Press Release Details

Activision Blizzard Announces First Quarter 2023 Financial Results

April 26, 2023 at 10:39 AM EDT

First Quarter Net Bookings Grew 25% Year-Over-Year

First Quarter Mobile Net Bookings Grew Double-Digits Year-Over-Year

First Quarter GAAP Operating Income Grew Approximately 70% Year-Over-Year, Segment Operating Income Grew Approximately 30% Year-Over-Year

SANTA MONICA, Calif.--(BUSINESS WIRE)--Apr. 26, 2023-- Activision Blizzard, Inc. (Nasdaq: ATVI) today announced first quarter 2023 results.

Bobby Kotick, CEO of Activision Blizzard, shared, "In our 33rd year, Activision Blizzard is performing exceptionally well. Every one of our key intellectual properties continues to grow year-over-year, with Call of Duty once again a key driver of growth. Mobile net bookings grew double digits including another record quarter for King. Pre-sales for Diablo IV are strong. And none of this would be possible without our people, who deliver excellence for our players every single day. We remain confident that our deal with Microsoft benefits competition, consumers, and job creation in markets around the world, especially in the UK. The CMA’s report today does not reflect these realities, and we will work aggressively with Microsoft to reverse it on appeal."

Financial Metrics

 

 

Q1

(in millions, except EPS)

 

 

2023

 

 

 

2022

 

GAAP Net Revenues

 

$

2,383

 

 

$

1,768

 

Impact of GAAP deferralsA

 

$

(528

)

 

$

(287

)

 

 

 

 

 

GAAP EPS

 

$

0.93

 

 

$

0.50

 

Non-GAAP EPS

 

$

1.09

 

 

$

0.64

 

Impact of GAAP deferralsA

 

$

(0.49

)

 

$

(0.26

)

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 March 31, 2023, Activision Blizzard’s net revenues presented in accordance with GAAP were $2.38 billion, as compared with $1.77 billion for the first quarter of 2022. GAAP net revenues from digital channels were $2.16 billion. GAAP operating margin was 34%. GAAP earnings per diluted share was $0.93, as compared with $0.50 for the first quarter of 2022. On a non-GAAP basis, Activision Blizzard’s operating margin was 40% and earnings per diluted share was $1.09, as compared with $0.64 for the first quarter of 2022.

Activision Blizzard generated $577 million in operating cash flow for the quarter as compared with $642 million for the first quarter of 2022.

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 March 31, 2023, Activision Blizzard’s net bookingsB were $1.86 billion, as compared with $1.48 billion for the first quarter of 2022. In-game net bookingsC were $1.29 billion, as compared with $1.01 billion for the first quarter of 2022.

For the quarter ended March 31, 2023, overall Activision Blizzard Monthly Active Users (MAUs)D were 368 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 has been approved by the boards of directors of both Activision Blizzard and Microsoft and by Activision Blizzard’s stockholders.

On April 26, 2023, the United Kingdom Competition and Markets Authority ("CMA") announced a decision to block the merger, stating that competition concerns arose in relation to cloud gaming and that Microsoft’s remedies addressing any concerns in cloud gaming were not sufficient. Activision Blizzard considers that the CMA’s decision is disproportionate, irrational and inconsistent with the evidence. Microsoft has announced its decision to appeal the CMA’s ruling, and Activision Blizzard intends to fully support Microsoft’s efforts on this appeal. Activision Blizzard continues to believe that the deal is pro-competitive, will bring Activision Blizzard content to more gamers, and will result in substantial benefits to consumers and developers in the UK and globally. The parties continue to fully engage with other regulators reviewing the transaction to obtain any required regulatory approvals.

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 detailed quantitative financial guidance in conjunction with its first quarter 2023 earnings release. For further detail and discussion of our financial performance, please refer to Activision Blizzard's upcoming Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

Selected Business Highlights

Activision Blizzard continued to connect and engage the world through epic entertainment in the first quarter. Our talented teams are focused on delighting our communities and expanding our fully-owned intellectual properties across platforms, geographies and business models. Execution against our focused strategy fueled 25% growth in net bookings, approximately 70% growth in GAAP operating income, and approximately 30% growth in segment operating income, in each case on a year-over-year basis.

First quarter growth was broad-based, with net bookings increasing year-over-year in each of our five largest intellectual properties: Call of Duty®, Candy Crush®, Warcraft®, Overwatch®, and Diablo®. We continued to deliver strong results for our intellectual properties on the strategically-important mobile platform, with mobile net bookings growing double-digits year-over-year, driven by Candy Crush, Call of Duty Mobile and last year's launch of Diablo Immortal.

Our robust product pipeline, live game opportunity, and focus on operational discipline continue to create a foundation for strong financial performance for the full year. We remain cognizant of risks, including those related to our execution, economic conditions, the labor market and exchange rates, as well as headwinds for our professional esports business model. Nonetheless, we continue to expect at least high-teens year-over-year growth for GAAP revenue in 2023, and at least high-single digit year-over-year growth in net bookings and total segment operating income for the year.

Demand indicators for Diablo IV, which launches on June 6, are strong, although we continue to plan prudently. We expect Activision Blizzard second quarter GAAP revenue to grow at least 10%, net bookings to grow at least 30%, and total segment operating income to grow at least 40%, in each case on a year-over-year basis.

Activision

  • Activision segment revenue grew 28% year-over-year in the first quarter. Broad-based growth across Call of Duty drove segment operating income to more than triple the year-ago level.
  • Building on the record-setting launch of Call of Duty: Modern WarfareTM II last October, premium Call of Duty game sales in the first quarter were significantly higher than in the year-ago quarter. Activision’s expanded teams are delivering substantial post-launch content for both the premium game and the free-to-play WarzoneTM 2.0 experience. New content, modes and gameplay enhancements have had a positive impact on engagement, and Activision is planning more compelling live services for the coming months.
  • Call of Duty in-game net bookings on console and PC grew strongly year-over-year in the first quarter. Call of Duty Mobile net bookings also grew year-over-year, driven by enhancements to the player experience and live operations.
  • Activision’s teams are working hard on the next full annual premium release in the blockbuster series and Call of Duty: Warzone MobileTM, both slated for later this year. On June 20, Activision will launch Crash Team Rumble, a team-based brawler featuring characters from the beloved Crash universe, on Xbox and PlayStation.

Blizzard

  • Blizzard segment revenue increased 62% year-over-year in the first quarter, with each of Warcraft, Overwatch and Diablo contributing to growth. Segment operating income was broadly stable year-over-year, reflecting higher development and marketing costs, including launch investment ahead of the second quarter release of Diablo IV.
  • The Overwatch and World of Warcraft teams delivered substantial in-game content and live operations to excite and sustain their communities following major product launches in the fourth quarter. Following the November release of the DragonflightTM expansion for the Modern game, our World of Warcraft team is delivering more content faster than ever before, and subscriber retention in the West is higher than at the equivalent stage of recent Modern expansions. While Overwatch engagement moderated versus the Overwatch 2 launch quarter, hours played were approximately twice the levels seen prior to the release of the free-to-play experience. Season 3, which launched in February, drove strong retention and consistent player investment versus the prior season.
  • Diablo ImmortalTM on mobile and PC also contributed to Blizzard’s first quarter net bookings growth, with the game experiencing stable trends across engagement, retention and player investment. Elsewhere on mobile, Warcraft: Arclight RumbleTM, an action strategy game internally-developed at Blizzard, continues to progress well through regional testing.
  • Diablo IV, the next major installment in the genre-defining series, will launch on PC and console on June 6. Public testing of the game in March saw very high engagement and positive feedback, and pre-sales are strong. This ambitious title will serve as the launch for a compelling live service, with regular seasons and story-driven expansions planned to drive engagement for many years to come.

King

  • In the quarter that marked its 20th anniversary, King continues to deliver excellent financial performance, reflecting strong execution and deep expertise in optimizing live operations and user acquisition. First quarter segment revenue grew 8% year-over-year, equivalent to low double-digit growth on a constant currency basisE. King’s first quarter segment operating income was little changed year-over-year due to increased investment in marketing, which is expected to contribute to operating income growth in future quarters.
  • In-game net bookings increased 11% year-over-year, driven by the Candy Crush franchise. King continues to launch and optimize new seasonal content, features and events to engage its community, and attract lapsed and new players. The March 23 launch of the latest Candy Crush All Stars tournament, where players compete in Candy Crush SagaTM for a chance to appear in the live finals, drove incremental growth in installs and player investment at the end of the first quarter and into April.
  • Candy Crush payer numbers again grew year-over-year, and Candy Crush was the top-grossing game franchise in the U.S. app stores1 for the 23rd quarter in a row.
  • Amid a weak macro environment for digital advertising, King advertising revenue fell due to declines in business with partner networks. King continues to invest in innovative ad product offerings to fuel further growth in its direct business with brand advertisers.
  • King is already starting to see benefits from last June’s acquisition of Peltarion, an AI company. Peltarion’s technology is helping King to accelerate the production and testing of live operations and to offer more relevant game content to players, with the acquisition set to deliver a meaningful financial benefit in its first full year.

Balance Sheet

  • Cash and short-term investments at the end of the first quarter stood at $12.6 billion, and Activision Blizzard ended the quarter with a net cashF position of approximately $8.9 billion.

Activision Blizzard Disclosure Channels to Disseminate Information

Activision Blizzard, Inc. (“Activision Blizzard”) discloses information to the public concerning Activision Blizzard, Activision Blizzard’s products, content and services, and other items through a variety of disclosure channels in order to achieve broad, non-exclusionary distribution of information to the public. Some of the information distributed through these disclosure channels may be considered material information. Investors and others are encouraged to review the information we make public in the locations below.2 This list may be updated from time to time.

  • For information concerning Activision Blizzard and its products, content and services, please visit: https://www.activisionblizzard.com.
  • For information provided to the investment community, including news releases, events and presentations, and filings with the U.S. Securities and Exchange Commission, please visit: https://investor.activision.com.
  • For the latest information from Activision Blizzard, including press releases and the Activision Blizzard blog, please visit: https://www.activisionblizzard.com/newsroom.
  • For additional information, please follow Activision Blizzard’s and Lulu Cheng Meservey’s (Activision Blizzard’s Executive Vice President, Corporate Affairs and Chief Communications Officer) Twitter accounts: https://twitter.com/atvi_ab and https://twitter.com/lulumeservey. Except with respect to communications regarding Activision Blizzard, Ms. Meservey’s social media communications from https://twitter.com/lulumeservey are personal communications of Ms. Meservey and are not communications on behalf of Activision Blizzard.

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 games 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 sustained success has enabled the company to support corporate social responsibility initiatives that are directly tied to our games. As an example, our Call of Duty Endowment has helped find employment for over 100,000 veterans.

Learn more information about Activision Blizzard and how we connect and engage the world through epic entertainment on the company's website, www.activisionblizzard.com2.

1 Based on data.ai Intelligence

2 These corporate websites and social media channels, and the contents thereof, are not incorporated by reference into this press release nor deemed filed with the U.S. Securities and Exchange Commission.

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 microtransactions and downloadable content sold during the period, and is equal to in-game net revenues excluding the impact from deferrals.

D Monthly Active User (“MAU”) Definition: We monitor MAUs as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period. An individual who accesses two of our games would be counted as two users. In addition, due to technical limitations, for Activision and King, an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users. For Blizzard, an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user. In certain instances, we rely on third parties to publish our games. In these instances, MAU data is based on information provided to us by those third parties, or, if final data is not available, reasonable estimates of MAUs for these third-party published games.

E Year-over-year growth on a constant currency basis is calculated by translating current quarter local currency amounts to U.S. dollars based on prior period exchange rates. These amounts are compared to the prior period to derive constant-currency year-over-year performance. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of currency rate fluctuations.

  • Total net bookings increased by 25% year-over-year for the first quarter of 2023. On a constant currency basis, total net bookings increased 29% year-over-year for the first quarter of 2023 as currency rate changes negatively impacted year-over-year growth in the quarter by 4 percentage points.
  • Activision segment net revenues grew by 28% year-over-year, Blizzard segment net revenues grew by 62%, and King segment net revenues grew by 8% for the first quarter of 2023. On a constant currency year-over-year basis, Activision segment net revenue grew 30%, Blizzard segment net revenue grew 67%, and King segment net revenue grew 11% for the first quarter of 2023, as currency rate changes negatively impacted Activision segment net revenue year-over-growth by 2 percentage points, Blizzard segment net revenue year-over-growth by 5 percentage points, and King segment net revenue year-over-growth by 3 percentage points.

F Net cash is defined as cash and cash equivalents ($9.2B as of March 31, 2023) and short-term investments ($3.4B as of March 31, 2023) minus gross debt ($3.7B as of March 31, 2023).

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 currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of currency rate fluctuations. In addition, Activision Blizzard provides EBITDA (defined as GAAP net income (loss) before interest (income) expense, income taxes, depreciation, and amortization) and adjusted EBITDA (defined as non-GAAP operating margin (see non-GAAP financial measure below) before depreciation). The non-GAAP financial measures exclude the following items, as applicable in any given reporting period and our outlook:

  • expenses related to share-based compensation, including liability awards accounted for under ASC 718;
  • the amortization of intangibles from purchase price accounting;
  • fees and other expenses related to mergers and acquisitions, including related debt financings, and refinancing of long-term debt, including penalties and the write off of unamortized discount and deferred financing costs;
  • restructuring and related charges;
  • expenses related to the wind down of our partnership with NetEase in China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023;
  • other non-cash charges from reclassification of certain cumulative translation adjustments into earnings as required by GAAP;
  • the income tax adjustments associated with any of the above items (tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results); and
  • significant discrete tax-related items, including amounts related to changes in tax laws, amounts related to the potential or final resolution of tax positions, and other unusual or unique tax-related items and activities.

In the future, Activision Blizzard may also consider whether other items should also be excluded in calculating the non-GAAP financial measures used by the company. Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure Activision Blizzard’s financial and operating performance. In particular, the measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard by excluding certain items that may not be indicative of the company’s core business, operating results, or future outlook. Additionally, we consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Internally, management uses these non-GAAP financial measures, along with others, in assessing the company’s operating results, and measuring compliance with the requirements of the company’s debt financing agreements, as well as in planning and forecasting.

Activision Blizzard’s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net income, non-GAAP earnings per share, non-GAAP operating margin, and non-GAAP or adjusted EBITDA do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard’s performance in relation to other companies.

Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP, results and outlook, and by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.

Cautionary Note Regarding Forward-looking Statements: The statements contained herein that are not historical facts are forward-looking statements including, but not limited to statements about: (1) projections of revenues, expenses, income or loss, earnings or loss per share, cash flow, or other financial items; (2) statements of our plans and objectives, including those related to releases of products or services; (3) statements of future financial or operating performance, including the impact of tax items thereon; (4) statements regarding the proposed transaction between Activision Blizzard and Microsoft pursuant to the Agreement and Plan of Merger, dated as of January 18, 2022, by and among Activision Blizzard, Microsoft, and Anchorage Merger Sub Inc., a wholly owned subsidiary of Microsoft (the “Merger Agreement” and such transaction, “the proposed transaction with Microsoft”), including any statements regarding the expected timetable for completing the proposed transaction with Microsoft, the ability to complete the proposed transaction with Microsoft, and the expected benefits of the proposed transaction with Microsoft; and (5) statements of assumptions underlying such statements. Activision Blizzard, Inc. generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “aims,” “believes,” “may,” “might,” “expects,” “intends,” “seeks,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming,” and the negative version of these words and other similar words and expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risks, reflect management’s current expectations, estimates, and projections about our business, and are inherently uncertain and difficult to predict.

We caution that a number of important factors, many of which are beyond our control, could cause our actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. Such factors include, but are not limited to: the risk that the proposed transaction with Microsoft may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the failure to satisfy the conditions to the consummation of the proposed transaction with Microsoft, including the receipt of certain governmental and regulatory approvals (which may or may not be received on a timely basis or at all); the occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement; the effect of the announcement or pendency of the proposed transaction with Microsoft on our business relationships, operating results, and business generally; risks that the proposed transaction with Microsoft disrupts our current plans and operations and potential difficulties in employee retention and recruitment as a result of the proposed transaction with Microsoft; risks related to diverting management’s attention from ongoing business operations; the outcome of any legal proceedings that have been or may be instituted against us related to the Merger Agreement or the transactions contemplated thereby; restrictions during the pendency of the proposed transaction with Microsoft that may impact our ability to pursue certain business opportunities or strategic transactions; uncertainty about current and future economic conditions and other adverse changes in general political conditions in any of the major countries in which we do business; decline in demand for our products and services if general economic conditions decline; fluctuations in currency exchange rates; our ability to deliver popular, high-quality content in a timely manner; negative impacts on our business resulting from concerns regarding our workplace, including associated legal proceedings; our ability to attract, retain, and motivate skilled personnel; future impacts from COVID-19; the level of demand for our games and products; our ability to meet customer expectations with respect to our brands, games, services, and/or business practices; competition; our reliance on a relatively small number of franchises for a significant portion of our revenues and profits; negative impacts from the results of collective bargaining, legal proceedings related to unionization, or campaigns by unions directed at our workforce; our ability to adapt to rapid technological change and allocate our resources accordingly; the increasing importance of digital sales and the risks of that business model; our ability to effectively manage the scope and complexity of our business, including risks related to our professional esports business model; our reliance on third-party platforms, which are also our competitors, for the distribution of products; our dependence on the success and availability of video game consoles manufactured by third parties and our ability to develop commercially successful products for these consoles; the increasing importance of free-to-play games and the risks of that business model; the risks and uncertainties of conducting business outside the U.S., including the need for regulatory approval to operate, the relatively weaker protection for our intellectual property rights, and the impact of cultural differences on consumer preferences; insolvency or business failure of any of our business partners; the importance of retail sales to our business and the risks of that business model; any difficulties in integrating acquired businesses or realizing the anticipated benefits of strategic transactions; seasonality in the sale of our products; fluctuation in our recurring business; the risk of distributors, retailers, development, and licensing partners or other third parties being unable to honor their commitments or otherwise putting our brand at risk; our reliance on tools and technologies owned by third parties; our use of open source software; risks associated with undisclosed content or features in our games; impact of objectionable consumer- or other third-party-created content on our operating results or reputation; outages, disruptions, or degradations in our services, products, and/or technological infrastructure; cybersecurity-related attacks, significant data breaches, fraudulent activity, or disruption of our information technology systems or networks; significant disruption during our live events; catastrophic events; climate change; provisions in our corporate documents and Delaware state law that could delay or prevent a change of control; other legal proceedings; increasing regulation in key territories over our business, products, and distribution; changes in government regulation relating to the Internet; our compliance with evolving data privacy laws and regulations; scrutiny regarding the appropriateness of the content in our games and our ability to receive target ratings for certain titles; changes in tax rates and/or tax laws and exposure to additional tax liabilities; changes in financial accounting standards or the application of existing or future standards as our business evolves; and the other factors included in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission.

The forward-looking statements contained herein are based on information available to Activision Blizzard, Inc. as of the date of this filing, and we assume no obligation to update any such forward-looking statements. Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained herein primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and may cause actual results to differ materially from current expectations.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in millions)

 

Three Months Ended March 31,

 

2023

2022

Net revenues

 

 

Product sales

$

695

 

$

386

 

In-game, subscription, and other revenues

 

1,688

 

 

1,382

 

Total net revenues

 

2,383

 

 

1,768

 

 

 

 

Costs and expenses

 

 

Cost of revenues—product sales:

 

 

Product costs

 

136

 

 

91

 

Software royalties and amortization

 

101

 

 

81

 

Cost of revenues—in-game, subscription, and other:

 

 

Game operations and distribution costs

 

363

 

 

288

 

Software royalties and amortization

 

65

 

 

19

 

Product development

 

402

 

 

346

 

Sales and marketing

 

278

 

 

252

 

General and administrative

 

238

 

 

212

 

Total costs and expenses

 

1,583

 

 

1,289

 

 

 

 

Operating income

 

800

 

 

479

 

 

 

 

Interest expense from debt

 

27

 

 

27

 

Other (income) expense, net

 

(122

)

 

(13

)

Income before income tax expense

 

895

 

 

465

 

 

 

 

Income tax expense

 

155

 

 

70

 

 

 

 

Net income

$

740

 

$

395

 

 

 

 

Basic earnings per common share

$

0.94

 

$

0.51

 

Weighted average common shares outstanding

 

785

 

 

780

 

 

 

 

Diluted earnings per common share

$

0.93

 

$

0.50

 

Weighted average common shares outstanding assuming dilution

 

792

 

 

786

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in millions)

 

 

March 31, 2023

December 31, 2022

Assets

 

 

Current assets

 

 

Cash and cash equivalents

$

9,236

 

$

7,060

 

Held-to-maturity investments

 

3,280

 

 

4,932

 

Accounts receivable, net

 

764

 

 

1,204

 

Software development

 

715

 

 

640

 

Other current assets

 

524

 

 

633

 

Total current assets

 

14,519

 

 

14,469

 

Software development

 

622

 

 

641

 

Property and equipment, net

 

199

 

 

193

 

Deferred income taxes, net

 

1,180

 

 

1,201

 

Other assets

 

507

 

 

508

 

Intangible assets, net

 

437

 

 

442

 

Goodwill

 

9,929

 

 

9,929

 

Total assets

$

27,393

 

$

27,383

 

 

 

 

Liabilities and Shareholders' Equity

 

 

Current liabilities

 

 

Accounts payable

$

177

 

$

324

 

Deferred revenues

 

1,653

 

 

2,088

 

Accrued expenses and other liabilities

 

987

 

 

1,143

 

Total current liabilities

 

2,817

 

 

3,555

 

Long-term debt, net

 

3,611

 

 

3,611

 

Deferred income taxes, net

 

32

 

 

158

 

Other liabilities

 

818

 

 

816

 

Total liabilities

 

7,278

 

 

8,140

 

 

 

 

Shareholders' equity

 

 

Common stock

 

 

 

 

Additional paid-in capital

 

12,396

 

 

12,260

 

Treasury stock

 

(5,563

)

 

(5,563

)

Retained earnings

 

13,911

 

 

13,171

 

Accumulated other comprehensive loss

 

(629

)

 

(625

)

Total shareholders’ equity

 

20,115

 

 

19,243

 

Total liabilities and shareholders’ equity

$

27,393

 

$

27,383

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

SUPPLEMENTAL CASH FLOW INFORMATION

(Amounts in millions)

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

March 31,

 

Year over Year

 

 

2022

 

2022

 

2022

 

2022

 

2023

 

% Increase (Decrease)

Cash Flow Data

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

$

642

 

$

198

 

$

257

 

$

1,123

 

$

577

 

(10

) %

Capital Expenditures

 

 

15

 

 

37

 

 

15

 

 

24

 

 

37

 

147

 

Non-GAAP Free Cash Flow1

 

$

627

 

$

161

 

$

242

 

$

1,099

 

$

540

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow - TTM2

 

$

2,212

 

$

2,022

 

$

1,758

 

$

2,220

 

$

2,155

 

(3

)

Capital Expenditures - TTM2

 

 

73

 

 

96

 

 

88

 

 

91

 

 

113

 

55

 

Non-GAAP Free Cash Flow1 - TTM2

 

$

2,139

 

$

1,926

 

$

1,670

 

$

2,129

 

$

2,042

 

(5

) %

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 June 30, 2021, three months ended September 30, 2021, and three months ended December 31, 2021, were $388 million, $521 million, and $661 million, respectively. Capital Expenditures for the three months ended June 30, 2021, three months ended September 30, 2021, and three months ended December 31, 2021, were $14 million, $23 million, and $21 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 March 31, 2023

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

Total Costs and
Expenses

GAAP Measurement

$

2,383

 

$

136

 

$

101

 

$

363

 

$

65

 

$

402

 

$

278

 

$

238

 

$

1,583

 

Share-based compensation1

 

 

 

 

 

(19

)

 

(1

)

 

(4

)

 

(54

)

 

(9

)

 

(37

)

 

(124

)

Amortization of intangible assets2

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(1

)

 

(4

)

Partnership wind down and related costs3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

(4

)

Merger and acquisition-related fees and other expenses4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

(21

)

Non-GAAP Measurement

$

2,383

 

$

136

 

$

82

 

$

362

 

$

58

 

$

348

 

$

269

 

$

175

 

$

1,430

 

Net effect of deferred revenues and related cost of revenues5

$

(528

)

$

(20

)

$

(32

)

$

(7

)

$

2

 

$

 

$

 

$

 

$

(57

)

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

Net Income

Basic Earnings
per Share

Diluted Earnings
per Share

 

 

 

 

 

GAAP Measurement

$

800

 

$

740

 

$

0.94

 

$

0.93

 

 

 

 

 

 

Share-based compensation1

 

124

 

 

124

 

 

0.16

 

 

0.16

 

 

 

 

 

 

Amortization of intangible assets2

 

4

 

 

4

 

 

0.01

 

 

0.01

 

 

 

 

 

 

Partnership wind down and related costs3

 

4

 

 

4

 

 

 

 

 

 

 

 

 

 

Merger and acquisition-related fees and other expenses4

 

21

 

 

21

 

 

0.03

 

 

0.03

 

 

 

 

 

 

Income tax impacts from items above6

 

 

 

(27

)

 

(0.04

)

 

(0.04

)

 

 

 

 

 

Non-GAAP Measurement

$

953

 

$

866

 

$

1.10

 

$

1.09

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues5

$

(471

)

$

(393

)

$

(0.50

)

$

(0.49

)

 

 

 

 

 

1

 

Reflects expenses related to share-based compensation.

2

 

Reflects amortization of intangible assets from purchase price accounting.

3

 

Reflects expenses related to the wind down of our partnership with NetEase, Inc. ("NetEase") in Mainland China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023.

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)

 

Three Months Ended March 31, 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

Total Costs and
Expenses

GAAP Measurement

$

1,768

 

$

91

 

$

81

 

$

288

 

$

19

$

346

 

$

252

 

$

212

 

$

1,289

 

Share-based compensation1

 

 

 

 

 

(4

)

 

(2

)

 

 

(53

)

 

(15

)

 

(24

)

 

(98

)

Amortization of intangible assets2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

(2

)

Restructuring and related costs3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

2

 

Merger and acquisition-related fees and other expenses4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32

)

 

(32

)

Non-GAAP Measurement

$

1,768

 

$

91

 

$

77

 

$

286

 

$

19

$

293

 

$

237

 

$

156

 

$

1,159

 

Net effect of deferred revenues and related cost of revenues5

$

(287

)

$

(14

)

$

(38

)

$

(2

)

$

2

$

 

$

 

$

 

$

(52

)

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

Net Income

Basic Earnings
per Share

Diluted Earnings
per Share

 

 

 

 

 

GAAP Measurement

$

479

 

$

395

 

$

0.51

 

$

0.50

 

 

 

 

 

 

Share-based compensation1

 

98

 

 

98

 

 

0.13

 

 

0.13

 

 

 

 

 

 

Amortization of intangible assets2

 

2

 

 

2

 

 

 

 

 

 

 

 

 

 

Restructuring and related costs3

 

(2

)

 

(2

)

 

 

 

 

 

 

 

 

 

Merger and acquisition-related fees and other expenses4

 

32

 

 

32

 

 

0.04

 

 

0.04

 

 

 

 

 

 

Income tax impacts from items above6

 

 

 

(24

)

 

(0.03

)

 

(0.03

)

 

 

 

 

 

Non-GAAP Measurement

$

609

 

$

501

 

$

0.64

 

$

0.64

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues5

$

(235

)

$

(204

)

$

(0.26

)

$

(0.26

)

 

 

 

 

 

1

Reflects expenses related to share-based compensation.

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

OPERATING SEGMENTS INFORMATION

(Amounts in millions)

 

Three Months Ended

 

March 31, 2023

 

$ Increase / (Decrease)

 

 

Activision

 

Blizzard

 

King

 

Total

 

Activision

 

Blizzard

 

King

 

Total

Segment Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues from external customers

 

$

580

 

$

435

 

$

739

 

$

1,754

 

 

$

127

 

$

170

 

 

$

57

 

 

$

354

 

Intersegment net revenues1

 

 

 

 

8

 

 

 

 

8

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Segment net revenues

 

$

580

 

$

443

 

$

739

 

$

1,762

 

 

$

127

 

$

169

 

 

$

57

 

 

$

353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

179

 

$

56

 

$

241

 

$

476

 

 

$

120

 

$

3

 

 

$

(2

)

 

$

121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

27.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

Activision

 

Blizzard

 

King

 

Total

 

 

 

 

 

 

 

 

Segment Net Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues from external customers

 

$

453

 

$

265

 

$

682

 

$

1,400

 

 

 

 

 

 

 

 

 

Intersegment net revenues1

 

 

 

 

9

 

 

 

 

9

 

 

 

 

 

 

 

 

 

Segment net revenues

 

$

453

 

$

274

 

$

682

 

$

1,409

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

59

 

$

53

 

$

243

 

$

355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

25.2

%

 

 

 

 

 

 

 

 

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; certain partnership wind down 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 March 31,

 

2023

2022

Reconciliation to consolidated net revenues:

 

 

Segment net revenues

$

1,762

 

$

1,409

 

Revenues from non-reportable segments1

 

101

 

 

81

 

Net effect from recognition (deferral) of deferred net revenues2

 

528

 

 

287

 

Elimination of intersegment revenues3

 

(8

)

 

(9

)

Consolidated net revenues

$

2,383

 

$

1,768

 

 

 

 

Reconciliation to consolidated income before income tax expense:

 

 

Segment operating income

$

476

 

$

355

 

Operating income (loss) from non-reportable segments1

 

6

 

 

19

 

Net effect from recognition (deferral) of deferred net revenues and related cost of revenues2

 

471

 

 

235

 

Share-based compensation expense4

 

(124

)

 

(98

)

Amortization of intangible assets

 

(4

)

 

(2

)

Restructuring and related costs5

 

 

 

2

 

Partnership wind down and related costs6

 

(4

)

 

 

Merger and acquisition-related fees and other expenses7

 

(21

)

 

(32

)

Consolidated operating income

 

800

 

 

479

 

Interest expense from debt

 

27

 

 

27

 

Other (income) expense, net

 

(122

)

 

(13

)

Consolidated income before income tax expense

$

895

 

$

465

 

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.

5

Reflects restructuring initiatives.

6

Reflects expenses related to the wind down of our partnership with NetEase in Mainland China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023.

7

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

 

March 31, 2023

March 31, 2022

$ Increase
(Decrease)

% Increase
(Decrease)

 

Amount

% of Total1

Amount

% of Total1

Net Revenues by Distribution Channel

 

 

 

 

 

 

Digital online channels2

$

2,157

 

91

%

$

1,589

 

90

%

$

568

36

%

Retail channels

 

104

 

4

 

 

85

 

5

 

 

19

22

 

Other3

 

122

 

5

 

 

94

 

5

 

 

28

30

 

Total consolidated net revenues

$

2,383

 

100

%

$

1,768

 

100

%

$

615

35

 

 

 

 

 

 

 

 

Change in deferred revenues4

 

 

 

 

 

 

Digital online channels2

$

(448

)

 

$

(222

)

 

 

 

Retail channels

 

(69

)

 

 

(64

)

 

 

 

Other3

 

(11

)

 

 

(1

)

 

 

 

Total changes in deferred revenues

$

(528

)

 

$

(287

)

 

 

 

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

 

March 31, 2023

 

March 31, 2022

 

$ Increase (Decrease)

 

% Increase (Decrease)

 

Amount

 

% of Total1

 

Amount

 

% of Total1

 

 

Net Revenues by Platform

 

 

 

 

 

 

 

 

 

 

 

Console

$

639

 

 

27

%

 

$

484

 

 

27

%

 

$

155

 

32

%

PC

 

666

 

 

28

 

 

 

383

 

 

22

 

 

 

283

 

74

 

Mobile and ancillary2

 

956

 

 

40

 

 

 

807

 

 

46

 

 

 

149

 

18

 

Other3

 

122

 

 

5

 

 

 

94

 

 

5

 

 

 

28

 

30

 

Total consolidated net revenues

$

2,383

 

 

100

%

 

$

1,768

 

 

100

%

 

$

615

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred revenues4

 

 

 

 

 

 

 

 

 

 

 

Console

$

(282

)

 

 

 

$

(221

)

 

 

 

 

 

 

PC

 

(203

)

 

 

 

 

(80

)

 

 

 

 

 

 

Mobile and ancillary2

 

(32

)

 

 

 

 

15

 

 

 

 

 

 

 

Other3

 

(11

)

 

 

 

 

(1

)

 

 

 

 

 

 

Total changes in deferred revenues

$

(528

)

 

 

 

$

(287

)

 

 

 

 

 

 

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

 

March 31, 2023

March 31, 2022

$ Increase
(Decrease)

% Increase
(Decrease)

 

Amount

% of Total1

Amount

% of Total1

Net Revenues by Geographic Region

 

 

 

 

 

 

Americas

$

1,378

 

58

%

$

1,016

 

57

%

$

362

36

%

EMEA2

 

699

 

29

 

 

527

 

30

 

 

172

33

 

Asia Pacific

 

306

 

13

 

 

225

 

13

 

 

81

36

 

Total consolidated net revenues

$

2,383

 

100

%

$

1,768

 

100

%

$

615

35

 

 

 

 

 

 

 

 

Change in deferred revenues3

 

 

 

 

 

 

Americas

$

(323

)

 

$

(174

)

 

 

 

EMEA2

 

(164

)

 

 

(93

)

 

 

 

Asia Pacific

 

(41

)

 

 

(20

)

 

 

 

Total changes in deferred revenues

$

(528

)

 

$

(287

)

 

 

 

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

 

June 30,
2022

September 30,
2022

December 31,
2022

March 31,
2023

March 31,
2023

GAAP Net Income

$

280

 

$

435

 

$

403

 

$

740

 

$

1,858

 

Interest expense from debt

 

27

 

 

27

 

 

27

 

 

27

 

 

108

 

Other income (expense), net

 

(10

)

 

(42

)

 

(117

)

 

(122

)

 

(291

)

Provision for income taxes

 

41

 

 

65

 

 

55

 

 

155

 

 

316

 

Depreciation and amortization

 

25

 

 

29

 

 

28

 

 

21

 

 

103

 

EBITDA

 

363

 

 

514

 

 

396

 

 

821

 

 

2,094

 

 

 

 

 

 

 

Share-based compensation expense1

 

100

 

 

102

 

 

161

 

 

124

 

 

487

 

Restructuring and related costs2

 

(3

)

 

2

 

 

 

 

 

 

(1

)

Partnership wind down and related costs3

 

 

 

 

 

27

 

 

4

 

 

31

 

Merger and acquisition-related fees and other expenses4

 

16

 

 

10

 

 

10

 

 

21

 

 

57

 

Adjusted EBITDA

$

476

 

$

628

 

$

594

 

$

970

 

$

2,668

 

 

 

 

 

 

 

Change in deferred net revenues and related cost of revenues5

$

(1

)

$

25

 

$

1,059

 

$

(471

)

$

612

 

1

Reflects expenses related to share-based compensation.

2

Reflects restructuring initiatives.

3

Reflects expenses related to the wind down of our partnership with NetEase in Mainland China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023.

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.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

OPERATING METRICS

(Amounts in millions)

 

Net Bookings1

 

Three Months Ended March 31,

 

2023

2022

$ Increase
(Decrease)

% Increase
(Decrease)

Net bookings1

$

1,855

$

1,481

$

374

25

%

In-game net bookings2

$

1,289

$

1,011

$

278

27

%

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

 

March 31, 2022

 

June 30, 2022

 

September 30, 2022

 

December 31, 2022

 

March 31, 2023

Activision

100

 

94

 

97

 

111

 

98

Blizzard

22

 

27

 

31

 

45

 

27

King

250

 

240

 

240

 

233

 

243

Total MAUs

372

 

361

 

368

 

389

 

368

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.

 

Activision Blizzard, Inc.

Investors and Analysts:
ir@activisionblizzard.com
or
Press:
pr@activisionblizzard.com

Source: Activision Blizzard, Inc.