Second Quarter Net Bookings Grew 50%
Year-Over-Year
Second Quarter GAAP Operating Income and
Segment Operating Income Each Grew Over 70% Year-Over-Year
Blizzard Delivered Its First $1B Net
Bookings Quarter and Record Segment Operating Income, Driven by the
Successful Launch of Diablo IV
Merger Agreement with Microsoft Extended to
October 18, 2023 In Return for Higher Termination Fee, New
Commercial Arrangements. Activision Blizzard Board Declares $0.99
Per Share Dividend.
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced second
quarter 2023 results.
“This quarter, our talented teams delivered strong performance
for our players and shareholders. We delivered a 50% year-over-year
increase in net bookings, operating income growth over 70%,
earnings per share growth over 80%, and a record quarter for
Blizzard with over $1 billion in net bookings for the first time,”
said Bobby Kotick, CEO of Activision Blizzard. “Most importantly,
we continue to set new standards of excellence for workplace
culture and provide joy and connection to hundreds of millions of
players around the world. While we continue to have concerns about
the economy and growing industry competition, we remain focused on
the long-term opportunities ahead and completing our merger with
Microsoft.”
Financial Metrics
Q2
(in millions, except EPS)
2023
2022
GAAP Net Revenues
$
2,207
$
1,644
Impact of GAAP deferralsA
$
254
$
(7
)
GAAP Diluted EPS
$
0.74
$
0.36
Non-GAAP Diluted EPS
$
0.91
$
0.48
Impact of GAAP deferralsA
$
0.17
$
(0.01
)
Please refer to the tables at the back of this earnings release
for a reconciliation of the company’s GAAP and non-GAAP
results.
For the quarter ended June 30, 2023, Activision Blizzard’s net
revenues presented in accordance with GAAP were $2.21 billion, as
compared with $1.64 billion for the second quarter of 2022. GAAP
net revenues from digital channels were $2.01 billion. GAAP
operating margin was 26%. GAAP earnings per diluted share was
$0.74, as compared with $0.36 for the second quarter of 2022. On a
non-GAAP basis, Activision Blizzard’s operating margin was 32% and
earnings per diluted share was $0.91, as compared with $0.48 for
the second quarter of 2022.
Activision Blizzard generated $590 million in operating cash
flow for the quarter as compared with $198 million for the second
quarter of 2022.
Please refer to the tables at the back of this earnings release
for a reconciliation of the company’s GAAP and non-GAAP
results.
Operating Metrics
For the quarter ended June 30, 2023, Activision Blizzard’s net
bookingsB were $2.46 billion, as compared with $1.64 billion for
the second quarter of 2022. In-game net bookingsC were $1.56
billion, as compared with $1.20 billion for the second quarter of
2022.
For the quarter ended June 30, 2023, overall Activision Blizzard
Monthly Active Users (MAUs)D were 356 million.
Microsoft Transaction
As announced on January 18, 2022, Microsoft plans to acquire
Activision Blizzard for $95.00 per share in an all-cash
transaction. The transaction has been approved by the boards of
directors of both Activision Blizzard and Microsoft and by
Activision Blizzard’s stockholders.
On July 18, 2023, Activision Blizzard and Microsoft entered into
an agreement waiving certain rights to terminate the merger
agreement if the merger has not been consummated prior to October
18, 2023. The terms of the agreement include an increase in the
termination fee payable to Activision Blizzard from $3.0 billion to
$3.5 billion if the transaction is terminated after August 29,
2023, and to $4.5 billion if the transaction is terminated after
September 15, 2023. The agreement also includes amendments to
Activision Blizzard’s commercial Xbox arrangements with Microsoft,
valued at up to $250 million for each of fiscal years 2023 and
2024. The agreement further enables Activision Blizzard to declare
and pay one regular cash dividend for fiscal year 2023 of up to
$0.99 per share, prior to and not contingent on the closing of the
transaction. Please refer to our Current Report on Form 8-K filed
on July 19, 2023 for further detail.
Also on July 18, 2023, the Company’s Board of Directors declared
a cash dividend of $0.99 per share of the Company’s outstanding
common stock, payable on August 17, 2023, to shareholders of record
at the close of business on August 2, 2023 from cash on hand.
Conference Call and Earnings Presentation
In light of the proposed transaction with Microsoft, and as is
customary during the pendency of an acquisition, Activision
Blizzard will not be hosting a conference call, issuing an earnings
presentation, or providing detailed quantitative financial guidance
in conjunction with its second quarter 2023 earnings release. For
further detail and discussion of our financial performance, please
refer to Activision Blizzard's upcoming Quarterly Report on Form
10-Q for the quarter ended June 30, 2023.
Selected Business Highlights
Activision Blizzard continued to connect and engage the world
through epic entertainment in the second quarter. Our talented
teams delivered compelling content across platforms, geographies
and business models, delighting our communities and driving strong
financial results. Net bookings grew 50% year-over-year in the
second quarter, while GAAP operating income and segment operating
income each grew over 70% year-over-year.
Each of our business units grew net bookings year-over-year in
the second quarter. Blizzard delivered its first $1 billion net
bookings quarter following the record-setting launch of Diablo®
IV, Blizzard’s fastest-selling title to date. Player investment
in live operations content drove 17% year-over-year net bookings
growth for Activision and another quarterly net bookings record at
King. Activision Blizzard in-game net bookings grew 30%
year-over-year in the second quarter, and represent over 60% of
total net bookings over the last 12 months. Net bookings on the
mobile platform grew 4% year-over-year, and represent approximately
40% of total net bookings over the last 12 months.
We expect to deliver strong financial performance for the full
year, driven by the successful reinvigoration of the Diablo
franchise and growth in live operations across the company. We do
remain cognizant of risks, including those related to our
execution, the consumer spending environment, and the labor market,
and we are forecasting our second half content releases prudently.
We continue to expect at least high-teens year-over-year growth for
GAAP revenue in 2023, and at least high-single digit year-over-year
growth in net bookings and total segment operating income for the
year. This outlook does not incorporate potential financial
benefits included in the Microsoft extension announced today.
Activision
- Activision segment revenue grew 17% year-over-year in the
second quarter, while operating income increased over 80%
year-over-year, driven by growth across the Call of Duty®
franchise.
- Net bookings on PC and console grew strongly year-over-year, as
players continued to engage and invest in the Call of Duty:
Modern Warfare® II universe. Premium Call of Duty
sales grew sharply year-over-year. Second quarter in-game net
bookings were higher than both the first quarter and the year ago
period, with Season 3 being the highest-grossing Modern Warfare
II in-game season to date, driven by a strong community
response to gameplay enhancements and the new BlackCell battle pass
offering. Our teams are looking forward to releasing additional
seasons of new content and ongoing community updates in the coming
months.
- Call of Duty Mobile engagement and net bookings were
stable year-over-year, with the team continuing to see a positive
response to enhancements to the player experience and optimization
of live operations. Lifetime worldwide consumer spending on Call
of Duty Mobile since its October 2019 launch passed $3 billion
in the second quarter.
- Call of Duty approaches its 20-year anniversary in
October with around 90 million monthly players, with over half of
all engagement on the mobile platform. Activision’s teams are hard
at work on major new installments in the franchise slated for the
fourth quarter. Development of this year's full annual premium
release on PC and console is proceeding well. Call of Duty:
Warzone Mobile™, an ambitious, internally developed mobile game
tightly integrated with the PC and console experience, continues to
progress through regional testing.
Blizzard
- In the second quarter, Blizzard segment revenue grew over 160%
year-over-year and operating income more than tripled
year-over-year, each setting new quarterly records, driven by the
launch of Diablo IV.
- As of the end of the second quarter, Diablo IV had
sold-through more units than any other Blizzard title at an
equivalent stage of release. Over 10 million players experienced
Diablo IV in June, playing for over 700 million hours, and
retention trends for the title are particularly strong.
- The launch of Diablo IV marks the start of a live
service plan designed to deeply engage the Diablo community
and create opportunities for continued player investment. July 20
sees the release of Diablo IV’s first quarterly season, Season of
the Malignant, bringing new themes, content, and fresh gameplay to
the community. Blizzard’s teams are also making strong progress on
expansions that will deliver major new features and continue the
game’s acclaimed narrative for many years to come.
- Following the launch of Diablo IV, Blizzard also saw
increased engagement in Diablo Immortal™, with June
monthly net bookings for the mobile and PC title reaching the
highest level since January. Elsewhere on mobile, Warcraft:
Arclight Rumble™, an action strategy game internally
developed at Blizzard, continues to progress through testing ahead
of its regional soft launch.
- Blizzard continued to engage the Overwatch® and
Warcraft® communities with live operations in the second
quarter. While engagement and player investment in Overwatch
2 declined sequentially in the quarter, the Overwatch
team is looking forward to the August 10 release of Overwatch 2:
Invasion. This will be the largest seasonal update yet, planned
to include new PVE Story Missions, a new game mode, and a new hero
progression system as well as an additional hero.
- The World of Warcraft® team is delivering more content
faster than ever before following the November release of the
Dragonflight™ expansion for the Modern game, and subscriber
retention in the West remains higher than at the equivalent stage
of recent Modern expansions.
King
- King segment revenue grew 9% year-over-year to a new quarterly
record, equivalent to 10% year-over-year growth on a constant
currency basisE, again driven by strong execution across Candy
Crush™ live operations and user acquisition. Segment operating
income was slightly lower year-over-year due to increased
investment in marketing, which is expected to contribute to
operating income growth in future quarters.
- In-game net bookings increased 10% year-over-year. The spring
Candy Crush All Stars tournament, the first to include contestants
from multiple continents, drove particularly strong year-over-year
growth in installs and player investment in the Candy Crush
franchise in April. Candy Crush payer numbers again grew
year-over-year in the second quarter, and Candy Crush was
the top-grossing game franchise in the U.S. app stores1 for the
24th quarter in a row.
- In the second quarter King saw further benefits from the
acquisition of Peltarion, an AI technology company acquired in June
2022. Peltarion’s machine learning technology is helping King to
accelerate the production and testing of Candy Crush live
operations and to offer more relevant game content to players. King
is now working on additional use cases involving generative AI to
assist its developers in accelerating their workflow.
- King’s advertising business grew year-over-year in the second
quarter, with growth across direct brand advertisers and partner
networks. Direct sales benefited from the rollout of innovative new
ad formats and success in targeting new verticals, while indirect
growth was driven by enhancements to our platform and the ramp of
new partners.
Building the Model Workplace
Activision Blizzard remains focused on setting a new standard
for workplace excellence and transparency. In May, the company
released its first annual Transparency Report, explaining how we
are delivering on our commitments to employees, shareholders,
players, and other stakeholders, and highlighting the work that has
helped us to build what we believe is among the most welcoming and
inclusive workplaces in our industry. The report contains detailed
reviews of the policies, processes, and programs Activision
Blizzard employs to achieve its workplace ambitions, as well as
comprehensive data and details of workplace conduct. We believe we
are among a handful of Fortune 500 companies sharing this level of
workplace detail, and in doing so, we hope to encourage other
organizations to follow suit. Please refer to our DEFA14A filed on
May 31, 2023 for further detail.
Overwatch League™
As previously disclosed, our collaborative arrangements for our
professional esports leagues continue to face headwinds. During the
second quarter, we amended certain terms of our collaborative
arrangements with team entities participating in the Overwatch
League. According to the amended terms, following the conclusion of
the current Overwatch League season, the teams will vote on an
updated operating agreement. If the teams do not vote to continue
under an updated operating agreement, a termination fee of $6
million will be payable to each participating team entity (total
fee of approximately $114 million). As of June 30, 2023, a
termination liability has not been accrued. Total revenues from the
Overwatch League comprise less than 1% of our consolidated net
revenues.
Balance Sheet
Cash and short-term investments at the end of the second quarter
stood at $13.2 billion, and Activision Blizzard ended the quarter
with a net cashF position of approximately $9.5 billion.
Activision Blizzard Disclosure Channels to Disseminate
Information
Activision Blizzard, Inc. (“Activision Blizzard”) discloses
information to the public concerning Activision Blizzard,
Activision Blizzard’s products, content and services, and other
items through a variety of disclosure channels in order to achieve
broad, non-exclusionary distribution of information to the public.
Some of the information distributed through these disclosure
channels may be considered material information. Investors and
others are encouraged to review the information we make public in
the locations below.2 This list may be updated from time to
time.
- For information concerning Activision Blizzard and its
products, content and services, please visit:
https://www.activisionblizzard.com.
- For information provided to the investment community, including
news releases, events and presentations, and filings with the U.S.
Securities and Exchange Commission, please visit:
https://investor.activision.com.
- For the latest information from Activision Blizzard, including
press releases and the Activision Blizzard blog, please visit:
https://www.activisionblizzard.com/newsroom.
- For additional information, please follow Activision Blizzard’s
and Lulu Cheng Meservey’s (Activision Blizzard’s Executive Vice
President, Corporate Affairs and Chief Communications Officer)
Twitter accounts: https://twitter.com/atvi_ab and
https://twitter.com/lulumeservey. Except with respect to
communications regarding Activision Blizzard, Ms. Meservey’s social
media communications from https://twitter.com/lulumeservey are
personal communications of Ms. Meservey and are not communications
on behalf of Activision Blizzard.
About Activision Blizzard
Our mission, to connect and engage the world through epic
entertainment, has never been more important. Through communities
rooted in our video games we enable hundreds of millions of people
to experience joy, thrill and achievement. We enable social
connections through the lens of fun, and we foster purpose and a
sense of accomplishment through healthy competition. Like sport,
but with greater accessibility, our players can find purpose and
meaning through competitive gaming. Video games, unlike any other
social or entertainment media, have the ability to break down the
barriers that can inhibit tolerance and understanding. Celebrating
differences is at the core of our culture and ensures we can create
games for players of diverse backgrounds in the 190 countries our
games are played.
As a member of the Fortune 500 and as a component company of the
S&P 500, we have an extraordinary track record of delivering
superior shareholder returns for over 30 years. Our sustained
success has enabled the company to support corporate social
responsibility initiatives that are directly tied to our games. As
an example, our Call of Duty Endowment has helped find employment
for over 100,000 veterans.
Learn more information about Activision Blizzard and how we
connect and engage the world through epic entertainment on the
company's website, www.activisionblizzard.com2.
1 Based on data.ai Intelligence
2 These corporate websites and social media channels, and the
contents thereof, are not incorporated by reference into this press
release nor deemed filed with the U.S. Securities and Exchange
Commission.
A Net effect of accounting treatment from revenue deferrals on
certain of our online-enabled products. Since certain of our games
are hosted online or include significant online functionality that
represents a separate performance obligation, we defer the
transaction price allocable to the online functionality from the
sale of these games and then recognize the attributable revenues
over the relevant estimated service periods, which are generally
less than a year. The related cost of revenues is deferred and
recognized as an expense as the related revenues are recognized.
Impact from changes in deferrals refers to the net effect from
revenue deferrals accounting treatment for the purposes of
revenues, along with, for the purposes of EPS, the related cost of
revenues deferrals treatment and the related tax impacts.
Internally, management excludes the impact of this change in
deferred revenues and related cost of revenues when evaluating the
company’s operating performance, when planning, forecasting and
analyzing future periods, and when assessing the performance of its
management team. Management believes this is appropriate because
doing so enables an analysis of performance based on the timing of
actual transactions with our customers. In addition, management
believes excluding the change in deferred revenues and the related
cost of revenues provides a much more timely indication of trends
in our operating results.
B Net bookings is an operating metric that is defined as the net
amount of products and services sold digitally or sold-in
physically in the period, and includes license fees, merchandise,
and publisher incentives, among others, and is equal to net
revenues excluding the impact from deferrals.
C In-game net bookings primarily includes the net amount of
microtransactions and downloadable content sold during the period,
and is equal to in-game net revenues excluding the impact from
deferrals.
D Monthly Active User (“MAU”) Definition: We monitor MAUs as a
key measure of the overall size of our user base. MAUs are the
number of individuals who accessed a particular game in a given
month. We calculate average MAUs in a period by adding the total
number of MAUs in each of the months in a given period and dividing
that total by the number of months in the period. An individual who
accesses two of our games would be counted as two users. In
addition, due to technical limitations, for Activision and King, an
individual who accesses the same game on two platforms or devices
in the relevant period would be counted as two users. For Blizzard,
an individual who accesses the same game on two platforms or
devices in the relevant period would generally be counted as a
single user. In certain instances, we rely on third parties to
publish our games. In these instances, MAU data is based on
information provided to us by those third parties, or, if final
data is not available, reasonable estimates of MAUs for these
third-party published games.
E Year-over-year growth on a constant currency basis is
calculated by translating current quarter local currency amounts to
U.S. dollars based on prior period exchange rates. These amounts
are compared to the prior period to derive constant-currency
year-over-year performance. We present constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of currency rate
fluctuations.
- Total net bookings increased by 50% year-over-year for the
second quarter of 2023. On a constant currency basis, total net
bookings increased 51% year-over-year for the second quarter of
2023 as currency rate changes negatively impacted year-over-year
growth in the quarter by 1 percentage point.
- Activision segment net revenues grew by 17% year-over-year,
Blizzard segment net revenues grew by 164%, and King segment net
revenues grew by 9% for the second quarter of 2023. On a constant
currency year-over-year basis, Activision segment net revenue grew
19%, Blizzard segment net revenue grew 172%, and King segment net
revenue grew 10% for the second quarter of 2023, as currency rate
changes negatively impacted Activision segment net revenue
year-over-growth by 2 percentage points, Blizzard segment net
revenue year-over-growth by 8 percentage points, and King segment
net revenue year-over-year growth by 1 percentage point.
F Net cash is defined as cash and cash equivalents ($10.8B as of
June 30, 2023) and short-term investments ($2.4B as of June 30,
2023) minus gross debt ($3.7B as of June 30, 2023).
Non-GAAP Financial Measures: As a supplement to our
financial measures presented in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”), Activision Blizzard
presents certain non-GAAP measures of financial performance. These
non-GAAP financial measures are not intended to be considered in
isolation from, as a substitute for, or as more important than, the
financial information prepared and presented in accordance with
GAAP. In addition, these non-GAAP measures have limitations in that
they do not reflect all of the items associated with the company’s
results of operations as determined in accordance with GAAP.
Activision Blizzard provides net income (loss), earnings (loss)
per share, and operating margin data and guidance both including
(in accordance with GAAP) and excluding (non-GAAP) certain items.
When relevant, the company also provides constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of currency rate
fluctuations. In addition, Activision Blizzard provides EBITDA
(defined as GAAP net income (loss) before interest (income)
expense, income taxes, depreciation, and amortization) and adjusted
EBITDA (defined as non-GAAP operating margin (see non-GAAP
financial measure below) before depreciation). The non-GAAP
financial measures exclude the following items, as applicable in
any given reporting period and our outlook:
- expenses related to share-based compensation, including
liability awards accounted for under ASC 718;
- the amortization of intangibles from purchase price
accounting;
- fees and other expenses related to mergers and acquisitions,
including related debt financings, and refinancing of long-term
debt, including penalties and the write off of unamortized discount
and deferred financing costs;
- restructuring and related charges;
- expenses related to the wind down of our partnership with
NetEase in China in regards to licenses covering the publication of
several Blizzard titles which expired in January 2023;
- other non-cash charges from reclassification of certain
cumulative translation adjustments into earnings as required by
GAAP;
- the income tax adjustments associated with any of the above
items (tax impact on non-GAAP pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results); and
- significant discrete tax-related items, including amounts
related to changes in tax laws, amounts related to the potential or
final resolution of tax positions, and other unusual or unique
tax-related items and activities.
In the future, Activision Blizzard may also consider whether
other items should also be excluded in calculating the non-GAAP
financial measures used by the company. Management believes that
the presentation of these non-GAAP financial measures provides
investors with additional useful information to measure Activision
Blizzard’s financial and operating performance. In particular, the
measures facilitate comparison of operating performance between
periods and help investors to better understand the operating
results of Activision Blizzard by excluding certain items that may
not be indicative of the company’s core business, operating
results, or future outlook. Additionally, we consider quantitative
and qualitative factors in assessing whether to adjust for the
impact of items that may be significant or that could affect an
understanding of our ongoing financial and business performance or
trends. Internally, management uses these non-GAAP financial
measures, along with others, in assessing the company’s operating
results, and measuring compliance with the requirements of the
company’s debt financing agreements, as well as in planning and
forecasting.
Activision Blizzard’s non-GAAP financial measures are not based
on a comprehensive set of accounting rules or principles, and the
terms non-GAAP net income, non-GAAP earnings per share, non-GAAP
operating margin, and non-GAAP or adjusted EBITDA do not have a
standardized meaning. Therefore, other companies may use the same
or similarly named measures, but exclude different items, which may
not provide investors a comparable view of Activision Blizzard’s
performance in relation to other companies.
Management compensates for the limitations resulting from the
exclusion of these items by considering the impact of the items
separately and by considering Activision Blizzard’s GAAP, as well
as non-GAAP, results and outlook, and by presenting the most
comparable GAAP measures directly ahead of non-GAAP measures, and
by providing a reconciliation that indicates and describes the
adjustments made.
Cautionary Note Regarding Forward-looking Statements: The
statements contained herein that are not historical facts are
forward-looking statements including, but not limited to: (1)
projections of revenues, expenses, income or loss, earnings or loss
per share, cash flow, or other financial items; (2) statements of
our plans and objectives, including those related to releases of
products, services, features or other content; (3) statements of
future financial or operating performance, including the impact of
tax items thereon; (4) statements regarding the proposed
transaction between Activision Blizzard and Microsoft pursuant to
the Agreement and Plan of Merger, dated as of January 18, 2022, by
and among Activision Blizzard, Microsoft, and Anchorage Merger Sub
Inc., a wholly owned subsidiary of Microsoft (as may be amended,
supplemented or otherwise modified from time to time, the “Merger
Agreement” and such transaction, “the proposed transaction with
Microsoft”), including any statements regarding the expected
timetable for completing the proposed transaction with Microsoft,
the ability to complete the proposed transaction with Microsoft,
and the expected benefits of the proposed transaction with
Microsoft; (5) statements regarding building the model workplace;
(6) statements regarding potential termination fees payable in
connection with the Overwatch League; and (7) statements of
assumptions underlying such statements. Activision Blizzard, Inc.
generally uses words such as “outlook,” “forecast,” “will,”
“could,” “should,” “would,” “to be,” “plan,” “aims,” “believes,”
“may,” “might,” “expects,” “intends,” “seeks,” “anticipates,”
“estimate,” “future,” “positioned,” “potential,” “project,”
“remain,” “scheduled,” “set to,” “subject to,” “upcoming,” and the
negative version of these words and other similar words and
expressions to help identify forward-looking statements.
Forward-looking statements are subject to business and economic
risks, reflect management’s current expectations, estimates, and
projections about our business, and are inherently uncertain and
difficult to predict.
We caution that a number of important factors, many of which are
beyond our control, could cause our actual future results and other
future circumstances to differ materially from those expressed in
any forward-looking statements. Such factors include, but are not
limited to: the risk that the proposed transaction with Microsoft
may not be completed in a timely manner or at all, which may
adversely affect our business and the price of our common stock;
the failure to satisfy the conditions to the consummation of the
proposed transaction with Microsoft, including the receipt of
certain governmental and regulatory approvals (which may or may not
be received on a timely basis or at all); the occurrence of any
event, change, or other circumstance that could give rise to the
termination of the Merger Agreement; the effect of the announcement
or pendency of the proposed transaction with Microsoft on our
business relationships, operating results, and business generally;
risks that the proposed transaction with Microsoft disrupts our
current plans and operations and potential difficulties in employee
retention and recruitment as a result of the proposed transaction
with Microsoft; risks related to diverting management’s attention
from ongoing business operations; the outcome of any legal
proceedings that have been or may be instituted against us related
to the Merger Agreement or the transactions contemplated thereby;
restrictions during the pendency of the proposed transaction with
Microsoft that may impact our ability to pursue certain business
opportunities or strategic transactions; uncertainty about current
and future economic conditions and other adverse changes in general
political conditions in any of the major countries in which we do
business; decline in demand for our products and services if
general economic conditions decline; fluctuations in currency
exchange rates; our ability to deliver popular, high-quality
content in a timely manner; negative impacts on our business
resulting from concerns regarding our workplace, including
associated legal proceedings; our ability to attract, retain, and
motivate skilled personnel; future impacts from COVID-19; the level
of demand for our games and products; our ability to meet customer
expectations with respect to our brands, games, services, and/or
business practices; competition; our reliance on a relatively small
number of franchises for a significant portion of our revenues and
profits; negative impacts from the results of collective
bargaining, legal proceedings related to unionization, or campaigns
by unions directed at our workforce; our ability to adapt to rapid
technological change and allocate our resources accordingly; the
increasing importance of digital sales and the risks of that
business model; our ability to effectively manage the scope and
complexity of our business, including risks related to our
professional esports business model; our reliance on third-party
platforms, which are also our competitors, for the distribution of
products; our dependence on the success and availability of video
game consoles manufactured by third parties and our ability to
develop commercially successful products for these consoles; the
increasing importance of free-to-play games and the risks of that
business model; the risks and uncertainties of conducting business
outside the U.S., including the need for regulatory approval to
operate, the relatively weaker protection for our intellectual
property rights, and the impact of cultural differences on consumer
preferences; insolvency or business failure of any of our business
partners; the importance of retail sales to our business and the
risks of that business model; any difficulties in integrating
acquired businesses or realizing the anticipated benefits of
strategic transactions; seasonality in the sale of our products;
fluctuation in our recurring business; the risk of distributors,
retailers, development, and licensing partners or other third
parties being unable to honor their commitments or otherwise
putting our brand at risk; our reliance on tools and technologies
owned by third parties; our use of open source software; risks
associated with undisclosed content or features in our games;
impact of objectionable consumer- or other third-party-created
content on our operating results or reputation; outages,
disruptions, or degradations in our services, products, and/or
technological infrastructure; cybersecurity-related attacks,
significant data breaches, fraudulent activity, or disruption of
our information technology systems or networks; significant
disruption during our live events; catastrophic events; climate
change; provisions in our corporate documents and Delaware state
law that could delay or prevent a change of control; other legal
proceedings; increasing regulation in key territories over our
business, products, and distribution; changes in government
regulation relating to the Internet; our compliance with evolving
data privacy laws and regulations; scrutiny regarding the
appropriateness of the content in our games and our ability to
receive target ratings for certain titles; changes in tax rates
and/or tax laws and exposure to additional tax liabilities; changes
in financial accounting standards or the application of existing or
future standards as our business evolves; and the other factors
included in Part I, Item 1A “Risk Factors” of our Annual Report on
Form 10-K for the year ended December 31, 2022, filed with the U.S.
Securities and Exchange Commission.
The forward-looking statements contained herein are based on
information available to Activision Blizzard, Inc. as of the date
of this filing, and we assume no obligation to update any such
forward-looking statements. Actual events or results may differ
from those expressed in forward-looking statements. As such, you
should not rely on forward-looking statements as predictions of
future events. We have based the forward-looking statements
contained herein primarily on our current expectations and
projections about future events and trends that we believe may
affect our business, financial condition, operating results,
prospects, strategy, and financial needs. These statements are not
guarantees of our future performance and are subject to risks,
uncertainties, and other factors, some of which are beyond our
control and may cause actual results to differ materially from
current expectations.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Amounts in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net revenues
Product sales
$
520
$
304
$
1,215
$
690
In-game, subscription, and other
revenues
1,687
1,340
3,375
2,722
Total net revenues
2,207
1,644
4,590
3,412
Costs and expenses
Cost of revenues—product sales:
Product costs
116
80
252
172
Software royalties and amortization
105
63
207
144
Cost of revenues—in-game, subscription,
and other:
Game operations and distribution costs
373
317
736
605
Software royalties and amortization
62
25
126
43
Product development
405
311
807
658
Sales and marketing
333
263
611
514
General and administrative
230
247
468
459
Total costs and expenses
1,624
1,306
3,207
2,595
Operating income
583
338
1,383
817
Interest expense from debt
27
27
54
54
Other (income) expense, net
(168
)
(10
)
(290
)
(23
)
Income before income tax expense
724
321
1,619
786
Income tax expense
137
41
291
111
Net income
$
587
$
280
$
1,328
$
675
Basic earnings per common share
$
0.75
$
0.36
$
1.69
$
0.86
Weighted average common shares
outstanding
786
782
785
781
Diluted earnings per common share
$
0.74
$
0.36
$
1.67
$
0.86
Weighted average common shares outstanding
assuming dilution
794
788
793
787
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Amounts in millions)
June 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
10,770
$
7,060
Held-to-maturity investments
2,314
4,932
Accounts receivable, net
1,035
1,204
Software development
762
640
Other current assets
615
633
Total current assets
15,496
14,469
Software development
684
641
Property and equipment, net
204
193
Deferred income taxes, net
1,289
1,201
Other assets
479
508
Intangible assets, net
437
442
Goodwill
9,929
9,929
Total assets
$
28,518
$
27,383
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable
$
225
$
324
Deferred revenues
1,877
2,088
Accrued expenses and other liabilities
1,220
1,143
Total current liabilities
3,322
3,555
Long-term debt, net
3,612
3,611
Deferred income taxes, net
32
158
Other liabilities
759
816
Total liabilities
7,725
8,140
Shareholders' equity
Common stock
—
—
Additional paid-in capital
12,489
12,260
Treasury stock
(5,563
)
(5,563
)
Retained earnings
14,498
13,171
Accumulated other comprehensive loss
(631
)
(625
)
Total shareholders’ equity
20,793
19,243
Total liabilities and shareholders’
equity
$
28,518
$
27,383
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
SUPPLEMENTAL CASH FLOW
INFORMATION
(Amounts in millions)
Three Months Ended
June 30, 2022
September 30, 2022
December 31, 2022
March 31, 2023
June 30, 2023
Year over Year % Increase
(Decrease)
Cash Flow Data
Operating Cash Flow
$
198
$
257
$
1,123
$
577
$
590
198
%
Capital Expenditures
37
15
24
37
23
(38
)
Non-GAAP Free Cash Flow1
$
161
$
242
$
1,099
$
540
$
567
252
Operating Cash Flow - TTM2
$
2,022
$
1,758
$
2,220
$
2,155
$
2,547
26
Capital Expenditures - TTM2
96
88
91
113
99
3
Non-GAAP Free Cash Flow1 - TTM2
$
1,926
$
1,670
$
2,129
$
2,042
$
2,448
27
%
1
Non-GAAP free cash flow represents
operating cash flow minus capital expenditures.
2
TTM represents trailing twelve months.
Operating Cash Flow for three months ended September 30, 2021,
three months ended December 31, 2021, and three months ended March
31, 2022, were $521 million, $661 million, and $642 million,
respectively. Capital Expenditures for the three months ended
September 30, 2021, three months ended December 31, 2021, and three
months ended March 31, 2022, were $23 million, $21 million, and $15
million, respectively.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP MEASURES
(Amounts in millions, except per share
data)
Three Months Ended June 30,
2023
Net Revenues
Cost of
Revenues
—
Product Sales:
Product Costs
Cost of
Revenues
—
Product Sales:
Software
Royalties and
Amortization
Cost of
Revenues—
In-
game/Subs/Other:
Game Operations
and Distribution Costs
Cost of
Revenues—In-
game/Subs/Other:
Software
Royalties and
Amortization
Product
Development
Sales and
Marketing
General and
Administrative
Total Costs
and Expenses
GAAP Measurement
$
2,207
$
116
$
105
$
373
$
62
$
405
$
333
$
230
$
1,624
Share-based compensation1
—
—
(19
)
(1
)
(4
)
(45
)
(8
)
(25
)
(102
)
Partnership wind down and related
costs2
—
—
—
—
—
—
—
2
2
Merger and acquisition-related fees and
other expenses3
—
—
—
—
—
—
—
(21
)
(21
)
Non-GAAP Measurement
$
2,207
$
116
$
86
$
372
$
58
$
360
$
325
$
186
$
1,503
Net effect of deferred revenues and
related cost of revenues4
$
254
$
(6
)
$
98
$
3
$
(3
)
$
—
$
—
$
—
$
92
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings
per Share
GAAP Measurement
$
583
$
587
$
0.75
$
0.74
Share-based compensation1
102
102
0.13
0.13
Partnership wind down and related
costs2
(2
)
(2
)
—
—
Merger and acquisition-related fees and
other expenses3
21
21
0.03
0.03
Income tax impacts from items above5
—
16
0.02
0.02
Non-GAAP Measurement
$
704
$
724
$
0.92
$
0.91
Net effect of deferred revenues and
related cost of revenues4
$
162
$
130
$
0.17
$
0.17
1
Reflects expenses related to share-based
compensation.
2
Reflects expenses related to the wind down
of our partnership with NetEase, Inc. ("NetEase") in Mainland China
in regards to licenses covering the publication of several Blizzard
titles which expired in January 2023.
3
Reflects fees and other expenses related
to our proposed transaction with Microsoft Corporation
("Microsoft"), primarily legal and advisory fees.
4
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues, along with related
cost of revenues, on certain of our online-enabled products,
including the effects of taxes.
5
Reflects the income tax impact associated
with the above items. Tax impact on non-GAAP pre-tax income is
calculated under the same accounting principles applied to the GAAP
pre-tax income under ASC 740, which employs an annual effective tax
rate method to the results.
The GAAP and non-GAAP earnings per share information is
presented as calculated. The sum of these measures, as presented,
may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP MEASURES
(Amounts in millions, except per share
data)
Six Months Ended June 30, 2023
Net Revenues
Cost of
Revenues
—
Product Sales:
Product Costs
Cost of
Revenues
—
Product Sales:
Software
Royalties and
Amortization
Cost of
Revenues—In-
game/Subs/Other:
Game Operations
and Distribution
Costs
Cost of
Revenues—In-
game/Subs/Other:
Software
Royalties and
Amortization
Product
Development
Sales and
Marketing
General and
Administrative
Total Costs
and Expenses
GAAP Measurement
$
4,590
$
252
$
207
$
736
$
126
$
807
$
611
$
468
$
3,207
Share-based compensation1
—
—
(38
)
(2
)
(8
)
(99
)
(17
)
(62
)
(226
)
Amortization of intangible assets2
—
—
—
—
(3
)
—
—
(1
)
(4
)
Partnership wind down and related
costs3
—
—
—
—
—
—
—
(2
)
(2
)
Merger and acquisition-related fees and
other expenses4
—
—
—
—
—
—
—
(42
)
(42
)
Non-GAAP Measurement
$
4,590
$
252
$
169
$
734
$
115
$
708
$
594
$
361
$
2,933
Net effect of deferred revenues and
related cost of revenues5
$
(274
)
$
(26
)
$
65
$
(4
)
$
(1
)
$
—
$
—
$
—
$
34
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings
per Share
GAAP Measurement
$
1,383
$
1,328
$
1.69
$
1.67
Share-based compensation1
226
226
0.29
0.29
Amortization of intangible assets2
4
4
0.01
0.01
Partnership wind down and related
costs3
2
2
—
—
Merger and acquisition-related fees and
other expenses4
42
42
0.05
0.05
Income tax impacts from items above6
—
(13
)
(0.02
)
(0.02
)
Non-GAAP Measurement
$
1,657
$
1,589
$
2.02
$
2.00
Net effect of deferred revenues and
related cost of revenues5
$
(308
)
$
(262
)
$
(0.33
)
$
(0.33
)
1
Reflects expenses related to share-based
compensation.
2
Reflects amortization of intangible assets
from purchase price accounting.
3
Reflects expenses related to the wind down
of our partnership with NetEase in Mainland China in regards to
licenses covering the publication of several Blizzard titles which
expired in January 2023.
4
Reflects fees and other expenses related
to our proposed transaction with Microsoft, primarily legal and
advisory fees.
5
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues, along with related
cost of revenues, on certain of our online-enabled products,
including the effects of taxes.
6
Reflects the income tax impact associated
with the above items. Tax impact on non-GAAP pre-tax income is
calculated under the same accounting principles applied to the GAAP
pre-tax income under ASC 740, which employs an annual effective tax
rate method to the results.
The GAAP and non-GAAP earnings per share information is
presented as calculated. The sum of these measures, as presented,
may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP MEASURES
(Amounts in millions, except per share
data)
Three Months Ended June 30,
2022
Net Revenues
Cost of
Revenues
—
Product Sales:
Product Costs
Cost of
Revenues
—
Product Sales:
Software
Royalties and
Amortization
Cost of
Revenues—In-
game/Subs/Other:
Game Operations
and Distribution
Costs
Cost of
Revenues—In-
game/Subs/Other:
Software
Royalties and
Amortization
Product
Development
Sales and
Marketing
General and
Administrative
Total Costs
and Expenses
GAAP Measurement
$
1,644
$
80
$
63
$
317
$
25
$
311
$
263
$
247
$
1,306
Share-based compensation1
—
—
(2
)
(1
)
—
(47
)
(14
)
(36
)
(100
)
Amortization of intangible assets2
—
—
—
—
—
—
—
(2
)
(2
)
Restructuring and related costs3
—
—
—
—
—
—
—
3
3
Merger and acquisition-related fees and
other expenses4
—
—
—
—
—
—
—
(16
)
(16
)
Non-GAAP Measurement
$
1,644
$
80
$
61
$
316
$
25
$
264
$
249
$
196
$
1,191
Net effect of deferred revenues and
related cost of revenues5
$
(7
)
$
(7
)
$
(30
)
$
17
$
14
$
—
$
—
$
—
$
(6
)
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings
per Share
GAAP Measurement
$
338
$
280
$
0.36
$
0.36
Share-based compensation1
100
100
0.13
0.13
Amortization of intangible assets2
2
2
—
—
Restructuring and related costs3
(3
)
(3
)
—
—
Merger and acquisition-related fees and
other expenses4
16
16
0.02
0.02
Income tax impacts from items above6
—
(15
)
(0.02
)
(0.02
)
Non-GAAP Measurement
$
453
$
380
$
0.49
$
0.48
Net effect of deferred revenues and
related cost of revenues5
$
(1
)
$
(8
)
$
(0.01
)
$
(0.01
)
1
Reflects expenses related to share-based
compensation.
2
Reflects amortization of intangible assets
from purchase price accounting.
3
Reflects restructuring initiatives.
4
Reflects fees and other expenses related
to our proposed transaction with Microsoft, primarily legal and
advisory fees.
5
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues, along with related
cost of revenues, on certain of our online-enabled products,
including the effects of taxes.
6
Reflects the income tax impact associated
with the above items. Tax impact on non-GAAP pre-tax income is
calculated under the same accounting principles applied to the GAAP
pre-tax income under ASC 740, which employs an annual effective tax
rate method to the results.
The GAAP and non-GAAP earnings per share information is
presented as calculated. The sum of these measures, as presented,
may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP MEASURES
(Amounts in millions, except per share
data)
Six Months Ended June 30, 2022
Net Revenues
Cost of
Revenues
—
Product Sales:
Product Costs
Cost of
Revenues
—
Product Sales:
Software
Royalties and
Amortization
Cost of
Revenues—In-
game/Subs/Other:
Game Operations
and Distribution
Costs
Cost of
Revenues—In-
game/Subs/Other:
Software
Royalties and
Amortization
Product
Development
Sales and
Marketing
General and
Administrative
Total Costs
and Expenses
GAAP Measurement
$
3,412
$
172
$
144
$
605
$
43
$
658
$
514
$
459
$
2,595
Share-based compensation1
—
—
(6
)
(3
)
—
(100
)
(29
)
(61
)
(199
)
Amortization of intangible assets2
—
—
—
—
—
—
—
(4
)
(4
)
Restructuring and related costs3
—
—
—
—
—
—
—
5
5
Merger and acquisition-related fees and
other expenses4
—
—
—
—
—
—
—
(48
)
(48
)
Non-GAAP Measurement
$
3,412
$
172
$
138
$
602
$
43
$
558
$
485
$
351
$
2,349
Net effect of deferred revenues and
related cost of revenues5
$
(293
)
$
(22
)
$
(68
)
$
16
$
17
$
—
$
—
$
—
$
(57
)
Operating Income
Net Income
Basic Earnings per
Share
Diluted Earnings per
Share
GAAP Measurement
$
817
$
675
$
0.86
$
0.86
Share-based compensation1
199
199
0.25
0.25
Amortization of intangible assets2
4
4
—
—
Restructuring and related costs3
(5
)
(5
)
(0.01
)
(0.01
)
Merger and acquisition-related fees and
other expenses4
48
48
0.06
0.06
Income tax impacts from items above5
—
(39
)
(0.05
)
(0.05
)
Non-GAAP Measurement
$
1,063
$
882
$
1.13
$
1.12
Net effect of deferred revenues and
related cost of revenues5
$
(236
)
$
(213
)
$
(0.27
)
$
(0.27
)
1
Reflects expenses related to share-based
compensation.
2
Reflects amortization of intangible assets
from purchase price accounting.
3
Reflects restructuring initiatives.
4
Reflects fees and other expenses related
to our proposed transaction with Microsoft, primarily legal and
advisory fees.
5
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues, along with related
cost of revenues, on certain of our online-enabled products,
including the effects of taxes.
6
Reflects the income tax impact associated
with the above items. Tax impact on non-GAAP pre-tax income is
calculated under the same accounting principles applied to the GAAP
pre-tax income under ASC 740, which employs an annual effective tax
rate method to the results.
The GAAP and non-GAAP earnings per share information is
presented as calculated. The sum of these measures, as presented,
may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
Three Months Ended
June 30, 2023
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
574
$
1,049
$
747
$
2,370
$
84
$
659
$
63
$
806
Intersegment net revenues1
—
9
—
9
—
(2
)
—
(2
)
Segment net revenues
$
574
$
1,058
$
747
$
2,379
$
84
$
657
$
63
$
804
Segment operating income
$
167
$
409
$
266
$
842
$
75
$
315
$
(5
)
$
385
Operating Margin
35.4
%
June 30, 2022
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
490
$
390
$
684
$
1,564
Intersegment net revenues1
—
11
—
11
Segment net revenues
$
490
$
401
$
684
$
1,575
Segment operating income
$
92
$
94
$
271
$
457
Operating Margin
29.0
%
Six Months Ended
June 30, 2023
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
1,154
$
1,484
$
1,486
$
4,124
$
211
$
829
$
120
$
1,160
Intersegment net revenues1
—
17
—
17
—
(3
)
—
(3
)
Segment net revenues
$
1,154
$
1,501
$
1,486
$
4,141
$
211
$
826
$
120
$
1,157
Segment operating income
$
346
$
466
$
507
$
1,319
$
195
$
318
$
(7
)
$
506
Operating Margin
31.9
%
June 30, 2022
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
943
$
655
$
1,366
$
2,964
Intersegment net revenues1
—
20
—
20
Segment net revenues
$
943
$
675
$
1,366
$
2,984
Segment operating income
$
151
$
148
$
514
$
813
Operating Margin
27.2
%
1
Intersegment revenues reflect licensing
and service fees charged between segments.
Our operating segments are consistent with the manner in which
our operations are reviewed and managed by our Chief Executive
Officer, who is our chief operating decision maker (“CODM”). The
CODM reviews segment performance exclusive of: the impact of the
change in deferred revenues and related cost of revenues with
respect to certain of our online-enabled games; share-based
compensation expense (including liability awards accounted for
under ASC 718); amortization of intangible assets as a result of
purchase price accounting; fees and other expenses (including legal
fees, costs, expenses and accruals) related to acquisitions,
associated integration activities, and financings; certain
restructuring and related costs; certain partnership wind down and
related costs; and other non-cash charges. See the following
page for the reconciliation tables of segment revenues and
operating income to consolidated net revenues and consolidated
income before income tax expense.
Our operating segments are also consistent with our internal
organization structure, the way we assess operating performance and
allocate resources, and the availability of separate financial
information. We do not aggregate operating segments.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Reconciliation to consolidated net
revenues:
Segment net revenues
$
2,379
$
1,575
$
4,141
$
2,984
Revenues from non-reportable segments1
91
73
192
155
Net effect from recognition (deferral) of
deferred net revenues2
(254
)
7
274
293
Elimination of intersegment revenues3
(9
)
(11
)
(17
)
(20
)
Consolidated net revenues
$
2,207
$
1,644
$
4,590
$
3,412
Reconciliation to consolidated income
before income tax expense:
Segment operating income
$
842
$
457
$
1,319
$
813
Operating income (loss) from
non-reportable segments1
24
(5
)
30
14
Net effect from recognition (deferral) of
deferred net revenues and related cost of revenues2
(162
)
1
308
236
Share-based compensation expense4
(102
)
(100
)
(226
)
(199
)
Amortization of intangible assets
—
(2
)
(4
)
(4
)
Restructuring and related costs5
—
3
—
5
Partnership wind down and related
costs6
2
—
(2
)
—
Merger and acquisition-related fees and
other expenses7
(21
)
(16
)
(42
)
(48
)
Consolidated operating income
583
338
1,383
817
Interest expense from debt
27
27
54
54
Other (income) expense, net
(168
)
(10
)
(290
)
(23
)
Consolidated income before income tax
expense
$
724
$
321
$
1,619
$
786
1
Includes other income and expenses outside
of our reportable segments, including our distribution business and
unallocated corporate income and expenses.
2
Reflects the net effect from (deferral) of
revenues and recognition of deferred revenues, along with related
cost of revenues, on certain of our online-enabled products.
3
Intersegment revenues reflect licensing
and service fees charged between segments.
4
Reflects expenses related to share-based
compensation.
5
Reflects restructuring initiatives.
6
Reflects expenses related to the wind down
of our partnership with NetEase in Mainland China in regards to
licenses covering the publication of several Blizzard titles which
expired in January 2023.
7
Reflects fees and other expenses related
to our proposed transaction with Microsoft, primarily legal and
advisory fees.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY DISTRIBUTION
CHANNEL
(Amounts in millions)
Three Months Ended
June 30, 2023
June 30, 2022
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
2,012
91
%
$
1,474
90
%
$
538
36
%
Retail channels
81
4
65
4
16
25
Other3
114
5
105
6
9
9
Total consolidated net revenues
$
2,207
100
%
$
1,644
100
%
$
563
34
Change in deferred revenues4
Digital online channels2
$
282
$
44
Retail channels
(21
)
(50
)
Other3
(7
)
(1
)
Total changes in deferred revenues
$
254
$
(7
)
Six Months Ended
June 30, 2023
June 30, 2022
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
4,168
91
%
$
3,063
90
%
$
1,105
36
%
Retail channels
185
4
151
4
34
23
Other3
237
5
198
6
39
20
Total consolidated net revenues
$
4,590
100
%
$
3,412
100
%
$
1,178
35
Change in deferred revenues4
Digital online channels2
$
(165
)
$
(178
)
Retail channels
(90
)
(115
)
Other3
(19
)
—
Total changes in deferred revenues
$
(274
)
$
(293
)
1
The percentages of total are presented as
calculated. Therefore, the sum of these percentages, as presented,
may differ due to the impact of rounding.
2
Net revenues from Digital online channels
represent revenues from digitally-distributed downloadable content,
microtransactions, subscriptions, and products, as well as
licensing royalties.
3
Net revenues from Other primarily include
revenues from our distribution business, the Overwatch League, and
the Call of Duty League.
4
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues on certain of our
online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY PLATFORM
(Amounts in millions)
Three Months Ended
June 30, 2023
June 30, 2022
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
556
25
%
$
376
23
%
$
180
48
%
PC
594
27
332
20
262
79
Mobile and ancillary2
943
43
831
51
112
13
Other3
114
5
105
6
9
9
Total consolidated net revenues
$
2,207
100
%
$
1,644
100
%
$
563
34
Change in deferred revenues4
Console
$
26
$
(97
)
PC
246
25
Mobile and ancillary2
(11
)
66
Other3
(7
)
(1
)
Total changes in deferred revenues
$
254
$
(7
)
Six Months Ended
June 30, 2023
June 30, 2022
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
1,194
26
%
$
859
25
%
$
335
39
%
PC
1,259
27
716
21
543
76
Mobile and ancillary2
1,900
41
1,639
48
261
16
Other3
237
5
198
6
39
20
Total consolidated net revenues
$
4,590
100
%
$
3,412
100
%
$
1,178
35
Change in deferred revenues4
Console
$
(255
)
$
(317
)
PC
43
(55
)
Mobile and ancillary2
(43
)
79
Other3
(19
)
—
Total changes in deferred revenues
$
(274
)
$
(293
)
1
The percentages of total are presented as
calculated. Therefore, the sum of these percentages, as presented,
may differ due to the impact of rounding.
2
Net revenues from Mobile and ancillary
primarily include revenues from mobile devices.
3
Net revenues from Other primarily include
revenues from our distribution business, the Overwatch League, and
the Call of Duty League.
4
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues on certain of our
online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY GEOGRAPHIC
REGION
(Amounts in millions)
Three Months Ended
June 30, 2023
June 30, 2022
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
1,278
58
%
$
982
60
%
$
296
30
%
EMEA2
660
30
470
29
190
40
Asia Pacific
269
12
192
12
77
40
Total consolidated net revenues
$
2,207
100
%
$
1,644
100
%
$
563
34
Change in deferred revenues3
Americas
$
72
$
(10
)
EMEA2
67
(21
)
Asia Pacific
115
24
Total changes in deferred revenues
$
254
$
(7
)
Six Months Ended
June 30, 2023
June 30, 2022
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
2,656
58
%
$
1,999
59
%
$
657
33
%
EMEA2
1,359
30
996
29
363
36
Asia Pacific
575
13
417
12
158
38
Total consolidated net revenues
$
4,590
100
%
$
3,412
100
%
$
1,178
35
Change in deferred revenues3
Americas
$
(251
)
$
(186
)
EMEA2
(97
)
(111
)
Asia Pacific
74
4
Total changes in deferred revenues
$
(274
)
$
(293
)
1
The percentages of total are presented as
calculated. Therefore, the sum of these percentages, as presented,
may differ due to the impact of rounding.
2
Net revenues from EMEA consist of the
Europe, Middle East, and Africa geographic regions.
3
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues on certain of our
online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA
(Amounts in millions)
Trailing Twelve
Months Ended
September 30,
2022
December 31,
2022
March 31, 2023
June 30, 2023
June 30, 2023
GAAP Net Income
$
435
$
403
$
740
$
587
$
2,165
Interest expense from debt
27
27
27
27
108
Other income (expense), net
(42
)
(117
)
(122
)
(168
)
(449
)
Provision for income taxes
65
55
155
137
412
Depreciation and amortization
29
28
21
18
96
EBITDA
514
396
821
601
2,332
Share-based compensation expense1
102
161
124
102
489
Restructuring and related costs2
2
—
—
—
2
Partnership wind down and related
costs3
—
27
4
(2
)
29
Merger and acquisition-related fees and
other expenses4
10
10
21
21
62
Adjusted EBITDA
$
628
$
594
$
970
$
722
$
2,914
Change in deferred net revenues and
related cost of revenues5
$
25
$
1,059
$
(471
)
$
162
$
775
1
Reflects expenses related to share-based
compensation.
2
Reflects restructuring initiatives.
3
Reflects expenses related to the wind down
of our partnership with NetEase in Mainland China in regards to
licenses covering the publication of several Blizzard titles which
expired in January 2023.
4
Reflects fees and other expenses related
to our proposed transaction with Microsoft, primarily legal and
advisory fees.
5
Reflects the net effect from deferral of
revenues and (recognition) of deferred revenues, along with related
cost of revenues, on certain of our online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OPERATING METRICS
(Amounts in millions)
Net Bookings1
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
$ Increase
(Decrease)
% Increase
(Decrease)
2023
2022
$ Increase
(Decrease)
% Increase
(Decrease)
Net bookings1
$
2,461
$
1,637
$
824
50
%
$
4,316
$
3,119
$
1,197
38
%
In-game net bookings2
$
1,562
$
1,197
$
365
30
%
$
2,851
$
2,208
$
643
29
1
We monitor net bookings as a key operating
metric in evaluating the performance of our business because it
enables an analysis of performance based on the timing of actual
transactions with our customers and provides more timely
indications of trends in our operating results. Net bookings is the
net amount of products and services sold digitally or sold-in
physically in the period, and includes license fees, merchandise,
and publisher incentives, among others. Net bookings is equal to
net revenues excluding the impact from deferrals.
2
In-game net bookings primarily includes
the net amount of downloadable content and microtransactions sold
during the period, and is equal to in-game net revenues excluding
the impact from deferrals.
Monthly Active Users3
June 30, 2022
September 30, 2022
December 31, 2022
March 31, 2023
June 30, 2023
Activision
94
97
111
98
92
Blizzard
27
31
45
27
26
King
240
240
233
243
238
Total MAUs
361
368
389
368
356
3
We monitor monthly active users (“MAUs”)
as a key measure of the overall size of our user base. MAUs are the
number of individuals who accessed a particular game in a given
month. We calculate average MAUs in a period by adding the total
number of MAUs in each of the months in a given period and dividing
that total by the number of months in the period. An individual who
accesses two of our games would be counted as two users. In
addition, due to technical limitations, for Activision and King, an
individual who accesses the same game on two platforms or devices
in the relevant period would be counted as two users. For Blizzard,
an individual who accesses the same game on two platforms or
devices in the relevant period would generally be counted as a
single user. In certain instances, we rely on third parties to
publish our games. In these instances, MAU data is based on
information provided to us by those third parties, or, if final
data is not available, reasonable estimates of MAUs for these
third-party published games.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230717625669/en/
Activision Blizzard, Inc. Investors and Analysts:
ir@activisionblizzard.com or Press: pr@activisionblizzard.com
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