Activision Blizzard beats revenue expectations despite gaming industry slowdown

“Call of Duty” maker Activision Blizzard (ATVI) reported its Q2 earnings after the closing bell Monday, beating analysts’ expectations on revenue, but falling short on the bottom line as the industry contends with a slowdown from its pandemic-era highs.

Here are the most important numbers from the announcement versus what Wall Street was anticipating from the gaming giant, as compiled by Bloomberg.

  • Bookings: $1.64 billion versus $1.59 billion expected

  • Earnings per share: $0.47 versus $0.48 expected

Shares of Activision Blizzard were largely flat following the report.

While Activision Blizzard beat analysts’ expectations, bookings were down more than 14% year-over-year. “Bookings” measure overall revenue, but subtracts deferred sales from certain online purchases.

The gaming industry is undergoing a serious hangover following its explosive growth during the pandemic. Both Microsoft (MSFT) and Sony (SONY) reported slowdowns in software sales and user engagement during their latest earnings.

Microsoft, which doesn’t break out revenue for its Xbox products, said services revenue fell 6% year-over-year. Sony, for its part, reported a 13% year-over-year decline in software revenue. Unit sales, meanwhile, fell 26% year-over-year.

In June of this year, according to NPD, spending across game hardware, content, and accessories dropped 11% year-over-year to $4.3 billion.

But Activision Blizzard has a huge lineup of titles coming including a new “Call of Duty,” new free-to-play “Call of Duty: Warzone,” and more.

What’s more, despite many tech companies announcing hiring slowdowns and freezes, Activision Blizzard CEO Bobby Kotick said the gaming firm has grown its headcount.

“Even in a challenging economic environment, with so many companies announcing hiring freezes and layoffs, our development headcount grew 25% year-over-year as of the end of the second quarter.”

FILE - The Activision Blizzard Booth is shown on June 13, 2013, during the Electronic Entertainment Expo in Los Angeles.  Microsoft’s purchase of video game publisher Activision Blizzard faces antitrust scrutiny in the U.K., where competition regulators say they’ve opened an initial inquiry into the $69 billion deal. The Competition and Markets Authority said Wednesday, July 6, 2022,  it has started looking into whether the transaction would result “in a substantial lessening of competition” in the United Kingdom.  (AP Photo/Jae C. Hong, File)

The video game industry is dealing with a hangover from the highs it experienced during the pandemic. (AP Photo/Jae C. Hong, File)

Microsoft is also waiting to learn if its planned acquisition of Activision Blizzard can move forward. While Microsoft has said that it’s confident the $68.7 billion deal will close by the end of fiscal 2023, the Federal Trade Commission is still looking into the purchase.

Global regulators are also examining the acquisition. On July 6, the U.K.’s Competition and Markets Authority announced that it launched an investigation into the move. The authority is expected to announce its findings on Sept. 1.

If the deal goes through, Microsoft would gain access to Activision Blizzard’s massive library of games including “Call of Duty” and “World of Warcraft.” Microsoft, meanwhile, has assured fans that if regulators approve the acquisition, “Call of Duty” will still be available on Sony’s consoles.

Activision Blizzard has been dealing with the fallout from explosive allegations that it, and Kotick, fostered an environment akin to a frat house atmosphere plagued by sexual harassment and gender discrimination.

In March, the company paid $18 million to settle a lawsuit filed by the U.S. Equal Employment Opportunity Commission related to the allegations. California’s Department of Fair Employment and Housing also filed a lawsuit against the gaming company, though that case is still pending.

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