The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Activision Blizzard beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share grew significantly.
Margins grew across the board.
Activision Blizzard reported revenue of $751.0 million. The 21 analysts polled by S&P Capital IQ predicted a top line of $710.2 million on the same basis. GAAP reported sales were 12% higher than the prior-year quarter's $754.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.15. The 23 earnings estimates compiled by S&P Capital IQ averaged $0.08 per share. GAAP EPS of $0.20 for Q3 were 54% higher than the prior-year quarter's $0.13 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 72.5%, 390 basis points better than the prior-year quarter. Operating margin was 27.0%, 510 basis points better than the prior-year quarter. Net margin was 26.9%, 730 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $2.34 billion. On the bottom line, the average EPS estimate is $0.67.
Next year's average estimate for revenue is $4.68 billion. The average EPS estimate is $1.01.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 6,966 members out of 7,193 rating the stock outperform, and 227 members rating it underperform. Among 1,399 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,362 give Activision Blizzard a green thumbs-up, and 37 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 $15.67.
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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 Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services recommend 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.