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Overwatch drives Activision Blizzard to record Q1 2017

Revenues climbed to $1.73 billion with digital growing 50% y-o-y

Activision Blizzard is off to a fantastic start for Fiscal 2017, reporting record results in the first quarter, in large part thanks to Blizzard's immensely popular Overwatch. GAAP net revenues were up y-o-y from $1.46 billion to $1.73 billion while GAAP earnings per share jumped 17% to an all-time quarterly record $0.56. Additionally, GAAP net revenues from digital channels totaled a Q1 record of $1.39 billion, growing 50% y-o-y and accounting for 80% of the company's total. Meanwhile, Activision's operating cash flow was over $400 million, up 22% y-o-y.

Overwatch actually drove Blizzard to its biggest Q1 online player community in its history with MAUs of 41 million, representing a 58% jump over last year. With less than a year on the market and over 30 million players, Overwatch has quickly grown to become the 8th billion-dollar franchise in Activision Blizzard's portfolio. Blizzard's Hearthstone also enjoyed growth in its MAUs even without any new content releases in the first quarter, and recently shot past 70 million registered players.

Activision Blizzard CEO Bobby Kotick commented, "This quarter we delivered record revenues, earnings per share and cash flow, and over-performed guidance. Among the drivers of our results was Overwatch... The Overwatch League is gaining momentum and we're excited to offer our community of players the best professional league experience. Destiny 2 and Call of Duty: WWII are also coming later this year, and both reveals have been very well received by fans."

Unlike last year's Call of Duty, which earned a negative reaction to its first trailer, Activision Blizzard was happy to report that last week's reveal for WWII "was the most watched livestream in Call of Duty history, and the reveal trailer became the fastest video to reach 10 million views in Call of Duty history." The company said that pre-orders are now "off to a very strong start" ahead of its November 3 release this year. Pre-orders for Bungie's Destiny 2 are also off to a strong start, Activision noted.

From an audience perspective, Activision Blizzard had 431 million MAUs in the quarter, but it didn't get as much help from the mobile side with King. King's MAUs were down y-o-y to 342 million, but importantly, the company said it's seen better engagement per user. And, King boasted that it had two of the top 10 highest-grossing titles in the U.S. mobile app stores for the 14th quarter in a row.

Looking ahead to the second quarter and full year, Activision Blizzard is forecasting $1.43 billion in GAAP revenues with earnings per share of $0.15 in Q2, and GAAP revenues of $6.1 billion with earnings per share of $0.88 for calendar 2017.

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