Activision Blizzard Inc, the largest U.S. video-game maker, raised its full year profit forecast after it surpassed third-quarter estimates due to strong sales of Destiny and growth in its console business.
The Santa Monica, California-based company reported a record non-GAAP net revenue of $1.71 billion or $0.23 earnings per share in the recent quarter, compared to last years Q3 result of $657 million or $0.08 earnings per share.
CEO Bobby Kotick said that the record sales were boosted by its new sci-fi shooter game Destiny, which was released in September. The title was the largest new franchise launch in video game history and ranked among the top 10 largest video game launches of all time in the U.S. Since its release, Destiny has acquired more than 9.5 million registered users.
Mr. Kotick also pointed out a strong performance among the companys existing titles, including World of Warcraft, which reported a quarterly increase in subscribers to 7.4 million ahead of an expansion pack that comes out next week. The company is expected to grow its portfolio in 2015 with two new franchises, Heroes of the Storm and Call of Duty Online.
Activision Blizzard, maker of the “Starcraft” and “Diablo” titles, raised its full-year non-GAAP revenue projection to $4.8 billion and non-GAAP earnings per share to $1.35 from the previous forecast of $4.7 billion and $1.29 earnings per share.
“We expect to deliver double-digit non-GAAP revenue growth year-over-year and record non-GAAP earnings per share” said Mr. Kotick.
Activision and other game makers benefited from the release of next-generation consoles, Sonys PS4, Microsofts Xbox One and Nintendos Wii U. The game makers third-quarter net revenue from next-gen consoles reached $468 million, nearly double the current generation consoles $284 million.
In North America, which accounted for 53% of all sales in the quarter, non-GAAP net revenue more than doubled to $624 million, while in Europe the company also enjoyed a healthy growth of 40% to $451 million.
Activision reported a GAAP net loss, including stock-based compensation and changes in deferred revenue, of $23 million, or $0.03 cents per share, compared with a profit of $56 million year-to-year. The company had projected a GAAP net loss of $0.07 per share. GAAP revenue increased 9% to $753 million.
Activision Blizzard Inc lost 1.72% on Tuesday and closed at $19.95 on NASDAQ, marking a one-year increase of 18.47%. Shares rallied as much as 5.11% to $20.97 by 11:25 GMT in pre-market trade on Wednesday after the reports release. The company is valued at $14.31 billion based on Tuesdays close. According to the Financial Times, the 22 analysts offering 12-month price targets for Activision Blizzard Inc have a median target of $26.00, with a high estimate of $30.00 and a low estimate of $22.00. The median estimate represents a 30.33% increase from the last price of $19.95.
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