Activision Blizzard reported today that its earnings for the second quarter ended June 30 beat Wall Street’s expectations on both earnings and revenues.
But the stock price fell 3% in after-hours trading, presumably because of weak guidance for the current quarter.
The company had no major game launches during the quarter, but its financial performance is driven from ongoing revenue from existing online titles. Activision Blizzard’s core businesses include Overwatch, Call of Duty, World of Warcraft, and its Candy Crush mobile games.
For the quarter ended June 30, 2019, the Santa Monica, California-based company said that its revenues were $1.40 billion, as compared with $1.64 billion for the second quarter of 2018. GAAP earnings per diluted share were 43 cents, as compared with 52 cents for the second quarter of 2018.
For the quarter ended June 30, 2019, on a non-GAAP basis, Activision Blizzard’s earnings per diluted share were 53 cents, compared to 62 cents for the second quarter of 2018. Analysts expected GAAP earnings per share of 21 cents and non-GAAP earnings per share of 35 cents on $1.32 billion in revenues.
The weak part of the report is that the company expected third-quarter revenues to be about $1.1 billion, well below expectations of $1.36 billion. In other words, the company isn’t as confident as Wall Street hoped it would be, and so the stock has fallen slightly in after-hours trading.
In the second quarter, Activision had 37 million monthly active users, Blizzard had 32 million, and King had 258 million. That’s a drop from three months earlier. In the first quarter, Activision had 41 million monthly active users, Blizzard had 32 million, and King had 272 million.
But the company said that engagement was up for its Candy Crush, Call of Duty, and Overwatch games. Still, the results were not good enough to beat last year’s numbers.
“Our second quarter results exceeded our prior outlook for both revenue and earnings per share,” said Activision CEO Bobby Kotick in a statement. “In the first half of 2019 we have prioritized investments in our key franchises and, beginning in the second half of this year our audiences will have a chance to see and experience the initial results of these efforts.”
The company laid off about 800 employees in February. This followed financial results for the fiscal year 2018 that were the company’s best-ever but fell short of expectations.
That report produced a lot of criticism for Activision Blizzard. The environment for games is still mixed, as President Donald Trump condemned violent video games on Monday, after a series of mass shootings. That causes the company’s stock price to dip briefly.