Tuesday, August 16, 2016

Gearing Up Alts, and Ding #24, #25 and #26

OK, so #24 and #25 were quite a while ago, and were my boosted Outlaw Rogue, my third hunter and now a shiny new demon hunter.  I was going to go ahead and finish up the demon hunter quest line on the alliance side as well, but I noticed that I actually hit 100 pretty far before finishing the storyline, so I figured I'd wait so I could use the starting area to get a head start towards 110 on him.

So rather than work on #27, #28 etc using the invasions, I'm actually using them to gear up some of the lesser geared alts.  The goal is to have all 26 level 100's at a minimum ilvl of at least 660 by the time Legion releases.  I may bump that up a bit at some point, because at least now, I'm showing really fast gains using the invasions.  My lowest geared alt at the moment is at 626 and that's essentially with only working on this for a day since I was out on holiday all of last week.

So I may pick up and try to invasion my way through some levels on some toons at some point, but at least for now, I'm sticking with just gearing folks.

So here are some generally spoiler free thoughts on the invasions and Broken Shores questline.  My first thought on the Broken Shores quest line was to wonder when George R. R. Martin started writing content for Blizzard.  In general, I thought the story was pretty well done, although there were a few things that I was wondering (and I haven't finished the whole Harbinger series yet, so some of this may be expalined there).  Main question in my mind was where was Khadgar?

Also, portions of the main scenario still seemed a bit glitchy to me, which was disappointing, but in general, it was a really nice way to get a feel for your new class layouts and abilities if you hadn't done so already.

The invasions have been fun so far as well.  I'm a bit confused by the weapon drops and weapon upgrade items given that we'll all be replacing our weapons in a couple of weeks, but I guess that's okay.  The invasions are also making me very happy that I finally splurged and bought top level flying for all my toons.

So that's it for now.

Cheers.

Friday, August 5, 2016

An Analysis of Blizzard's Second Quarter Earnings Release

So this quarter again marked more changes in what Activision-Blizzard reports in their earnings releases on a quarterly basis, and we'll get to more information that later.

Overall, it was a fantastically successful quarter for Activision-Blizzard.  They reported non-GAAP revenue of $1.6 billion for the quarter, compared to $759 million in the prior year, an increase of 112%.  Non-GAAP EPS increased from $0.13 per share to $0.54 per share, and increase of 315%, and soundly beat the consensus estimates by the analysts that follow the company, which were $0.42 per share.

The company also generated an enormous amount of cash during the quarter, with free cash flow of $435 million for the quarter and $717 million year to date.  They paid off another $816 million of debt taken on from the Candy Crush acquisition during the quarter.  Combine that with the repayments from Q1, and that means that they've already repaid $1.3 billion of the $2.3 billion in total debt that they took on to help finance the King / Candy Crush acquisition just FIVE MONTHS AGO.  This company continues to be a cash generating machine.

On Monthly Active User's ("MAU's"), the company's new organization-wide user engagement metric, MAU's as a whole were down, with declines in both King and Activision more than offsetting a significant increase for Blizzard, driven mostly by the release of Overwatch.

Here is the table from their 10-Q:


The decline at Activision from prior quarter is due to the release of Call of Duty:  Black Ops III in the fall of 2015, which caused numbers to be high for the last couple of quarters.

So overall, a very positive quarter for the Company as a whole.

The one interesting change that I referenced earlier is that for the first time in recent history, the company did not include any detailed financial information for their individual segments (i.e., Activision, Blizzard and King) in their earnings release.  That information is still publicly available, but as I discussed last quarter, you now have to hunt down their Form 10-Q filing with the SEC to find it (see my discussion of what's in their 10-Q here).

So in terms of information for Blizzard specifically, revenue for the quarter was up 92% from $385 million to $738 million.  Operating income for the quarter was up 185% from $117 million to $333 million and operating margins increased from 30.3% to 45.1%.  For the first six months of the year, revenue for Blizzard was up 40% from $737 million to $1,032 million.  Operating profit for the first six months increased 64% from $256 million to $419 million.  Operating margins increased from 34.7% to 40.6%.

According to their 10-Q filing, the increase in Blizzard revenue was due to increases for Overwatch and Hearthstone, offset by declines in Diablo III (which released in China in the second quarter of last year).  Revenue was also impacted by declines in Heroes of the Storm and Warcraft (due to a smaller subscriber base).  They also mentioned that sales and marketing costs were up for Blizzard due to current and future product launches.

The other specific item that was mentioned on the earnings call was the pre-purchases of Legion were tracking in line with where they were with pre-purchases for Warlords.

So that's it for this quarter.  Stayed tuned later this month for more from @AlternativeChat and I in podcast form as we'll dive into more details on the earnings release, quarterly reports and other developments!



Monday, August 1, 2016

A Change in How Blizzard Reports Revenue

On Friday, Blizzard hosted a brief conference call with their investors to explain some changes that would be coming with this quarter in how they present their revenue.

As I've discussed in this space before, Blizzard presents their revenue on both a GAAP and a non-GAAP basis.  GAAP stands for Generally Accepted Accounting Principles.  GAAP requires that Blizzard record their revenue when it is actually earned and not necessarily when they collect the cash.  

As a quick example, let's look at the WoW Token.  On a non-GAAP basis, as soon as Blizzard sells that WoW Token to someone, they are counting that $20 as non-GAAP revenue as soon as they have your cash in hand.  But on a GAAP basis, they aren't allowed to record the cost of that Token as revenue until someone actually uses it for game time.

Similar differences occur if you are pre-ordering a product like Legion, or if you are paying for your subscription in 6 month blocks.

Back in May, the U.S. Securities and Exchange Commission (SEC), which regulates public companies like Activision-Blizzard that trade on U.S. stock exchanges, issued new rules and regulation on the use of non-GAAP measures by public companies.  

In response to those new rules, Blizzard announced that they will no longer be disclosing non-GAAP revenue in their earnings releases.  Only GAAP revenue.

They said they will continue to use non-GAAP revenue internally to measure their performance and incentivize their people, but just won't continue to disclose it externally.

Here is a link to a presentation that Blizzard used on the call on Friday that explains the differences:


So what does this mean for those of us that follow Blizzard closely.  Very little.  As you can tell from the presentation, while they won't have an actual line on their earnings release for non-GAAP revenue, all of the information that you need to calculate that number will still be there and easily available, so we'll continue to calculate it and talk about it in the analysis that I do every quarter on their releases.

Tuesday, July 26, 2016

Thoughts So Far on 7.0.3

So I've had the chance to give patch 7.0.3 a solid trial run at this point and have a few thoughts that I wanted to share:


  • I don't like the new name plates, but am still hunting for an add-on that produces an option that I like better.
  • Not a big fan of Outlaw so far, although I need to give it more of a try before reaching any final conclusions.
  • Both destruction and affliction feel different but okay to me as a warlock at this point.  Haven't had much time with demonology yet.
  • I've been leveling as BM on my hunter, which feels very different, but I like it being more about "send in the pets".  Marksmanship feels okay but very different.  Haven't had the chance to do much with SV yet.
  • I like shadow priests, although other than the new voidform thing, it doesn't feel all that different.
  • Loving the boomkin changes so far.
  • Mages are still mages.
I think I'm probably going to get that third hunter to level 100 before Legion drops at this point.  He's working his way through Pandaria now, so feels like I've got a decent amount of time to get it done.  That'll be #25 along with my level 100 boost (which I've already used on an Outlaw rogue).

Cheers.

Thursday, July 7, 2016

Step Away From the Mission Table!

Several things have recently come together at the same time to make me conclude that it's probably time to step back from the garrison gold-making efforts:

  1. The background downloader just fired up starting to dribble the pre-patch bits and bytes onto my PC.
  2. Yesterday was my best garrison gold-making day ever.  Granted, only by about 325g, but with what I feel was a still impressive 28,150g on the day, seemed like a good time to go out on a high note.
  3. I also had two fairly arbitrary gold thresholds that I was targeting.  One on my Horde server and one on my Alliance server and I managed to pass them both yesterday.  
So with all of that coming together at more or less the same time, I've decided it's probably time to back off of the regular garrison gold mission stuff and just focus on leveling until the pre-patch comes out and I can run as many toons as possible through that stuff.

Right now, my third hunter is sitting at level 68 and just started working his way through Northrend.  If I can get him to 100 before the pre-patch, I'd then switch to working on mage #3.

The focus during the pre-patch originally will be on my three mains - warlock, hunter and death knight, and then will spend a little bit of time on trying to get gear for my three undergeared Alliance toons - rogue, warrior and monk.

So that's the plan folks. 

Cheers,

Joar


Tuesday, June 21, 2016

Happy 7 Year Blogoversary To Me!

So the 7th anniversary of this blog passed pretty uneventfully this past week.  I've been trying to come up with something profound to write about, but with our current massive lack of content, I just don't have much to say in celebration of the passing of this milestone.

Mostly what I've been doing in game has still be focused around garrison gold-making.  I've been averaging around 250,000g per month across all my toons.  That total is for a total of 22 characters across two different servers.  I'm also generally not playing every day.  In general, it's an average of just over 12,000g per day played.

This is mostly just doing garrison missions and using excess garrison resources and the trading post to sell various materials on the auction house.

I've also been working on leveling my third hunter.  He just hit level 58 and is on his way to Outland.  If the pre-patch hits in late July like most are expecting, he'll probably be the last toon to get to max level before Legion drops.  Counting my level 100 boost (which I'm going to use on a rogue, oddly enough), that'll give me 25 level 100's for Legion.  Which is pretty much certifiably bat shit crazy.

Of course, like the last 3 expansions, Legion isn't expected to be at all alt friendly, so I'm sure that'll be the last time I level a huge volume of alts, just like the last 3 expansions. [/sarcasm off]

Cheers!

Joar

Monday, May 23, 2016

Mission Accomplished - Level #100 #23

So that's mission accomplished on my leveling plans for Draenor.  I'm pretty happy with having got through all that, and will likely continue the garrison gold making charge as well as leveling a 3rd hunter and maybe a 3rd mage, at least until the pre-expansion patch comes out.  I'm guessing that's still at least a month out at this point.

The garrison gold making continues to go pretty well, average something over 60,000g per week using the techniques that I've outlined here.

My last two max level toons I've passed on fully building out their garrisons because I don't believe there will be time to recoup the cost between now and when garrisons get nerfed.

This toon was a monk, so I was heavily leveraging the xp boost that comes from the monk dailies on this one, so he ended up with a total played time from 1-100 of right at 1 day, 15 hours.

Cheers,

Joar