Company Increases CY 2015 Revenues and EPS
Outlook
Company Delivered Record Quarterly Digital
Revenues, Generating $697 Million in Non-GAAP Digital Revenues,
Growing 38% Year-Over-Year
Announces Agreement to Acquire King Digital
Entertainment for $5.9 Billion, Accretive to Estimated 2016
Non-GAAP EPS by ~30%1
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced
better-than-expected financial results for the third quarter of
2015 and an agreement to acquire King Digital Entertainment for
$5.9 billion in equity value ($5.0 billion in enterprise value).
The addition of King’s highly-complementary business further
positions Activision Blizzard for growth across platforms,
audiences, genres, and business models. Please see our separate
press release for details.
As a result of this announcement, Activision Blizzard will host
a conference call to discuss both the transaction and earnings. The
call will be broadcast over the Internet at 5 a.m. Pacific Time
(8:00 a.m. Eastern Time) before market opens on Tuesday, November
3, 2015. Please see further call-in details below.
Third Quarter
(in millions, except EPS)
2015
PriorOutlook*
2014
GAAP
Net Revenues
$ 990 $ 875 $ 753
EPS $ 0.17 $
0.08 $ (0.03)
Non-GAAP
Net Revenues
$ 1,040 $ 930 $ 1,170
EPS $ 0.21 $
0.14 $ 0.23
*Prior outlook was provided by the company on August 4, 2015
in its earnings release.
For the quarter ended September 30, 2015, Activision Blizzard’s
GAAP net revenues were $990 million, as compared with $753 million
for the third quarter of 2014. On a non-GAAP basis, the company’s
net revenues were $1.04 billion, as compared with $1.17 billion for
the third quarter of 2014. For the third quarter, GAAP net revenues
from digital channels were a record $629 million. On a non-GAAP
basis, net revenues from digital channels were a record $697
million and represented a Q3 record 67% of the company’s total
revenues, growing 38% year-over-year.
For the quarter ended September 30, 2015, Activision Blizzard’s
GAAP earnings per diluted share were $0.17, as compared with a loss
of $0.03 for the third quarter of 2014. On a non-GAAP basis, the
company’s earnings per diluted share were $0.21, as compared with
$0.23 for the third quarter of 2014.
At constant FXA, non-GAAP revenues were down 4% and EPS was up
13% for the quarter versus prior year. Year-to-date, non-GAAP
revenues and EPS were up 5% and 35%, respectively, year-over-year,
given strong engagement and recurring digital trends on our
year-round monetizing franchises.
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 of Activision Blizzard,
said, “We continue to benefit from our focus on creating the
world’s best interactive entertainment. Our incredibly talented
employees around the world once again delivered great content and
strong financial results. Mobile gaming is the largest and
fastest-growing opportunity for interactive entertainment and we
will have one of the world’s most successful mobile game companies
and its talented teams providing great content to new customers, in
new geographies throughout the world. King has a truly fantastic
management team and over 1,600 incredibly talented employees and we
are excited to welcome them into the Activision Blizzard
family.”
Selected Business Highlights:
- Activision Publishing had its highest
ever third quarter non-GAAP operating income, driven by strong
engagement and digital revenue, with Q3 monthly active users
(MAUs)B up 17% year-over-year, and the largest Q3 and year-to-date
digital revenues in its history. Activision Publishing continues to
have 3 of the top 5 games on next-generation consoles
life-to-date.2
- Activision Publishing’s Call of
Duty® franchise year-to-date non-GAAP revenues increased by
a double-digit percentage year-over-year due to strong catalog
sales of Call of Duty: Black Ops, Call of
Duty: Black Ops II, and Call of Duty: Advanced
Warfare, both for full game and Supply Drops. Call of Duty:
Advanced Warfare remains the No. 1 game on next-generation
consoles life-to-date, as it has been since its launch a year
ago.2
- On September 15, 2015, Activision
Publishing and Bungie released The Taken King, the largest
update to the Destiny universe yet, which was enthusiastically
received by fans and critics alike. Day-one downloads broke
PlayStation records, day-one engagement saw the highest
number of active players in Destiny’s history, daily player
engagement is now well above 3 hours per day and the Destiny
community has climbed to over 25 million registered players. Since
its launch, Destiny has become the most watched console game
on Twitch.
- On September 20, 2015, Activision
Publishing released Skylanders® SuperChargers,
the next installment in the franchise with all new vehicles, action
figures and exclusive Nintendo characters. Even with increased
competition, SuperChargers is one of Skylanders’
highest-rated entries to date and has strong engagement, with more
toys per player than last year.
- Blizzard Entertainment’s third quarter
MAUsB were up 50% year-over-year, reflecting strong engagement with
the online player community.
- World of Warcraft® subscriptions
remained relatively stable, ending the quarter at 5.5 million
subscribersC. Players are excited about the upcoming expansion,
Legion™, which will feature a new class, customizable
Artifact weapons, class order halls, and much more. World of
Warcraft remains the No. 1 subscription‐based MMORPG in the
world.
- On August 24, 2015, Blizzard
Entertainment launched The Grand Tournament™, the second
expansion for Hearthstone®: Heroes of
Warcraft™, with over 130 new cards. As a result of this
new content, continued strength on mobile, and continued strength
across geographies, key engagement metrics grew 77% year-over-year
and set a new quarterly revenue record for the franchise.
- Blizzard Entertainment brought new
players into Heroes of the Storm™ with the release of
The Eternal Conflict, a series of content and hero additions based
on the Diablo® universe. Blizzard also held the Heroes of the
Storm regional championships as part of its Road to BlizzCon®
esports series, including the Americas Championship in Las Vegas
and the Europe Championship in Prague.
- Blizzard Entertainment’s Diablo
III continued to bring in new players in Q3, and in China, the
game passed the 2-million-unit milestone.
- Blizzard Entertainment began closed
beta testing for Overwatch™ on October 27, 2015, with over 7
million players signed-up to participate, not including China.
Company Outlook:
- On August 6, 2015, Blizzard
Entertainment revealed Legion, the sixth expansion to
World of Warcraft, including the deadly new Demon Hunter
hero class and Artifacts, customizable legendary weapons that
transform and grow in power as players battle.
- On August 18, 2015, Activision
Publishing announced Skylanders Battlecast, bringing cards
to life in a free-to-play mobile card battle game. Players will be
able to purchase physical card packs at retail stores or digital
card packs in-game. The title is expected to launch in 2016.
- On October 20, 2015, Activision
Publishing brought back the pop culture phenomenon that previously
reached over 40 million players in North America and Europe with
the launch of Guitar Hero® Live. Reception from
players and critics alike has been very positive. The game is
designed to be a living, breathing platform to keep players
engaged, and so far average time per player is nearly two hours a
day.
- On October 22, 2015, Activision
Blizzard announced a new division that will build on the Company's
competitive gaming leadership by creating all-new ways to deliver
the best-in-class fan experience across games, platforms and
geographies, furthering the development of its world-leading
esports ecosystem. Former CEO of ESPN and the NFL Network Steve
Bornstein serves as the division's Chairman and Mike Sepso, who was
most recently a co-founder and president of Major League Gaming
(MLG), serves as its Senior Vice President.
- On November 6, 2015, Activision
Publishing expects to release the highly anticipated Call of
Duty: Black Ops III from its award-winning studio, Treyarch.
Momentum ahead of launch has been strong and engagement for Call
of Duty: Black Ops II grew quarter-over-quarter again to nearly
12 million MAUsB, an unprecedented level for a game that is three
years old and only available on old-generation consoles.
- On November 6, 2015, Activision
Blizzard will host Investor Day. Presentations by senior management
will be webcast live beginning at 8:30 AM PT on the events and
presentations section of the Company's investor relations website
at http://investor.activisionblizzard.com/events.cfm. A replay of
the event will also be available.
- Blizzard Entertainment’s ninth BlizzCon
will be returning to the Anaheim Convention Center on Friday,
November 6, and Saturday, November 7. One of the biggest
attractions at BlizzCon will be the culmination of this year’s Road
to BlizzCon esports tournaments, with the global champions for
World of Warcraft, StarCraft® II,
Hearthstone, and Heroes of the Storm being crowned.
For the latest announcements and information, please visit
www.blizzcon.com.
- On November 10, 2015, Blizzard
Entertainment expects to launch StarCraft II: Legacy of the
Void™, the third installment of the company’s real-time
strategy sequel. Pre-purchases have outpaced Heart of the
Swarm®, the previous installment. Legacy of the Void
will be a standalone product that won’t require any prior releases,
so it will be easier than ever for new players to get into the game
and experience all of the latest content. Players are already
enjoying the prologue content.
- Given the weakening of foreign
currencies versus the U.S. dollar, the company’s 2015 international
revenues and earnings are translated at lower rates than in 2014.
This also impacts the company’s 2015 outlook as compared to 2014
actual results because approximately 50% of the company’s revenues,
and a higher percentage of profits, are generated outside the U.S.
while a much higher percentage of the company’s costs are incurred
in the U.S. See comparison table, below.
Activision Blizzard’s fourth quarter and calendar year 2015
outlook is, as follows:
Prior Outlook* Current Outlook
(in millions, except
EPS)
GAAPOutlook
Non-GAAP Outlook
GAAP Outlook
Non-GAAP Outlook
CY
2015
Net Revenues $ 4,425 $ 4,600 $ 4,530 $ 4,650
EPS $ 1.06 $ 1.30 $ 1.07 $ 1.31
Fully Diluted
Shares**
750 750 750 750
Q4
2015
Net Revenues N/A N/A $ 1,218 $ 2,148
EPS N/A N/A $
0.09 $ 0.82
Fully Diluted
Shares**
N/A N/A
753
753
The following table compares our CY14 actual earnings per share
to CY15 outlook earnings per share.
Comparison EPS
Prior Non-GAAP Outlook*
Current Non-GAAP Outlook
Change CY14 – Actuals $ 1.42 $ 1.42
Slate /
Operations 0.15 0.17 0.02
Foreign Currency (0.19) (0.20)
(0.01)
Tax Rate & Share Count (0.08)
(0.08)
CY15 – Outlook $ 1.30 $ 1.31 0.01
Currency Assumptions for 2015 Outlook (Q3-Q4):
- $1.10 USD/Euro for current outlook and
prior outlook* (vs. a $1.33 average for 2014)
- $1.54 USD/British Pound Sterling for
current and prior outlook* (vs. a $1.65 average for 2014)
- Note: Revenue and EPS increase if the
Euro or British Pound Sterling strengthen vs. USD.
- Currency assumptions have not changed
since prior outlook since actual spot rates for the Euro and
British Pound Sterling have not significantly changed, however, the
actual mix of our revenues has skewed more heavily towards
international revenues than previously planned.
* Prior outlook was provided by the company on August 4, 2015 in
its earnings release.** Fully diluted weighted average shares
include participating securities and dilutive options on a weighted
average basis.
Conference Call
Activision Blizzard will host a conference call that will be
broadcast over the Internet at 5 a.m. Pacific Time (8:00 a.m.
Eastern Time) before market opens on November 3, 2015. The
previously scheduled conference call for 1:30 p.m. Pacific Time
(4:30 p.m. Eastern Time) is cancelled. Details for the call have
changed and are as follows:
Tuesday, November 3, 2015
5:00 a.m. Pacific Time (8:00 a.m. Eastern
Time)
To listen to the call, please log
onto:
http://investor.activision.com/events.cfm
Or dial:
U.S. and Canada: 888-596-2572
International: 913-312-0653
Passcode: 9960349
King will announce third quarter 2015 results and hold its
conference call for analysts and investors on November 4, 2015 as
regularly scheduled.
About Activision Blizzard
Activision Blizzard, Inc., a member of the S&P 500, is the
world’s most successful standalone interactive entertainment
company. It develops and publishes games based on some of the most
beloved entertainment franchises, including Call of Duty®, Destiny,
Skylanders®, Guitar Hero®, World of Warcraft®, StarCraft®, Diablo®,
and Hearthstone®: Heroes of Warcraft™. The company is one of the
FORTUNE “100 Best Companies To Work For®” 2015. Headquartered in
Santa Monica, California, it has operations throughout the world,
and its games are played in 196 countries. Activision Blizzard
makes games for leading interactive platforms. More information
about Activision Blizzard and its products can be found on the
company's website, www.activisionblizzard.com.
1 Based on 2016E IBES Consensus estimates as of October 30,
2015. Assumes $2.3 billion of incremental term loan financing at
3.25% interest rate based on Activision Blizzard current Term Loan
interest rate and US marginal tax rate of 36.3%. Assumes
transaction closes on March 31, 2016 and additional dilutive share
impact to EPS of 5 million shares from our internal estimate of
conversion equity based on outstanding options, restricted shares,
and restricted stock units of King as of October 30, 2015 (i.e. no
further assumption of exercises, vesting, grants of equity awards
post October 30, 2015). Does not include any synergies.2 The NPD
Group and GfK Chart-Track
A Constant FX Definition: Constant FX
provides current period results converted into USD using the
average exchange rates from the comparative prior periods rather
than the actual exchange rates in effect during the respective
current periods.
B Monthly Active User (MAU) Definition: We monitor
MAUs as a key measure of the overall size of our user base and
their regular engagement with our portfolio of games. MAUs are the
number of individuals who played 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
by the number of months in the period. An individual who plays two
of our games would be counted as two users. For Activision
Publishing MAUs, an individual who plays the same game on two
platforms or devices in the relevant period would be counted as two
users due to technical limitations. For Blizzard MAUs, an
individual who plays the same game on two platforms or devices in
the relevant period would be counted as one user.
C 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. 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:
- 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 (including
legal fees, costs, expenses and accruals) 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
- fees and other expenses related to the
proposed acquisition of King Digital Entertainment plc and the 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 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.
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: The
statements contained in this press release 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 product releases; (3) statements of future financial or
operating performance; (4) statements relating to the agreement to
acquire King Digital Entertainment plc and the potential impact of
that proposed transaction; and (5) statements of assumptions
underlying such statements. The company generally uses words such
as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to
be,” “plan,” “plans,” “believes,” “may,” “might,” “expects,”
“intends,” “intends as,” “anticipates,” “estimate,” “future,”
“positioned,” “potential,” “project,” “remain,” “scheduled,” “set
to,” “subject to,” “upcoming” and other similar expressions to help
identify forward-looking statements. Forward-looking statements are
subject to business and economic risk, reflect management’s current
expectations, estimates and projections about our business, and are
inherently uncertain and difficult to predict.
The Company cautions that a number of important factors could
cause Activision Blizzard's 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: sales levels of Activision Blizzard’s titles;
increasing concentration of revenue among a small number of titles;
Activision Blizzard’s ability to predict consumer preferences,
including interest in specific genres, and preferences among
hardware platforms; the amount of our debt and the limitations
imposed by the covenants in the agreements governing our debt;
adoption rate and availability of new hardware (including
peripherals) and related software, particularly during the console
transitions; counterparty risks relating to customers, licensees,
licensors and manufacturers; maintenance of relationships with key
personnel, customers, financing providers, licensees, licensors,
manufacturers, vendors, and third-party developers, including the
ability to attract, retain and develop key personnel and developers
that can create high quality titles; changing business models,
including digital delivery of content and the increased prevalence
of free-to-play games; product delays or defects; competition,
including from used games and other forms of entertainment; rapid
changes in technology and industry standards; possible declines in
software pricing; product returns and price protection; the
identification of suitable future acquisition opportunities and
potential challenges associated with geographic expansion; the
seasonal and cyclical nature of the interactive entertainment
market; litigation risks and associated costs; protection of
proprietary rights; shifts in consumer spending trends; capital
market risks; applicable regulations; domestic and international
economic, financial and political conditions and policies; tax
rates and foreign exchange rates; the impact of the current
macroeconomic environment; and the other factors identified in
“Risk Factors” included in Part I, Item 1A of Activision Blizzard’s
most recent annual report on Form 10-K. Additional information
regarding forward-looking statements related to acquisition of King
announced today are set for in the press release announcing the
acquisition.
The forward-looking statements in this presentation are based on
information available to the Company as of the date of this press
release and, while believed to be true when made, may ultimately
prove to be incorrect. The Company may change its intention, belief
or expectation, at any time and without notice, based upon any
changes in such factors, in the Company’s assumptions or otherwise.
The Company undertakes no obligation to release publicly any
revisions to any forward-looking statements to reflect events or
circumstances after the original date of this press release, August
4, 2015, or to reflect the occurrence of unanticipated events.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Amounts in millions, except per share
data) Three Months Ended
Nine Months Ended September 30,
September 30, 2015 2014 2015
2014
Net revenues Product sales $ 425 $
337 $ 1,736 $ 1,693 Subscription, licensing and other revenues1
565 416 1,576 1,140 Total net
revenues 990 753 3,312 2,833
Costs and expenses Cost
of sales - product costs 195 156 560 568 Cost of sales - online 56
56 161 170 Cost of sales - software royalties and amortization 81
34 314 136 Cost of sales - intellectual property licenses 5 7 12 20
Product development 159 131 453 387 Sales and marketing 189 221 445
465 General and administrative 109 140
297 342 Total costs and expenses 794 745 2,242 2,088
Operating income 196 8 1,070 745
Interest and other expense, net 51 51 151 152
Income (loss) before income tax expense (benefit) 145 (43 )
919 593 Income tax expense (benefit) 18 (20 ) 186 119
Net income (loss) $ 127 $ (23 ) $ 733 $ 474
Basic earnings (loss) per common share
2
$ 0.17 $ (0.03 ) $ 0.99 $ 0.65 Weighted average common shares
outstanding 730 718 727 714
Diluted earnings (loss) per common share
2
$ 0.17
$
(0.03
)
$ 0.98 $ 0.64 Weighted average common shares outstanding assuming
dilution 739 718 736 725
1 Subscription, licensing and other revenues represent revenues
from World of Warcraft subscriptions, 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 8 million and 9 million for the three and nine months
ended September 30, 2015, respectively, and 14 million and 16
million for the three and nine months ended September 30, 2014,
respectively. For the three and nine months ended
September 30, 2015, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate earnings per
common share, assuming dilution, was $125 million and $723 million,
respectively, as compared to total net income of $127 million and
$733 million, respectively, for the same periods. For the three and
nine months ended September 30, 2014, net income (loss)
attributable to Activision Blizzard, Inc. common shareholders used
to calculate earnings per common share, assuming dilution, was
$(23) million and $462 million, respectively, as compared to total
net income (loss) of $(23) million and $474 million, respectively,
for the same periods.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions)
September 30, December 31,
2015 2014 Assets Current assets Cash and cash
equivalents $ 4,365 $ 4,848 Short-term investments 154 10 Accounts
receivable, net 503 659 Inventories, net 238 123 Software
development 342 452 Intellectual property licenses 27 5 Deferred
income taxes, net 373 368 Other current assets 307
444 Total current assets 6,309 6,909 Long-term
investments 9 9 Software development 73 20 Intellectual property
licenses — 18 Property and equipment, net 200 157 Other assets 171
85 Intangible assets, net 24 29 Trademark and trade names 433 433
Goodwill 7,083 7,086 Total assets $
14,302 $ 14,746
Liabilities and
Shareholders' Equity Current liabilities Accounts payable $ 309
$ 325 Deferred revenues 907 1,797 Accrued expenses and other
liabilities 394 592 Total current
liabilities 1,610 2,714 Long-term debt, net 4,078 4,324 Deferred
income taxes, net 110 114 Other liabilities 515
361 Total liabilities 6,313
7,513 Shareholders' equity Common stock — —
Additional paid-in capital 10,209 9,924 Treasury stock (5,613 )
(5,762 ) Retained earnings 3,937 3,374 Accumulated other
comprehensive loss (544 ) (303 ) Total shareholders’
equity 7,989 7,233 Total liabilities
and shareholders’ equity $ 14,302 $ 14,746
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data) Three
Months Ended September 30, 2015 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 $ 990 $ 195 $ 56
$ 81 $ 5 $ 159 $ 189 $ 109
$ 794 Less: Net effect from deferral of net revenues and
related cost of sales1 50 7 — 17 — — — — 24 Less: Stock-based
compensation2 — — (1 ) (4 ) — (6 ) (2 ) (15 ) (28 ) Less:
Amortization of intangible assets3 — —
— — (1 )
— — —
(1 ) Non-GAAP Measurement $ 1,040 $ 202
$ 55 $ 94 $ 4 $ 153
$ 187 $ 94 $ 789
Operating Income Net Income Basic
Earnings per Share Diluted Earnings per Share
GAAP Measurement $ 196 $ 127 $ 0.17 $ 0.17 Less: Net effect from
deferral of net revenues and related cost of sales 26 11 0.01 0.01
Less: Stock-based compensation 28 19 0.03 0.03 Less: Amortization
of intangible assets 1 1 —
— Non-GAAP Measurement $ 251 $
158 $ 0.21 $ 0.21
Nine
Months Ended September 30, 2015 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 $ 3,312 $ 560 $
161 $ 314 $ 12 $ 453 $ 445 $ 297
$ 2,242 Less: Net effect from deferral of net revenues and
related cost of sales1 (809 ) (165 ) — (128 ) 1 — — — (292 ) Less:
Stock-based compensation2 — — — (10 ) — (20 ) (7 ) (33 ) (70 )
Less: Amortization of intangible assets3 —
— — —
(4 ) — —
— (4 ) Non-GAAP Measurement $
2,503 $ 395 $ 161 $ 176
$ 9 $ 433 $ 438
$ 264 $ 1,876
Operating
Income Net Income Basic Earnings per
Share Diluted Earnings per Share GAAP Measurement
$ 1,070 $ 733 $ 0.99 $ 0.98 Less: Net effect from deferral of net
revenues and related cost of sales (517 ) (419 ) (0.57 ) (0.56 )
Less: Stock-based compensation 70 50 0.07 0.07 Less: Amortization
of intangible assets 4 3
— — Non-GAAP Measurement $ 627
$ 367 $ 0.50 $ 0.49
1 Reflects the net change in deferred revenues and related cost
of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects amortization of intangible assets from purchase price
accounting.
The per share adjustments and the GAAP and non-GAAP earnings per
share information are presented as calculated. The sum of these
measures, as presented, may differ due to the impact of
rounding.
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. For
the three and nine months ended September 30, 2015, net income
attributable to Activision Blizzard, Inc. common shareholders used
to calculate non-GAAP earnings per common share, assuming dilution,
was $156 million and $361 million, respectively, as compared to
total net income of $158 million and $367 million, respectively,
for the same periods. For purposes of calculating earnings per
share, we had, on a weighted-average basis, common shares
outstanding of 730 million, participating securities of
approximately 8 million, and dilutive shares of 9 million during
the three months ended September 30, 2015. For purposes of
calculating earnings per share, we had, on a weighted-average
basis, common shares outstanding of 727 million, participating
securities of approximately 9 million, and dilutive shares of 9
million during the nine months ended September 30, 2015.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data) Three
Months Ended September 30, 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 $ 753 $ 156 $ 56 $ 34 $ 7 $ 131 $ 221
$ 140 $ 745 Less: Net effect from deferral of net revenues and
related cost of sales1 417 80 — 157 — — — — 237 Less: Stock-based
compensation2 — — — (1 ) — (5 ) (3 ) (13 ) (22 ) Less: Amortization
of intangible assets3 — — — — (2 ) — — — (2 ) Less: Fees and other
expenses related to the Purchase Transaction and related debt
financings4 — — — —
— — — (48 )
(48 ) Non-GAAP Measurement $ 1,170 $ 236 $ 56
$ 190 $ 5 $ 126 $ 218 $ 79 $ 910
Operating Income Net Income Basic
Earnings per Share Diluted Earnings per Share GAAP
Measurement $ 8 $ (23 ) $ (0.03 ) $ (0.03 ) Less: Net effect from
deferral of net revenues and related cost of sales 180 133 0.18
0.18 Less: Stock-based compensation 22 14 0.02 0.02 Less:
Amortization of intangible assets 2 1 — — Less: Fees and other
expenses related to the Purchase Transaction and related debt
financings4 48 48 0.07
0.07 Non-GAAP Measurement $ 260 $ 173 $ 0.24 $
0.23
Nine Months Ended September 30,
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 $ 2,833 $ 568 $
170 $ 136 $ 20 $ 387 $ 465 $ 342
$ 2,088 Less: Net effect from deferral of net revenues and
related cost of sales1 (233 ) (83 ) — 109 1 — — — 27 Less:
Stock-based compensation2 — — — (12 ) — (17 ) (6 ) (41 ) (76 )
Less: Amortization of intangible assets3 — — — — (4 ) — — — (4 )
Less: Fees and other expenses related to the Purchase Transaction
and related debt financings4 — —
— — —
— —
(48 ) (48 ) Non-GAAP Measurement $ 2,600
$ 485 $ 170 $ 233
$ 17 $ 370 $ 459 $ 253
$ 1,987
Operating Income
Net Income Basic Earnings per Share
Diluted Earnings per Share GAAP Measurement $ 745 $ 474 $
0.65 $ 0.64 Less: Net effect from deferral of net revenues and
related cost of sales (260 ) (212 ) (0.29 ) (0.29 ) Less:
Stock-based compensation 76 46 0.06 0.06 Less: Amortization of
intangible assets 4 3 — — Less: Fees and other expenses related to
the Purchase Transaction and related debt financings4 48
48 0.07
0.07 Non-GAAP Measurement $ 613 $ 359
$ 0.49 $ 0.48
1 Reflects the net change in deferred revenues and related cost
of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects amortization of intangible assets from purchase price
accounting.
4 Reflects fees and other expenses (including legal fees, costs,
expenses and accruals) 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.
The per share adjustments and the GAAP and non-GAAP earnings per
share information are presented as calculated. The sum of these
measures, as presented, may differ due to the impact of
rounding.
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. For
the three and nine months ended September 30, 2014, net income
attributable to Activision Blizzard, Inc. common shareholders used
to calculate non-GAAP earnings per common share, assuming dilution,
was $170 million and $350 million, respectively, as compared to
total net income of $173 million and $359 million, respectively,
for the same periods. For purposes of calculating earnings per
share, we had, on a weighted-average basis, common shares
outstanding of 718 million, participating securities of
approximately 14 million, and dilutive shares of 10 million during
the three months ended September 30, 2014. For purposes of
calculating earnings per share, we had, on a weighted-average
basis, common shares outstanding of 714 million, participating
securities of approximately 16 million, and dilutive shares of 11
million during the nine months ended September 30, 2014.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Three and Nine Months Ended
September 30, 2015 and 2014 (Amounts in millions)
Three Months Ended September 30,
2015 September 30, 2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
GAAP Net Revenues by Distribution Channel
Retail channels $
281
28
% $ 171 23 % $
110
64
% Digital online channels2
629
64
504 67
125
25
Total Activision and Blizzard 910 92 675 90 235 35 Distribution
80 8 78
10 2 3 Total consolidated GAAP
net revenues 990 100
753 100 237 31
Change in Deferred Revenues3 Retail channels
(18
) 416 Digital online channels2
68
1 Total changes in deferred revenues 50
417
Non-GAAP Net Revenues by Distribution
Channel Retail channels 263 25 587 50 (324 ) (55 ) Digital
online channels2 697 67
505 43 192 38
Total Activision and Blizzard 960 92 1,092 93 (132 ) (12 )
Distribution 80 8
78 7 2 3 Total non-GAAP
net revenues4 $ 1,040 100 % $ 1,170
100 % $ (130 ) (11 )%
Nine Months Ended September 30, 2015
September 30, 2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
GAAP Net Revenues by Distribution Channel
Retail channels $
1,344
41 % $ 1,257 44 % $
87
7 % Digital online channels2
1,779
54 1,358
48
421
31
Total Activision and Blizzard 3,123 94 2,615 92 508 19 Distribution
189 6 218
8 (29 ) (13 ) Total consolidated
GAAP net revenues 3,312 100
2,833 100
479 17
Change in Deferred Revenues3 Retail
channels
(876
) (388 ) Digital online channels2
67
155 Total changes in deferred revenues
(809 ) (233 )
Non-GAAP Net Revenues by
Distribution Channel Retail channels 468 19 869 33 (401 ) (46 )
Digital online channels2 1,846
74 1,513 58
333 22 Total Activision and Blizzard 2,314 92 2,382 92 (68 )
(3 ) Distribution 189 8
218 8 (29 ) (13 )
Total non-GAAP net revenues4 $ 2,503
100 % $ 2,600 100 % $ (97 ) (4 )%
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 subscriptions, licensing royalties,
value-added services, downloadable content, micro-transactions, and
products.
3 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred
revenues.
4 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Three Months Ended
September 30, 2015 and 2014 (Amounts in millions)
Three Months Ended September 30,
2015 September 30, 2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
GAAP Net Revenues by Segment/Platform Mix
Activision and Blizzard: Online2 $ 195
20 % $ 205 27 % $ (10 ) (5 )% PC 164 17 165 22 (1 ) (1 )
Next-generation (PS4, Xbox One, Wii U) 245 25 109 14 136 125
Prior-generation (PS3, Xbox 360, Wii) 175
18 161 21
14 9 Total console3 420
42 270 36
150 56 Mobile and other4 131
13 35
5 96 NM Total Activision and
Blizzard 910 92
675 90 235 35
Distribution: Total Distribution 80
8 78 10
2 3 Total consolidated GAAP net revenues 990
100 753
100 237 31
Change in
Deferred Revenues5 Activision and Blizzard: Online2 (40
) 4 PC 4 (69 ) Next-generation (PS4, Xbox One, Wii U) 88 359
Prior-generation (PS3, Xbox 360, Wii) (8 ) 123
Total console3 80 482 Mobile and
other4 6 — Total changes in deferred
revenues 50 417
Non-GAAP Net
Revenues by Segment/Platform Mix Activision and Blizzard:
Online2 155 15 209 18 (54 ) (26 ) PC 168 16 96 8 72 75
Next-generation (PS4, Xbox One, Wii U) 333 32 468 40 (135 ) (29 )
Prior-generation (PS3, Xbox 360, Wii) 167
16 284 24
(117 ) (41 ) Total console3 500
48 752 64
(252 ) (34 ) Mobile and other4 137
13 35
3 102 NM Total Activision and
Blizzard 960 92
1,092 93 (132 ) (12 )
Distribution: Total Distribution 80
8 78 7
2 3 Total consolidated non-GAAP net revenues6 $ 1,040
100 % $ 1,170
100 % $ (130 ) (11 )%
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 Revenues from online consists of revenues from all World of
Warcraft products, including subscriptions, boxed products,
expansion packs, licensing royalties, and value-added services.
3 Downloadable content and their related revenues are included
in each respective console platforms and total console.
4 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.
5 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred net
revenues.
6 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Nine Months Ended September
30, 2015 and 2014 (Amounts in millions)
Nine Months Ended September 30, 2015
September 30, 2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
GAAP Net Revenues by Segment/Platform Mix
Activision and Blizzard: Online2 $ 687
21 % $ 601 21 % $ 86 14 % PC 427 13 447 16 (20 ) (4 )
Next-generation (PS4, Xbox One, Wii U) 996 30 353 12 643 182
Prior-generation (PS3, Xbox 360, Wii) 741
22 1,049 37
(308 ) (29 ) Total console3 1,737
52 1,402
49 335 24 Mobile and other4
272 8 165
6 107 65 Total Activision
and Blizzard 3,123 94
2,615 92 508
19 Distribution: Total Distribution 189
6 218 8
(29 ) (13 ) Total consolidated GAAP net revenues
3,312 100 2,833
100 479 17
Change in Deferred Revenues5 Activision and Blizzard:
Online2 (165 ) 36 PC 52 18 Next-generation (PS4, Xbox One,
Wii U) (365 ) 214 Prior-generation (PS3, Xbox 360, Wii) (363
) (513 ) Total console3 (728 ) (299 )
Mobile and other4 32 12 Total changes
in deferred revenues (809 ) (233 )
Non-GAAP
Net Revenues by Segment/Platform Mix Activision and Blizzard:
Online2 522 21 637 25 (115 ) (18 ) PC 479 19 465 18 14 3
Next-generation (PS4, Xbox One, Wii U) 631 25 567 22 64 11
Prior-generation (PS3, Xbox 360, Wii) 378
15 536 21
(158 ) (29 ) Total console3 1,009
40 1,103
42 (94 ) (9 ) Mobile and other4
304 12 177
7 127 72 Total Activision and
Blizzard 2,314 92
2,382 92 (68 ) (3 )
Distribution: Total Distribution 189
8 218 8
(29 ) (13 ) Total consolidated non-GAAP net revenues6 $
2,503 100 % $ 2,600
100 % $ (97 ) (4 )%
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 Revenues from online consists of revenues from all World of
Warcraft products, including subscriptions, boxed products,
expansion packs, licensing royalties, and value-added services.
3 Downloadable content and their related revenues are included
in each respective console platforms and total console.
4 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.
5 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred net
revenues.
6 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Three and Nine Months Ended
September 30, 2015 and 2014 (Amounts in millions)
Three Months Ended September 30,
2015 September 30, 2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
GAAP Net Revenues by Geographic Region
North America $ 495 50 % $ 350 46 % $ 145 41 %
Europe 367 37 316 42 51 16 Asia Pacific 128
13 87 12
41 47 Total consolidated GAAP net revenues 990
100 753
100 237 31
Change in Deferred
Revenues2 North America 45 274 Europe 11 135 Asia
Pacific (6 ) 8 Total changes in net revenues
50 417
Non-GAAP Net Revenues by Geographic
Region North America 540 52 624 53 (84 ) (13 ) Europe 378 36
451 39 (73 ) (16 ) Asia Pacific 122
12 95 8 27
28 Total non-GAAP net revenues3 $ 1,040
100 % $ 1,170 100 % $ (130 ) (11 )%
Nine Months Ended
September 30, 2015 September 30,
2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
GAAP Net Revenues by Geographic Region
North America $ 1,750 53 % $ 1,384 49 % $ 366
26 % Europe 1,219 37 1,172 41 47 4 Asia Pacific 343
10 277
10 66 24 Total consolidated GAAP net
revenues 3,312 100
2,833 100 479 17
Change in Deferred Revenues2 North America
(502 ) (136 ) Europe (298 ) (102 ) Asia Pacific (9 )
5 Total changes in net revenues (809 ) (233 )
Non-GAAP Net Revenues by Geographic Region North
America 1,248 50 1,248 48 — — Europe 921 37 1,070 41 (149 ) (14 )
Asia Pacific 334 13
282 11 52
18 Total non-GAAP net revenues3 $ 2,503
100 % $ 2,600 100 % $ (97 ) (4 )%
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 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred net
revenues.
3 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Three and Nine Months Ended
September 30, 2015 and 2014 (Amounts in millions)
Three Months Ended September 30,
2015 September 30, 2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
Segment net revenues:
Activision2 $ 591 57 % $ 704 60 % $ (113 ) (16 )% Blizzard3
369 35 388 33 (19 ) (5 ) Distribution4 80
8 78 7
2 3 Operating segment total 1,040 100 % 1,170
100 % (130 ) (11 )
Reconciliation to consolidated net
revenues: Net effect from deferral of net revenues (50 )
(417 ) Consolidated net revenues $ 990 $ 753
237 31 %
Segment income from operations: Activision2
$ 122 $ 95 $ 27 28 % Blizzard3 128 164 (36 ) (22 ) Distribution4
1 1 — — Operating segment
total 251 260 (9 ) (3 )
Reconciliation to consolidated operating
income and consolidated income (loss) before income tax expense
(benefit) Net effect from deferral of net revenues and related
cost of sales (26 ) (180 ) Stock-based compensation expense (28 )
(22 ) Amortization of intangible assets (1 ) (2 ) Fees and other
expenses related to the Purchase Transaction and related debt
financings5 — (48 ) Consolidated operating
income 196 8 188 NM Interest and other expense, net 51
51 Consolidated income (loss) before income
tax expense (benefit) $ 145 $ (43 ) 188 NM Operating
margin from total operating segments 24.1 % 22.2 %
Nine Months Ended September 30,
2015 September 30, 2014
$ Increase (Decrease)
% Increase (Decrease)
Amount % of Total1
Amount % of Total1
Segment net revenues:
Activision2 $ 1,208 48 % $ 1,193 46 % $ 15 1 % Blizzard3
1,106 44 1,189 46 (83 ) (7 ) Distribution4 189
8 218 8
(29 ) (13 ) Operating segment total 2,503 100 % 2,600
100 % (97 ) (4 )
Reconciliation to consolidated net
revenues: Net effect from deferral of net revenues 809
233 Consolidated net revenues $ 3,312 $
2,833 479 17 %
Segment income (loss) from
operations: Activision2 $ 244 $ 66 $ 178 NM Blizzard3 383 548
(165 ) (30 ) Distribution4 — (1 ) 1
(100 ) Operating segment total 627 613 14 2
Reconciliation to consolidated operating income and consolidated
income before income tax expense Net effect from deferral of
net revenues and related cost of sales 517 260 Stock-based
compensation expense (70 ) (76 ) Amortization of intangible assets
(4 ) (4 ) Fees and other expenses related to the Purchase
Transaction and related debt financings5 — (48
) Consolidated operating income 1,070 745 325 44 Interest and other
expense, net 151 152 Consolidated
income before income tax expense $ 919 $ 593 326 55 %
Operating margin from total operating segments 25.1 % 23.6 %
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 Activision Publishing (“Activision”) — publishes interactive
entertainment products and content.
3 Blizzard Entertainment, Inc. (“Blizzard”) — publishes PC games
and online subscription-based games in the MMORPG category.
4 Activision Blizzard Distribution (“Distribution”) —
distributes interactive entertainment software and hardware
products.
5 Reflects fees and other expenses (including legal fees, costs,
expenses and accruals) 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.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES EBITDA
and Adjusted EBITDA For the Trailing Twelve Months Ended
September 30, 2015 (Amounts in millions)
Trailing Twelve Months Ended
December 31, March 31, June 30, September 30, September 30, 2014
2015 2015 2015 2015
GAAP Net Income $ 361 $ 394 $ 212
$ 127 $ 1,094 Interest Expense, net 51 50 50 51 202 Provision for
income taxes 27 98 70 18 213 Depreciation and amortization
29 20 21 25 94
EBITDA 468 562 353 221
1,603 Deferral of net revenues and related cost of
sales1 475 (362 ) (181 ) 26 (42 ) Stock-based compensation expense2
29 23 21 28 101 Fees and other expenses related to the Purchase
Transaction and related debt financings3 (36 ) —
— — (36 )
Adjusted EBITDA
$ 936 $ 223 $
193 $ 275 $ 1,626
1 Reflects the net change in deferred revenues and related cost
of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects fees and other expenses (including legal fees, costs,
expenses and accruals) 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 Three Months and Year Ending December 31, 2015 GAAP
to Non-GAAP Reconciliation (Amounts in millions, except per
share data) Outlook for the
Outlook for the Three Months
Ending Year Ending December 31, 2015 December
31, 2015 Net Revenues (GAAP) $
1,218 $ 4,530 Excluding the impact of:
Change in deferred revenues1
930
120
Net Revenues (Non-GAAP) $
2,148
$
4,650
Earnings Per Diluted Share (GAAP) $
0.09 $ 1.07 Excluding the impact of:
Deferral of net revenues and related cost of sales2 0.68 0.12
Stock-based compensation3 0.03 0.10 Amortization of intangible
assets4 0.01 0.01
Fees and other expenses related to
acquisitions5
0.01 0.01
Earnings Per Diluted Share
(Non-GAAP) $ 0.82 $ 1.31
1 Reflects the net change in deferred revenues.
2 Reflects the net change in deferred revenues and related cost
of sales.
3 Reflects expenses related to stock-based compensation.
4 Reflects amortization of intangible assets from purchase price
accounting.
5 Reflects fees and other expenses related to the proposed
acquisition of King Digital Entertainment plc and the debt
financings related thereto.
The per share adjustments and the GAAP and non-GAAP earnings
(loss) per share information are presented as calculated. Therefore
the sum of these measures, as presented, may differ due to the
impact of rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151102007005/en/
Activision Blizzard, Inc.Amrita AhujaSVP,
Investor Relations310-255-2075Amrita.Ahuja@Activision.comorMary
OsakoSVP, Global
Communications424-322-5166Mary.Osako@Activision.com
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