The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Activision Blizzard beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank, and GAAP earnings per share grew.
Margins improved across the board.
Activision Blizzard chalked up revenue of $2.41 billion. The 19 analysts polled by S&P Capital IQ expected revenue of $2.21 billion on the same basis. GAAP reported sales were 1.5% lower than the prior-year quarter's $1.43 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
Non-GAAP EPS came in at $0.62. The 21 earnings estimates compiled by S&P Capital IQ forecast $0.56 per share on the same basis. GAAP EPS were $0.08 for Q4 compared to -$0.20 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 48.7%, 1,010 basis points better than the prior-year quarter. Operating margin was 1.8%, 650 basis points better than the prior-year quarter. Net margin was 7%, 2,330 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $552.5 million. On the bottom line, the average EPS estimate is $0.04.
Next year's average estimate for revenue is $4.57 billion. The average EPS estimate is $0.97.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 6,882 members rating the stock outperform and 202 members rating it underperform. Among 1,636 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,591 give Activision Blizzard a green thumbs-up, and 45 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Activision Blizzard is outperform, with an average price target of $16.06.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of and creating a synthetic long position in Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.