Activision Blizzard, Inc. (ATVI) has reported a 56.69 percent jump in profit for the quarter ended Sep. 30, 2016. The company has earned $199 million, or $0.26 a share in the quarter, compared with $127 million, or $0.17 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $371 million, or $0.49 a share compared with $147 million or $0.20 a share, a year ago.
Revenue during the quarter surged 58.38 percent to $1,568 million from $990 million in the previous year period. Gross margin for the quarter expanded 30 basis points over the previous year period to 66.26 percent. Total expenses were 81.25 percent of quarterly revenues, up from 80.20 percent for the same period last year. That has resulted in a contraction of 105 basis points in operating margin to 18.75 percent.
Operating income for the quarter was $294 million, compared with $196 million in the previous year period.
However, the adjusted operating income for the quarter stood at $542 million compared to $225 million in the prior year period. At the same time, adjusted operating margin improved 1184 basis points in the quarter to 34.57 percent from 22.73 percent in the last year period.
Bobby Kotick, chief executive officer of Activision Blizzard, said, "This quarter we again over-performed our plan, delivering record third-quarter revenues of $1.57 billion, up almost 60% and earnings per share of $0.49, more than doubling year-over-year on a non-GAAP basis (as redefined)." "We continue to see enthusiasm from our global audiences for our key franchises including Call of Duty, Destiny, Candy Crush and World of Warcraft, plus our newest franchise - Overwatch, which after only about four months had already reached over 20 million players and has incredible player engagement. Looking forward, we expect continued momentum from all of our growth strategies, especially our esports initiatives and our integration of in-game advertising."
For the fourth-quarter 2016, Activision Blizzard, Inc. forecasts revenue to be $1,856 million. It projects adjusted revenue to be $1,856 million. The company expects diluted earnings per share to be $0.05. On an adjusted basis, the company projects diluted earnings per share to be $0.40.
For fiscal year 2016, Activision Blizzard, Inc. revenue to be $6,450 million. It projects adjusted revenue to be $6,450 million. The company expects diluted earnings per share to be $0.98. The company projects diluted earnings per share to be $1.92 on adjusted basis.
Working capital drops significantly
Activision Blizzard, Inc. has witnessed a decline in the working capital over the last year. It stood at $1,633 million as at Sep. 30, 2016, down 65.25 percent or $3,066 million from $4,699 million on Sep. 30, 2015. Current ratio was at 1.44 as on Sep. 30, 2016, down from 3.92 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 5 days for the quarter from 12 days for the last year period. Days sales outstanding went down to 19 days for the quarter compared with 33 days for the same period last year.
Days inventory outstanding has decreased to 11 days for the quarter compared with 48 days for the previous year period. At the same time, days payable outstanding went down to 36 days for the quarter from 69 for the same period last year.
Debt increases substantially
Activision Blizzard, Inc. has witnessed an increase in total debt over the last one year. It stood at $6,362 million as on Sep. 30, 2016, up 56.01 percent or $2,284 million from $4,078 million on Sep. 30, 2015. Short-term debt stood at $1,481 million as on Sep. 30, 2016. Total debt was 34.61 percent of total assets as on Sep. 30, 2016, compared with 28.51 percent on Sep. 30, 2015. Debt to equity ratio was at 0.72 as on Sep. 30, 2016, up from 0.51 as on Sep. 30, 2015.
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