What happened
Shares of Activision Blizzard (ATVI) closed up 2.1% on Wednesday. The video game producer delivered blowout earnings results late Tuesday that buoyed investor confidence. Adjusted earnings per share of $1.20 came in well above the $0.76 that analysts had expected.
The company also announced new leadership at Blizzard Entertainment, following a lawsuit alleging sexual harassment and discrimination toward female employees.
The stock is currently down 11.6% year to date and has trailed the broader market.
So what
The Activision segment experienced record revenue and operating income in the first half of the year, driven by continued strong engagement in Call of Duty.
"We achieved new records for each, even as we continue to increase investment in the business and our development teams to support our strong pipeline," Chief Financial Officer Armin Zerza said.
For Q2, total bookings came in at $1.921 billion, down from $2.1 billion in the year-ago period. But operating margin continued to stretch higher, rising 2 percentage points year over year to reach 44%.
Image source: Getty Images.
During the earnings call, CEO Bobby Kotick spent a great deal of time addressing the cloud hanging over the company. He stated, "Our work environment, everywhere we operate, will not permit discrimination, harassment, or unequal treatment."
While Kotick said the company has taken many steps to address the complaints already, it took another by naming Jennifer Oneal and Mike Ybarra as the new co-leads at Blizzard.
Now what
Despite the turmoil, Activision appears to be executing well. Call of Duty, World of Warcraft (a Blizzard title), and Candy Crush all contributed to the strong results last quarter, but investors were more encouraged by the boost to full-year guidance. Activision now expects bookings to be slightly up over the robust numbers the company turned in last year.
Growth in 2021 sets the stage for a potentially big 2022, when it's expected that Diablo: Immortal and possibly Diablo IV will launch, driving big sales. Analysts currently expect the company to grow bookings 4.2% this year before increasing 13.4% next year to $9.95 billion.
