Activision Blizzard, Inc. (Nasdaq: ATVI) today announced
fourth-quarter and 2021 results.
“I’m so incredibly proud of our teams for their commitment and
passion as we continued to engage the world through epic
entertainment in 2021,” said Bobby Kotick, CEO of Activision
Blizzard. “As we look to the future, with Microsoft’s scale and
resources, we will be better equipped to grow existing franchises,
launch new potential franchises and unlock the rich library of
games we have assembled over 40 years. Our 370 million players
around the world and workplace excellence remain our focus. For
investors, our recently announced transaction is the culmination of
three decades of providing superior shareholder returns.”
Financial Metrics
Q4
CY
(in millions, except EPS)
2021
Prior Outlook*
2020
2021
2020
GAAP Net Revenues
$2,163
$2,020
$2,413
$8,803
$8,086
Impact of GAAP deferralsA
$324
$763
$638
($449)
$333
GAAP EPS
$0.72
$0.54
$0.65
$3.44
$2.82
Non-GAAP EPS
$1.01
$0.62
$0.76
$4.08
$3.21
Impact of GAAP deferralsA
$0.24
$0.67
$0.45
($0.36)
$0.26
* Prior outlook was provided by the company on November 2, 2021
in its earnings release.
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 year ended December 31, 2021, Activision Blizzard’s net
revenues presented in accordance with GAAP were $8.80 billion, as
compared with $8.09 billion for 2020. GAAP net revenues from
digital channels were $7.66 billion. GAAP operating margin was 37%.
GAAP earnings per diluted share was $3.44, as compared with $2.82
for 2020. On a non-GAAP basis, Activision Blizzard’s operating
margin was 44% and earnings per diluted share was $4.08, as
compared with $3.21 for 2020.
For the quarter ended December 31, 2021, Activision Blizzard’s
net revenues presented in accordance with GAAP were $2.16 billion,
as compared with $2.41 billion for the fourth quarter of 2020. GAAP
net revenues from digital channels were $1.78 billion. GAAP
operating margin was 32%. GAAP earnings per diluted share was
$0.72, as compared with $0.65 for the fourth quarter of 2020. On a
non-GAAP basis, Activision Blizzard’s operating margin was 45% and
earnings per diluted share was $1.01, as compared with $0.76 for
the fourth quarter of 2020.
Activision Blizzard generated $2.41 billion in operating cash
flow for the year ended December 31, 2021, as compared with $2.25
billion for 2020. For the quarter, operating cash flow was $661
million, as compared with $1.14 billion for the fourth quarter of
2020.
Please refer to the tables at the back of this press release for
a reconciliation of the company’s GAAP and non-GAAP results.
Operating Metrics
For the year ended December 31, 2021, Activision Blizzard’s net
bookingsB were $8.35 billion, as compared with $8.42 billion for
2020. In-game net bookingsC were $5.10 billion, as compared with
$4.85 billion for 2020.
For the quarter ended December 31, 2021, Activision Blizzard’s
net bookingsB were $2.49 billion, as compared with $3.05 billion
for the fourth quarter of 2020. In-game net bookingsC were $1.24
billion, as compared with $1.32 billion for the fourth quarter of
2020.
For the quarter ended December 31, 2021, overall Activision
Blizzard Monthly Active Users (MAUs)D were 371 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 valued at $68.7 billion, inclusive of Activision
Blizzard's net cash. The transaction is subject to customary
closing conditions and completion of regulatory review and
Activision Blizzard's stockholder approval. The transaction, which
is expected to close in Microsoft’s fiscal year ending June 30
2023, has been approved by the boards of directors of both
Activision Blizzard and Microsoft.
Conference Call and Earnings Presentation
In light of the pending 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 financial guidance in conjunction with
its fourth quarter 2021 earnings release. For further detail and
discussion of our financial performance please refer to our
upcoming Annual Report on Form 10-K for the year ended December 31,
2021.
Selected Business Highlights
Activision Blizzard delivered record full-year GAAP results in
2021, growing GAAP revenue 9% year-over-year, GAAP operating profit
19% year-over-year and GAAP EPS 22% year-over-year, building on
very strong results in the prior year. Net bookings were broadly
consistent year-over-year, again following very strong growth in
2020.
While fourth quarter 2021 GAAP revenue was ahead of our guidance
provided on November 2, 2021, fourth quarter net bookings were
below our prior outlook, primarily due to lower than expected
performance in the Activision segment, which offset record
performance at King. Activision Blizzard’s mobile net bookings grew
18% year-over-year and represented 33% of total net bookings in the
fourth quarter.
Fourth quarter GAAP EPS was ahead of our prior outlook. Non-GAAP
EPS reflected a $0.16 benefit from the implementation of changes to
our compensation plans, primarily to enhance equity ownership for
employees and bring our employee equity compensation more in line
with current industry practice.
Growing our developer base remains a strategic priority for the
company. We continued to increase our developer headcount in the
fourth quarter and added hundreds of talented professionals in
2021. Our teams are executing against an exciting pipeline of
content planned for 2022. Activision expects to drive
renewed expansion in the Call of Duty® franchise later in
the year with groundbreaking all-new experiences. Blizzard
is planning substantial new content for key franchises, and
King expects to build on its momentum with further
innovative live operations across its portfolio.
Activision Blizzard is committed to ensuring an inclusive and
safe working environment for its employees, and in the fourth
quarter continued to implement previously announced initiatives to
strengthen its practices and policies. The company also announced
the conversion of nearly 500 temporary workers to full-time
employees at Activision Publishing studios, along with securing
increased wages and expanded paid time off benefits for a large
portion of temporary workers.
Activision
- Call of Duty net bookings on console and PC declined
year-over-year in the fourth quarter, reflecting lower premium
sales for Call of Duty: Vanguard versus the year ago title
and lower engagement in Call of Duty: Warzone™. Fourth
quarter in-game player investment on console and PC remained well
above the level seen prior to the March 2020 launch of
Warzone.
- Development on this year’s premium and Warzone
experiences is being led by Activision’s renowned Infinity Ward
studio. The team is working on the most ambitious plan in franchise
history, with industry-leading innovation and a broadly appealing
franchise setting.
- Call of Duty Mobile net bookings grew year-over-year in
the fourth quarter, driven by continued contribution from the game
in China. For the full year, Call of Duty Mobile net
bookings grew strongly, with 2021 worldwide consumer spending on
the title exceeding $1 billion.
- Studio expansion has continued to add development resources
worldwide as plans continue for ongoing live operations and new,
unannounced titles in the Call of Duty universe.
Blizzard
- Within the Warcraft franchise, fourth quarter World
of WarcraftTM reach and engagement continued to benefit from
the combination of the Modern game and Classic under a single
subscription. In 2021, World of Warcraft delivered its
strongest engagement and net bookings outside of a Modern expansion
year in a decade. Hearthstone® fourth quarter net bookings
grew year-over-year, driven by a steady cadence of new
content.
- Blizzard is planning substantial new content for the
Warcraft franchise in 2022, including new experiences in
World of Warcraft and Hearthstone, and getting
all-new mobile Warcraft content into players’ hands for the
first time.
- In the Diablo franchise, Diablo II: ResurrectedTM
sold through more units from its September release until the year
end than any other Activision Blizzard remaster over an equivalent
period. On mobile, Diablo ImmortalTM concluded its public
testing with positive feedback.
- Blizzard is making strong progress on its pipeline, including
new experiences in Warcraft, ongoing development in
Diablo and Overwatch, and an exciting new
IP.
King
- King’s in-game net bookings grew 14% year-over-year to a new
record in the fourth quarter, driven by 20% year-over-year growth
for Candy CrushTM, King’s largest franchise. Candy
Crush was the top-grossing game franchise in the U.S. app
stores1 for the 18th consecutive quarter.
- Hours played across the King portfolio again grew
year-over-year in the fourth quarter, with players responding
positively to a more frequent cadence of compelling in-game content
and events for key titles. King’s payer numbers grew by a
double-digit percentage versus the year ago quarter.
- King’s advertising business grew rapidly in the fourth quarter
to reach a new high. For 2021, advertising revenue grew over 60%
year-over-year.
- Having passed the $1 billion annual operating income milestone
in 2021, the King business is entering 2022 with strong momentum.
Its teams are focused on continuing to deliver engaging features
and events alongside robust live operations and disciplined user
acquisition in the coming quarters.
Balance Sheet and Dividend
- Cash and short-term investments at the end of the fourth
quarter stood at $10.6 billion, and Activision Blizzard ended the
quarter with a net cash position of approximately $7.0
billion.
- The Board of Directors declared a cash dividend of $0.47 per
common share, payable on May 6, 2022 to shareholders of record at
the close of business on April 15, 2022.
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 game franchises 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 enduring franchises are some of the world’s most popular,
including Call of Duty®, Crash Bandicoot™, Warcraft®, Overwatch®,
Diablo®, StarCraft®, Candy Crush™, Bubble Witch™, Pet Rescue™ and
Farm Heroes™. Our sustained success has enabled the company to
support corporate social responsibility initiatives that are
directly tied to our franchises. As an example, our Call of Duty
Endowment has helped find employment for over 90,000 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.com.
1 Based on App Annie Intelligence.
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
downloadable content and microtransactions 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.
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 FX information to
provide a framework for assessing how our underlying businesses
performed excluding the effect of foreign 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 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;
- 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 statements
about: (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 or services, restructuring activities, and
employee retention and recruitment; (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 (the “proposed
transaction”), including any statements regarding the expected
timetable for completing the proposed transaction, the ability to
complete the proposed transaction and the expected benefits of the
proposed transaction; and (5) 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 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 transaction,
including the adoption of the merger agreement by our stockholders
and the receipt of certain governmental and regulatory approvals;
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 transaction on our
business relationships, operating results, and business generally;
risks that the proposed transaction disrupts our current plans and
operations and potential difficulties in employee retention as a
result of the transaction; risks related to diverting management’s
attention from ongoing business operations; the outcome of any
legal proceedings that may be instituted against us related to the
merger agreement or the transaction; restrictions during the
pendency of the proposed transaction that may impact our ability to
pursue certain business opportunities or strategic transactions;
the potential for receipt of alternative acquisition proposals from
potential acquirors; the ongoing global impact of a novel strain of
coronavirus which emerged in December 2019 (“COVID-19”) (including,
without limitation, the potential for significant short- and
long-term global unemployment and economic weakness and a resulting
impact on global discretionary spending; potential strain on the
retailers, distributors, and manufacturers who sell our physical
products to customers and the platform providers on whose networks
and consoles certain of our games are available; effects on our
ability to release our content in a timely manner; effects on the
operations of our professional esports leagues; the impact of
large-scale intervention by the Federal Reserve and other central
banks around the world, including the impact on interest rates;
increased demand for our games due to stay-at-home orders and
curtailment of other forms of entertainment, which may not be
sustained and is likely to fluctuate as stay-at-home orders are
reduced, lifted and/or reinstated; macroeconomic impacts arising
from the long duration of the COVID-19 pandemic, including labor
shortages and supply chain disruptions; and volatility in foreign
exchange rates); our ability to consistently deliver popular,
high-quality titles in a timely manner, which has been made more
difficult as a result of the COVID-19 pandemic; competition;
concentration of revenue among a small number of franchises; our
ability to satisfy the expectations of consumers with respect to
our brands, games, services, and/or business practices; our ability
to attract, retain, and motivate skilled personnel; rapid changes
in technology and industry standards; increasing importance of
revenues derived from digital distribution channels; risks
associated with the retail sales business model; the continued
growth in the scope and complexity of our business; substantial
influence of third-party platform providers over our products and
costs; success and availability of video game consoles manufactured
by third parties, including our ability to predict the consoles
that will be most successful in the marketplace and develop
commercially-successful products for those consoles; risks
associated with the free-to-play business model, including our
dependence on a relatively small number of consumers for a
significant portion of revenues and profits from any given game;
our ability to realize the expected benefits of, and effectively
implement and manage, our restructuring actions; difficulties in
integrating acquired businesses or otherwise realizing the
anticipated benefits of strategic transactions; the seasonality in
the sale of our products; risks relating to behavior of our
distributors, retailers, development, and licensing partners, or
other affiliated third parties that may harm our brands or business
operations; risks associated with our use of open source software;
risks and uncertainties of conducting business outside the United
States (the “U.S.”), including the recently enacted Chinese
regulation that further limits the number of hours per week
children under the age of 18 can play video games; risks associated
with undisclosed content or features that may result in consumers’
refusal to buy or retailers’ refusal to sell our products; risks
associated with objectionable consumer- or other
third-party-created content; reliance on servers and networks to
distribute and operate our games and our proprietary online gaming
service; data breaches and other cybersecurity risks; significant
disruption during our live events; risks related to the impacts of
catastrophic events, including the susceptibility of some of our
primary operating locations to earthquakes; provisions in our
corporate documents that may make it more difficult for any person
to acquire control of our company; risks and costs associated with
legal proceedings, including the impact of the complaint filed by
the California Department of Fair Employment and Housing alleging
violations of the California Fair Employment and Housing Act and
the California Equal Pay Act and separate investigations and
complaints by other parties and regulators related to certain
employment practices and related disclosures; court approval of our
settlement agreement with the Equal Employment Opportunity
Commission (“EEOC”) and successful implementation of the
requirements of the agreement with the EEOC; intellectual property
claims; increasing regulation in key territories; regulation
relating to the Internet, including potential harm from laws
impacting “net neutrality”; regulation concerning data privacy,
including China’s recently passed Personal Information Protection
Law; scrutiny regarding the appropriateness of our games’ content,
including ratings assigned by third parties; changes in tax rates
or exposure to additional tax liabilities, as well as the outcome
of current or future tax disputes; fluctuations in currency
exchange rates; impacts of changes in financial accounting
standards; insolvency or business failure of any of our business
partners, which has been magnified as a result of the COVID-19
pandemic; risks associated with our reliance on discretionary
spending; and the other factors identified in “Risk Factors”
included in Part I, Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2020 and Part II, Item 1A of our
Quarterly Report on Form 10-Q for the quarter ended September 30,
2021.
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.
Additional Information and Where to Find It
In connection with the transaction, Activision Blizzard will
file relevant materials with the SEC, including a proxy statement
on Schedule 14A. Promptly after filing its definitive proxy
statement with the SEC, Activision Blizzard will mail the
definitive proxy statement and a proxy card to each stockholder
entitled to vote at the special meeting relating to the
transaction. INVESTORS AND SECURITY HOLDERS OF ACTIVISION BLIZZARD
ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION
WITH THE TRANSACTION THAT ACTIVISION BLIZZARD WILL FILE WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT ACTIVISION BLIZZARD AND THE TRANSACTION. The
definitive proxy statement, the preliminary proxy statement and
other relevant materials in connection with the transaction (when
they become available), and any other documents filed by Activision
Blizzard with the SEC, may be obtained free of charge at the SEC’s
website (http://www.sec.gov) or at Activision Blizzard’s website
(https://investor.Activision.com) or by writing to Activision
Blizzard, Investor Relations, 3100 Ocean Park Boulevard, Santa
Monica, California, 90405.
Activision Blizzard and certain of its directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from
Activision Blizzard’s stockholders with respect to the transaction.
Information about Activision Blizzard’s directors and executive
officers and their ownership of Activision Blizzard’s common stock
is set forth in Activision Blizzard’s proxy statement on Schedule
14A filed with the SEC on April 30, 2021 as amended on May 3, 2021.
To the extent that holdings of Activision Blizzard’s securities
have changed since the amounts printed in Activision Blizzard’s
proxy statement, such changes have been or will be reflected on
Statements of Change in Ownership on Form 4 filed with the SEC.
Information regarding the identity of the participants, and their
direct or indirect interests in the transaction, by security
holdings or otherwise, will be set forth in the proxy statement and
other materials to be filed with SEC in connection with the
transaction.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Amounts in millions, except per share
data)
Three Months Ended December
31,
Year Ended December
31,
2021
2020
2021
2020
Net revenues
Product sales
$
645
$
866
$
2,311
$
2,350
In-game, subscription, and other
revenues1
1,518
1,547
6,492
5,736
Total net revenues
2,163
2,413
8,803
8,086
Costs and expenses
Cost of revenues—product sales:
Product costs
274
349
649
705
Software royalties, amortization, and
intellectual property licenses
73
117
346
269
Cost of revenues—in-game, subscription,
and other:
Game operations and distribution costs
290
313
1,215
1,131
Software royalties, amortization, and
intellectual property licenses
20
39
107
155
Product development
321
350
1,337
1,150
Sales and marketing
299
341
1,025
1,064
General and administrative
174
255
788
784
Restructuring and related costs
30
55
77
94
Total costs and expenses
1,481
1,819
5,544
5,352
Operating income
682
594
3,259
2,734
Interest and other expense (income),
net
45
31
95
87
Loss on extinguishment of debt
—
—
—
31
Income before income tax expense
637
563
3,164
2,616
Income tax expense
73
55
465
419
Net income
$
564
$
508
$
2,699
$
2,197
Basic earnings per common share
$
0.72
$
0.66
$
3.47
$
2.85
Weighted average common shares
outstanding
779
773
777
771
Diluted earnings per common share
$
0.72
$
0.65
$
3.44
$
2.82
Weighted average common shares outstanding
assuming dilution
782
780
784
778
1
In-game, subscription, and other revenues
represent revenues from microtransactions and downloadable content,
World of Warcraft subscriptions, licensing royalties from our
products and franchises, and other miscellaneous revenues.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Amounts in millions)
December 31, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$
10,423
$
8,647
Accounts receivable, net
972
1,052
Software development
449
352
Other current assets
712
514
Total current assets
12,556
10,565
Software development
211
160
Property and equipment, net
169
209
Deferred income taxes, net
1,377
1,318
Other assets
497
641
Intangible assets, net
447
451
Goodwill
9,799
9,765
Total assets
$
25,056
$
23,109
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable
$
285
$
295
Deferred revenues
1,118
1,689
Accrued expenses and other liabilities
1,008
1,116
Total current liabilities
2,411
3,100
Long-term debt, net
3,608
3,605
Deferred income taxes, net
506
418
Other liabilities
932
949
Total liabilities
7,457
8,072
Shareholders' equity
Common stock
—
—
Additional paid-in capital
11,715
11,531
Treasury stock
(5,563
)
(5,563
)
Retained earnings
12,025
9,691
Accumulated other comprehensive loss
(578
)
(622
)
Total shareholders’ equity
17,599
15,037
Total liabilities and shareholders’
equity
$
25,056
$
23,109
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(Amounts in millions)
Year Ended December
31,
2021
2020
Cash flows from operating activities:
Net income
$
2,699
$
2,197
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income taxes
7
(94
)
Non-cash operating lease cost
65
65
Depreciation and amortization
116
197
Amortization of capitalized software
development costs and intellectual property licenses1
324
249
Share-based compensation expense2
508
218
Realized and unrealized gain on equity
investment
(28
)
(3
)
Other
2
31
Changes in operating assets and
liabilities:
Accounts receivable, net
71
(194
)
Software development and intellectual
property licenses
(426
)
(378
)
Other assets
(114
)
(88
)
Deferred revenues
(537
)
216
Accounts payable
(7
)
(10
)
Accrued expenses and other liabilities
(266
)
(154
)
Net cash provided by operating
activities
2,414
2,252
Cash flows from investing activities:
Proceeds from maturities of
available-for-sale investments
214
121
Proceeds from sale of available-for-sale
investments
66
—
Purchases of available-for-sale
investments
(248
)
(221
)
Capital expenditures
(80
)
(78
)
Other investing activities
(11
)
—
Net cash used in investing activities
(59
)
(178
)
Cash flows from financing activities:
Proceeds from issuance of common stock to
employees
90
170
Tax payment related to net share
settlements on restricted stock units
(246
)
(39
)
Dividends paid
(365
)
(316
)
Proceeds from issuance of debt, net of
discounts
—
1,994
Repayment of long-term debt
—
(1,050
)
Payment of financing costs
—
(20
)
Premium payment for early redemption of
notes
—
(28
)
Net cash provided by (used in) financing
activities
(521
)
711
Effect of foreign exchange rate changes on
cash and cash equivalents
(48
)
69
Net increase in cash and cash equivalents
and restricted cash
1,786
2,854
Cash and cash equivalents and restricted
cash at beginning of period
8,652
5,798
Cash and cash equivalents and restricted
cash at end of period
$
10,438
$
8,652
1
Excludes deferral and amortization of
share-based compensation expense.
2
Includes the net effects of
capitalization, deferral, and amortization of share-based
compensation expense.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
SUPPLEMENTAL CASH FLOW
INFORMATION
(Amounts in millions)
Three Months Ended
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
Year over Year
2020
2020
2020
2020
2021
2021
2021
2021
% Increase (Decrease)
Cash Flow Data
Operating Cash Flow
$
148
$
768
$
196
$
1,140
$
844
$
388
$
521
$
661
(42
)%
Capital Expenditures
19
13
24
22
22
14
23
21
(5
)
Non-GAAP Free Cash Flow1
$
129
$
755
$
172
$
1,118
$
822
$
374
$
498
$
640
(43
)
Operating Cash Flow - TTM2
$
1,529
$
2,143
$
2,030
$
2,252
$
2,948
$
2,568
$
2,893
$
2,414
7
Capital Expenditures - TTM2
117
103
93
78
81
82
81
80
3
Non-GAAP Free Cash Flow1 - TTM2
$
1,412
$
2,040
$
1,937
$
2,174
$
2,867
$
2,486
$
2,812
$
2,334
7
%
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 June 30, 2019, three
months ended September 30, 2019, and three months ended December
31, 2019, were $154 million, $309 million, and $918 million,
respectively. Capital Expenditures for the three months ended June
30, 2019, three months ended September 30, 2019, and three months
ended December 31, 2019, were $27 million, $34 million, and $37
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
December 31, 2021
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
Restructuring
and related
costs
Total Costs
and Expenses
GAAP Measurement
$
2,163
$
274
$
73
$
290
$
20
$
321
$
299
$
174
$
30
$
1,481
Share-based compensation1
—
—
(3
)
(5
)
—
(145
)
(29
)
(67
)
—
(249
)
Amortization of intangible assets2
—
—
—
—
—
—
—
(2
)
—
(2
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(30
)
(30
)
Non-GAAP Measurement
$
2,163
$
274
$
70
$
285
$
20
$
176
$
270
$
105
$
—
$
1,200
Net effect of deferred revenues and
related cost of revenues4
$
324
$
29
$
68
$
6
$
6
$
—
$
—
$
—
$
—
$
109
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings
per Share
GAAP Measurement
$
682
$
564
$
0.72
$
0.72
Share-based compensation1
249
249
0.32
0.32
Amortization of intangible assets2
2
2
—
—
Restructuring and related costs3
30
30
0.04
0.04
Income tax impacts from items above5
—
(57
)
(0.07
)
(0.07
)
Non-GAAP Measurement
$
963
$
788
$
1.01
$
1.01
Net effect of deferred revenues and
related cost of revenues4
$
215
$
188
$
0.24
$
0.24
1
Reflects expenses related to share-based
compensation, including $194 million for liability awards accounted
for under ASC 718. The liability awards primarily relate to recent
changes to the Company’s compensation payments for 2021 and
represent expenses associated with achievement against our fiscal
year 2021 performance targets (which will now be settled in shares
of our common stock, rather than cash) and additional payments
associated with these compensation changes that will be settled via
issuance of shares of our common stock. Refer to our Operating
Segment tables for further details.
2
Reflects amortization of intangible assets
from purchase price accounting.
3
Reflects restructuring initiatives,
primarily severance and other restructuring-related costs.
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)
Year Ended
December 31, 2021
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
Restructuring
and related
costs
Total Costs
and Expenses
GAAP Measurement
$
8,803
$
649
$
346
$
1,215
$
107
$
1,337
$
1,025
$
788
$
77
$
5,544
Share-based compensation1
—
—
(17
)
(7
)
—
(211
)
(44
)
(229
)
—
(508
)
Amortization of intangible assets2
—
—
—
—
(3
)
—
—
(7
)
—
(10
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(77
)
(77
)
Non-GAAP Measurement
$
8,803
$
649
$
329
$
1,208
$
104
$
1,126
$
981
$
552
$
—
$
4,949
Net effect of deferred revenues and
related cost of revenues4
$
(449
)
$
(5
)
$
(109
)
$
5
$
7
$
—
$
—
$
—
$
—
$
(102
)
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings
per Share
GAAP Measurement
$
3,259
$
2,699
$
3.47
$
3.44
Share-based compensation1
508
508
0.65
0.65
Amortization of intangible assets2
10
10
0.01
0.01
Restructuring and related costs3
77
77
0.10
0.10
Income tax impacts from items above5
—
(98
)
(0.13
)
(0.13
)
Non-GAAP Measurement
$
3,854
$
3,196
$
4.11
$
4.08
Net effect of deferred revenues and
related cost of revenues4
$
(347
)
$
(280
)
$
(0.36
)
$
(0.36
)
1
Reflects expenses related to share-based
compensation, including $194 million for liability awards accounted
for under ASC 718. The liability awards primarily relate to recent
changes to the Company’s compensation payments for 2021 and
represent expenses associated with achievement against our fiscal
year 2021 performance targets (which will now be settled in shares
of our common stock, rather than cash) and additional payments
associated with these compensation changes that will be settled via
issuance of shares of our common stock. Refer to our Operating
Segment tables for further details.
2
Reflects amortization of intangible assets
from purchase price accounting.
3
Reflects restructuring initiatives,
primarily severance and other restructuring-related costs.
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)
Three Months Ended
December 31, 2020
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
Restructuring
and related costs
Total Costs
and Expenses
GAAP Measurement
$
2,413
$
349
$
117
$
313
$
39
$
350
$
341
$
255
$
55
$
1,819
Share-based compensation1
—
—
(6
)
—
—
(14
)
(3
)
(57
)
—
(80
)
Amortization of intangible assets2
—
—
—
—
(13
)
—
—
(5
)
—
(18
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(55
)
(55
)
Non-GAAP Measurement
$
2,413
$
349
$
111
$
313
$
26
$
336
$
338
$
193
$
—
$
1,666
Net effect of deferred revenues and
related cost of revenues4
$
638
$
31
$
193
$
5
$
2
$
—
$
—
$
—
$
—
$
231
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings
per Share
GAAP Measurement
$
594
$
508
$
0.66
$
0.65
Share-based compensation1
80
80
0.10
0.10
Amortization of intangible assets2
18
18
0.02
0.02
Restructuring and related costs3
55
55
0.07
0.07
Income tax impacts from items above5
—
(71
)
(0.09
)
(0.09
)
Non-GAAP Measurement
$
747
$
590
$
0.76
$
0.76
Net effect of deferred revenues and
related cost of revenues4
$
407
$
353
$
0.46
$
0.45
1
Reflects expenses related to share-based
compensation.
2
Reflects amortization of intangible assets
from purchase price accounting.
3
Reflects restructuring initiatives,
primarily severance and other restructuring-related costs.
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)
Year Ended
December 31, 2020
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
Restructuring
and related
costs
Total Costs
and Expenses
GAAP Measurement
$
8,086
$
705
$
269
$
1,131
$
155
$
1,150
$
1,064
$
784
$
94
$
5,352
Share-based compensation1
—
—
(14
)
(1
)
—
(42
)
(21
)
(140
)
—
(218
)
Amortization of intangible assets2
—
—
—
—
(68
)
—
—
(11
)
—
(79
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(94
)
(94
)
Non-GAAP Measurement
$
8,086
$
705
$
255
$
1,130
$
87
$
1,108
$
1,043
$
633
$
—
$
4,961
Net effect of deferred revenues and
related cost of revenues4
$
333
$
(40
)
$
111
$
13
$
11
$
—
$
—
$
—
$
—
$
95
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings
per Share
GAAP Measurement
$
2,734
$
2,197
$
2.85
$
2.82
Share-based compensation1
218
218
0.28
0.28
Amortization of intangible assets2
79
79
0.10
0.10
Restructuring and related costs3
94
94
0.12
0.12
Loss on extinguishment of debt5
—
31
0.04
0.04
Income tax impacts from items above6
—
(123
)
(0.16
)
(0.16
)
Non-GAAP Measurement
$
3,125
$
2,496
$
3.24
$
3.21
Net effect of deferred revenues and
related cost of revenues4
$
238
$
205
$
0.26
$
0.26
1
Reflects expenses related to share-based
compensation.
2
Reflects amortization of intangible assets
from purchase price accounting.
3
Reflects restructuring initiatives,
primarily severance and other restructuring-related costs.
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 loss on extinguishment of
debt from financing activities.
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
December 31, 2021
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
1,157
$
387
$
684
$
2,228
$
(500
)
$
(143
)
$
107
$
(536
)
Intersegment net revenues1
—
32
—
32
—
(17
)
—
(17
)
Segment net revenues
$
1,157
$
419
$
684
$
2,260
$
(500
)
$
(160
)
$
107
$
(553
)
Segment operating income
$
618
$
161
$
385
$
1,164
$
(162
)
$
1
$
143
$
(18
)
Operating Margin
51.5
%
December 31, 2020
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
1,657
$
530
$
577
$
2,764
Intersegment net revenues1
—
49
—
49
Segment net revenues
$
1,657
$
579
$
577
$
2,813
Segment operating income
$
780
$
160
$
242
$
1,182
Operating Margin
42.0
%
Year Ended
December 31, 2021
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
3,478
$
1,733
$
2,580
$
7,791
$
(464
)
$
(61
)
$
416
$
(109
)
Intersegment net revenues1
—
94
—
94
—
(17
)
—
(17
)
Segment net revenues
$
3,478
$
1,827
$
2,580
$
7,885
$
(464
)
$
(78
)
$
416
$
(126
)
Segment operating income
$
1,667
$
698
$
1,140
$
3,505
$
(201
)
$
5
$
283
$
87
Operating Margin
44.5
%
December 31, 2020
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
3,942
$
1,794
$
2,164
$
7,900
Intersegment net revenues1
—
111
—
111
Segment net revenues
$
3,942
$
1,905
$
2,164
$
8,011
Segment operating income
$
1,868
$
693
$
857
$
3,418
Operating Margin
42.7
%
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 accounting 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; 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.
The Company has been reviewing its overall compensation
structure and philosophy and began implementing changes to its
compensation payments for 2021, primarily to enhance equity
ownership for employees and bring our employee equity compensation
more in line with current industry practice. As an aspect of this
change, the Company determined to settle amounts not yet paid as of
December 31, 2021 under its annual performance plans in stock as
opposed to cash and further to provide such incentives at no less
than target performance without regard to whether target
performance was achieved, resulting in a year-end share-based
compensation liability of $194 million. The changes in Q4 2021
resulted in $160 million of expense related to achievement against
2021 performance targets that would have otherwise been included in
our segment operating income to instead be excluded from our 2021
segment operating income as it is now part of share-based
compensation, accounted for as a liability under ASC 718. The
changes increased our Activision, Blizzard, King and non-reportable
segment operating income by $43 million, $25 million, $65 million,
and $27 million, respectively, for the three months and year ended
December 31, 2021. In addition, going forward, to the extent
certain of our previously cash-based bonus programs are instead
issued as time-based equity or settled via equity, such amounts
will be recorded as share-based compensation and will be excluded
from segment operating income.
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 December
31,
Year Ended December
31,
2021
2020
2021
2020
Reconciliation to consolidated net
revenues:
Segment net revenues
$
2,260
$
2,813
$
7,885
$
8,011
Revenues from non-reportable segments1
259
287
563
519
Net effect from recognition (deferral) of
deferred net revenues2
(324
)
(638
)
449
(333
)
Elimination of intersegment revenues3
(32
)
(49
)
(94
)
(111
)
Consolidated net revenues
$
2,163
$
2,413
$
8,803
$
8,086
Reconciliation to consolidated income
before income tax expense:
Segment operating income
$
1,164
$
1,182
$
3,505
$
3,418
Operating income (loss) from
non-reportable segments1
14
(28
)
2
(55
)
Net effect from recognition (deferral) of
deferred net revenues and related cost of revenues2
(215
)
(407
)
347
(238
)
Share-based compensation expense4
(249
)
(80
)
(508
)
(218
)
Amortization of intangible assets
(2
)
(18
)
(10
)
(79
)
Restructuring and related costs5
(30
)
(55
)
(77
)
(94
)
Consolidated operating income
682
594
3,259
2,734
Interest and other expense (income),
net
45
31
95
87
Loss on extinguishment of debt
—
—
—
31
Consolidated income before income tax
expense (benefit)
$
637
$
563
$
3,164
$
2,616
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, including liability awards accounted for under ASC
718.
5
Reflects restructuring initiatives,
primarily severance and other restructuring-related costs.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
NET REVENUES BY DISTRIBUTION
CHANNEL
(Amounts in millions)
Three Months Ended
December 31, 2021
December 31, 2020
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
1,780
82
%
$
1,874
78
%
$
(94
)
(5
)%
Retail channels
125
6
234
10
(109
)
(47
)
Other3
258
12
305
13
(47
)
(15
)
Total consolidated net revenues
$
2,163
100
%
$
2,413
100
%
$
(250
)
(10
)
Change in deferred revenues4
Digital online channels2
$
169
$
466
Retail channels
151
182
Other3
4
(10
)
Total changes in deferred revenues
$
324
$
638
Year Ended
December 31, 2021
December 31, 2020
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
7,663
87
%
$
6,658
82
%
$
1,005
15
%
Retail channels
479
5
741
9
(262
)
(35
)
Other3
661
8
687
8
(26
)
(4
)
Total consolidated net revenues
$
8,803
100
%
$
8,086
100
%
$
717
9
Change in deferred revenues4
Digital online channels2
$
(421
)
$
464
Retail channels
(42
)
(112
)
Other3
14
(19
)
Total changes in deferred revenues
$
(449
)
$
333
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 includes
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
December 31, 2021
December 31, 2020
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
576
27
%
$
840
35
%
$
(264
)
(31
)%
PC
496
23
561
23
(65
)
(12
)
Mobile and ancillary2
833
39
707
29
126
18
Other3
258
12
305
13
(47
)
(15
)
Total consolidated net revenues
$
2,163
100
%
$
2,413
100
%
$
(250
)
(10
)
Change in deferred revenues4
Console
$
276
$
432
PC
25
207
Mobile and ancillary2
19
9
Other3
4
(10
)
Total changes in deferred revenues
$
324
$
638
Year Ended
December 31, 2021
December 31, 2020
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
2,637
30
%
$
2,784
34
%
$
(147
)
(5
)%
PC
2,323
26
2,056
25
267
13
Mobile and ancillary2
3,182
36
2,559
32
623
24
Other3
661
8
687
8
(26
)
(4
)
Total consolidated net revenues
$
8,803
100
%
$
8,086
100
%
$
717
9
Change in deferred revenues4
Console
$
(254
)
$
132
PC
(228
)
179
Mobile and ancillary2
19
41
Other3
14
(19
)
Total changes in deferred revenues
$
(449
)
$
333
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
include revenues from mobile devices, as well as non-platform
specific game related revenues, such as standalone sales of
physical merchandise and accessories.
3
Net revenues from Other primarily includes
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
December 31, 2021
December 31, 2020
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
1,112
51
%
$
1,247
52
%
$
(135
)
(11
)%
EMEA2
751
35
910
38
(159
)
(17
)
Asia Pacific
300
14
256
11
44
17
Total consolidated net revenues
$
2,163
100
%
$
2,413
100
%
$
(250
)
(10
)
Change in deferred revenues3
Americas
$
188
$
390
EMEA2
123
220
Asia Pacific
13
28
Total changes in deferred revenues
$
324
$
638
Year Ended
December 31, 2021
December 31, 2020
$ Increase
(Decrease)
% Increase
(Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
4,931
56
%
$
4,434
55
%
$
497
11
%
EMEA2
2,797
32
2,680
33
117
4
Asia Pacific
1,075
12
972
12
103
11
Total consolidated net revenues
$
8,803
100
%
$
8,086
100
%
$
717
9
Change in deferred revenues3
Americas
$
(288
)
$
285
EMEA2
(136
)
59
Asia Pacific
(25
)
(11
)
Total changes in deferred revenues
$
(449
)
$
333
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
March 31,
2021
June 30,
2021
September 30,
2021
December 31,
2021
December 31,
2021
GAAP Net Income
$
619
$
876
$
639
$
564
$
2,699
Interest and other expense (income),
net
30
(43
)
65
45
95
Provision for income taxes
146
126
120
73
465
Depreciation and amortization
33
28
27
27
116
EBITDA
828
987
851
709
3,375
Share-based compensation expense1
151
43
64
249
508
Restructuring and related costs2
30
13
3
30
77
Adjusted EBITDA
$
1,009
$
1,043
$
918
$
988
$
3,960
Change in deferred net revenues and
related cost of revenues3
$
(132
)
$
(276
)
$
(154
)
$
215
$
(347
)
1
Reflects expenses related to share-based
compensation, including liability awards accounted for under ASC
718.
2
Reflects restructuring initiatives,
primarily severance and other restructuring-related costs.
3
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.
Trailing twelve months amounts are
presented as calculated. Therefore, the sum of the four quarters,
as presented, may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
OPERATING METRICS
(Amounts in millions)
Net Bookings1
Three Months Ended December
31,
Year Ended December
31,
2021
2020
$ Increase
(Decrease)
% Increase
(Decrease)
2021
2020
$ Increase
(Decrease)
% Increase
(Decrease)
Net bookings1
$
2,487
$
3,051
$
(564
)
(18
)%
$
8,354
$
8,419
$
(65
)
(1
)%
In-game net bookings2
$
1,241
$
1,324
$
(83
)
(6
)%
$
5,100
$
4,852
$
248
5
%
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
December 31, 2020
March 31, 2021
June 30, 2021
September 30, 2021
December 31, 2021
Activision
128
150
127
119
107
Blizzard
29
27
26
26
24
King
240
258
255
245
240
Total MAUs
397
435
408
390
371
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/20220202006035/en/
Activision Blizzard, Inc.
Investors and Analysts: ir@activisionblizzard.com or Press:
pr@activisionblizzard.com
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