Mentioned in this article Games: Overwatch, World of Warcraft

Q2 revenue of $1.62 and record new share price exceed analyst expectations.

68% of its net revenue comes from ‘other’ sources, which includes Overwatch League.

“Mobile initiatives” bolstered with Tencent Call of Duty deal.

Activision Blizzard exceeded expectations with the release of its Q2 fiscal reports, with net revenue coming in at $1.64B on a GAAP basis for the latest quarter. This is up from the $1.55B forecast in May, showing a rise in profits even though no major games were released in the period. A share price of 52 cents (with adjust GAAP results putting it at 62 cents per share) exceeded analyst’s expected earnings of 25 cents per share. However, the figures are only a slight increase from ATVI’s $1.63B in net revenue from the same quarter in 2017. However, combined with its successful first quarter, 2018 is shaping up to be a solid year for the company.

“We delivered record first half revenues and earnings and exceeded our second quarter guidance,” says Collister Johnson, an ATVI executive speaking as part of an official ATVI Q2 earnings call. “We did this by providing our passionate and engaged communities with a steady stream of content, services, features, and events.”

Net revenues in ATVI’s “other” category, which include esports properties Major League Gaming and the Overwatch League, were up by 68%, surging to $104M, and making up 6% of the company’s total net revenue. ATVI cited its esports success as as a result of “a focus on city-based teams, professional players, structured economics and premium content.” It also credited the “recurring flow” of content across its portfolio of franchises as a means to deliver consistent revenue results, even in quarters lacking major title releases.

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Console and PC net revenue were down for ATVI from last year, while mobile profits look to be increasing year-over-year. “Our mobile initiatives will expand their [fan] access to our iconic franchises by making them available to hundreds of millions of new players around the world,” adds Robert A. Kotick, an executive from ATVI.

Additionally, the company has seen a 46% increase in profit from the Asia Pacific region, although the area still only makes up 12% of the company’s total net revenue. This figure could be set to inflate even further following the company’s recent deal with Chinese internet and esports giant Tencent , who are creating a Call of Duty mobile game tailored to the Chinese market, and “will leverage its massive network, broad distribution channels, and local marketing expertise as the game rolls out through testing and launch in the coming months.”

Major launches coming up for ATVI this year include titles like World of Warcraft’s Battle for Azeroth expansion and Call of Duty Black Ops 4, an expansion to hit sci-fi game Destiny 2 , and a “major franchise release” from developer King. “We’re expecting a very strong final quarter, contributing meaningfully higher mix of full year revenue and earnings relative to last year,” says ATVI executive Spencer Adam Neumann. “Now, while we still have a lot of execution ahead of us in the second half, we remain confident in our franchises, in our pipeline and in our full-year outlook.”

The company is also harnessing the increased popularity of esports through its Overwatch League and its associated content, having recently signed an agreement with ESPN and Disney XD for live coverage of the league’s events. “We saw significant engagement in particular around esports, with interest in the playoffs and championships for the Overwatch League running above even our own high expectations,” continues Collister Johnson. Two additional Overwatch League franchises have been sold at “record” prices by the company, adding Atlanta, Georgia and Guangzhou, China to the league.

“In Q2 we delivered better than expected results and sequential stability,” says Spencer Adam Neumann, an executive from ATVI. “We’re looking forward to important launches in the second half and all the while, we continue to make progress executing against our strategic initiatives, including mobile, the Overwatch League and advertising.”

ATVI is predicting $1.4B in revenue for 2018’s third quarter.