Activision Profit Beats Expectations on Sales of Destiny

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Activision Blizzard Inc., the largest U.S. video-game maker, reported third-quarter sales and profit that beat analysts’ estimates, crediting the new Destiny sci-fi shooter title and Hearthstone: Heroes of Warcraft.

Profit excluding some items rose to 23 cents a share in the third quarter, the Santa Monica, California-based company said yesterday in a statement. Analysts had projected 13 cents, the average of 23 estimates compiled by Bloomberg.

Chief Executive Officer Bobby Kotick said the record results were driven by Destiny, which was introduced in September and now has 9.5 million registered users, making it the top new franchise in history. He also credited strong sales of existing titles, including the online World of Warcraft, which reported a sequential jump in users ahead of an update.

“The over-performance is largely the result of the incredible success of Destiny and the continued success of Hearthstone,” Kotick said in an interview. “It’s really important for us to continue to demonstrate that we have the ability to successfully manage our existing franchises, but also release really compelling new IP.”

Revenue, also reported on an adjusted basis, grew 20 percent to $1.17 billion, topping analysts’ projections of $1 billion. The company said in September that consumers spent $325 million on Destiny in the first five days of release.

Activision gained 3.8 percent to $20.70 at 9:47 a.m. New York time. Before today, the stock had advanced 12 percent this year.

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Activision is putting out new games for a number of established franchises this year. They include Skylanders Trap Team, a combination video and action figure game.

Call of Duty: Advanced Warfare, the latest installment of that franchise, was released Nov. 3. A lawsuit from former Panamanian President Manuel Noriega claiming his image had been improperly used in a version of the game without permission was dismissed, the company said on Oct. 28.

The company’s guidance for the fourth quarter falls short of analysts’ projections. Activision projects profit of 86 cents, excluding items, and revenue of $2.2 billion on that basis. Analysts estimate 94 cents and $2.34 billion in revenue.

For the third quarter, including costs like stock-based compensation and changes in deferred revenue, Activision reported a net loss of $23 million, or 3 cents a share, compared with profit of $56 million, or 5 cents, a year earlier. Revenue grew 9 percent to $753 million on that basis.