Stock tumbles after guidance disappoints investors.
Activision Blizzard reported higher-than-expected revenue for the third quarter, boosted by the success of its World of Warcraft: Legion and Overwatch videogames as well as its acquisition of Candy Crush mobile game-maker King.
The company also raised its full-year adjusted profit and revenue forecasts.
Activision’s total adjusted revenue, which includes deferred revenue, rose to $1.63 billion in the third quarter ended Sept. 30 from $1.04 billion a year earlier.
Analysts on average had expected revenue of $1.57 billion, according to Thomson Reuters I/B/E/S.
Revenue from the company’s high-margin digital business more than doubled to $1.34 billion.
Activision raised its full-year adjusted revenue forecast to $6.53 billion from $6.48 billion, and its profit expectations to $2.02 per share from $1.90.
However, its forecasts for the key holiday-shopping quarter were slightly below analysts’ estimates, amid expectations of heavy competition from games launched by rivals.
Activision forecast adjusted earnings of 74 cents per share and revenue of $2.38 billion for the quarter, which includes the latest installment of its Call of Duty franchise, Call of Duty: Infinite Warfare, releasing on Friday.
Analysts on average were expecting a profit of 80 cents per share and sales of $2.48 billion.
Activision’s shares atvi fell 4% in after-hours trading on Thursday to $41.80.
The company could be conservative with its forecast due to its rivals’ launches, Wedbush analyst Michael Pachter said in a pre-earnings note.
Pachter expects the latest Call of Duty game to be the year’s most popular in a crowded holiday slate that includes Electronic Arts Inc’s Battlefield 1 and Titanfall 2 shooters, as well as Ubisoft Entertainment’s Watch Dogs 2.
“Every holiday is very competitive, and this holiday will be no different,” Dennis Durkin, Activision Blizzard CFO said in an interview.
“But we feel like we’ve got great momentum in our enduring franchises including Call of Duty and World of Warcraft, and early success in new franchises such as Blizzard’s Overwatch,” Durkin added.
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Activision, which bought “Candy Crush” maker King Digital for nearly $6 billion in February, said King had 394 million monthly active users, down slightly from the preceding quarter.