Revenue rose over 40% in 2016

Activision Blizzard’s (ATVI) revenue rose over 40% YoY (year-over-year) to $6.6 billion in fiscal 2016. In the first nine months of 2017, Activision’s revenue rose 8.7% to $5 billion from $4.6 billion in the first nine months of 2016.

Comparatively, its operating income rose only 7% YoY to $1.41 billion in 2016 from $1.32 billion in 2015. In the first nine months of 2017, the firm’s operating income has risen 10.3% to $1.9 billion.

Activision Blizzard’s Revenue and Profitability Growth

Activision’s GAAP (generally accepted accounting principles) net income rose 8.4% YoY to $967 million in 2016, whereas net income in the first nine months of 2017 rose 20% YoY to $857 million.

Fall in profit margins

Activision Blizzard’s profit margins declined in 2016 despite a rise in digital revenue. Activision’s digital revenue rose from 53% of total revenue in 2015 to 73% in 2016. In 3Q17, this figure rose to 84%. However, the company’s non-GAAP net margin fell from 19.1% in 2015 to 14.6% in 2016—way below ATVI’s net margin of 24% in 2011.

Activision will need to look at improving profit margins in fiscal 2018 and 2019 as revenue growth might slow.

Analysts expect revenue growth of 5.7% in 2017

Analysts expect Activision Blizzard’s (ATVI) revenue to rise 5.7% YoY to $6.97 billion. Analysts also expect revenue to rise marginally by 0.5% YoY to $2.46 billion in 4Q17 and 17.7% YoY to $1.41 billion to 1Q18.

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