Activision Blizzard Beats Expectations on Record Second-Quarter Revenue

Legendary Entertainment
'Warcraft' is the feature film based on the Activision Blizzard video game.

The gaming company behind the 'Warcraft' film also has movies and TV shows in development based on its 'Call of Duty' franchise.

Shares of Activision Blizzard were rising after the closing bell on Thursday after the company behind the World of Warcraft game — and now movie — franchise reported record second-quarter revenue and raised guidance for the full year.

The company's Blizzard segment recorded its biggest quarterly online player community in its history, with monthly active users up 13 percent to 33 million due to strength of World of Warcraft as well as Hearthstone: Heroes of Warcraft. In China, its Overwatch title became the fastest-selling PC game in history.

Worldwide, consumers logged 500 million hours of playing time on Overwatch during the quarter.

All together, Activision Blizzard reached 491 million active monthly users, owed mostly to its $4.8 billion acquisition in February of King Digital Entertainment, the maker of Candy Crush. The company said a new non-Candy Crush franchise release is expected by year's end.

But while Activision Blizzard saw revenue soar more than 50 percent to $1.6 billion in the most recent quarter, net income slid from $282 million a year ago to $167 million this time around due to amortization costs associated with the acquisition of King Digital.

While revenue from the Warcraft movie, based on the similarly named game, isn't broken out in the earnings numbers, Activision Blizzard has only a small participation in the profit from the Legendary Pictures co-production. The $160 million film did a modest $47 million domestically but $433 million worldwide, owed in large measure to its popularity in China. Activision Blizzard will likely benefit primarily from the publicity the movie generated for the game.

Activision Blizzard is delving much further into traditional entertainment, developing a movie and TV show based on its Call of Duty franchise, plus it has already agreed to 13 episodes of a show based on its Skylanders games that will stream on Netflix.

Activision Blizzard beat Wall Street revenue expectations by about $50 million and adjusted earnings of 54 cents per share was 8 cents better than expected. The stock closed 1 percent higher to $40.78 and was up another 3 percent after the closing bell.

"With Overwatch's incredibly successful launch, Call of Duty's record first-half performance and Candy Crush's continued growth as key drivers of our overall performance, we delivered a record Q2," said Activision Blizzard CEO Bobby Kotick.

Kotick said Activision Blizzard closed out the quarter with more than 10,000 employees.

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