Video-game company Activision Blizzard, fresh off its purchase of mobile gaming giant King Digital Entertainment, on Thursday reported a surge in adjusted profit, helping the company improve its outlook for results to come and stoking investors to buy its stock.
Overall, Activision Blizzard’s adjusted revenue rose 29 percent to $908 million, although analysts expected $812 million in adjusted revenue ahead of the company’s reported earnings. The video game company reported adjusted earnings of 23 cents per share, beating analysts who had predicted 12 cents per share.
Activision Blizzard, like other video-game makers, focuses on adjusted numbers because U.S. accounting rules spread sales out over the lifetime of new content for a game.
Activision’s shares traded up 4.1 percent at $36.35 in after-hours trading at approximately 1:30 p.m. PT.
The better-than-expected results helped the company lift its earnings guidance for the year by 3 cents to $1.78 per share. The company also issued an optimistic outlook for the second quarter, predicting 38 cents a share in earnings versus the Wall Street expectation of 34 cents a share.
The report from Activision, which is home to the “Call of Duty” franchise, is the first to include business from its February takeover of King Digital, the maker of popular mobile games like “Candy Crush.”
In the latest period, Activision didn’t release any major new titles, although it did issue a second expansion pack for “Call of Duty: Black Ops III.” The first quarter also tends to enjoy a halo effect from the holiday gift-giving season at the end of the year, as gamers apply gift cards they received toward online purchases.
Unadjusted, Activision Blizzard reported a profit of $336 million dollars or 45 cents a share, compared with a profit of $394 million dollars or 54 cents a share. Revenue rose 14 percent to $1.455 billion.