Activision-Blizzard Q2 2020: Year-over-year revenues are up for the first time in six quarters


We’re back with another dip into Activision-Blizzard’s financials, this one Q2 2020, the first report since shareholders lambasted the company for excessive executive pay and the first report since BlizzCon 2020 was outright canceled.

MMO readers will recall that Q1’s report was heavily focused on on COVID-19 impacts and talking up better-than-expected returns, but as we’ve covered, 2019 saw mass layoffs, the Blitzchung boycott, a weak BlizzCon, and plunging YOY revenues for five straight quarters in May 2019, August 2019, November 2019, February 2020, and May 2020, though Q1’s revenue drop was very slight and close to flattening, which at the time we said might mark a corner corner-turn for the company, especially given the lockdowns this past spring.

And we were right, as second quarter 2020 revenues for Acti-Blizz are up a lot compared to both Q2 2019 and Q2 2018. COVID-19 lockdowns were good to the company. As usual, Activision-Blizzard characterized the gains as “significantly” exceeding its outlook thanks chiefly to Call of Duty and the pandemic (pandemic “tailwinds” seems to be the word of the moment).

“For the quarter ended June 30, 2020, Activision Blizzard’s net revenues presented in accordance with GAAP were $1.93 billion, as compared with $1.40 billion for the second quarter of 2019. GAAP net revenues from digital channels were $1.59 billion, as compared with $1.09 billion for the second quarter of 2019. GAAP operating margin was 39%. GAAP earnings per diluted share were $0.75, as compared with $0.43 for the second quarter of 2019. For the quarter ended June 30, 2020, on a non-GAAP basis, Activision Blizzard’s operating margin was 42% and earnings per diluted share were $0.81, as compared with $0.53 for the second quarter of 2019. For the quarter ended June 30, 2020, operating cash flow was $768 million. For the trailing twelve-month period, operating cash flow was $2.14 billion.”

For those wanting to keep track of MAUs (monthly active users) across all of Blizzard’s games (rather than Activision on the whole), there’s not much to see here, as they remain flat, at 32M, where they’ve now been for a whole year. Most of the MAU growth is coming from other corners of Activision, in other words.

38M in Q1 2018
37M in Q2 2018
37M in Q3 2018 (BFA)
35M in Q4 2018 (mass layoffs)
32M in Q1 2019
32M in Q2 2019
33M in Q3 2019 (WoW Classic)
32M in Q4 2019 (Blitzchung)
32M in Q1 2020 (COVID-19)
32M in Q2 2020 (COVID-19)

World of Warcraft reach and engagement once again increased sequentially, as shelter-at-home conditions further boosted the franchise’s strong trajectory,” Blizzard says. “The Shadowlands expansion saw an enthusiastic response from players in its public testing, with pre-sales accelerating even further ahead of its release in the fourth quarter. Franchise engagement is the highest in a decade at this point ahead of an expansion. Hearthstone’s Ashes of Outland expansion launched alongside a new hero class, as the expanded team continued to accelerate the pace of innovative content in the franchise. Overwatch engagement grew year-over-year, including among returning players.”

We’ll update more with the conference call once it’s begun.

Updates from the call
Bobby Kotick kicked things off by pointing out Acti-Blizz now counts half of its overall playerbase as female. Huh.

We didn’t get a clear revenue breakdown for Blizzard (now we have done; see pics above), but the call did clarify that engagement with WoW is apparently the highest it’s been in the lead-up to an expansion in a decade.

Blizzard is planning a company playtest for Diablo Immortal “in the coming weeks.” (It had been promising regional alpha testing by mid 2020 for the last two quarters.)

There’s that pandemic “tailwinds” again, heh. Yeah, most of Activision-Blizz is still working from home.

World of Warcraft is driving Blizzard’s revenue gains once again: It’s up 20% year-over-year.

No hard date for WoW Shadowlands again, just another confirmation of Q4.

Multiple questions about the pandemic’s impact on Blizzard specifically, requesting updates on the company’s upcoming titles, especially in light of BlizzCon’s cancellation. J. Allen Brack says it’s hard to measure how those are coming along, given work-from-home conditions, but the Diablo and Overwatch teams are working away. No real updates there at all. He does reiterate that there will be some sort of virtual event early in 2021.

More on Diablo – the analyst asked for details on the regional testing plan. I have no idea how Brack can talk so much and say so little, but he does. No clear answer to the actual question here either.

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