Activision's forecasts disappoint as battle with Fortnite, PUBG escalates
Activision Blizzard Inc's forecasts for the current quarter and full year came in below Wall Street estimates as the video game publisher faces competition from free digital games such as Fortnite and PlayerUnknown's Battlegrounds.
The company had seen blockbuster sales from its "Call of Duty" franchise but the recent success of games from the "Battle Royale" genre has put pressure publishers including Activision and Take Two Interactive Software Inc .
Activision forecast current-quarter adjusted revenue of US$1.35 billion and profit of 31 cents per share, missing the analysts' average estimate of US$1.49 billion and 47 cents per share.
Its 2018 guidance for adjusted profit of US$2.51 per share and revenue of US$7.48 billion also came in below analysts' expectations. Analysts were expecting a profit of US$2.61 per share and revenue of US$7.51 billion.
"The guidance was pretty wimpy, around US$100 million below consensus and US$200 million below our prior estimate," Wedbush analyst Michael Pachter said in an email.
Activision shares have lost nearly 13 percent of their value since March 9, wiping off about US$7.5 billion from its market capitalisation. The company also had a lack of popular releases in the quarter.
"We've seen some near-term impact from Battle Royale," CFO Spencer Neumann said on a post-earnings call.
However, robust digital sales from games including "Call of Duty" helped Activision top Wall Street estimates for the first quarter on Thursday. Its revenue from high-margin digital business rose 13 percent to US$1.21 billion in the quarter.
The company's profit rose to US$500 million, or 65 cents per share, in the quarter ended March 31, from US$426 million, or 56 cents per share, a year earlier.
Excluding items, the company earned 38 cents per share, beating the average analyst estimate of 35 cent per share.
Total adjusted revenue rose to US$1.38 billion from US$1.20 billion.
Shares of the company were down 1.5 percent at US$65.80 in extended trading.