniel Alegre 

The company's strategy to release new free-to-play experiences continues to pay off. The Activision segment, which includes sales from the Call of Duty franchise, grew revenue 72% year over year. For that, management credited strong in-game spending and premium sales of Call of Duty: Black Ops Cold War

Segment Q1 Revenue YOY Change
Activision $891 million 72%
Blizzard $483 million 7%
King $609 million 22%
Total $2.1 billion 36%

Data source: Activision Blizzard. YOY = year-over-year.

2. Staying on offense

Our strategy centers around our long-held view that wholly owned entertainment franchises offer the opportunity for limitless innovation.
-- CEO Bobby Kotick 

This is certainly proving true with Call of Duty. Across PC, console, and mobile, the franchise increased its player reach by over 100 million since the release of Call of Duty: Mobile in the fall of 2019. 

The beautiful thing about Activision Blizzard is that it has direct connections with its 435 million monthly active users. It just rolled out its biggest update for the platform, which serves as the launchpad and content manager for several of its top titles, including Call of Duty, Overwatch, World of Warcraft, and Hearthstone. Since the update, sales per visitor have increased year over year through the first quarter. 

Looking beyond 2021, Activision Blizzard said that new games in the pipeline, most notably Diablo 4, Overwatch 2, and multiple Warcraft mobile titles, should deliver "substantial growth for the company."  

The mobile releases across Warcraft and Diablo will tap into the fast-growing mobile market and should attract millions of new players that the company can further monetize.

3. Player engagement driving big profits

Our increase in live operations is reflected in last quarter's results and our forward outlook, as we've seen our business shift from a seasonal focus with a holiday emphasis to an always-on business model with far less seasonality.
-- Kotick 

Activision Blizzard still experiences a revenue boost around major releases, such as the annual Call of Duty release. But more of the company's profits are coming from digital sales, particularly in-game spending, which is driven by ongoing content updates throughout the year. 

In the first quarter, in-game net bookings increased 40% year over year to $1.3 billion and remained at the same level as the holiday quarter. Higher digital spending drove Activision Blizzard's adjusted operating margin to a stellar 43%. 

Metric Q1 2021

YOY Change

Net bookings $2.07 billion 36%
In-game bookings $1.34 billion 40%
Adjusted EPS $0.98 29%

Data source: Activision Blizzard. YOY = year-over-year.

Management is guiding for only a single-digit percentage increase in total bookings and adjusted earnings for 2021, but record profit levels are starting to pile up on Activision Blizzard's balance sheet. It's now sitting on nearly $9.3 billion in cash and equivalents, or $5.7 billion in net cash after adjusting for debt. 

4. What is Activision doing with its cash?

We plan to triple the size of certain franchise teams compared to those team sizes in 2019. And we have aggressive hiring plans around the world, including new studios or major expansion in Poland, China, Australia and Canada.
-- Kotick 

With current games producing record financial results and more games in the pipeline, these hiring plans mean only one thing: Activision Blizzard still sees plenty of growth over the long term.