Company Delivered Record Q1 Non-GAAP Digital
Revenues and Record Q1 Non-GAAP EPS
Company Increases CY 2014 Full-Year Revenue
and EPS Outlook
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced
better-than-expected financial results for the first quarter of
2014.
First Quarter
(in millions,
except EPS)
2014
Prior
Outlook*
2013
GAAP
Net Revenues
$ 1,111 $ 885 $
1,324 EPS $ 0.40 $
0.15 $ 0.40
Non-GAAP Net Revenues
$ 772 $ 675 $ 804
EPS $ 0.19 $ 0.09
$ 0.17
*Prior Outlook was provided by the
company on February 6, 2014 in its earnings release
For the quarter ended March 31, 2014, Activision Blizzard’s GAAP
net revenues were $1.11 billion, as compared with $1.32 billion for
the first quarter of 2013. On a non-GAAP basis, the company’s net
revenues were $772 million, as compared with $804 million for the
first quarter of 2013. For the first quarter, GAAP net revenues
from digital channels represented 34% of the company’s total
revenues. On a non-GAAP basis, net revenues from digital channels
were a record 68%.
For the quarter ended March 31, 2014, Activision Blizzard’s GAAP
earnings per diluted share were $0.40, as compared with $0.40 for
the first quarter of 2013. On a non-GAAP basis, the company’s
earnings per diluted share were a record $0.19, as compared with
$0.17 for the first quarter of 2013. Our Q1 GAAP results were
higher-than-anticipated due to better-than-expected operating
performance in an amount about equal to our non-GAAP over
performance and a recently identified forecast miscalculation with
regard to deferred revenue recognition in our previous GAAP
outlook, which accounted for the balance of the GAAP over
delivery.
The company reports results on both a GAAP and a non-GAAP basis.
Please refer to the tables at the back of this press release for a
reconciliation of the company’s GAAP and non-GAAP results.
Bobby Kotick, Chief Executive Officer, Activision Blizzard,
said, “Our better-than-expected performance was driven by record
digital sales in Blizzard Entertainment’s franchises, including
World of Warcraft®, Diablo®, and Hearthstone™:
Heroes of Warcraft™, a new free-to-play game which had
already registered more than 10 million users as of its March 11,
2014 launch on Windows® and Mac®, in addition to Activision
Publishing’s Skylanders™ and Call of Duty®
franchises. For the first quarter, net revenues from non-GAAP
digital channels accounted for more than 68% of our revenues,
setting a new quarterly record and driving record non-GAAP Q1
operating margin and record non-GAAP Q1 EPS. Additionally, we
are raising our full year outlook and expect to grow our non-GAAP
revenues year-over-year and deliver record non-GAAP earnings per
share.”
Kotick added, “We have a strong product pipeline for the balance
of the year, beginning with the September 9th planned launch of
Destiny, which we believe could become our next billion dollar
franchise and the largest new videogame IP launch in history.
Activision Publishing also recently announced that Skylanders:
Trap Team and Call of Duty: Advanced Warfare are
expected to be released on October 5 and November 4,
respectively. In addition to plans for new content for
Hearthstone: Heroes of Warcraft and the release of Diablo
III: Ultimate Evil Edition™ on console later this year,
Blizzard Entertainment expects to launch World of Warcraft:
Warlords of Draenor™, which is already one of the fastest
selling expansions in the franchise’s history based on pre-sales,
in the second half of 2014.”
Kotick continued, “With our leading franchises, incredibly
talented employees, scale and deep financial resources, we are well
positioned to continue driving innovation and delivering the
world’s best games along with strong financial performance.”
Selected Business Highlights:
- For the first quarter of 2014, in North
America and Europe combined, Activision Publishing had the #1 and
#2 best-selling titles– Skylanders SWAP Force and Call of
Duty: Ghosts.1
- In North America and Europe combined,
Activision Publishing’s Skylanders SWAP Force™ was the #1
best-selling kids game overall in dollars for the first quarter of
2014.1
- For the first quarter, Blizzard
Entertainment had the #1 PC title in dollars in both North America
and Europe with Diablo III: Reaper of Souls™.2
- On March 10, 2014, Blizzard
Entertainment announced that players who pre-purchase either the
digital Standard Edition or Digital Deluxe Edition of World of
Warcraft’s upcoming expansion, Warlords of Draenor, will
be able to immediately boost one character of their choosing to
level 90, allowing them to experience the latest content alongside
their friends.3 Players who wish to boost multiple characters to
level 90 also now have the option to purchase additional level-90
character boosts directly through the game at $60 apiece.
Additionally, Blizzard announced that Warlords of Draenor
will be released no later than December 20, 2014.
- On March 11, 2014, Blizzard
Entertainment announced the launch of Hearthstone: Heroes of
Warcraft, a new cross-platform free-to-play digital card game
for Windows and Mac.
- On March 25, 2014, Blizzard
Entertainment announced that players the world over launched a
crusade against Malthael, the angel of Death, with the release of
Diablo III: Reaper of Souls for Windows and Mac. As of the
first week of the expansion’s availability, more than 2.7 million
copies had sold-through online and at retailers worldwide.4
- As of March 31, 2014, Blizzard
Entertainment’s World of Warcraft remains the #1
subscription-based MMORPG, with approximately 7.6 million
subscribers.5
Company Outlook
On April 3, 2014, Activision Publishing released
Devastation, the latest DLC Pack for Call of Duty:
Ghosts, exclusively on Xbox Live for both Xbox One and Xbox
360. The company expects to release Devastation for other
platforms later in the quarter.
On April 2, 2014, Blizzard Entertainment released
Hearthstone: Heroes of Warcraft on iPad® in Canada,
Australia, and New Zealand. Blizzard made the game available
through the iPad App Store for the rest of the world on April 16,
2014.
Based on its first-quarter results, Activision Blizzard
is raising its outlook for calendar year 2014, as follows:
(in millions, except EPS) GAAP Outlook
Prior*
GAAP Outlook
Non-GAAP Outlook Prior*
Non-GAAP Outlook
CY 2014
Net Revenues $ 4,220 $ 4,000 $ 4,675 $ 4,600 EPS $ 0. 89 $ 0.76 $
1.27 $ 1.26 Fully Diluted Shares** 750 750 750 750
Q2 2014
Net Revenues $ 910 n/a $ 600 n/a EPS $ 0.22 n/a $ 0.01 n/a Fully
Diluted Shares** 745 n/a 745 n/a *
Prior Outlook was provided by
the company on February 6, 2014 in its earnings release
** Fully diluted weighted average
shares include participating securities and dilutive options on a
weighted average basis
The increase in Activision Blizzard’s GAAP outlook for 2014 is a
result of the company’s actual Q1 GAAP performance (which was
higher than its prior Q1 GAAP outlook for the reasons cited on the
first page of this press release), as well as the company’s current
expectations for the remainder of the year.
Debt Repayment and Cash Dividend
Activision Blizzard repaid $375 million of its outstanding Term
Loan B on February 11, 2014. Additionally, the company will pay a
cash dividend of $0.20 per common share on May 14, 2014 to
shareholders of record at the close of business on March 19,
2014.
Conference Call
Today at 4:30 p.m. EDT, Activision Blizzard’s management will
host a conference call and Webcast to discuss the company’s results
for the quarter ended March 31, 2014 and management’s outlook for
the remainder of the calendar year. The company welcomes all
members of the financial and media communities and other interested
parties to visit the “Investor Relations” area of
www.activisionblizzard.com to listen to the conference call via
live Webcast or to listen to the call live by dialing into
888-312-9863 in the U.S. with passcode 6972116.
About Activision Blizzard
Activision Blizzard, Inc. is the largest and most profitable
independent western interactive entertainment publishing company.
It develops and publishes some of the most successful and beloved
entertainment franchises in any medium, including Call of Duty,
Skylanders, World of Warcraft, StarCraft and Diablo.
Headquartered in Santa Monica California, Activision Blizzard
maintains operations throughout the United States, Europe, and
Asia. It develops and publishes games on all leading interactive
platforms and its games are available in most countries around the
world. More information about Activision Blizzard and its products
can be found on the company's website,
www.activisionblizzard.com.
1According to The NPD Group, GfK Chart-Track and Activision
Blizzard internal estimates, including toys and accessories
2 According to The NPD Group and GfK Chart-Track
3 Players upgrading to Warlords of Draenor from World
of Warcraft Starter Edition must wait until trial restrictions
are removed before character boost becomes available (may take up
to 72 hours).
4 According to The NPD Group, GfK Chart-Track and Activision
Blizzard internal estimates
5 According to Activision Blizzard internal estimates
Subscriber Definition: World of Warcraft subscribers
include individuals who have paid a subscription fee or have an
active prepaid card to play World of Warcraft, as well as those who
have purchased the game and are within their free month of access.
Internet Game Room players who have accessed the game over the last
thirty days are also counted as subscribers. The above definition
excludes all players under free promotional subscriptions, expired
or cancelled subscriptions, and expired prepaid cards. Subscribers
in licensees' territories are defined along the same rules.
Non-GAAP Financial Measures: As a supplement to our
financial measures presented in accordance with 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 revenues, 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. 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:
- the change in deferred revenues and
related cost of sales with respect to certain of the company’s
online-enabled games;
- expenses related to stock-based
compensation;
- the amortization of intangibles from
purchase price accounting;
- fees and other expenses related to the
acquisition of 429 million shares of our common stock on October
11, 2013 from Vivendi, pursuant to the stock purchase agreement
dated July 25, 2013 and the $4.75 billion debt financings related
thereto; and
- the income tax adjustments associated
with any of the above items.
In the future, Activision Blizzard may also consider whether
other significant non-recurring 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.
Internally, management uses these non-GAAP financial measures 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 revenues, 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.
In addition to the reasons stated above, which are generally
applicable to each of the items Activision Blizzard excludes from
its non-GAAP financial measures, there are additional specific
reasons why the company believes it is appropriate to exclude the
change in deferred revenues and related cost of sales with respect
to certain of the company’s online-enabled games.
Since Activision Blizzard has determined that some of our games’
online functionality represents an essential component of gameplay
and, as a result, a more-than-inconsequential separate deliverable,
we recognize revenues attributed to these game titles over their
estimated service periods, which may range from five months to a
maximum of less than a year. The related cost of sales is deferred
and recognized as the related revenues are recognized. Internally,
management excludes the impact of this change in deferred revenues
and related cost of sales in its non-GAAP financial measures 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,
which is consistent with the way the company is measured by
investment analysts and industry data sources. In addition,
excluding the change in deferred revenues and the related cost of
sales provides a much more timely indication of trends in our
operating results.
Cautionary Note Regarding Forward-looking Statements:
Information in this press release that involves Activision
Blizzard’s expectations, plans, intentions or strategies regarding
the future, including statements under the heading “Company
Outlook,” are forward-looking statements that are not facts and
involve a number of risks and uncertainties. Activision Blizzard
generally uses words such as “outlook,” “will,” “could,” “should,”
“would,” “might,” “to be,” “plans,” “believes,” “may,” “expects,”
“intends,” "anticipates," "estimate," “future," "plan,"
"positioned," "potential," "project," "remain," "scheduled," "set
to," "subject to," "upcoming" and similar expressions to identify
forward-looking statements. Factors that could cause Activision
Blizzard’s actual future results to differ materially from those
expressed in the forward-looking statements set forth in this
release include, but are not limited to, sales levels of Activision
Blizzard’s titles, increasing concentration of titles, shifts in
consumer spending trends, the impact of the macroeconomic
environment, Activision Blizzard’s ability to predict consumer
preferences, including interest in specific genres such as
first-person action, “toys to life” and massively multiplayer
online games and preferences among hardware platforms, the seasonal
and cyclical nature of the interactive game market, changing
business models including digital delivery of content, competition,
including from used games and other forms of entertainment,
possible declines in software pricing, product returns and price
protection, product delays, adoption rate and availability of new
hardware (including peripherals) and related software, particularly
during the ongoing console transition, rapid changes in technology
and industry standards, the current regulatory environment,
litigation risks and associated costs, protection of proprietary
rights, maintenance of relationships with key personnel, customers,
financing providers, licensees, licensors, vendors, and third-party
developers, including the ability to attract, retain and develop
key personnel and developers that can create high quality titles,
counterparty risks relating to customers, licensees, licensors and
manufacturers, domestic and international economic, financial and
political conditions and policies, foreign exchange rates and tax
rates, the identification of suitable future acquisition
opportunities and potential challenges associated with geographic
expansion, capital market risks, the possibility that expected
benefits related to the recently completed transactions with
Vivendi may not materialize as expected, the amount of our debt and
the limitations imposed by the covenants in the agreements
governing our debt, and the other factors identified in the risk
factors section of Activision Blizzard’s most recent annual report
on Form 10-K. The forward-looking statements in this release are
based upon information available to Activision Blizzard as of the
date of this release, and Activision Blizzard assumes no obligation
to update any such forward-looking statements. Although these
forward-looking statements are believed to be true when made, they
may ultimately prove to be incorrect. These statements are not
guarantees of the future performance of Activision Blizzard and are
subject to risks, uncertainties and other factors, some of which
are beyond its control and may cause actual results to differ
materially from current expectations.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Amounts in millions, except per share
data) Three Months Ended March 31,
2014 2013
Net revenues: Product sales $ 769 $ 990 Subscription,
licensing and other revenues 1 342
334 Total net revenues
1,111 1,324 Costs and expenses:
Cost of sales - product costs 225 260 Cost of sales - online 58 57
Cost of sales - software royalties and amortization 57 61 Cost of
sales - intellectual property licenses 2 38 Product development 143
125 Sales and marketing 104 107 General and administrative
95 89 Total costs and
expenses 684 737
Operating income 427 587 Interest and other investment income
(expense), net (51 ) 2
Income before income tax expense 376 589 Income tax expense
83 133 Net income
$ 293 $ 456
Basic earnings per common share 2 $
0.40 $ 0.40 Weighted average common shares outstanding
709 1,113
Diluted earnings per
common share 2 $ 0.40 $ 0.40 Weighted average common shares
outstanding assuming dilution 720
1,120
1 Subscription, licensing and other revenues represents revenues
from World of Warcraft subscriptions, Call of Duty Elite
memberships, licensing royalties from our products and franchises,
value-added services, downloadable content, and other miscellaneous
revenues.
2 The company calculates earnings per share pursuant to the
two-class method which requires the allocation of net income
between common shareholders and participating security holders. We
had, on a weighted-average basis, participating securities of
approximately 17 million and 26 million for the three months ended
March 31, 2014 and 2013, respectively. Net income attributable to
Activision Blizzard Inc. common shareholders used to calculate
earnings per common share assuming dilution was $285 million for
the three months ended March 31, 2014 as compared to total net
income of $293 million for the same period. Net income attributable
to Activision Blizzard Inc. common shareholders used to calculate
earnings per common share assuming dilution was $446 million for
the three months ended March 31, 2013 as compared to total net
income of $456 million for the same period.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions) March 31,
December 31, 2014 2013
ASSETS Current
assets: Cash and cash equivalents $ 4,279 $ 4,410 Short-term
investments 8 33 Accounts receivable, net 219 510 Inventories, net
158 171 Software development 361 367 Intellectual property licenses
12 11 Deferred income taxes, net 336 321 Other current assets
321 418
Total current assets 5,694
6,241 Long-term investments 9 9 Software
development 44 21 Property and equipment, net 152 138 Other assets
66 35 Intangible assets, net 41 43 Trademark and trade names 433
433 Goodwill 7,089
7,092 Total assets $ 13,528
$ 14,012
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: Accounts payable $
166 $ 355 Deferred revenues 1,092 1,389 Accrued expenses and other
liabilities 635 636 Current portion of long-term debt
--- 25 Total current
liabilities 1,893
2,405 Long-term debt, net 4,320 4,668 Deferred income taxes,
net 86 66 Other liabilities 305
251 Total liabilities
6,604 7,390 Shareholders’
equity: Common stock --- --- Additional paid-in capital 9,812 9,682
Treasury stock (5,783 ) (5,814 ) Retained earnings 2,832 2,686
Accumulated other comprehensive income 63
68 Total shareholders’ equity
6,924 6,622
Total liabilities and shareholders’ equity $ 13,528
$ 14,012
ACTIVISION
BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET
INCOME TO NON-GAAP MEASURES (Amounts in millions, except
earnings per share data) Three Months Ended March 31,
2014
Net Revenues
Cost of Sales - Product Costs
Cost of Sales - Online
Cost of Sales - Software Royalties and
Amortization
Cost of Sales - Intellectual Property
Licenses
Product Development
Sales and Marketing
General and Administrative
Total Costs and Expenses
GAAP Measurement $ 1,111 $ 225 $ 58 $
57 $ 2 $ 143 $ 104 $ 95 $ 684
Less: Net effect from deferral of net revenues and related cost of
sales (a) (339 ) (95 ) - (25 ) - - - - (120 ) Less: Stock-based
compensation (b) - - - (7 ) - (8 ) (2 ) (13 ) (30 ) Less:
Amortization of intangible assets (c) -
- - -
(2 ) - -
- (2 ) Non-GAAP Measurement
$ 772 $ 130 $ 58 $
25 $ - $ 135 $ 102
$ 82 $ 532
Three Months Ended March 31, 2014
Operating Income
Net Income
Basic Earnings per Share
Diluted Earnings per Share
GAAP Measurement $ 427 $ 293 $ 0.40 $ 0.40 Less: Net effect from
deferral of net revenues and related cost of sales (a) (219 ) (171
) (0.24 ) (0.23 ) Less: Stock-based compensation (b) 30 18 0.03
0.02 Less: Amortization of intangible assets (c) 2
1 - -
Non-GAAP Measurement $ 240 $ 141
$ 0.19 $ 0.19
Three Months Ended March 31, 2013
Net Revenues
Cost of Sales - Product Costs
Cost of Sales - Online
Cost of Sales - Software Royalties and
Amortization
Cost of Sales - Intellectual Property
Licenses
Product Development
Sales and Marketing
General and Administrative
Total Costs and Expenses
GAAP Measurement $ 1,324 $ 260 $ 57 $
61 $ 38 $ 125 $ 107 $ 89 $ 737
Less: Net effect from deferral of net revenues and related cost of
sales (a) (520 ) (115 ) - (33 ) (3 ) - - - (151 ) Less: Stock-based
compensation (b) - - - (5 ) - (7 ) (2 ) (12 ) (26 ) Less:
Amortization of intangible assets (c) -
- - -
(3 ) - -
- (3 ) Non-GAAP Measurement $ 804
$ 145 $ 57 $ 23
$ 32 $ 118 $ 105 $
77 $ 557 Three Months
Ended March 31, 2013
Operating Income
Net Income
Basic Earnings per Share
Diluted Earnings per Share
GAAP Measurement $ 587 $ 456 $ 0.40 $ 0.40 Less: Net effect from
deferral of net revenues and related cost of sales (a) (369 ) (277
) (0.24 ) (0.24 ) Less: Stock-based compensation (b) 26 18 0.02
0.02 Less: Amortization of intangible assets (c) 3
2 - -
Non-GAAP Measurement $ 247 $ 199
$ 0.17 $ 0.17 (a) Reflects the
net change in deferred revenues and related cost of sales. (b)
Includes expense related to stock-based compensation. (c) Reflects
amortization of intangible assets from purchase price accounting.
The company calculates earnings per share
pursuant to the two-class method which requires the allocation of
net income between common shareholders and participating security
holders. Net income attributable to Activision Blizzard common
shareholders used to calculate non-GAAP earnings per common share
assuming dilution was $136 million for the three months ended March
31, 2014 as compared to total non-GAAP net income of $141 million
for the same period. Net income attributable to Activision Blizzard
common shareholders used to calculate non-GAAP earnings per common
share assuming dilution was $194 million for the three months ended
March 31, 2013 as compared to total non-GAAP net income of $199
million for the same period.
The per share adjustments are presented as calculated, and
the GAAP and non-GAAP earnings per share information is also
presented as calculated. The sum of these measures, as presented,
may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL
INFORMATION For the Three Months Ended March 31, 2014 and
2013 (Amounts in millions)
Three Months
Ended March 31, 2014 March 31, 2013
$ Increase % Increase Amount
% of Total4
Amount % of Total4
(Decrease) (Decrease) GAAP Net Revenues by
Distribution Channel Retail channels $ 659 59 % $ 896 68 % $
(237 ) (26 )% Digital online channels1 379 34
377 28 2 1 Total Activision and
Blizzard 1,038 93 1,273 96 (235 ) (18 ) Distribution
73 7 51 4 22 43
Total consolidated GAAP net revenues 1,111 100
1,324 100 (213 ) (16 )
Change
in Deferred Revenues2 Retail channels (487 ) (572 ) Digital
online channels1 148 52 Total changes
in deferred revenues (339 ) (520 )
Non-GAAP
Net Revenues by Distribution Channel Retail channels 172 22 324
40 (152 ) (47 ) Digital online channels1 527 68
429 53 98 23 Total
Activision and Blizzard 699 91 753 94 (54 ) (7 )
Distribution 73 9 51 6
22 43 Total non-GAAP net revenues3 $ 772 100 %
$ 804 100 % $ (32 ) (4 )%
1 Net revenues from digital online channels represent revenues
from subscriptions and memberships, licensing royalties,
value-added services, downloadable content, digitally distributed
products, and wireless devices.
2 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred
revenues.
3 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
4 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ
due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Three Months Ended March
31, 2014 and 2013 (Amounts in millions)
Three
Months Ended March 31, 2014 March 31,
2013 $ Increase % Increase
Amount % of Total6
Amount %
of Total6
(Decrease) (Decrease) GAAP Net
Revenues by Segment/Platform Mix Activision and Blizzard:
Online1 201 18 275 21 (74 ) (27 ) PC 100 9 93 7 7 8 %
Next-generation (PS4, Xbox One, WiiU) 108 10 7 1 101 NM
Current-generation (PS3, Xbox 360, Wii) 546 49 742 56
(196 ) (26 ) Total console2 654 59 749 57 (95 ) (13 )
Mobile and other5 83 7 156 12 (73 ) (47 )
Total Activision and Blizzard 1,038 93
1,273 96 (235 ) (18 ) Distribution: Total
Distribution 73 7 51 4 22 43 Total
consolidated GAAP net revenues 1,111 100 1,324 100
(213 ) (16 )
Change in Deferred Revenues3 Activision
and Blizzard: Online1 26 (47 ) PC 139 28 Next-generation
(PS4, Xbox One, WiiU) (76 ) (4 ) Current-generation (PS3, Xbox 360,
Wii) (428 ) (497 ) Total console2 (504 ) (501 ) Mobile and
other5 --- --- Total changes in deferred revenues
(339 ) (520 )
Non-GAAP Net Revenues by Segment/Platform
Mix Activision and Blizzard: Online1 227 29 228 28 (1 ) (0 ) PC
239 31 121 15 118 98 Next-generation (PS4, Xbox One, WiiU)
32 4 3 --- 29 NM Current-generation (PS3, Xbox 360, Wii) 118
15 245 30 (127 ) (52 ) Total console2 150 19 248
31 (98 ) (40 ) Mobile and other5 83 11 156 19 (73 )
(47 ) Total Activision and
Blizzard 699 91 753 94 (54 ) (7 )
Distribution: Total Distribution 73 9 51 6 22
43 Total consolidated non-GAAP net revenues4 772 100 804
100 (32 ) (4 )%
1 Revenues from online consists of revenues from all World of
Warcraft products, including subscriptions, boxed products,
expansion packs, licensing royalties, and value-added services. It
also includes revenues from Call of Duty Elite memberships.
2 Downloadable content and their related revenues are included
in each respective console platforms and total console.
3 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred net
revenues.
4 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
5 Revenues from mobile and other includes revenues from handheld
and mobile devices, as well as non-platform specific game related
revenues such as standalone sales of toys and accessories products
from the Skylanders franchise and other physical merchandise and
accessories.
6 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ
due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Three Months Ended March
31, 2014 and 2013 (Amounts in millions)
Three
Months Ended March 31, 2014 March 31, 2013
$ Increase % Increase Amount
% of Total3
Amount % of Total3
(Decrease) (Decrease) GAAP Net Revenues by
Geographic Region North America $ 563 51 % $ 738 56 % $ (175 )
(24 )% Europe 462 42 487 37 (25 ) (5 ) Asia Pacific 86
8 99 7 (13 ) (13 ) Total
consolidated GAAP net revenues 1,111 100
1,324 100 (213 ) (16 )
Change
in Deferred Revenues1 North America (233 ) (315 ) Europe (125 )
(169 ) Asia Pacific 19 (36 ) Total changes in
net revenues (339 ) (520 )
Non-GAAP Net
Revenues by Geographic Region North America 330 43 423 53 (93 )
(22 ) Europe 337 44 318 40 19 6 Asia Pacific 105 14
63 8 42 67 Total non-GAAP
net revenues2 $ 772 100 % $ 804 100 % $ (32 ) (4 )%
1 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred
revenues.
2 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
3 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ
due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES SEGMENT
INFORMATION For the Three Months Ended March 31, 2014 and
2013 (Amounts in millions)
Three Months
Ended March 31, 2014 March 31, 2013
$ Increase % Increase Amount
% of Total4 Amount % of
Total4 (Decrease) (Decrease) Segment
net revenues: Activision1 $ 237 31 % $ 423 53 % $ (186 ) (44 )%
Blizzard2 462 60 330 41 132 40 Distribution3 73 9
51 6 22 43 Operating
segment total 772 100 % 804 100 % (32 ) (4 )
Reconciliation to consolidated net revenues: Net effect from
deferral of net revenues 339 520
Consolidated net revenues $ 1,111 $ 1,324 $ (213 )
(16 )%
Segment income from operations: Activision1 $
2 $ 112 $ (110 ) (98 )% Blizzard2 239 135 104 77 Distribution3
(1 ) --- (1 ) --- Operating segment
total 240 247 (7 ) (3 )
Reconciliation to consolidated
operating income and consolidated income before income tax
expense:
Net effect from deferral of net revenues and related cost of sales
219 369 Stock-based compensation expense (30 ) (26 ) Amortization
of intangible assets (2 ) (3 ) Consolidated operating
income 427 587 (160 ) (27 ) Interest and other investment income
(expense), net (51 ) 2 Consolidated income
before income tax expense $ 376 $ 589 $ (213 ) (36 )%
Operating margin from total operating segments 31.1 % 30.7 %
1 Activision Publishing (“Activision”) — publishes interactive
entertainment products and contents.
2 Blizzard — Blizzard Entertainment, Inc. and its subsidiaries
(“Blizzard”) publishes PC games and online subscription-based games
in the MMORPG category.
3 Activision Blizzard Distribution (“Distribution”) —
distributes interactive entertainment software and hardware
products.
4 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ
due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES For the
Trailing Twelve Months Ending March 31, 2014 EBITDA and
Adjusted EBITDA (Amounts in millions)
Trailing Twelve Months Ending
June 30, September 30, December 31, March
31, March 31, 2013 2013 2013
2014 2014 GAAP Net Income (Loss)
$ 324
$ 56
$ 174
$ 293
$ 847
Interest (Income) / Expense, net --- 4 52 51 107 Provision
(Benefit) for income taxes 106 10 59 83 258 Depreciation and
amortization 23 21 40 19
103
EBITDA 453 91
325 446 1,315 Deferral of net revenues
and related cost of sales (a) (338 ) (32 ) 509 (219 ) (80 )
Stock-based compensation expense (b) 24 25 34 30 113 Fees and other
expenses related to the Purchase Transaction and related debt
financings (c) --- 62 18
--- 80
Adjusted EBITDA $
139 $ 146 $ 886
$ 257 $ 1,428
(a) Reflects the net change in deferred net revenues and related
cost of sales.
(b) Includes expense related to stock-based compensation.
(c) Reflects fees and other expenses related to the repurchase
of 429 million shares of our common stock from Vivendi (the
"Purchase Transaction") completed on October 11, 2013 and related
debt financings.
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 Outlook
for the Quarter Ending June 30, 2014 and Year Ending
December 31, 2014 GAAP to Non-GAAP Reconciliation
(Amounts in millions, except per share data)
Outlook for Outlook for Three Months
Ending Year Ending June 30, 2014
December 31, 2014 Net Revenues
(GAAP) $ 910 $
4,220
Excluding the
impact of:
Change in deferred net revenues (a) (310 )
455
Net Revenues (Non-GAAP) $ 600 $
4,675 Earnings Per Diluted Share (GAAP)
$ 0.22 $
0.89
Excluding the
impact of:
Net effect from deferral in net revenues and related cost of sales
(b) (0.24 )
0.26
Stock-based compensation (c) 0.03 0.11 Amortization of intangible
assets (d) - 0.01
Earnings Per Diluted Share
(Non-GAAP) $ 0.01 $ 1.27
(a) Reflects the net change in deferred net revenues.
(b) Reflects the net change in deferred net revenues and related
cost of sales.
(c) Reflects expense related to stock-based compensation.
(d) Reflects amortization of intangible assets from purchase
price accounting.
The per share adjustments are presented as calculated, and the
GAAP and non-GAAP earnings (loss) per share information is also
presented as calculated. The sum of these measures, as presented,
may differ due to the impact of rounding.
Activision Blizzard, Inc.Kristin SoutheySVP,
Investor Relations and Treasury(310)
255-2635ksouthey@activision.comorMaryanne
LataifSVP, Corporate Communications(310)
255-2704mlataif@activision.com
Activision Blizzard (NASDAQ:ATVI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Activision Blizzard (NASDAQ:ATVI)
Historical Stock Chart
From Jul 2023 to Jul 2024