Net income for the first fiscal quarter was $12.0 million, an increase of $7.8 million, as compared with net income of $4.2 million for the previous first quarter. Earnings per diluted share were $0.08, an increase of $0.05, as compared with $0.03 per diluted share reported for the same period last year.
Robert A. Kotick, Chairman and CEO of Activision, stated, "In addition to delivering record net revenues for the first quarter, we also significantly increased our earnings. Both Shrek 2 and Spider-Man 2 were top-selling titles, and as of today, the two titles combined have shipped more than five million units. In the past nine months, all five games created by our internal development studios have each shipped more than one million units, with three shipping more than three million units."
Kotick continued, "Our focus on big propositions is yielding superb results and we intend to continue leveraging our increasing portfolio of franchises. For the balance of this year and next year, our production strategy centers around developing games based on proven, predictable brands. This strategy should enable us to grow our revenues, earnings and operating margin, and increase our return on invested capital as we have over the past few years. As we look toward the future, Activision will also selectively develop groundbreaking original content, as we did last year with the introductions of True Crime: Streets of L.A. and Call of Duty."
Business Highlights
Activision's results were driven by strong global consumer response to its products across all platforms. During the quarter, the company released Shrek 2 and Spider-Man 2 for the PlayStation 2, Xbox, GameCube, Game Boy Advance and the PC and True Crime: Streets of L.A. for the PC.
Other highlights include:
- Today, Activision announced that one of its wholly owned studios, Neversoft, the creators behind the Tony Hawk franchise, is in development on a compelling new intellectual property that will bring Neversoft's world renowned development prowess to a new genre. The unnamed title is slated for release in fiscal 2006, alongside a new game based on the Tony Hawk franchise that Neversoft will also develop for fiscal 2006.
- According to NPD TRSTS, Spider-Man 2 was the #1 best-selling video game in the U.S. across all platforms for the month of June. Additionally, Shrek 2 was the #1 best-selling title across all platforms for the month of May and the #2 game behind Spider-Man 2 in June.
- On July 16, Activision Value Publishing announced a multi-year alliance with Discovery Consumer Products to develop and distribute video games based on the popular television series American Chopper.
- On July 14, Activision confirmed that id Software's highly anticipated DOOM 3 for the PC has entered manufacturing and will begin shipping to retail stores worldwide the week of August 2.
- On July 7, Activision announced that the company's North American Publishing unit has shipped more than two million units of its Spider-Man 2 video game timed to the theatrical release of Sony Pictures Entertainment's Columbia Pictures "Spider-Man 2".
- On April 8, Activision announced that it had partnered with Nielsen Entertainment to develop a new initiative that will allow video game companies to supply advertisers with audience measurement metrics to help them assess the impact of in-game ad exposure. The new initiative will provide tools for advertisers to effectively measure everything from ad exposure to demographics to audience recall when it comes to video game use.
Activision also increased its outlook for fiscal 2005. For the second quarter, the company expects net revenues of $254 million and earnings per diluted share of $0.08. For the third quarter, it expects net revenues of $515 million and earnings per diluted share of $0.52. For the fourth quarter, Activision expects net revenues of $120 million and earnings per diluted share of $0.01. For the full fiscal year, the company expects net revenues of $1.10 billion and earnings per diluted share of $0.69. The company's previous fiscal year outlook was $1.05 billion in net revenues and earnings per diluted share of $0.64. The company's revised outlook represents a 16% increase in net revenues and a 28% increase in earnings per diluted share year over year.
Looking ahead to the second quarter, Activision's slate will be driven by Doom 3 and Rome: Total War, two of the most anticipated PC games of the year; Call of Duty: United Offensive, the expansion pack to the best-selling, critically acclaimed PC title Call of Duty; DreamWork's Shark Tale, for the PlayStation 2, Xbox, GameCube, Game Boy Advance and the PC; and X-Men Legends for the PlayStation 2 , Xbox and GameCube.