Activision Blizzard, Inc. (Nasdaq: ATVI) today announced
third-quarter 2021 results.
“I’m pleased to report strong third quarter results ahead of our
prior outlook,” said Bobby Kotick, CEO of Activision Blizzard. “We
are excited about this week’s Call of Duty launch and expect
continued success in the fourth quarter. I want to thank our
employees for their continued commitment to each other, the
company, and our players. We look forward to sharing progress
updates on our workplace initiatives, alongside our business
performance.”
Financial Metrics
Q3
(in millions, except EPS)
2021
Prior Outlook*
2020
GAAP Net Revenues
$2,070
$1,970
$1,954
Impact of GAAP deferralsA
($190)
($120)
($187)
GAAP EPS
$0.82
$0.64
$0.78
Non-GAAP EPS
$0.89
$0.75
$0.88
Impact of GAAP deferralsA
($0.17)
($0.10)
($0.17)
* Prior outlook was provided by the company on August 3, 2021 in
its earnings release.
Please refer to the tables at the back of this earnings release
for a reconciliation of the company’s GAAP and non-GAAP
results.
For the quarter ended September 30, 2021, Activision Blizzard’s
net revenues presented in accordance with GAAP were $2.07 billion,
as compared with $1.95 billion for the third quarter of 2020. GAAP
net revenues from digital channels were $1.85 billion. GAAP
operating margin was 40%. GAAP earnings per diluted share was
$0.82, as compared with $0.78 for the third quarter of 2020. On a
non-GAAP basis, Activision Blizzard’s operating margin was 43% and
earnings per diluted share was $0.89, as compared with $0.88 for
the third quarter of 2020.
For the quarter, operating cash flow was $521 million, as
compared with $196 million for the third quarter of 2020. For the
trailing twelve-month period, operating cash flow was $2.89
billion.
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 September 30, 2021, Activision Blizzard’s
net bookingsB were $1.88 billion, as compared with $1.77 billion
for the third quarter of 2020. In-game net bookingsC were $1.20
billion consistent with the third quarter of 2020.
For the quarter ended September 30, 2021, overall Activision
Blizzard Monthly Active Users (MAUs)D were 390 million.
Commitment to a Safe, Inclusive Working Environment
We are committed to becoming the most welcoming, inclusive
company in our industry. We are taking further steps to advance our
commitment with greater impact, transparency, and urgency.
- We are adding staff and resources to our ethics and compliance
and employee relations teams. We are continuing to thoroughly
investigate each and every claim and complaint that we receive. As
a result of this process, more than 20 individuals have exited the
company in recent months.
- We are implementing a zero-tolerance harassment policy across
Activision Blizzard that will be applied consistently. Our goal is
to have the strictest harassment and non-retaliation policies of
any employer.
- Based on feedback from employees, we are waiving required
arbitration of future individual sexual harassment and
discrimination claims.
- We have introduced the goal of increasing the percentage of
women and non-binary people in our workforce by 50% within the next
five years, to more than one-third across the entire company.
- We plan to invest an additional $250 million over the next 10
years in initiatives that foster expanded opportunities in gaming
and technology for under-represented communities.
- To help us continue to recruit, retain and promote employees
from all backgrounds and identities, we are implementing the
requirement for a diverse slate of candidates for all full-time
open positions.
- A review of 2020 U.S. pay equity at our company conducted by an
independent firm showed that women on average earned slightly more
than men for comparable work in 2020. We are committed to
compensation remaining equitable for men and women performing
comparable work in 2021, and beyond.
In September we announced a comprehensive agreement with the
U.S. Equal Employment Opportunity Commission, which is subject to
court approval, to strengthen policies and programs intended to
further improve the prevention of harassment, discrimination, and
related conduct. As part of the agreement, we will establish an $18
million fund to compensate those who have experienced such behavior
at our company and elect to participate.
The company continues to monitor the progress of its business
units, franchise teams, and functional leaders with respect to
workplace initiatives. We will continue to provide regular updates
to all stakeholders.
Selected Business Highlights
Activision Blizzard’s third quarter results were above our
outlook. Third quarter monthly active usersD were consistent with
the year-ago level, even as regions continued to re-open, while net
bookingsB and operating income grew year-over-year. This
performance again illustrates the structural expansion that our
talented and passionate teams have driven in our largest franchises
as they created new ways for players to interact with our
intellectual properties, including free-to-play experiences. We
continue to increase investment in creative talent so that we can
grow and delight the communities for each of our key
franchises.
Activision
- The Call of Duty® ecosystem sustained reach, engagement,
and player investment well above levels seen prior to the
introduction of free-to-play experiences across console, PC, and
mobile.
- Activision segment revenue grew year-over-year to a new record
on a year-to-date basis. Segment revenue was lower year-over-year
in the third quarter due to the launch of Tony Hawk’sTM Pro
SkaterTM 1 + 2 in the year ago quarter and declines in Call
of Duty against a quarter that benefited from shelter-at-home
mandates and the early ramp of WarzoneTM.
- Activision had 119 million MAUsD in the third quarter. MAUsD in
the Call of Duty franchise were consistent year-over-year on
console and PC and grew on mobile.
- On console and PC, Call of Duty MAUsD and time spent
exhibited very similar retention from Q2 to Q3 as our experiences
in prior years.
- In-game player investment on console and PC remained well above
the level seen prior to the Warzone launch, at approximately
three times the level of Q3 2019.
- Strong conversion from free-to-play drove premium sales higher
than in any third quarter prior to the launch of
Warzone.
- For Call of Duty Mobile, net bookings grew over 40%
year-over-year in the third quarter, driven by double digit growth
in the West and a continued contribution from the game in
China.
- Call of Duty: Vanguard will release on November 5,
followed by the roll out of Call of Duty: Warzone Pacific,
the biggest update to the Warzone experience since launch, on
December 2.
Blizzard
- Blizzard segment revenue grew 20% year-over-year in the third
quarter, driven by the successful launch of Diablo® II:
ResurrectedTM. Blizzard had 26 million MAUsD in the third
quarter.
- For Diablo, our plan to enter an era of unprecedented
content scale for the franchise has experienced a strong start with
the September release of Diablo II: Resurrected, the return
of one of the most acclaimed titles in PC gaming history. First
week sales of the title were the highest recorded for a remaster
from the company.
- On mobile, Diablo® ImmortalTM is in public testing, and
remains on track for release in the first half of next year.
- World of Warcraft® reach and engagement continues to
benefit from the combination of the Modern game and Classic under a
single subscription. World of Warcraft is on track to
deliver its strongest engagement and net bookings outside of a
Modern expansion year in a decade.
- Hearthstone® net bookings were stable year-over-year in
the third quarter. In October, the team launched
MercenariesTM, an innovative role-playing mode that gives
existing, returning and new Hearthstone players an entirely
new way to play the game.
King
- King segment revenue grew 22% year-over-year to a new quarterly
record, with very strong year-over-year trends for both in-app
purchases and advertising. King had 245 million MAUsD in the third
quarter.
- Hours played across the King portfolio grew year-over-year in
the third quarter, with players responding positively to a more
frequent cadence of compelling in-game content and events for key
titles. Payer numbers grew by a double-digit percentage versus the
year ago quarter.
- In-game net bookings for Candy CrushTM grew over 20%
year-over-year, with Candy Crush once again the top-grossing
game franchise in the U.S. app stores1.
- At the end of the third quarter King launched the Candy
Crush All Stars U.S. tournament which has driven meaningful
increases in installs, game rounds played and in-app purchases in
recent weeks.
- King has been accelerating and refining content delivery in
Farm HeroesTM, its second largest franchise. This work
continued to bear fruit in the third quarter, and in-game net
bookings have grown around 20% year-over-year on a year-to-date
basis.
- King’s advertising business grew robustly, with quarterly
revenue growing sequentially and year-over-year to a new high. Both
volume and pricing grew strongly year-over-year, benefiting from
the team’s growing relationships with demand partners and the
ongoing ramp of new categories of advertisers.
Company Outlook
(in millions, except EPS)
GAAP Outlook
Non-GAAP Outlook
Impact of GAAP
deferralsA
CY
2021
Net Revenues
$8,660
$8,660
($10)
EPS
$3.27
$3.70
$0.06
Fully Diluted Shares
784
784
Q4
2021
Net Revenues
$2,020
$2,020
$763
EPS
$0.54
$0.62
$0.67
Fully Diluted Shares
785
785
Net bookingsB are expected to be $8.65 billion for 2021 and
$2.78 billion for the fourth quarter of 2021.
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 September 30, 2021 and management’s outlook
for the remainder of 2021. The company welcomes all members of the
financial and media communities and other interested parties to
visit https://investor.activision.com to listen to the conference
call via live Webcast or to listen to the call live by dialing into
866-777-2509 in the U.S. We encourage participants to pre-register
for the conference call using the following link
https://dpregister.com/sreg/10160435/ed92e6c0be. A replay of the
call will also be available after the call's conclusion and
archived for one year at
https://investor.activision.com/events.cfm.
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™, World of Warcraft®,
Overwatch®, Hearthstone®, Diablo®, StarCraft®, Candy Crush™, Bubble
Witch™, Pet Rescue™ and Farm Heroes™. Our sustained success has
enabled the company to support corporate social responsibility
initiatives that are directly tied to our franchises. As an
example, our Call of Duty Endowment has helped find employment for
over 90,000 veterans.
Learn more information about Activision Blizzard and how we
connect and engage the world through epic entertainment on the
company's website, www.activisionblizzard.com.
1 Based on App Annie Intelligence.
A Net effect of accounting treatment from revenue deferrals on
certain of our online-enabled products. Since certain of our games
are hosted online or include significant online functionality that
represents a separate performance obligation, we defer the
transaction price allocable to the online functionality from the
sale of these games and then recognize the attributable revenues
over the relevant estimated service periods, which are generally
less than a year. The related cost of revenues is deferred and
recognized as an expense as the related revenues are recognized.
Impact from changes in deferrals refers to the net effect from
revenue deferrals accounting treatment for the purposes of
revenues, along with, for the purposes of EPS, the related cost of
revenues deferrals treatment and the related tax impacts.
Internally, management excludes the impact of this change in
deferred revenues and related cost of revenues when evaluating the
company’s operating performance, when planning, forecasting and
analyzing future periods, and when assessing the performance of its
management team. Management believes this is appropriate because
doing so enables an analysis of performance based on the timing of
actual transactions with our customers. In addition, management
believes excluding the change in deferred revenues and the related
cost of revenues provides a much more timely indication of trends
in our operating results.
B Net bookings is an operating metric that is defined as the net
amount of products and services sold digitally or sold-in
physically in the period, and includes license fees, merchandise,
and publisher incentives, among others, and is equal to net
revenues excluding the impact from deferrals.
C In-game net bookings primarily includes the net amount of
downloadable content and microtransactions sold during the period,
and is equal to in-game net revenues excluding the impact from
deferrals.
D Monthly Active User (“MAU”) Definition: We monitor MAUs as a
key measure of the overall size of our user base. MAUs are the
number of individuals who accessed a particular game in a given
month. We calculate average MAUs in a period by adding the total
number of MAUs in each of the months in a given period and dividing
that total by the number of months in the period. An individual who
accesses two of our games would be counted as two users. In
addition, due to technical limitations, for Activision and King, an
individual who accesses the same game on two platforms or devices
in the relevant period would be counted as two users. For Blizzard,
an individual who accesses the same game on two platforms or
devices in the relevant period would generally be counted as a
single user. In certain instances, we rely on third parties to
publish our games. In these instances, MAU data is based on
information provided to us by those third parties, or, if final
data is not available, reasonable estimates of MAUs for these
third-party published games.
Non-GAAP Financial Measures: As a supplement to our
financial measures presented in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”), Activision Blizzard
presents certain non-GAAP measures of financial performance. These
non-GAAP financial measures are not intended to be considered in
isolation from, as a substitute for, or as more important than, the
financial information prepared and presented in accordance with
GAAP. In addition, these non-GAAP measures have limitations in that
they do not reflect all of the items associated with the company’s
results of operations as determined in accordance with GAAP.
Activision Blizzard provides net income (loss), earnings (loss)
per share, and operating margin data and guidance both including
(in accordance with GAAP) and excluding (non-GAAP) certain items.
When relevant, the company also provides constant FX information to
provide a framework for assessing how our underlying businesses
performed excluding the effect of foreign currency rate
fluctuations. In addition, Activision Blizzard provides EBITDA
(defined as GAAP net income (loss) before interest (income)
expense, income taxes, depreciation, and amortization) and adjusted
EBITDA (defined as non-GAAP operating margin (see non-GAAP
financial measure below) before depreciation). The non-GAAP
financial measures exclude the following items, as applicable in
any given reporting period and our outlook:
- expenses related to share-based compensation;
- the amortization of intangibles from purchase price
accounting;
- fees and other expenses related to acquisitions, including
related debt financings, and refinancing of long-term debt,
including penalties and the write off of unamortized discount and
deferred financing costs;
- restructuring and related charges;
- other non-cash charges from reclassification of certain
cumulative translation adjustments into earnings as required by
GAAP;
- the income tax adjustments associated with any of the above
items (tax impact on non-GAAP pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results); and
- significant discrete tax-related items, including amounts
related to changes in tax laws, amounts related to the potential or
final resolution of tax positions, and other unusual or unique
tax-related items and activities.
In the future, Activision Blizzard may also consider whether
other items should also be excluded in calculating the non-GAAP
financial measures used by the company. Management believes that
the presentation of these non-GAAP financial measures provides
investors with additional useful information to measure Activision
Blizzard’s financial and operating performance. In particular, the
measures facilitate comparison of operating performance between
periods and help investors to better understand the operating
results of Activision Blizzard by excluding certain items that may
not be indicative of the company’s core business, operating
results, or future outlook. Additionally, we consider quantitative
and qualitative factors in assessing whether to adjust for the
impact of items that may be significant or that could affect an
understanding of our ongoing financial and business performance or
trends. Internally, management uses these non-GAAP financial
measures, along with others, in assessing the company’s operating
results, and measuring compliance with the requirements of the
company’s debt financing agreements, as well as in planning and
forecasting.
Activision Blizzard’s non-GAAP financial measures are not based
on a comprehensive set of accounting rules or principles, and the
terms non-GAAP net income, non-GAAP earnings per share, non-GAAP
operating margin, and non-GAAP or adjusted EBITDA do not have a
standardized meaning. Therefore, other companies may use the same
or similarly named measures, but exclude different items, which may
not provide investors a comparable view of Activision Blizzard’s
performance in relation to other companies.
Management compensates for the limitations resulting from the
exclusion of these items by considering the impact of the items
separately and by considering Activision Blizzard’s GAAP, as well
as non-GAAP, results and outlook, and by presenting the most
comparable GAAP measures directly ahead of non-GAAP measures, and
by providing a reconciliation that indicates and describes the
adjustments made.
Cautionary Note Regarding Forward-looking Statements: The
statements contained herein that are not historical facts are
forward-looking statements including, but not limited to statements
about: (1) projections of revenues, expenses, income or loss,
earnings or loss per share, cash flow, or other financial items;
(2) statements of our plans and objectives, including those related
to releases of products or services, restructuring activities, and
employee retention and recruitment; (3) statements of future
financial or operating performance, including the impact of tax
items thereon; and (4) 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 ongoing global impact of a novel strain of
coronavirus which emerged in December 2019 (“COVID-19”) (including,
without limitation, the potential for significant short- and
long-term global unemployment and economic weakness and a resulting
impact on global discretionary spending; potential strain on the
retailers, distributors, and manufacturers who sell our physical
products to customers and the platform providers on whose networks
and consoles certain of our games are available; effects on our
ability to release our content in a timely manner; effects on the
operations of our professional esports leagues; the impact of
large-scale intervention by the Federal Reserve and other central
banks around the world, including the impact on interest rates;
increased demand for our games due to stay-at-home orders and
curtailment of other forms of entertainment, which may not be
sustained and is likely to fluctuate as stay-at-home orders are
reduced, lifted and/or reinstated; macroeconomic impacts arising
from the long duration of the COVID-19 pandemic, including labor
shortages and supply chain disruptions; and volatility in foreign
exchange rates); our ability to consistently deliver popular,
high-quality titles in a timely manner, which has been made more
difficult as a result of the COVID-19 pandemic; competition;
concentration of revenue among a small number of franchises; our
ability to satisfy the expectations of consumers with respect to
our brands, games, services, and/or business practices; our ability
to attract, retain, and motivate skilled personnel; rapid changes
in technology and industry standards; increasing importance of
revenues derived from digital distribution channels; risks
associated with the retail sales business model; the continued
growth in the scope and complexity of our business; substantial
influence of third-party platform providers over our products and
costs; success and availability of video game consoles manufactured
by third parties, including our ability to predict the consoles
that will be most successful in the marketplace and develop
commercially-successful products for those consoles; risks
associated with the free-to-play business model, including our
dependence on a relatively small number of consumers for a
significant portion of revenues and profits from any given game;
our ability to realize the expected benefits of, and effectively
implement and manage, our restructuring actions; difficulties in
integrating acquired businesses or otherwise realizing the
anticipated benefits of strategic transactions; the seasonality in
the sale of our products; risks relating to behavior of our
distributors, retailers, development, and licensing partners, or
other affiliated third parties that may harm our brands or business
operations; risks associated with our use of open source software;
risks and uncertainties of conducting business outside the United
States (the “U.S.”), including the recently enacted Chinese
regulation that further limits the number of hours per week
children under the age of 18 can play video games; risks associated
with undisclosed content or features that may result in consumers’
refusal to buy or retailers’ refusal to sell our products; risks
associated with objectionable consumer- or other
third-party-created content; reliance on servers and networks to
distribute and operate our games and our proprietary online gaming
service; data breaches and other cybersecurity risks; significant
disruption during our live events; risks related to the impacts of
catastrophic events, including the susceptibility of some of our
primary operating locations to earthquakes; provisions in our
corporate documents that may make it more difficult for any person
to acquire control of our company; risks and costs associated with
legal proceedings, including the impact of the complaint filed by
the California Department of Fair Employment and Housing alleging
violations of the California Fair Employment and Housing Act and
the California Equal Pay Act and separate investigations and
complaints by other parties and regulators related to certain
employment practices and related disclosures; court approval of our
settlement agreement with the Equal Employment Opportunity
Commission (“EEOC”) and successful implementation of the
requirements of the agreement with the EEOC; intellectual property
claims; increasing regulation in key territories; regulation
relating to the Internet, including potential harm from laws
impacting “net neutrality”; regulation concerning data privacy,
including China’s recently passed Personal Information Protection
Law; scrutiny regarding the appropriateness of our games’ content,
including ratings assigned by third parties; changes in tax rates
or exposure to additional tax liabilities, as well as the outcome
of current or future tax disputes; fluctuations in currency
exchange rates; impacts of changes in financial accounting
standards; insolvency or business failure of any of our business
partners, which has been magnified as a result of the COVID-19
pandemic; risks associated with our reliance on discretionary
spending; and the other factors identified in “Risk Factors”
included in Part I, Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2020 and Part II, Item 1A of our
Quarterly Report on Form 10-Q for the quarter ended September 30,
2021.
The forward-looking statements contained herein are based on
information available to Activision Blizzard, Inc. as of the date
of this filing, and we assume no obligation to update any such
forward-looking statements. Actual events or results may differ
from those expressed in forward-looking statements. As such, you
should not rely on forward-looking statements as predictions of
future events. We have based the forward-looking statements
contained herein primarily on our current expectations and
projections about future events and trends that we believe may
affect our business, financial condition, operating results,
prospects, strategy, and financial needs. These statements are not
guarantees of our future performance and are subject to risks,
uncertainties, and other factors, some of which are beyond our
control and may cause actual results to differ materially from
current expectations.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Amounts in millions, except per share
data)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Net revenues
Product sales
$
423
$
408
$
1,666
$
1,484
In-game, subscription, and other
revenues1
1,647
1,546
4,974
4,190
Total net revenues
2,070
1,954
6,640
5,674
Costs and expenses
Cost of revenues—product sales:
Product costs
120
101
375
357
Software royalties, amortization, and
intellectual property licenses
72
37
272
152
Cost of revenues—in-game, subscription,
and other:
Game operations and distribution costs
307
290
925
819
Software royalties, amortization, and
intellectual property licenses
28
41
87
115
Product development
329
274
1,016
802
Sales and marketing
244
238
727
722
General and administrative
143
186
614
529
Restructuring and related costs
3
9
46
39
Total costs and expenses
1,246
1,176
4,062
3,535
Operating income
824
778
2,578
2,139
Interest and other expense (income),
net
65
25
52
55
Loss on extinguishment of debt
—
31
—
31
Income before income tax expense
759
722
2,526
2,053
Income tax expense
120
118
391
365
Net income
$
639
$
604
$
2,135
$
1,688
Basic earnings per common share
$
0.82
$
0.78
$
2.75
$
2.19
Weighted average common shares
outstanding
778
772
777
771
Diluted earnings per common share
$
0.82
$
0.78
$
2.72
$
2.17
Weighted average common shares outstanding
assuming dilution
783
779
784
777
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)
September 30, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$
9,718
$
8,647
Accounts receivable, net
585
1,052
Software development
227
352
Other current assets
681
514
Total current assets
11,211
10,565
Software development
349
160
Property and equipment, net
171
209
Deferred income taxes, net
1,400
1,318
Other assets
632
641
Intangible assets, net
449
451
Goodwill
9,765
9,765
Total assets
$
23,977
$
23,109
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable
$
248
$
295
Deferred revenues
844
1,689
Accrued expenses and other liabilities
924
1,116
Total current liabilities
2,016
3,100
Long-term debt, net
3,607
3,605
Deferred income taxes, net
433
418
Other liabilities
971
949
Total liabilities
7,027
8,072
Shareholders' equity
Common stock
—
—
Additional paid-in capital
11,640
11,531
Treasury stock
(5,563
)
(5,563
)
Retained earnings
11,460
9,691
Accumulated other comprehensive loss
(587
)
(622
)
Total shareholders’ equity
16,950
15,037
Total liabilities and shareholders’
equity
$
23,977
$
23,109
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
SUPPLEMENTAL CASH FLOW
INFORMATION
(Amounts in millions)
Three Months Ended
September 30,
December 31,
March 31,
June 30,
September 30,
Year over Year
2020
2020
2021
2021
2021
% Increase (Decrease)
Cash Flow Data
Operating Cash Flow
$
196
$
1,140
$
844
$
388
$
521
166
%
Capital Expenditures
24
22
22
14
23
(4
)
Non-GAAP Free Cash Flow1
$
172
$
1,118
$
822
$
374
$
498
190
Operating Cash Flow - TTM2
$
2,030
$
2,252
$
2,948
$
2,568
$
2,893
43
Capital Expenditures - TTM2
93
78
81
82
81
(13
)
Non-GAAP Free Cash Flow1 - TTM2
$
1,937
$
2,174
$
2,867
$
2,486
$
2,812
45
%
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 December 31,
2019, three months ended March 31, 2020, and three months ended
June 30, 2020, were $918 million, $148 million, and $768 million,
respectively. Capital Expenditures for the three months ended
December 31, 2019, three months ended March 31, 2020, and three
months ended June 30, 2020, were $37 million, $19 million, and $13
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 September 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
$
2,070
$
120
$
72
$
307
$
28
$
329
$
244
$
143
$
3
$
1,246
Share-based compensation1
—
—
(3
)
(1
)
—
(32
)
(8
)
(20
)
—
(64
)
Amortization of intangible assets2
—
—
—
—
—
—
—
(2
)
—
(2
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(3
)
(3
)
Non-GAAP Measurement
$
2,070
$
120
$
69
$
306
$
28
$
297
$
236
$
121
$
—
$
1,177
Net effect of deferred revenues and
related cost of revenues4
$
(190
)
$
(4
)
$
(33
)
$
1
$
—
$
—
$
—
$
—
$
—
$
(36
)
Operating Income
Net Income
Basic Earnings per
Share
Diluted Earnings per
Share
GAAP Measurement
$
824
$
639
$
0.82
$
0.82
Share-based compensation1
64
64
0.08
0.08
Amortization of intangible assets2
2
2
—
—
Restructuring and related costs3
3
3
—
—
Income tax impacts from items above5
—
(9
)
(0.01
)
(0.01
)
Non-GAAP Measurement
$
893
$
699
$
0.90
$
0.89
Net effect of deferred revenues and
related cost of revenues4
$
(154
)
$
(133
)
$
(0.17
)
$
(0.17
)
1
Includes 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)
Nine Months Ended September 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
$
6,640
$
375
$
272
$
925
$
87
$
1,016
$
727
$
614
$
46
$
4,062
Share-based compensation1
—
—
(14
)
(2
)
—
(66
)
(16
)
(161
)
—
(259
)
Amortization of intangible assets2
—
—
—
—
(3
)
—
—
(5
)
—
(8
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(46
)
(46
)
Non-GAAP Measurement
$
6,640
$
375
$
258
$
923
$
84
$
950
$
711
$
448
$
—
$
3,749
Net effect of deferred revenues and
related cost of revenues4
$
(773
)
$
(34
)
$
(177
)
$
—
$
—
$
—
$
—
$
—
$
—
$
(211
)
Operating Income
Net Income
Basic Earnings per
Share
Diluted Earnings per
Share
GAAP Measurement
$
2,578
$
2,135
$
2.75
$
2.72
Share-based compensation1
259
259
0.33
0.33
Amortization of intangible assets2
8
8
0.01
0.01
Restructuring and related costs3
46
46
0.06
0.06
Income tax impacts from items above5
—
(39
)
(0.05
)
(0.05
)
Non-GAAP Measurement
$
2,891
$
2,409
$
3.10
$
3.07
Net effect of deferred revenues and
related cost of revenues4
$
(562
)
$
(469
)
$
(0.60
)
$
(0.59
)
1
Includes 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)
Three Months Ended September 30,
2020
Net Revenues
Cost of Revenues— Product
Sales: Product Costs
Cost of Revenues— Product
Sales: Software Royalties and Amortization
Cost of Revenues—In-
game/Subs/Other: Game Operations and Distribution Costs
Cost of Revenues—In-
game/Subs/Other: Software Royalties and Amortization
Product Development
Sales and Marketing
General and
Administrative
Restructuring and related
costs
Total Costs and
Expenses
GAAP Measurement
$
1,954
$
101
$
37
$
290
$
41
$
274
$
238
$
186
$
9
$
1,176
Share-based compensation1
—
—
(2
)
—
—
(12
)
(5
)
(34
)
—
(53
)
Amortization of intangible assets2
—
—
—
—
(12
)
—
—
(4
)
—
(16
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(9
)
(9
)
Non-GAAP Measurement
$
1,954
$
101
$
35
$
290
$
29
$
262
$
233
$
148
$
—
$
1,098
Net effect of deferred revenues and
related cost of revenues4
$
(187
)
$
(15
)
$
(15
)
$
(5
)
$
(2
)
$
—
$
—
$
—
$
—
$
(37
)
Operating Income
Net Income
Basic Earnings per
Share
Diluted Earnings per
Share
GAAP Measurement
$
778
$
604
$
0.78
$
0.78
Share-based compensation1
53
53
0.07
0.07
Amortization of intangible assets2
16
16
0.02
0.02
Restructuring and related costs3
9
9
0.01
0.01
Loss on extinguishment of debt5
—
31
0.04
0.04
Income tax impacts from items above6
—
(30
)
(0.04
)
(0.04
)
Non-GAAP Measurement
$
856
$
683
$
0.88
$
0.88
Net effect of deferred revenues and
related cost of revenues4
$
(150
)
$
(130
)
$
(0.16
)
$
(0.17
)
1
Includes expenses related to
share-based compensation.
2
Reflects amortization of
intangible assets from purchase price accounting.
3
Reflects restructuring
initiatives, primarily severance and other restructuring-related
costs.
4
Reflects the net effect from
deferral of revenues and (recognition) of deferred revenues, along
with related cost of revenues, on certain of our online-enabled
products, including the effects of taxes.
5
Reflects the loss on
extinguishment of debt from financing activities.
6
Reflects the income tax impact
associated with the above items. Tax impact on non-GAAP pre-tax
income is calculated under the same accounting principles applied
to the GAAP pre-tax income under ASC 740, which employs an annual
effective tax rate method to the results.
The GAAP and non-GAAP earnings
per share information is presented as calculated. The sum of these
measures, as presented, may differ due to the impact of
rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP MEASURES
(Amounts in millions, except per share
data)
Nine Months Ended September 30,
2020
Net Revenues
Cost of Revenues— Product
Sales: Product Costs
Cost of Revenues— Product
Sales: Software Royalties and Amortization
Cost of Revenues—In-
game/Subs/Other: Game Operations and Distribution Costs
Cost of Revenues—In-
game/Subs/Other: Software Royalties and Amortization
Product Development
Sales and Marketing
General and
Administrative
Restructuring and related
costs
Total Costs and
Expenses
GAAP Measurement
$
5,674
$
357
$
152
$
819
$
115
$
802
$
722
$
529
$
39
$
3,535
Share-based compensation1
—
—
(8
)
(1
)
—
(30
)
(17
)
(82
)
—
(138
)
Amortization of intangible assets2
—
—
—
—
(55
)
—
—
(7
)
—
(62
)
Restructuring and related costs3
—
—
—
—
—
—
—
—
(39
)
(39
)
Non-GAAP Measurement
$
5,674
$
357
$
144
$
818
$
60
$
772
$
705
$
440
$
—
$
3,296
Net effect of deferred revenues and
related cost of revenues4
$
(306
)
$
(72
)
$
(82
)
$
8
$
9
$
—
$
—
$
—
$
—
$
(137
)
Operating Income
Net Income
Basic Earnings per
Share
Diluted Earnings per
Share
GAAP Measurement
$
2,139
$
1,688
$
2.19
$
2.17
Share-based compensation1
138
138
0.18
0.18
Amortization of intangible assets2
62
62
0.08
0.08
Restructuring and related costs3
39
39
0.05
0.05
Loss on extinguishment of debt5
—
31
0.04
0.04
Income tax impacts from items above6
—
(52
)
(0.07
)
(0.07
)
Non-GAAP Measurement
$
2,378
$
1,906
$
2.47
$
2.45
Net effect of deferred revenues and
related cost of revenues4
$
(169
)
$
(148
)
$
(0.19
)
$
(0.19
)
1
Includes expenses related to
share-based compensation.
2
Reflects amortization of
intangible assets from purchase price accounting.
3
Reflects restructuring
initiatives, primarily severance and other restructuring-related
costs.
4
Reflects the net effect from
deferral of revenues and (recognition) of deferred revenues, along
with related cost of revenues, on certain of our online-enabled
products, including the effects of taxes.
5
Reflects the loss on
extinguishment of debt from financing activities.
6
Reflects the income tax impact
associated with the above items. Tax impact on non-GAAP pre-tax
income is calculated under the same accounting principles applied
to the GAAP pre-tax income under ASC 740, which employs an annual
effective tax rate method to the results.
The GAAP and non-GAAP earnings
per share information is presented as calculated. The sum of these
measures, as presented, may differ due to the impact of
rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
Three Months Ended
September 30, 2021
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
641
$
478
$
652
$
1,771
$
(132
)
$
85
$
116
$
69
Intersegment net revenues1
—
15
—
15
—
(3
)
—
(3
)
Segment net revenues
$
641
$
493
$
652
$
1,786
$
(132
)
$
82
$
116
$
66
Segment operating income
$
244
$
188
$
303
$
735
$
(101
)
$
55
$
55
$
9
Operating Margin
41.2
%
September 30, 2020
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
773
$
393
$
536
$
1,702
Intersegment net revenues1
—
18
—
18
Segment net revenues
$
773
$
411
$
536
$
1,720
Segment operating income
$
345
$
133
$
248
$
726
Operating Margin
42.2
%
Nine Months Ended
September 30, 2021
$ Increase /
(Decrease)
Activision
Blizzard
King
Total
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
2,321
$
1,347
$
1,896
$
5,564
$
36
$
83
$
309
$
428
Intersegment net revenues1
—
62
—
62
—
—
—
—
Segment net revenues
$
2,321
$
1,409
$
1,896
$
5,626
$
36
$
83
$
309
$
428
Segment operating income
$
1,049
$
537
$
755
$
2,341
$
(39
)
$
4
$
140
$
105
Operating Margin
41.6
%
September 30, 2020
Activision
Blizzard
King
Total
Segment Net Revenues
Net revenues from external customers
$
2,285
$
1,264
$
1,587
$
5,136
Intersegment net revenues1
—
62
—
62
Segment net revenues
$
2,285
$
1,326
$
1,587
$
5,198
Segment operating income
$
1,088
$
533
$
615
$
2,236
Operating Margin
43.0
%
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; 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 September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Reconciliation to consolidated net
revenues:
Segment net revenues
$
1,786
$
1,720
$
5,626
$
5,198
Revenues from non-reportable segments1
109
65
303
232
Net effect from recognition (deferral) of
deferred net revenues2
190
187
773
306
Elimination of intersegment revenues3
(15
)
(18
)
(62
)
(62
)
Consolidated net revenues
$
2,070
$
1,954
$
6,640
$
5,674
Reconciliation to consolidated income
before income tax expense:
Segment operating income
$
735
$
726
$
2,341
$
2,236
Operating income (loss) from
non-reportable segments1
4
(20
)
(12
)
(27
)
Net effect from recognition (deferral) of
deferred net revenues and related cost of revenues2
154
150
562
169
Share-based compensation expense
(64
)
(53
)
(259
)
(138
)
Amortization of intangible assets
(2
)
(16
)
(8
)
(62
)
Restructuring and related costs4
(3
)
(9
)
(46
)
(39
)
Consolidated operating income
824
778
2,578
2,139
Interest and other expense (income),
net
65
25
52
55
Loss on extinguishment of debt
—
31
—
31
Consolidated income before income tax
expense (benefit)
$
759
$
722
$
2,526
$
2,053
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 restructuring
initiatives, primarily severance and other restructuring-related
costs.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
NET REVENUES BY DISTRIBUTION
CHANNEL
(Amounts in millions)
Three Months Ended
September 30, 2021
September 30, 2020
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
1,852
89
%
$
1,753
90
%
$
99
6
%
Retail channels
69
3
117
6
(48
)
(41
)
Other3
149
7
84
4
65
77
Total consolidated net revenues
$
2,070
100
%
$
1,954
100
%
$
116
6
Change in deferred revenues4
Digital online channels2
$
(164
)
$
(148
)
Retail channels
(27
)
(39
)
Other3
1
—
Total changes in deferred revenues
$
(190
)
$
(187
)
Nine Months Ended
September 30, 2021
September 30, 2020
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Distribution
Channel
Digital online channels2
$
5,883
89
%
$
4,782
84
%
$
1,101
23
%
Retail channels
354
5
509
9
(155
)
(30
)
Other3
403
6
383
7
20
5
Total consolidated net revenues
$
6,640
100
%
$
5,674
100
%
$
966
17
Change in deferred revenues4
Digital online channels2
$
(590
)
$
(1
)
Retail channels
(192
)
(295
)
Other3
9
(10
)
Total changes in deferred revenues
$
(773
)
$
(306
)
1
The percentages of total are
presented as calculated. Therefore, the sum of these percentages,
as presented, may differ due to the impact of rounding.
2
Net revenues from Digital online
channels represent revenues from digitally-distributed downloadable
content, microtransactions, subscriptions, and products, as well as
licensing royalties.
3
Net revenues from Other primarily
includes revenues from our distribution business, the Overwatch
League, and the Call of Duty League.
4
Reflects the net effect from
deferral of revenues and (recognition) of deferred revenues on
certain of our online-enabled products.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
NET REVENUES BY PLATFORM
(Amounts in millions)
Three Months Ended
September 30, 2021
September 30, 2020
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
523
25
%
$
695
36
%
$
(172
)
(25
)%
PC
578
28
514
26
64
12
Mobile and ancillary2
820
40
661
34
159
24
Other3
149
7
84
4
65
77
Total consolidated net revenues
$
2,070
100
%
$
1,954
100
%
$
116
6
Change in deferred revenues4
Console
$
(114
)
$
(129
)
PC
(80
)
(45
)
Mobile and ancillary2
3
(13
)
Other3
1
—
Total changes in deferred revenues
$
(190
)
$
(187
)
Nine Months Ended
September 30, 2021
September 30, 2020
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Platform
Console
$
2,061
31
%
$
1,944
34
%
$
117
6
%
PC
1,827
28
1,494
26
333
22
Mobile and ancillary2
2,349
35
1,853
33
496
27
Other3
403
6
383
7
20
5
Total consolidated net revenues
$
6,640
100
%
$
5,674
100
%
$
966
17
Change in deferred revenues4
Console
$
(530
)
$
(301
)
PC
(253
)
(27
)
Mobile and ancillary2
1
32
Other3
9
(10
)
Total changes in deferred revenues
$
(773
)
$
(306
)
1
The percentages of total are
presented as calculated. Therefore, the sum of these percentages,
as presented, may differ due to the impact of rounding.
2
Net revenues from Mobile and
ancillary include revenues from mobile devices, as well as
non-platform specific game related revenues, such as standalone
sales of physical merchandise and accessories.
3
Net revenues from Other primarily
includes revenues from our distribution business, the Overwatch
League, and the Call of Duty League.
4
Reflects the net effect from
deferral of revenues and (recognition) of deferred revenues on
certain of our online-enabled products.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
NET REVENUES BY GEOGRAPHIC
REGION
(Amounts in millions)
Three Months Ended
September 30, 2021
September 30, 2020
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
1,166
56
%
$
1,127
58
%
$
39
3
%
EMEA2
619
30
589
30
30
5
Asia Pacific
285
14
238
12
47
20
Total consolidated net revenues
$
2,070
100
%
$
1,954
100
%
$
116
6
Change in deferred revenues3
Americas
$
(136
)
$
(86
)
EMEA2
(63
)
(75
)
Asia Pacific
9
(26
)
Total changes in deferred revenues
$
(190
)
$
(187
)
Nine Months Ended
September 30, 2021
September 30, 2020
$ Increase (Decrease)
% Increase (Decrease)
Amount
% of Total1
Amount
% of Total1
Net Revenues by Geographic
Region
Americas
$
3,819
58
%
$
3,188
56
%
$
631
20
%
EMEA2
2,045
31
1,770
31
275
16
Asia Pacific
776
12
716
13
60
8
Total consolidated net revenues
$
6,640
100
%
$
5,674
100
%
$
966
17
Change in deferred revenues3
Americas
$
(475
)
$
(106
)
EMEA2
(260
)
(159
)
Asia Pacific
(38
)
(41
)
Total changes in deferred revenues
$
(773
)
$
(306
)
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
December 31,
2020
March 31, 2021
June 30, 2021
September 30,
2021
September 30,
2021
GAAP Net Income
$
508
$
619
$
876
$
639
$
2,642
Interest and other expense (income),
net
31
30
(43
)
65
83
Provision for income taxes
55
146
126
120
447
Depreciation and amortization
45
33
28
27
133
EBITDA
639
828
987
851
3,305
Share-based compensation expense1
80
151
43
64
338
Restructuring and related costs2
55
30
13
3
101
Adjusted EBITDA
$
774
$
1,009
$
1,043
$
918
$
3,744
Change in deferred net revenues and
related cost of revenues3
$
407
$
(132
)
$
(276
)
$
(154
)
$
(155
)
1
Includes expenses related to
share-based compensation.
2
Reflects restructuring
initiatives, primarily severance and other restructuring-related
costs.
3
Reflects the net effect from
deferral of revenues and (recognition) of deferred revenues, along
with related cost of revenues, on certain of our online-enabled
products.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
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, 2021
December 31, 2021
Net Revenues1
$
2,020
$
8,660
Change in deferred revenues2
$
763
$
(10
)
Earnings Per Diluted Share
(GAAP)
$
0.54
$
3.27
Excluding the impact of:
Share-based compensation3
0.09
0.42
Amortization of intangible assets4
—
0.01
Restructuring and related costs5
0.01
0.06
Income tax impacts from items above6
(0.01
)
(0.06
)
Earnings Per Diluted Share
(Non-GAAP)
$
0.62
$
3.70
Net effect of deferred net revenues and
related cost of revenues on Earnings Per Diluted Share7
$
0.67
$
0.06
1
Net Revenues represents the
revenue outlook for both GAAP and Non-GAAP as they are measured the
same.
2
Reflects the net effect from
deferral of revenues and (recognition) of deferred revenues on
certain of our online-enabled products.
3
Reflects expenses related to
share-based compensation.
4
Reflects amortization of
intangible assets from purchase price accounting.
5
Reflects restructuring
initiatives, primarily severance and other restructuring-related
costs.
6
Reflects the income tax impacts
associated with the above items. Due to the inherent uncertainties
in share price and option exercise behavior, we do not generally
forecast excess tax benefits or tax shortfalls.
7
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 effect of taxes.
The per share adjustments and the
GAAP and Non-GAAP earnings per share information are presented as
calculated. Therefore, the sum of these measures, as presented, may
differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND
SUBSIDIARIES
OPERATING METRICS
(Amounts in millions)
Net Bookings1
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
$ Increase (Decrease)
% Increase (Decrease)
2021
2020
$ Increase (Decrease)
% Increase (Decrease)
Net bookings1
$
1,880
$
1,767
$
113
6
%
$
5,867
$
5,368
$
499
9
%
In-game net bookings2
$
1,198
$
1,200
$
(2
)
—
%
$
3,859
$
3,529
$
330
9
%
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
September 30, 2020
December 31, 2020
March 31, 2021
June 30, 2021
September 30, 2021
Activision
111
128
150
127
119
Blizzard
30
29
27
26
26
King
249
240
258
255
245
Total MAUs
390
397
435
408
390
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/20211102006277/en/
Activision Blizzard, Inc. Investors and Analysts:
ir@activisionblizzard.com or Press: pr@activisionblizzard.com
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