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How Activision Blizzard Views 2Q17 and Fiscal 2017

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Revenues of ~$1.4 billion in 2Q17

In 2Q17, Activision Blizzard (ATVI) expects revenues of ~$4.4 billion, which includes GAAP[1. generally accepted accounting principles] deferred revenues of $225 million. The company also expects product costs of 23% and operating expenses of 64%. Its earnings per share (or EPS) are estimated to reach $0.15.

Activision’s non-GAAP operating expenses are expected to be 48% with EPS of $0.38 in 2Q17. Activision raised its guidance outlook for fiscal 2017 during its 1Q17 earnings call on May 4, 2017. The company expects revenues of $6.1 billion with non-GAAP operating expenses of 46% and EPS of $1.80, up $0.10 compared to its previous guidance.

Analysts expect Activision’s revenues to fall 24.4% in 2Q17 to ~$1.2 billion. Analysts expect the company’s revenues to fall 1.5% YoY to $6.5 billion in fiscal 2017.

In comparison, analysts expect Electronic Arts’ (EA) revenues to rise 12.8% YoY to $769 million in fiscal 1Q18.[1. fiscal 1Q18 ending June 30, 2017] Take-Two Interactive Software’s (TTWO) revenues are also expected to rise 3.2% to $281.2 million in 2Q17.

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Releases in 2017

In 2Q17, Activision plans to release a new Hearthstone expansion and the Overwatch Uprising event. Heroes of the Storm 2.0 is expected to be launched with additional content in 2017. The company also expects to release new content and updates in several games in 2017, which is expected to drive revenues.

Activision Blizzard’s chief corporate officer, Dennis Durkin, stated, “Our strong owned IP portfolio combined with promising emerging business opportunities like esports, advertising and consumer products provides us with a compelling opportunity for growth in 2018 and beyond.”

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