Activision Blizzard’s third-quarter earnings report beat expectations, but shares sank after the company announced delays on two key games and a Blizzard leadership departure.
The videogame maker announced delays for Overwatch 2 and Diablo IV, both key upcoming titles from the Blizzard catalog. The company declined to disclose a precise release date but said it’s not planning for material contributions from either game in 2022.
Activision Blizzard stock (ticker: ATVI) fell 10%, to $69.80, in after-hours trading Tuesday. The S&P 500 rose 0.4% on Tuesday.
The company reported adjusted earnings of 89 cents a share, ahead of Wall Street’s consensus estimate for 70 cents a share, according to FactSet. Net bookings—a form of adjusted revenue that videogame firms and investors prefer because it gives a more accurate read on digital goods sales during the quarter—hit $1.88 billion, in line with consensus estimates, according to FactSet.
COO Daniel Alegre said during the company’s earnings call that Blizzard co-leader Jen Oneal plans to leave the company at the end of the year. Alegre said Mike Ybarra will take on her leadership responsibilities as the sole leader for Blizzard. Oneal and Ybarra were named co-leaders of Blizzard in August with the departure of Blizzard President J. Allen Brack.
Brack’s departure followed a wave of turnover and negative headlines about the company’s workplace culture. The California Department of Fair Employment and Housing filed a civil action lawsuit in July, which alleged the company “fostered a pervasive ‘frat boy’ workplace culture.” The company disclosed in September that it received a subpoena from the U.S. Securities and Exchange Commission about disclosures related to workplace issues.
After employees staged a walkout over the summer and urged the company to make substantive changes, the company set goals that include increasing the percentage of women and non-binary people in its workforce by 50% within the next five years, investing $250 million over 10 years toward opportunities for those from under-represented communities, and addressing pay inequity.
CEO Bobby Kotick also cut his salary to the minimum allowed under California law. The company also waived any requirement of arbitration in claims of sexual harassment and discrimination—a key issues for the employees advocating for change.
The company expects adjusted earnings of 62 cents a share and net bookings of $2.78 billion in the fourth quarter.
Write to Connor Smith at connor.smith@barrons.com
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