#Earnings Results: Activision Blizzard stock rises as results top Street view, zero-tolerance harassment policy stressed

Activision Blizzard has had to navigate accusations of turning a blind eye to sexual harassment and bias for years amid a lawsuit filed by the California Department of Fair Employment and Housing. The Santa Monica, Calif.-based company announced that Jen Oneal and Mike Ybarra are now co-leaders of Blizzard Entertainment earlier Tuesday.

On the call, executives repeatedly stressed they were instituting several measures to make the company a safer, more diverse and equal place to work, but that continuing risk factors were still in play.

“If we experience prolonged periods of adverse publicity, significantly reduced productivity, or other negative consequences related to this matter, our business likely would be adversely impacted,” said Daniel Alegre, president and chief operating officer, on the call. “We are carefully monitoring all aspects of our business for any such impacts.”

One notable sign of disruption came last month when Jeff Hamilton, “World of Warcraft” senior system designer, went public by saying the controversy was affecting employees so much that “almost no work” was being done on the game.

Activision Blizzard shares rose more than 5% after hours, following a 3.5% decline in the regular session to close at $79.83.

The company reported second-quarter net income of $876 million, or $1.12 a share, compared with $580 million, or 75 cents a share, in the year-ago period. Analysts surveyed by FactSet had forecast earnings of 80 cents a share.

Revenue rose to $2.3 billion from $1.93 billion in the year-ago quarter, while bookings declined to $1.92 billion from $2.08 billion last year. Bookings represent the value of digital products and services sold during a quarter, but part of the revenue from those purchases is often recognized in future quarters.

Activision said adjusted earnings, which exclude share-based compensation expenses and other items, rose to $1.20 a share from 81 cents a share in the year-ago period.

Analysts had forecast adjusted earnings of 76 cents a share on revenue of $1.89 billion and bookings of $1.91 billion.

Activision Blizzard is well-known for videogames like “Call of Duty,” which serves the traditional console and PC market with “Black Ops — Cold War” and “Modern Warfare” titles, and has a free-to-play “Warzone” battle-royale option similar to Epic Games’ “Fortnite.” All of those options are available on mobile platforms, and the company said that consumer spending on “Call of Duty Mobile” was on track to exceed $1 billion for the year.

Read: Videogames entered the mainstream for good in the pandemic, but the industry faces a rough transition

The company said its Activision segment reported revenue of $789 million for the quarter, while its Blizzard-segment revenue grew “double digits” year over year to $433 million. King-segment revenue grew 15% to $635 million. Blizzard publishes the “World of Warcraft” franchise, along with the “Overwatch” and “Diablo” franchises, while King, which the company acquired five years ago, features “Candy Crush” as its lead game.

Going forward, Activision Blizzard said it expects adjusted earnings of 75 cents a share on revenue of $1.97 billion and bookings of $1.85 billion for the third quarter, and $3.54 a share on revenue of $8.52 billion and bookings of $8.65 billion for the year.

Analysts estimate earnings of 75 cents a share on revenue of $1.8 billion and bookings of $1.89 billion for the third quarter, and earnings of $3.76 a share on revenue of $8.77 billion and bookings of $8.76 billion for the year.

Take-Two Interactive Inc.
TTWO,
-7.71%
reported earnings on Monday, topping Wall Street estimates while pushing out the release date for some games, and shares dropped. Electronic Arts Inc.
EA,
-2.99%
and Zynga Inc.
ZNGA,
-1.89%
report on Wednesday and Thursday, respectively.