Sign Up for Updates

Activision Blizzard Announces Second Quarter 2022 Financial Results image

Activision Blizzard Announces Second Quarter 2022 Financial Results

Santa Monica, CA — Activision Blizzard, Inc. announced second quarter 2022 results.

Banata obby Kotick, CEO of Activision Blizzard, shared, “Our acquisitions this past quarter of Proletariat and Peltarion further boost our development resources, including our artificial intelligence and machine learning capabilities. Even in a challenging economic environment, with so many companies announcing hiring freezes and layoffs, our development headcount grew 25% year-over-year as of the end of the second quarter. Our talented teams are planning to release exciting new Call of Duty, World of Warcraft and Overwatch content later this year. Of course, we look forward to completing our pending $95 per share all-cash transaction with Microsoft as soon as possible.”

Financial Metrics
Q2
(in millions, except EPS) 2022 2021
GAAP Net Revenues $ 1,644 $ 2,296
Impact of GAAP deferralsA $ (7 ) $ (375 )
GAAP EPS $ 0.36 $ 1.12
Non-GAAP EPS $ 0.48 $ 1.20
Impact of GAAP deferralsA $ (0.01 ) $ (0.29 )

Please refer to the tables at the back of this earnings release for a reconciliation of the company’s GAAP and non-GAAP results.

For the quarter ended June 30, 2022, Activision Blizzard’s net revenues presented in accordance with GAAP were $1.64 billion, as compared with $2.30 billion for the second quarter of 2021. GAAP net revenues from digital channels were $1.47 billion. GAAP operating margin was 21%. GAAP earnings per diluted share was $0.36, as compared with $1.12 for the second quarter of 2021. On a non-GAAP basis, Activision Blizzard’s operating margin was 28% and earnings per diluted share was $0.48, as compared with $1.20 for the second quarter of 2021.

Activision Blizzard generated $198 million in operating cash flow for the quarter as compared with $388 million for the second quarter of 2021.

Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results.

Operating Metrics

For the quarter ended June 30, 2022, Activision Blizzard’s net bookingsB were $1.64 billion, as compared with $1.92 billion for the second quarter of 2021. In-game net bookingsC were $1.20 billion, as compared with $1.32 billion for the second quarter of 2021.

For the quarter ended June 30, 2022, overall Activision Blizzard Monthly Active Users (MAUs)D were 361 million.

Microsoft transaction

As announced on January 18, 2022, Microsoft plans to acquire Activision Blizzard for $95.00 per share in an all-cash transaction. The transaction is subject to customary closing conditions and completion of regulatory review. The transaction, which is expected to close in Microsoft’s fiscal year ending June 30, 2023, has been approved by the boards of directors of both Activision Blizzard and Microsoft and by Activision Blizzard’s stockholders.

Conference Call and Earnings Presentation

In light of the proposed transaction with Microsoft, and as is customary during the pendency of an acquisition, Activision Blizzard will not be hosting a conference call, issuing an earnings presentation, or providing quantitative financial guidance in conjunction with its second quarter 2022 earnings release. For further detail and discussion of our financial performance please refer to our quarterly report on Form 10-Q for the quarter ended June 30, 2022.

Selected Business Highlights

During the second quarter, our teams made strong progress on a broad pipeline of content across established franchises. Releases planned for the second half of the year include Call of Duty®: Modern Warfare II, a new Call of Duty: Warzone™ 2.0 experience, World of Warcraft®: Wrath of the Lich King® Classic, World of Warcraft: Dragonflight™, and Overwatch® 2, with Diablo® IV planned for release in 2023. We continue to increase investment in our creative resources to meet the demand for our content – our development headcount at the end of the second quarter grew by 25% year-over-year.

While the company remains cognizant of risks including those related to the labor market and economic conditions, and we still have significant execution ahead of us, we expect these releases to increase our global audience, deepen community engagement, and drive year-over-year growth in player investment in the fourth quarter and beyond.

GAAP revenue and EPS declined year-over-year in the second quarter, and the company expects GAAP revenue and earnings per share to remain lower year-over-year in the second half of the year. Second quarter segment operating income increased versus the first quarter for each of Activision, Blizzard and King. Based on the current pipeline, total segment operating income is expected to increase modestly in the third quarter versus the second quarter, and to return to year-over-year growth in the fourth quarter.

Activision Blizzard remains committed to becoming the most welcoming, inclusive company in our industry, and continues to implement previously announced initiatives to strengthen our practices and policies. In the second quarter, we added experienced DE&I leaders in key positions across the organization. In July, the company launched Level Up U, a 12-week program that prepares talented individuals from inside and outside the industry to become full-time game developers. Level Up U is the first major program funded through a $250 million investment over 10 years announced last October to accelerate opportunities in gaming and technology for under-represented communities.

Activision

  • The fourth quarter will usher in a new era for the Call of Duty franchise. Anticipation is high for Call of Duty: Modern Warfare II, planned for release on console and PC on October 28. The sequel to 2019’s Modern Warfare®, the most successful Call of Duty title to date, will lead the most ambitious rollout yet across the franchise. An all-new Call of Duty: Warzone 2.0 experience, tightly integrated with the premium game, will launch as an extension of the Modern Warfare universe later this year.
  • Activision’s expanded studios also continue to make strong progress on an innovative mobile experience that will extend Warzone to the largest and fastest growing platform. Across the Call of Duty ecosystem, the teams are well positioned to support these launches with substantial live operations while also continuing development of new premium content planned for 2023 and beyond.
  • Activision’s second quarter segment revenue and operating income declined year-over-year, reflecting lower engagement for the Call of Duty franchise, but grew versus the first quarter. Call of Duty net bookings on console and PC grew sequentially in the second quarter, following gameplay improvements and seasonal content across Call of Duty: Vanguard and Call of Duty: Warzone that were well-received by players. Net bookings for Call of Duty Mobile were consistent with the first quarter.

Blizzard

  • The June launch of Diablo Immortal™, a deep and authentic Diablo experience designed for the mobile platform, marked the start of a rollout of substantial content across Blizzard’s key franchises. Diablo Immortal received high player ratings on mobile app stores around the world, and reached the top of the game download charts in more than 100 countries and regions following its launch. Over half of the game’s player accounts to date are new to Blizzard. The game ranked in the top-10 grossing games in U.S. app stores for the month of June1.
  • Diablo IV, the next-generation installment in the genre-defining series, is planned for launch on PC and console in 2023. The title will support cross-play and cross-progression across platforms, and is designed to be the foundation for an engaging live service, providing ongoing storytelling and new content for many years to come.
  • In the Warcraft franchise, Blizzard plans to deliver an unprecedented level of WoW content in the coming months, with Wrath of the Lich King Classic launching on September 26 and World of Warcraft: Dragonflight, the innovative next expansion for the modern game, slated for release later in the year. Blizzard is committed to growing its development resources to meet and exceed its community’s expectations, and at the end of the second quarter significantly bolstered its World of Warcraft team through the acquisition of Boston-based studio Proletariat.
  • During the second quarter, Blizzard unveiled Warcraft: Arclight Rumble™, an action-packed mobile strategy game that gives both new and existing fans an entirely different way to experience the Warcraft universe. Public testing of the game is underway in select regions.
  • Overwatch 2 is planned to launch in early access on PC and console on October 4. With a free-to-play live service model designed to provide frequent and substantial seasonal updates, this launch kicks off the next chapter for the acclaimed team-based action game.
  • Blizzard’s second quarter segment revenue and operating income were lower year-over-year but higher versus the first quarter. World of Warcraft net bookings declined versus a year-ago quarter that included the launch of Burning Crusade™ Classic, offsetting year-over-year growth for Hearthstone® and the contribution from the June launch of Diablo Immortal.

King

  • King’s segment revenue and operating income grew year-over-year, driven by Candy Crush™, King’s largest franchise. King’s in-game net bookings increased 6% year-over-year, reflecting strong execution across live operations and user acquisition.
  • King continues to increase the frequency and depth of seasonal content and introduce more player-versus-player features within Candy Crush, fueling growth in engagement and player investment. Time spent within Candy again grew year-over-year, franchise payer numbers grew by a double-digit percentage year-over-year, and Candy Crush was the top-grossing game franchise in the U.S. app stores1 for the 20th consecutive quarter.
  • King’s advertising business grew over 20% year-over-year, despite intensifying macro headwinds through the quarter, as the team continued to carefully ramp ad volume on the King network.
  • In June, King acquired software company Peltarion to accelerate the use of AI and machine learning technology in serving its community even more engaging content.

Balance Sheet and Dividend

  • Cash and short-term investments at the end of the second quarter stood at $10.8 billion, and Activision Blizzard ended the quarter with a net cashE position of approximately $7.1 billion.
  • On May 6, 2022, the Company paid a cash dividend of $0.47 per common share to shareholders of record at the close of business on April 15, 2022.

About Activision Blizzard

Our mission, to connect and engage the world through epic entertainment, has never been more important. Through communities rooted in our video game franchises we enable hundreds of millions of people to experience joy, thrill and achievement. We enable social connections through the lens of fun, and we foster purpose and a sense of accomplishment through healthy competition. Like sport, but with greater accessibility, our players can find purpose and meaning through competitive gaming. Video games, unlike any other social or entertainment media, have the ability to break down the barriers that can inhibit tolerance and understanding. Celebrating differences is at the core of our culture and ensures we can create games for players of diverse backgrounds in the 190 countries our games are played.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in millions)
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net revenues
Product sales $ 304 $ 568 $ 690 $ 1,243
In-game, subscription, and other revenues1 1,340 1,728 2,722 3,328
Total net revenues 1,644 2,296 3,412 4,571
Costs and expenses
Cost of revenues—product sales:
Product costs 80 116 172 255
Software royalties and amortization 63 88 144 200
Cost of revenues—in-game, subscription, and other:
Game operations and distribution costs 317 322 605 619
Software royalties and amortization 25 29 43 59
Product development 311 335 658 688
Sales and marketing 263 245 514 482
General and administrative 250 189 464 471
Restructuring and related costs (3 ) 13 (5 ) 43
Total costs and expenses 1,306 1,337 2,595 2,817
Operating income 338 959 817 1,754
Interest and other expense (income), net 17 (43 ) 31 (14 )
Income before income tax expense 321 1,002 786 1,768
Income tax expense 41 126 111 272
Net income $ 280 $ 876 $ 675 $ 1,496
Basic earnings per common share $ 0.36 $ 1.13 $ 0.86 $ 1.93
Weighted average common shares outstanding 782 777 781 776
Diluted earnings per common share $ 0.36 $ 1.12 $ 0.86 $ 1.91
Weighted average common shares outstanding assuming dilution 788 783 787 784
1 In-game, subscription, and other revenues represent revenues from microtransactions and downloadable content, World of Warcraft subscriptions, licensing royalties from our products and franchises, and other miscellaneous revenues.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
June 30, 2022 December 31, 2021
Assets
Current assets
Cash and cash equivalents $ 10,483 $ 10,423
Accounts receivable, net 572 972
Software development 768 449
Other current assets 684 712
Total current assets 12,507 12,556
Software development 124 211
Property and equipment, net 175 169
Deferred income taxes, net 1,259 1,377
Other assets 545 497
Intangible assets, net 453 447
Goodwill 9,931 9,799
Total assets $ 24,994 $ 25,056
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 197 $ 285
Deferred revenues 847 1,118
Accrued expenses and other liabilities 980 1,008
Total current liabilities 2,024 2,411
Long-term debt, net 3,609 3,608
Deferred income taxes, net 251 506
Other liabilities 862 932
Total liabilities 6,746 7,457
Shareholders’ equity
Common stock
Additional paid-in capital 12,069 11,715
Treasury (TSRMF) stock (5,563 ) (5,563 )
Retained earnings 12,333 12,025
Accumulated other comprehensive loss (591 ) (578 )
Total shareholders’ equity 18,248 17,599
Total liabilities and shareholders’ equity $ 24,994 $ 25,056
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
SUPPLEMENTAL CASH FLOW INFORMATION
(Amounts in millions)
Three Months Ended
June 30, September 30, December 31, March 31, June 30, Year over Year
2021 2021 2021 2022 2022 % Increase (Decrease)
Cash Flow Data
Operating Cash Flow $ 388 $ 521 $ 661 $ 642 $ 198 (49 )%
Capital Expenditures 14 23 21 15 37 164
Non-GAAP Free Cash Flow1 $ 374 $ 498 $ 640 $ 627 $ 161 (57 )
Operating Cash Flow – TTM2 $ 2,568 $ 2,893 $ 2,414 $ 2,212 $ 2,022 (21 )
Capital Expenditures – TTM2 82 81 80 73 96 17
Non-GAAP Free Cash Flow1 – TTM2 $ 2,486 $ 2,812 $ 2,334 $ 2,139 $ 1,926 (23 )%
1 Non-GAAP free cash flow represents operating cash flow minus capital expenditures.
2 TTM represents trailing twelve months. Operating Cash Flow for three months ended September 30, 2020, three months ended December 31, 2020, and three months ended March 31, 2021, were $196 million, $1,140 million, and $844 million, respectively. Capital Expenditures for the three months ended September 30, 2020, three months ended December 31, 2020, and three months ended March 31, 2021, were $24 million, $22 million, and $22 million, respectively.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Three Months Ended
June 30, 2022
Net Revenues Cost of Revenues—Product Sales: Product Costs Cost of Revenues—Product Sales: Software Royalties and Amortization Cost of Revenues—In-game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In-game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses
GAAP Measurement $ 1,644 $ 80 $ 63 $ 317 $ 25 $ 311 $ 263 $ 250 $ (3 ) $ 1,306
Share-based compensation1 (2 ) (1 ) (47 ) (14 ) (36 ) (100 )
Amortization of intangible assets2 (2 ) (2 )
Restructuring and related costs3 3 3
Merger and acquisition-related fees and other expenses4 (16 ) (16 )
Non-GAAP Measurement $ 1,644 $ 80 $ 61 $ 316 $ 25 $ 264 $ 249 $ 196 $ $ 1,191
Net effect of deferred revenues and related cost of revenues5 $ (7 ) $ (7 ) $ (30 ) $ 17 $ 14 $ $ $ $ $ (6 )
Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share
GAAP Measurement $ 338 $ 280 $ 0.36 $ 0.36
Share-based compensation1 100 100 0.13 0.13
Amortization of intangible assets2 2 2
Restructuring and related costs3 (3 ) (3 )
Merger and acquisition-related fees and other expenses4 16 16 0.02 0.02
Income tax impacts from items above6 (15 ) (0.02 ) (0.02 )
Non-GAAP Measurement $ 453 $ 380 $ 0.49 $ 0.48
Net effect of deferred revenues and related cost of revenues5 $ (1 ) $ (8 ) $ (0.01 ) $ (0.01 )
1 Reflects expenses related to share-based compensation, including $14 million for liability awards accounted for under ASC 718.
2 Reflects amortization of intangible assets from purchase price accounting.
3 Reflects restructuring initiatives.
4 Reflects fees and other expenses related to our proposed transaction with Microsoft Corporation (“Microsoft”), primarily legal and advisory fees.
5 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes.
6 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Six Months Ended
June 30, 2022
Net Revenues Cost of Revenues—Product Sales: Product Costs Cost of Revenues—Product Sales: Software Royalties and Amortization Cost of Revenues—In-game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In-game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses
GAAP Measurement $ 3,412 $ 172 $ 144 $ 605 $ 43 $ 658 $ 514 $ 464 $ (5 ) $ 2,595
Share-based compensation1 (6 ) (3 ) (100 ) (29 ) (61 ) (199 )
Amortization of intangible assets2 (4 ) (4 )
Restructuring and related costs3 5 5
Merger and acquisition-related fees and other expenses4 (48 ) (48 )
Non-GAAP Measurement $ 3,412 $ 172 $ 138 $ 602 $ 43 $ 558 $ 485 $ 351 $ $ 2,349
Net effect of deferred revenues and related cost of revenues5 $ (293 ) $ (22 ) $ (68 ) $ 16 $ 17 $ $ $ $ $ (57 )
Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share
GAAP Measurement $ 817 $ 675 $ 0.86 $ 0.86
Share-based compensation1 199 199 0.25 0.25
Amortization of intangible assets2 4 4
Restructuring and related costs3 (5 ) (5 ) (0.01 ) (0.01 )
Merger and acquisition-related fees and other expenses4 48 48 0.06 0.06
Income tax impacts from items above6 (39 ) (0.05 ) (0.05 )
Non-GAAP Measurement $ 1,063 $ 882 $ 1.13 $ 1.12
Net effect of deferred revenues and related cost of revenues5 $ (236 ) $ (213 ) $ (0.27 ) $ (0.27 )
1 Reflects expenses related to share-based compensation, including $29 million for liability awards accounted for under ASC 718.
2 Reflects amortization of intangible assets from purchase price accounting.
3 Reflects restructuring initiatives.
4 Reflects fees and other expenses related to our proposed transaction with Microsoft, primarily legal and advisory fees.
5 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes.
6 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Three Months Ended
June 30, 2021
Net Revenues Cost of Revenues—Product Sales: Product Costs Cost of Revenues—Product Sales: Software Royalties and Amortization Cost of Revenues—In-game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In-game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses
GAAP Measurement $ 2,296 $ 116 $ 88 $ 322 $ 29 $ 335 $ 245 $ 189 $ 13 $ 1,337
Share-based compensation1 (5 ) (1 ) (18 ) (3 ) (16 ) (43 )
Amortization of intangible assets2 (2 ) (2 )
Restructuring and related costs3 (13 ) (13 )
Non-GAAP Measurement $ 2,296 $ 116 $ 83 $ 321 $ 29 $ 317 $ 242 $ 171 $ $ 1,279
Net effect of deferred revenues and related cost of revenues4 $ (375 ) $ (17 ) $ (81 ) $ (1 ) $ $ $ $ $ $ (99 )
Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share
GAAP Measurement $ 959 $ 876 $ 1.13 $ 1.12
Share-based compensation1 43 43 0.06 0.06
Amortization of intangible assets2 2 2
Restructuring and related costs3 13 13 0.02 0.02
Income tax impacts from items above5 7 0.01 0.01
Non-GAAP Measurement $ 1,017 $ 941 $ 1.21 $ 1.20
Net effect of deferred revenues and related cost of revenues4 $ (276 ) $ (229 ) $ (0.29 ) $ (0.29 )
1 Reflects expenses related to share-based compensation.
2 Reflects amortization of intangible assets from purchase price accounting.
3 Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes.
5 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Six Months Ended
June 30, 2021
Net Revenues Cost of Revenues—Product Sales: Product Costs Cost of Revenues—Product Sales: Software Royalties and Amortization Cost of Revenues—In-game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In-game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses
GAAP Measurement $ 4,571 $ 255 $ 200 $ 619 $ 59 $ 688 $ 482 $ 471 $ 43 $ 2,817
Share-based compensation1 (12 ) (1 ) (34 ) (7 ) (140 ) (194 )
Amortization of intangible assets2 (3 ) (4 ) (7 )
Restructuring and related costs3 (43 ) (43 )
Non-GAAP Measurement $ 4,571 $ 255 $ 188 $ 618 $ 56 $ 654 $ 475 $ 327 $ $ 2,573
Net effect of deferred revenues and related cost of revenues4 $ (584 ) $ (30 ) $ (144 ) $ (2 ) $ $ $ $ $ $ (176 )
Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share
GAAP Measurement $ 1,754 $ 1,496 $ 1.93 $ 1.91
Share-based compensation1 194 194 0.25 0.25
Amortization of intangible assets2 7 7 0.01 0.01
Restructuring and related costs3 43 43 0.06 0.05
Income tax impacts from items above5 (30 ) (0.04 ) (0.04 )
Non-GAAP Measurement $ 1,998 $ 1,710 $ 2.20 $ 2.18
Net effect of deferred revenues and related cost of revenues4 $ (408 ) $ (336 ) $ (0.43 ) $ (0.43 )
1 Reflects expenses related to share-based compensation.
2 Reflects amortization of intangible assets from purchase price accounting.
3 Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes.
5 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
Three Months Ended June 30, 2022 $ Increase / (Decrease)
Activision Blizzard King Total Activision Blizzard King Total
Segment Net Revenues
Net revenues from external customers $ 490 $ 390 $ 684 $ 1,564 $ (299 ) $ (21 ) $ 49 $ (271 )
Intersegment net revenues1 11 11 (11 ) (11 )
Segment net revenues $ 490 $ 401 $ 684 $ 1,575 $ (299 ) $ (32 ) $ 49 $ (282 )
Segment operating income $ 92 $ 94 $ 271 $ 457 $ (271 ) $ (47 ) $ 23 $ (295 )
Operating Margin 29.0 %
June 30, 2021
Activision Blizzard King Total
Segment Net Revenues
Net revenues from external customers $ 789 $ 411 $ 635 $ 1,835
Intersegment net revenues1 22 22
Segment net revenues $ 789 $ 433 $ 635 $ 1,857
Segment operating income $ 363 $ 141 $ 248 $ 752
Operating Margin 40.5 %
Six Months Ended June 30, 2022 $ Increase / (Decrease)
Activision Blizzard King Total Activision Blizzard King Total
Segment Net Revenues
Net revenues from external customers $ 943 $ 655 $ 1,366 $ 2,964 $ (737 ) $ (214 ) $ 122 $ (829 )
Intersegment net revenues1 20 20 (27 ) (27 )
Segment net revenues $ 943 $ 675 $ 1,366 $ 2,984 $ (737 ) $ (241 ) $ 122 $ (856 )
Segment operating income $ 151 $ 148 $ 514 $ 813 $ (653 ) $ (201 ) $ 62 $ (792 )
Operating Margin 27.2 %
June 30, 2021
Activision Blizzard King Total
Segment Net Revenues
Net revenues from external customers $ 1,680 $ 869 $ 1,244 $ 3,793
Intersegment net revenues1 47 47
Segment net revenues $ 1,680 $ 916 $ 1,244 $ 3,840
Segment operating income $ 804 $ 349 $ 452 $ 1,605
Operating Margin 41.8 %
1 Intersegment revenues reflect licensing and service fees charged between segments.

Our operating segments are consistent with the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). The CODM reviews segment performance exclusive of: the impact of the change in deferred revenues and related cost of revenues with respect to certain of our online-enabled games; share-based compensation expense (including liability awards accounted for under ASC 718); amortization of intangible assets as a result of purchase price accounting; fees and other expenses (including legal fees, costs, expenses and accruals) related to acquisitions, associated integration activities, and financings; certain restructuring and related costs; and other non-cash charges. See the following page for the reconciliation tables of segment revenues and operating income to consolidated net revenues and consolidated income before income tax expense.

Our operating segments are also consistent with our internal organization structure, the way we assess operating performance and allocate resources, and the availability of separate financial information. We do not aggregate operating segments.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Reconciliation to consolidated net revenues:
Segment net revenues $ 1,575 $ 1,857 $ 2,984 $ 3,840
Revenues from non-reportable segments1 73 86 155 194
Net effect from recognition (deferral) of deferred net revenues2 7 375 293 584
Elimination of intersegment revenues3 (11 ) (22 ) (20 ) (47 )
Consolidated net revenues $ 1,644 $ 2,296 $ 3,412 $ 4,571
Reconciliation to consolidated income before income tax expense:
Segment operating income $ 457 $ 752 $ 813 $ 1,605
Operating income (loss) from non-reportable segments1 (5 ) (11 ) 14 (15 )
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues2 1 276 236 408
Share-based compensation expense4 (100 ) (43 ) (199 ) (194 )
Amortization of intangible assets (2 ) (2 ) (4 ) (7 )
Restructuring and related costs5 3 (13 ) 5 (43 )
Merger and acquisition-related fees and other expenses6 (16 ) (48 )
Consolidated operating income 338 959 817 1,754
Interest and other expense (income), net 17 (43 ) 31 (14 )
Consolidated income before income tax expense (benefit) $ 321 $ 1,002 $ 786 $ 1,768
1 Includes other income and expenses outside of our reportable segments, including our distribution business and unallocated corporate income and expenses.
2 Reflects the net effect from (deferral) of revenues and recognition of deferred revenues, along with related cost of revenues, on certain of our online-enabled products.
3 Intersegment revenues reflect licensing and service fees charged between segments.
4 Reflects expenses related to share-based compensation, including liability awards accounted for under ASC 718.
5 Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
6 Reflects fees and other expenses related to our proposed transaction with Microsoft, primarily legal and advisory fees.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY DISTRIBUTION CHANNEL
(Amounts in millions)
Three Months Ended
June 30, 2022 June 30, 2021 $ Increase
(Decrease)
% Increase
(Decrease)
Amount % of Total1 Amount % of Total1
Net Revenues by Distribution Channel
Digital online channels2 $ 1,474 90 % $ 2,026 88 % $ (552 ) (27 )%
Retail channels 65 4 137 6 (72 ) (53 )
Other3 105 6 133 6 (28 ) (21 )
Total consolidated net revenues $ 1,644 100 % $ 2,296 100 % $ (652 ) (28 )
Change in deferred revenues4
Digital online channels2 $ 44 $ (285 )
Retail channels (50 ) (93 )
Other3 (1 ) 3
Total changes in deferred revenues $ (7 ) $ (375 )
Six Months Ended
June 30, 2022 June 30, 2021 $ Increase
(Decrease)
% Increase
(Decrease)
Amount % of Total1 Amount % of Total1
Net Revenues by Distribution Channel
Digital online channels2 $ 3,063 90 % $ 4,031 88 % $ (968 ) (24 )%
Retail channels 151 4 286 6 (135 ) (47 )
Other3 198 6 254 6 (56 ) (22 )
Total consolidated net revenues $ 3,412 100 % $ 4,571 100 % $ (1,159 ) (25 )
Change in deferred revenues4
Digital online channels2 $ (178 ) $ (425 )
Retail channels (115 ) (167 )
Other3 8
Total changes in deferred revenues $ (293 ) $ (584 )
1 The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding.
2 Net revenues from Digital online channels represent revenues from digitally-distributed downloadable content, microtransactions, subscriptions, and products, as well as licensing royalties.
3 Net revenues from Other primarily include revenues from our distribution business, the Overwatch League, and the Call of Duty League.
4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY PLATFORM
(Amounts in millions)
Three Months Ended
June 30, 2022 June 30, 2021 $ Increase
(Decrease)
% Increase
(Decrease)
Amount % of Total1 Amount % of Total1
Net Revenues by Platform
Console $ 376 23 % $ 740 32 % $ (364 ) (49 )%
PC 332 20 628 27 (296 ) (47 )
Mobile and ancillary2 831 51 795 35 36 5
Other3 105 6 133 6 (28 ) (21 )
Total consolidated net revenues $ 1,644 100 % $ 2,296 100 % $ (652 ) (28 )
Change in deferred revenues4
Console $ (97 ) $ (245 )
PC 25 (128 )
Mobile and ancillary2 66 (5 )
Other3 (1 ) 3
Total changes in deferred revenues $ (7 ) $ (375 )
Six Months Ended
June 30, 2022 June 30, 2021 $ Increase
(Decrease)
% Increase
(Decrease)
Amount % of Total1 Amount % of Total1
Net Revenues by Platform
Console $ 859 25 % $ 1,538 34 % $ (679 ) (44 )%
PC 716 21 1,248 27 (532 ) (43 )
Mobile and ancillary2 1,639 48 1,531 33 108 7
Other3 198 6 254 6 (56 ) (22 )
Total consolidated net revenues $ 3,412 100 % $ 4,571 100 % $ (1,159 ) (25 )
Change in deferred revenues4
Console $ (317 ) $ (417 )
PC (55 ) (172 )
Mobile and ancillary2 79 (3 )
Other3 8
Total changes in deferred revenues $ (293 ) $ (584 )
1 The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding.
2 Net revenues from Mobile and ancillary primarily include revenues from mobile devices.
3 Net revenues from Other primarily include revenues from our distribution business, the Overwatch League, and the Call of Duty League.
4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY GEOGRAPHIC REGION
(Amounts in millions)
Three Months Ended
June 30, 2022 June 30, 2021 $ Increase
(Decrease)
% Increase
(Decrease)
Amount % of Total1 Amount % of Total1
Net Revenues by Geographic Region
Americas $ 982 60 % $ 1,346 59 % $ (364 ) (27 )%
EMEA2 470 29 695 30 (225 ) (32 )
Asia Pacific 192 12 255 11 (63 ) (25 )
Total consolidated net revenues $ 1,644 100 % $ 2,296 100 % $ (652 ) (28 )
Change in deferred revenues3
Americas $ (10 ) $ (218 )
EMEA2 (21 ) (133 )
Asia Pacific 24 (24 )
Total changes in deferred revenues $ (7 ) $ (375 )
Six Months Ended
June 30, 2022 June 30, 2021 $ Increase
(Decrease)
% Increase
(Decrease)
Amount % of Total1 Amount % of Total1
Net Revenues by Geographic Region
Americas $ 1,999 59 % $ 2,653 58 % $ (654 ) (25 )%
EMEA2 996 29 1,426 31 (430 ) (30 )
Asia Pacific 417 12 492 11 (75 ) (15 )
Total consolidated net revenues $ 3,412 100 % $ 4,571 100 % $ (1,159 ) (25 )
Change in deferred revenues3
Americas $ (186 ) $ (340 )
EMEA2 (111 ) (196 )
Asia Pacific 4 (48 )
Total changes in deferred revenues $ (293 ) $ (584 )
1 The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding.
2 Net revenues from EMEA consist of the EuropeMiddle East, and Africa geographic regions.
3 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA
(Amounts in millions)
Trailing Twelve
Months Ended
September 30,
2021
December 31,
2021
March 31,
2022
June 30,
2022
June 30,
2022
GAAP Net Income $ 639 $ 564 $ 395 $ 280 $ 1,878
Interest and other expense (income), net 65 45 14 17 141
Provision for income taxes 120 73 70 41 304
Depreciation and amortization 27 27 24 25 103
EBITDA 851 709 503 363 2,426
Share-based compensation expense1 64 249 98 100 511
Restructuring and related costs2 3 30 (2 ) (3 ) 28
Merger and acquisition-related fees and other expenses3 32 16 48
Adjusted EBITDA $ 918 $ 988 $ 631 $ 476 $ 3,013
Change in deferred net revenues and related cost of revenues4 $ (154 ) $ 215 $ (235 ) $ (1 ) $ (175 )
1 Reflects expenses related to share-based compensation, including liability awards accounted for under ASC 718.
2 Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
3 Reflects fees and other expenses related to our proposed transaction with Microsoft, primarily legal and advisory fees.
4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OPERATING METRICS
(Amounts in millions)
Net Bookings1
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 $ Increase
(Decrease)
% Increase
(Decrease)
2022 2021 $ Increase
(Decrease)
% Increase
(Decrease)
Net bookings1 $ 1,637 $ 1,921 $ (284 ) (15 )% $ 3,119 $ 3,987 $ (868 ) (22 )%
In-game net bookings2 $ 1,197 $ 1,319 $ (122 ) (9 )% $ 2,208 $ 2,661 $ (453 ) (17 )%
1 We monitor net bookings as a key operating metric in evaluating the performance of our business because it enables an analysis of performance based on the timing of actual transactions with our customers and provides more timely indications of trends in our operating results. Net bookings is the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others. Net bookings is equal to net revenues excluding the impact from deferrals.
2 In-game net bookings primarily includes the net amount of downloadable content and microtransactions sold during the period, and is equal to in-game net revenues excluding the impact from deferrals.
Monthly Active Users3
June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022
Activision 127 119 107 100 94
Blizzard 26 26 24 22 27
King 255 245 240 250 240
Total MAUs 408 390 371 372 361
3 We monitor monthly active users (“MAUs”) as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period. An individual who accesses two of our games would be counted as two users. In addition, due to technical limitations, for Activision and King, an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users. For Blizzard, an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user. In certain instances, we rely on third parties to publish our games. In these instances, MAU data is based on information provided to us by those third parties, or, if final data is not available, reasonable estimates of MAUs for these third-party published games.

become a member today

learn more

  • Copyright © 2024 Licensing International
  • Translation provided by Google Translate, please pardon any shortcomings

    int(6620)