Activision Blizzard, Inc. (Nasdaq: ATVI) today announced second
quarter 2022 results.
Bobby Kotick, CEO of Activision Blizzard, shared, “Our
acquisitions this past quarter of Proletariat and Peltarion further
boost our development resources, including our artificial
intelligence and machine learning capabilities. Even in a
challenging economic environment, with so many companies announcing
hiring freezes and layoffs, our development headcount grew 25%
year-over-year as of the end of the second quarter. Our talented
teams are planning to release exciting new Call of Duty, World of
Warcraft and Overwatch content later this year. Of course, we look
forward to completing our pending $95 per share all-cash
transaction with Microsoft as soon as possible.”
Financial Metrics
Q2
(in millions, except EPS)
2022
2021
GAAP Net Revenues
$
1,644
$
2,296
Impact of GAAP deferralsA
$
(7
)
$
(375
)
GAAP EPS
$
0.36
$
1.12
Non-GAAP EPS
$
0.48
$
1.20
Impact of GAAP deferralsA
$
(0.01
)
$
(0.29
)
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, 2022, Activision Blizzard’s net
revenues presented in accordance with GAAP were $1.64 billion, as
compared with $2.30 billion for the second quarter of 2021. GAAP
net revenues from digital channels were $1.47 billion. GAAP
operating margin was 21%. GAAP earnings per diluted share was
$0.36, as compared with $1.12 for the second quarter of 2021. On a
non-GAAP basis, Activision Blizzard’s operating margin was 28% and
earnings per diluted share was $0.48, as compared with $1.20 for
the second quarter of 2021.
Activision Blizzard generated $198 million in operating cash
flow for the quarter as compared with $388 million for the second
quarter of 2021.
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 quarter ended June 30, 2022, Activision Blizzard’s net
bookingsB were $1.64 billion, as compared with $1.92 billion for
the second quarter of 2021. In-game net bookingsC were $1.20
billion, as compared with $1.32 billion for the second quarter of
2021.
For the quarter ended June 30, 2022, overall Activision Blizzard
Monthly Active Users (MAUs)D were 361 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 is subject to customary closing
conditions and completion of regulatory review. 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 and by Activision Blizzard’s
stockholders.
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 quantitative financial guidance in
conjunction with its second quarter 2022 earnings release. For
further detail and discussion of our financial performance please
refer to our quarterly report on Form 10-Q for the quarter ended
June 30, 2022.
Selected Business Highlights
During the second quarter, our teams made strong progress on a
broad pipeline of content across established franchises. Releases
planned for the second half of the year include Call of Duty®:
Modern Warfare II, a new Call of Duty: Warzone™
2.0 experience, World of Warcraft®: Wrath of the Lich
King® Classic, World of Warcraft: Dragonflight™, and
Overwatch® 2, with Diablo® IV planned for release in
2023. We continue to increase investment in our creative resources
to meet the demand for our content - our development headcount at
the end of the second quarter grew by 25% year-over-year.
While the company remains cognizant of risks including those
related to the labor market and economic conditions, and we still
have significant execution ahead of us, we expect these releases to
increase our global audience, deepen community engagement, and
drive year-over-year growth in player investment in the fourth
quarter and beyond.
GAAP revenue and EPS declined year-over-year in the second
quarter, and the company expects GAAP revenue and earnings per
share to remain lower year-over-year in the second half of the
year. Second quarter segment operating income increased versus the
first quarter for each of Activision, Blizzard and King. Based on
the current pipeline, total segment operating income is expected to
increase modestly in the third quarter versus the second quarter,
and to return to year-over-year growth in the fourth quarter.
Activision Blizzard remains committed to becoming the most
welcoming, inclusive company in our industry, and continues to
implement previously announced initiatives to strengthen our
practices and policies. In the second quarter, we added experienced
DE&I leaders in key positions across the organization. In July,
the company launched Level Up U, a 12-week program that prepares
talented individuals from inside and outside the industry to become
full-time game developers. Level Up U is the first major program
funded through a $250 million investment over 10 years announced
last October to accelerate opportunities in gaming and technology
for under-represented communities.
Activision
- The fourth quarter will usher in a new era for the Call of
Duty franchise. Anticipation is high for Call of Duty:
Modern Warfare II, planned for release on console and PC on
October 28. The sequel to 2019’s Modern Warfare®, the most
successful Call of Duty title to date, will lead the most
ambitious rollout yet across the franchise. An all-new Call of
Duty: Warzone 2.0 experience, tightly integrated with
the premium game, will launch as an extension of the Modern
Warfare universe later this year.
- Activision’s expanded studios also continue to make strong
progress on an innovative mobile experience that will extend
Warzone to the largest and fastest growing platform. Across
the Call of Duty ecosystem, the teams are well positioned to
support these launches with substantial live operations while also
continuing development of new premium content planned for 2023 and
beyond.
- Activision’s second quarter segment revenue and operating
income declined year-over-year, reflecting lower engagement for the
Call of Duty franchise, but grew versus the first quarter.
Call of Duty net bookings on console and PC grew
sequentially in the second quarter, following gameplay improvements
and seasonal content across Call of Duty: Vanguard and
Call of Duty: Warzone that were well-received by players.
Net bookings for Call of Duty Mobile were consistent with
the first quarter.
Blizzard
- The June launch of Diablo Immortal™, a deep and
authentic Diablo experience designed for the mobile
platform, marked the start of a rollout of substantial content
across Blizzard’s key franchises. Diablo Immortal received
high player ratings on mobile app stores around the world, and
reached the top of the game download charts in more than 100
countries and regions following its launch. Over half of the game’s
player accounts to date are new to Blizzard. The game ranked in the
top-10 grossing games in U.S. app stores for the month of
June1.
- Diablo IV, the next-generation installment in the
genre-defining series, is planned for launch on PC and console in
2023. The title will support cross-play and cross-progression
across platforms, and is designed to be the foundation for an
engaging live service, providing ongoing storytelling and new
content for many years to come.
- In the Warcraft franchise, Blizzard plans to deliver an
unprecedented level of WoW content in the coming months, with
Wrath of the Lich King Classic launching on September 26 and
World of Warcraft: Dragonflight, the innovative next
expansion for the modern game, slated for release later in the
year. Blizzard is committed to growing its development resources to
meet and exceed its community’s expectations, and at the end of the
second quarter significantly bolstered its World of Warcraft
team through the acquisition of Boston-based studio
Proletariat.
- During the second quarter, Blizzard unveiled Warcraft:
Arclight Rumble™, an action-packed mobile strategy game that
gives both new and existing fans an entirely different way to
experience the Warcraft universe. Public testing of the game is
underway in select regions.
- Overwatch 2 is planned to launch in early access on PC
and console on October 4. With a free-to-play live service model
designed to provide frequent and substantial seasonal updates, this
launch kicks off the next chapter for the acclaimed team-based
action game.
- Blizzard’s second quarter segment revenue and operating income
were lower year-over-year but higher versus the first quarter.
World of Warcraft net bookings declined versus a year-ago
quarter that included the launch of Burning Crusade™
Classic, offsetting year-over-year growth for
Hearthstone® and the contribution from the June launch of
Diablo Immortal.
King
- King's segment revenue and operating income grew
year-over-year, driven by Candy Crush™, King’s largest
franchise. King’s in-game net bookings increased 6% year-over-year,
reflecting strong execution across live operations and user
acquisition.
- King continues to increase the frequency and depth of seasonal
content and introduce more player-versus-player features within
Candy Crush, fueling growth in engagement and player
investment. Time spent within Candy again grew year-over-year,
franchise payer numbers grew by a double-digit percentage
year-over-year, and Candy Crush was the top-grossing game
franchise in the U.S. app stores1 for the 20th consecutive
quarter.
- King’s advertising business grew over 20% year-over-year,
despite intensifying macro headwinds through the quarter, as the
team continued to carefully ramp ad volume on the King
network.
- In June, King acquired software company Peltarion to accelerate
the use of AI and machine learning technology in serving its
community even more engaging content.
Balance Sheet and Dividend
- Cash and short-term investments at the end of the second
quarter stood at $10.8 billion, and Activision Blizzard ended the
quarter with a net cashE position of approximately $7.1
billion.
- On May 6, 2022, the Company paid a cash dividend of $0.47 per
common share 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 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.com.
1
Based on data.ai 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.
E
Net cash is defined as cash and
cash equivalents ($10.5B as of June 30, 2022) and short-term
investments ($0.3B as of June 30, 2022) minus gross debt ($3.7B as
of June 30, 2022).
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 merger 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;
- 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; (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 (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; 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 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; the occurrence of
any event, change, or other circumstance that could give rise to
the termination of 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
(the “Microsoft 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 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 Microsoft
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; the potential for receipt
of alternative acquisition proposals from potential acquirors; the
global impact of the ongoing COVID-19 pandemic and other
macroeconomic factors (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 and with effective quality control; effects on
our ability to prevent cyber-security incidents while our workforce
is dispersed; effects on the operations of our professional esports
leagues; the impact on interest rates, including via the impact of
large-scale intervention by the Federal Reserve and other central
banks around the world and other economic factors; increased demand
for our games due to stay-at-home orders and curtailment of other
forms of entertainment, which may not be sustained and may
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; our ability to satisfy the expectations of
consumers with respect to our brands, games, services, and/or
business practices; negative impacts on our business from concerns
regarding our workplace; our ability to attract, retain, and
motivate skilled personnel; competition; concentration of revenue
among a small number of franchises; negative impacts from
unionization or attempts to unionize by our workforce; rapid
changes in technology and industry standards; increasing importance
of revenues derived from digital distribution channels; our ability
to manage 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;
risks and uncertainties of conducting business outside the U.S.,
including the need for regulatory approval to operate, impacts on
our business arising from the current conflict between Russia and
Ukraine, the relatively weaker protection for our intellectual
property rights, and the impact of cultural differences on consumer
preferences; risks associated with the retail sales business model;
our ability to realize the expected benefits of our recent
restructuring actions; difficulties in integrating acquired
businesses or otherwise realizing the anticipated benefits of
strategic transactions; the seasonality in the sale of our
products; fluctuation in our recurring business; 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; our reliance on tools and
technologies owned by third parties; risks associated with our use
of open source software; 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;
outages, disruptions or degradations in our services, products,
and/or technological infrastructure; data breaches, fraudulent
activity, and other cybersecurity risks; significant disruption
during our live events; risks related to the impacts of
catastrophic events; climate change; provisions in our corporate
documents that may make it more difficult for any person to acquire
control of our company; ongoing legal proceedings related to
workplace concerns and otherwise, including the impact of the
complaint filed in 2021 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; successful implementation of the requirements of the
court-approved consent decree with the Equal Employment Opportunity
Commission; 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 Personal Information
Protection Law; scrutiny regarding the appropriateness of our
games’ content, including ratings assigned by third parties;
changes in tax rates and/or tax laws or exposure to additional tax
liabilities; 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 consumer discretionary spending; risks associated with
increased inflation on our costs and the impacts on consumer
discretionary spending; and the other factors included in “Risk
Factors” included in Part I, Item 1A of our Annual Report on Form
10-K for the year ended December 31, 2021, 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.
(Tables to Follow)
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Amounts in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net revenues
Product sales
$
304
$
568
$
690
$
1,243
In-game, subscription, and other
revenues1
1,340
1,728
2,722
3,328
Total net revenues
1,644
2,296
3,412
4,571
Costs and expenses
Cost of revenues—product sales:
Product costs
80
116
172
255
Software royalties and amortization
63
88
144
200
Cost of revenues—in-game, subscription,
and other:
Game operations and distribution costs
317
322
605
619
Software royalties and amortization
25
29
43
59
Product development
311
335
658
688
Sales and marketing
263
245
514
482
General and administrative
250
189
464
471
Restructuring and related costs
(3
)
13
(5
)
43
Total costs and expenses
1,306
1,337
2,595
2,817
Operating income
338
959
817
1,754
Interest and other expense (income),
net
17
(43
)
31
(14
)
Income before income tax expense
321
1,002
786
1,768
Income tax expense
41
126
111
272
Net income
$
280
$
876
$
675
$
1,496
Basic earnings per common share
$
0.36
$
1.13
$
0.86
$
1.93
Weighted average common shares
outstanding
782
777
781
776
Diluted earnings per common share
$
0.36
$
1.12
$
0.86
$
1.91
Weighted average common shares outstanding
assuming dilution
788
783
787
784
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)
June 30, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
10,483
$
10,423
Accounts receivable, net
572
972
Software development
768
449
Other current assets
684
712
Total current assets
12,507
12,556
Software development
124
211
Property and equipment, net
175
169
Deferred income taxes, net
1,259
1,377
Other assets
545
497
Intangible assets, net
453
447
Goodwill
9,931
9,799
Total assets
$
24,994
$
25,056
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable
$
197
$
285
Deferred revenues
847
1,118
Accrued expenses and other liabilities
980
1,008
Total current liabilities
2,024
2,411
Long-term debt, net
3,609
3,608
Deferred income taxes, net
251
506
Other liabilities
862
932
Total liabilities
6,746
7,457
Shareholders' equity
Common stock
—
—
Additional paid-in capital
12,069
11,715
Treasury stock
(5,563
)
(5,563
)
Retained earnings
12,333
12,025
Accumulated other comprehensive loss
(591
)
(578
)
Total shareholders’ equity
18,248
17,599
Total liabilities and shareholders’
equity
$
24,994
$
25,056
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
SUPPLEMENTAL CASH FLOW
INFORMATION
(Amounts in millions)
Three Months Ended
June 30,
September 30,
December 31,
March 31,
June 30,
Year over Year
2021
2021
2021
2022
2022
% Increase (Decrease)
Cash Flow Data
Operating Cash Flow
$
388
$
521
$
661
$
642
$
198
(49
)%
Capital Expenditures
14
23
21
15
37
164
Non-GAAP Free Cash Flow1
$
374
$
498
$
640
$
627
$
161
(57
)
Operating Cash Flow - TTM2
$
2,568
$
2,893
$
2,414
$
2,212
$
2,022
(21
)
Capital Expenditures - TTM2
82
81
80
73
96
17
Non-GAAP Free Cash Flow1 - TTM2
$
2,486
$
2,812
$
2,334
$
2,139
$
1,926
(23
)%
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,
2020, three months ended December 31, 2020, and three months ended
March 31, 2021, were $196 million, $1,140 million, and $844
million, respectively. Capital Expenditures for the three months
ended September 30, 2020, three months ended December 31, 2020, and
three months ended March 31, 2021, were $24 million, $22 million,
and $22 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,
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
Restructuring and related
costs
Total Costs and
Expenses
GAAP Measurement
$
1,644
$
80
$
63
$
317
$
25
$
311
$
263
$
250
$
(3
)
$
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, including $14 million for liability
awards accounted for under ASC 718.
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 Corporation
("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
Restructuring and related
costs
Total Costs and
Expenses
GAAP Measurement
$
3,412
$
172
$
144
$
605
$
43
$
658
$
514
$
464
$
(5
)
$
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 above6
—
(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, including $29 million for liability
awards accounted for under ASC 718.
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)
Three Months Ended June 30,
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
$
2,296
$
116
$
88
$
322
$
29
$
335
$
245
$
189
$
13
$
1,337
Share-based compensation1
—
—
(5
)
(1
)
—
(18
)
(3
)
(16
)
—
(43
)
Amortization of intangible assets2
—
—
—
—
—
—
—
(2
)
—
(2
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(13
)
(13
)
Non-GAAP Measurement
$
2,296
$
116
$
83
$
321
$
29
$
317
$
242
$
171
$
—
$
1,279
Net effect of deferred revenues and
related cost of revenues4
$
(375
)
$
(17
)
$
(81
)
$
(1
)
$
—
$
—
$
—
$
—
$
—
$
(99
)
Operating Income
Net Income
Basic Earnings per
Share
Diluted Earnings per
Share
GAAP Measurement
$
959
$
876
$
1.13
$
1.12
Share-based compensation1
43
43
0.06
0.06
Amortization of intangible assets2
2
2
—
—
Restructuring and related costs3
13
13
0.02
0.02
Income tax impacts from items above5
—
7
0.01
0.01
Non-GAAP Measurement
$
1,017
$
941
$
1.21
$
1.20
Net effect of deferred revenues and
related cost of revenues4
$
(276
)
$
(229
)
$
(0.29
)
$
(0.29
)
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)
Six Months Ended June 30, 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
$
4,571
$
255
$
200
$
619
$
59
$
688
$
482
$
471
$
43
$
2,817
Share-based compensation1
—
—
(12
)
(1
)
—
(34
)
(7
)
(140
)
—
(194
)
Amortization of intangible assets2
—
—
—
—
(3
)
—
—
(4
)
—
(7
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(43
)
(43
)
Non-GAAP Measurement
$
4,571
$
255
$
188
$
618
$
56
$
654
$
475
$
327
$
—
$
2,573
Net effect of deferred revenues and
related cost of revenues4
$
(584
)
$
(30
)
$
(144
)
$
(2
)
$
—
$
—
$
—
$
—
$
—
$
(176
)
Operating Income
Net Income
Basic Earnings per
Share
Diluted Earnings per
Share
GAAP Measurement
$
1,754
$
1,496
$
1.93
$
1.91
Share-based compensation1
194
194
0.25
0.25
Amortization of intangible assets2
7
7
0.01
0.01
Restructuring and related costs3
43
43
0.06
0.05
Income tax impacts from items above5
—
(30
)
(0.04
)
(0.04
)
Non-GAAP Measurement
$
1,998
$
1,710
$
2.20
$
2.18
Net effect of deferred revenues and
related cost of revenues4
$
(408
)
$
(336
)
$
(0.43
)
$
(0.43
)
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
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
Three Months Ended
June 30, 2022
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
490
$
390
$
684
$
1,564
$
(299
)
$
(21
)
$
49
$
(271
)
Intersegment net revenues1
—
11
—
11
—
(11
)
—
(11
)
Segment net revenues
$
490
$
401
$
684
$
1,575
$
(299
)
$
(32
)
$
49
$
(282
)
Segment operating income
$
92
$
94
$
271
$
457
$
(271
)
$
(47
)
$
23
$
(295
)
Operating Margin
29.0
%
June 30, 2021
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
789
$
411
$
635
$
1,835
Intersegment net revenues1
—
22
—
22
Segment net revenues
$
789
$
433
$
635
$
1,857
Segment operating income
$
363
$
141
$
248
$
752
Operating Margin
40.5
%
Six Months Ended
June 30, 2022
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
943
$
655
$
1,366
$
2,964
$
(737
)
$
(214
)
$
122
$
(829
)
Intersegment net revenues1
—
20
—
20
—
(27
)
—
(27
)
Segment net revenues
$
943
$
675
$
1,366
$
2,984
$
(737
)
$
(241
)
$
122
$
(856
)
Segment operating income
$
151
$
148
$
514
$
813
$
(653
)
$
(201
)
$
62
$
(792
)
Operating Margin
27.2
%
June 30, 2021
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
1,680
$
869
$
1,244
$
3,793
Intersegment net revenues1
—
47
—
47
Segment net revenues
$
1,680
$
916
$
1,244
$
3,840
Segment operating income
$
804
$
349
$
452
$
1,605
Operating Margin
41.8
%
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; 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,
2022
2021
2022
2021
Reconciliation to consolidated net
revenues:
Segment net revenues
$
1,575
$
1,857
$
2,984
$
3,840
Revenues from non-reportable segments1
73
86
155
194
Net effect from recognition (deferral) of
deferred net revenues2
7
375
293
584
Elimination of intersegment revenues3
(11
)
(22
)
(20
)
(47
)
Consolidated net revenues
$
1,644
$
2,296
$
3,412
$
4,571
Reconciliation to consolidated income
before income tax expense:
Segment operating income
$
457
$
752
$
813
$
1,605
Operating income (loss) from
non-reportable segments1
(5
)
(11
)
14
(15
)
Net effect from recognition (deferral) of
deferred net revenues and related cost of revenues2
1
276
236
408
Share-based compensation expense4
(100
)
(43
)
(199
)
(194
)
Amortization of intangible assets
(2
)
(2
)
(4
)
(7
)
Restructuring and related costs5
3
(13
)
5
(43
)
Merger and acquisition-related fees and
other expenses6
(16
)
—
(48
)
—
Consolidated operating income
338
959
817
1,754
Interest and other expense (income),
net
17
(43
)
31
(14
)
Consolidated income before income tax
expense (benefit)
$
321
$
1,002
$
786
$
1,768
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.
6
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, 2022
June 30, 2021
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
1,474
90
%
$
2,026
88
%
$
(552
)
(27
)%
Retail channels
65
4
137
6
(72
)
(53
)
Other3
105
6
133
6
(28
)
(21
)
Total consolidated net revenues
$
1,644
100
%
$
2,296
100
%
$
(652
)
(28
)
Change in deferred revenues4
Digital online channels2
$
44
$
(285
)
Retail channels
(50
)
(93
)
Other3
(1
)
3
Total changes in deferred revenues
$
(7
)
$
(375
)
Six Months Ended
June 30, 2022
June 30, 2021
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
3,063
90
%
$
4,031
88
%
$
(968
)
(24
)%
Retail channels
151
4
286
6
(135
)
(47
)
Other3
198
6
254
6
(56
)
(22
)
Total consolidated net revenues
$
3,412
100
%
$
4,571
100
%
$
(1,159
)
(25
)
Change in deferred revenues4
Digital online channels2
$
(178
)
$
(425
)
Retail channels
(115
)
(167
)
Other3
—
8
Total changes in deferred revenues
$
(293
)
$
(584
)
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, 2022
June 30, 2021
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
376
23
%
$
740
32
%
$
(364
)
(49
)%
PC
332
20
628
27
(296
)
(47
)
Mobile and ancillary2
831
51
795
35
36
5
Other3
105
6
133
6
(28
)
(21
)
Total consolidated net revenues
$
1,644
100
%
$
2,296
100
%
$
(652
)
(28
)
Change in deferred revenues4
Console
$
(97
)
$
(245
)
PC
25
(128
)
Mobile and ancillary2
66
(5
)
Other3
(1
)
3
Total changes in deferred revenues
$
(7
)
$
(375
)
Six Months Ended
June 30, 2022
June 30, 2021
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
859
25
%
$
1,538
34
%
$
(679
)
(44
)%
PC
716
21
1,248
27
(532
)
(43
)
Mobile and ancillary2
1,639
48
1,531
33
108
7
Other3
198
6
254
6
(56
)
(22
)
Total consolidated net revenues
$
3,412
100
%
$
4,571
100
%
$
(1,159
)
(25
)
Change in deferred revenues4
Console
$
(317
)
$
(417
)
PC
(55
)
(172
)
Mobile and ancillary2
79
(3
)
Other3
—
8
Total changes in deferred revenues
$
(293
)
$
(584
)
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, 2022
June 30, 2021
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
982
60
%
$
1,346
59
%
$
(364
)
(27
)%
EMEA2
470
29
695
30
(225
)
(32
)
Asia Pacific
192
12
255
11
(63
)
(25
)
Total consolidated net revenues
$
1,644
100
%
$
2,296
100
%
$
(652
)
(28
)
Change in deferred revenues3
Americas
$
(10
)
$
(218
)
EMEA2
(21
)
(133
)
Asia Pacific
24
(24
)
Total changes in deferred revenues
$
(7
)
$
(375
)
Six Months Ended
June 30, 2022
June 30, 2021
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
1,999
59
%
$
2,653
58
%
$
(654
)
(25
)%
EMEA2
996
29
1,426
31
(430
)
(30
)
Asia Pacific
417
12
492
11
(75
)
(15
)
Total consolidated net revenues
$
3,412
100
%
$
4,571
100
%
$
(1,159
)
(25
)
Change in deferred revenues3
Americas
$
(186
)
$
(340
)
EMEA2
(111
)
(196
)
Asia Pacific
4
(48
)
Total changes in deferred revenues
$
(293
)
$
(584
)
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,
2021
December 31,
2021
March 31, 2022
June 30, 2022
June 30, 2022
GAAP Net Income
$
639
$
564
$
395
$
280
$
1,878
Interest and other expense (income),
net
65
45
14
17
141
Provision for income taxes
120
73
70
41
304
Depreciation and amortization
27
27
24
25
103
EBITDA
851
709
503
363
2,426
Share-based compensation expense1
64
249
98
100
511
Restructuring and related costs2
3
30
(2
)
(3
)
28
Merger and acquisition-related fees and
other expenses3
—
—
32
16
48
Adjusted EBITDA
$
918
$
988
$
631
$
476
$
3,013
Change in deferred net revenues and
related cost of revenues4
$
(154
)
$
215
$
(235
)
$
(1
)
$
(175
)
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 fees and other expenses
related to our proposed transaction with 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.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
OPERATING METRICS
(Amounts in millions)
Net Bookings1
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
$ Increase (Decrease)
% Increase (Decrease)
2022
2021
$ Increase (Decrease)
% Increase (Decrease)
Net bookings1
$
1,637
$
1,921
$
(284
)
(15
)%
$
3,119
$
3,987
$
(868
)
(22
)%
In-game net bookings2
$
1,197
$
1,319
$
(122
)
(9
)%
$
2,208
$
2,661
$
(453
)
(17
)%
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, 2021
September 30, 2021
December 31, 2021
March 31, 2022
June 30, 2022
Activision
127
119
107
100
94
Blizzard
26
26
24
22
27
King
255
245
240
250
240
Total MAUs
408
390
371
372
361
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/20220729005545/en/
Activision Blizzard, Inc. Investors and Analysts:
ir@activisionblizzard.com or Press: pr@activisionblizzard.com
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