Another busy week of earnings ahead; but thankfully things get calmer after Friday – sorry for the huge information dump!
Today, I’ll be covering Activision Blizzard, BP and Enphase Energy.
Activision Blizzard (ATVI) – Q4 Earnings
Activision Blizzard provided better-than-expected results this quarter, with a positive outlook for 2023. This is in part due to a string of product releases, boosting both sales and ongoing in-game purchases revenue. Games include Call of Duty: Modern Warfare II, Overwatch 2, World of Warcraft: Wrath of the Lich King Classic and Warcraft: Dragonflight. In 2023, the company will also launch the much-anticipated Diablo IV.
Key Points:
- Revenue of $2,334m, up from $2,163m (+7.9%) a year ago
- Product sales revenue grew to $721m, up 11.8% year-over-year
- In-game purchases, subscription and other revenue increased to $1,613m, up 6.3% year-over-year
- Gross profit of $1,578m, up from $1,506m (+4.8%) a year ago. Gross profit margin has declined to 67.6% compared to 69.6% a year ago
- Operating profit of $368m, down from $682m (-46.0%) a year ago
- Largely due to the development teams growing by 25% year-over-year, along with additional money being spent on product development for current and upcoming releases
- There is also a $35m payment to the US regulators to settle charges regarding their poor management of complaints and violations of whistle-blower protection rules
- Profit before tax of $458, compared to $637m a year ago
- Profit after tax of $403m, compared to $564m a year ago
- Basic earnings per share of $0.52
- Yearly dividend has not yet been announced. This is expected to be declared on 9th February 2023
- No specific guidance provided for 2023 due to the planned acquisition by Microsoft. Additionally, no earnings call occurred. However, the earnings report does suggest continued strong performance in 2023 with revenue growth in the high-teens. Costs for Q1 will also increase due to more aggressive marketing regarding the Diablo IV game launch in June
- Microsoft and Activision Blizzard are still aiming to close the acquisition process (Microsoft will buy Activision Blizzard for $95.00 per share if approved) by the end of June 2023. However, there are investigations ongoing by US, EU and UK regulators regarding anti-trust and anti-competition concerns. It’s very probable that the acquisition – if it even closes at all – will not close until the end of 2023. As such, the stock price is only at $75 today, a whole 21% below Microsoft’s offer
- Monthly active users rose to 389 million, up from 368 million in the prior quarter.
BP (BP) – Q4 Earnings
Similarly to Shell, BP beat expectations across the board. Unsurprisingly, these results have increased calls for the government to put more pressure on the energy giants to pay more tax on these excessive profits. Making things worse for BP on a PR perspective, investors have put pressure on the company to continue high levels of production, despite their previous pledge to reduce output by 2030. More on that below. In the meantime, BP have increased their dividend and have approved more buybacks to spend that extra cash.
Key Points:
- Revenue of $70,356m, up from $52,238m (+34.7%) a year ago
- Gross profit of $36,255m, up from $20,149m (+79.9%) a year ago
- Profit before tax of $17,720m, compared to $4,793m a year ago
- Profit after tax of $11,161m, compared to $2,578m a year ago
- Basic earnings per share of $59.43
- Dividend of $6.61 per share announced, to be paid on 31st March 2023
- Guidance for the first quarter suggests oil prices are likely to remain stable due to uncertainty around Russia and Ukraine, as well as the continued China reopening boosting demand
- The company previously issued a goal to reduce oil and gas output by 40% by 2030. Today, however, BP announced it will be scaling back on this pledge, instead aiming for a reduction of 25% by 2030
- A further $2.75bn in share buybacks were announced
Enphase Energy (ENPH) – Q4 Earnings
Enphase beat expectations across the board (once again) in Q4, while also providing better-than-expected guidance for the first quarter of 2023. This comes as a bit of a shock, as many analysts anticipated sales in the solar-power sector would decline due to a combination of inflation and a weakening housing market. It seems this – so far – isn’t the case. The stock rose 8% in after-hours trading.
Key Points:
- Revenue of $725m, up from $413m (+75.6%) a year ago
- Gross profit of $311m, up from $163m (+90.2%) a year ago
- Cost of sales rose to $414m, up from $249m (+66.0%) a year ago; a slower pace increase than revenue growth. Gross margins rose to 42.9%, up from 39.6% a year ago
- Operating profit of $157m, up from $58m (+172.1%) a year ago
- Profit before tax of $168, compared to $134m a year ago
- Profit after tax of $154m, compared to $53m a year ago
- Basic earnings per share of $1.13
- Guidance for Q1 revenue comes in at between $700m and $740m, pretty flat compared to the current quarter but much better than analysts expected. Gross margins will remain between 40% and 43%, while operating expenses will be much higher due to stock-based compensation and restructuring charges
- Enphase will be a key beneficiary of the US Inflation Reduction Act, and as such, the company are expanding their manufacturing capacity to take full advantage of the expected increase in sales
Do you invest in any of these companies? Have these earnings changed your view about the company’s prospects in any way? Let me know in the comments!
