[May 05, 2016] |
|
Activision Blizzard Announces Better-Than-Expected First Quarter 2016 Financial Results
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced
better-than-expected financial results for the first quarter of 2016.
|
|
First Quarter
|
(in millions, except EPS)
|
|
2016
|
|
Prior
Outlook*
|
|
2015
|
GAAP
|
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
$
|
1,455
|
|
$
|
1,260
|
|
$
|
1,278
|
EPS
|
|
$
|
0.45
|
|
$
|
0.21
|
|
$
|
0.53
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
$
|
908
|
|
$
|
800
|
|
$
|
703
|
EPS
|
|
$
|
0.23
|
|
$
|
0.11
|
|
$
|
0.16
|
*Prior outlook was provided by the company on February 11, 2016 in
its earnings release.
For the quarter ended March 31, 2016, Activision Blizzard's GAAP net
revenues were a Q1 record $1.46 billion, as compared with $1.28 billion
for the first quarter of 2015. On a non-GAAP basis, the company's net
revenues were a Q1 record $908 million, as compared with $703 million
for the first quarter of 2015. For the first quarter, GAAP net revenues
from digital channels were an all-time quarterly record of $926 million,
up 59% year-over-year, and represented a Q1 record 64% of the company's
total revenues. On a non-GAAP basis, net revenues from digital channels
were an all-time quarterly record of $797 million, up 48%
year-over-year, and represented an all-time quarterly record of 88% of
the company's total revenues.
For the quarter ended March 31, 2016, Activision Blizzard's GAAP
earnings per diluted share were $0.45, as compared with $0.53 for the
first quarter of 2015, down year-over-year primarily due to purchase
price accounting related to the acquisition of King Digital
Entertainment. On a non-GAAP basis, the company's earnings per diluted
share were a Q1 record $0.23, as compared with $0.16 for the first
quarter of 2015.
Please refer to the tables at the back of this press release for a
reconciliation of the company's GAAP and non-GAAP results.
Bobby Kotick, Chief Executive Officer of Activision Blizzard, said,
"This quarter we over-performed our non-GAAP February guidance by $108
million in revenue and $0.12 in earnings per share. We have a strong
core business and more opportunities ahead of us than ever before, and
talent continues to be our greatest asset."
Kotick added, "We are grateful to be honored again by FORTUNE as one of
the '100 Best Companies to Work For®,' moving up 19 spots in the ranking
from last year."
Kotick continued, "Our long-term growth prospects have never been more
exciting and we are fortunate to have the most able, capable people to
pursue them."
Selected Business Highlights:
Expanding Audience Reach
-
On February 23, 2016, Activision Blizzard completed the acquisition of
King. The company now has 544 million MAUsA.
-
Activision had the biggest Q1 online player community in its history,
with MAUsA of 55 million, up 10% year-over-year. Activision
continues to have four of the top 10 games on next-generation consoles
life-to-date, including Call of Duty®:
Black Ops III at No. 1.1 Call of Duty MAUsA
were up quarter-over-quarter and year-over-year, setting another
all-time record for the franchise.
-
Blizzard had the biggest Q1 online player community in its history,
with MAUsA of 26 million, up 23% year-over-year, reflecting
strong engagement with the broader portfolio. Hearthstone®:
Heroes of Warcraft™ surpassed the 50
million registered player milestone.
-
King's 463 million MAUsA were up 3% quarter-over-quarter.
King had three of the top-15-grossing titles in the U.S. mobile app
stores for the 9th quarter in a row.2
Deepening Engagement
-
Activision Blizzard, including King, had about 42 billion hours of
played and watched time spent over the past twelve months. This is
in-line with or above video viewing on some of the largest
entertainment networks in the world, including Netflix, Facebook and
the major professional US sports leagues on national TV combined
(including the NFL, NBA, MLB, NHL, and MLS).
Player Investment
-
Activision Blizzard non-GAAP revenues from in-game content increased
20% year-over-year on the base Activision and Blizzard businesses, and
increased 80% with the inclusion of King's stub quarter results.
-
Activision's first quarter non-GAAP revenues and operating income grew
substantially year-over-year, with non-GAAP digital revenues achieving
a Q1 record. Call of Duty is setting new records for
in-game content sales. The franchise more than doubled the number of
players who chose to purchase in-game content while maintaining
average revenue per paying user.
-
Blizzard's Hearthstone: Heroes of Warcraft delivered 20%
non-GAAP revenue growth, compared to the prior-year quarter.
-
King's metrics improved quarter-over-quarter, in terms of the number
of monthly unique payers, gross bookings per paying player, as well as
overall gross bookings when these metrics are measured on the same
basis as in 2015. The Candy Crush™ franchise returned to
growth as well, driven by the Q1 launch of Candy Crush Jelly Saga™
and continued strong performance of the first two Candy Crush games.
Company Outlook:
-
From March 30-April 3, 2016, Activision Blizzard Media Networks
broadcasted Major League Gaming's Major Championship for Valve's
Counter-Strike: Global Offensive, which set new viewership records for
the game.
-
On April 4, 2016, Activision concluded the Stage 1 Pro Division Finals
of The Call of Duty World League. The 2016 Call of Duty
Championships will take place this fall, where teams will compete
for a $3 million prize pool.
-
From April 9-10, 2016, Blizzard's Heroes of the Dorm™
collegiate tournament, featuring online team brawler Heroes of
the Storm®, was live telecast on ESPN
networks during prime time. The audience for the telecast grew 17%
versus the 2015 championship.
-
On April 12, 2016, Activision and its partners at Bungie launched an
update for Destiny, adding content and gameplay
improvements which drove engagement increases. Destiny
now has nearly 30 million registered players. Later this year,
Activision and Bungie plan to release a large new expansion for the
Destiny universe.
-
On April 19, 2016, Activision released the second of four map packs
for Call of Duty: Black Ops III, delivering four new,
epic multiplayer maps in addition to an all-new Zombies experience,
available first on PlayStation 4.
-
On April 26, 2016, Blizzard released the third expansion for
Hearthstone: Heroes of Warcraft, Whispers of the Old Gods™,
which has 134 new collectible cards. Following the launch of the
expansion, the game reached a record number of daily active users and
hours per daily active user.
-
On May 2, 2016, Activision revealed the highly-anticipated Call
of Duty: Infinite Warfare, set in space and releasing on
November 4. This is the first release on a 3-year
development cycle from award-winning studio, Infinity Ward. The Legacy
and Digital Deluxe Editions come with a next-generation remastered
copy of Call of Duty: Modern Warfare®,
one of the most beloved games for the franchise.
-
On May 24, 2016, Blizzard's team-based shooter, Overwatch™,
will be coming to PlayStation 4, Xbox One, and PC. Early access to the
open beta on all platforms began on May 3rd; the open beta
test will run through May 9th and already has millions of
people playing.
-
On August 30, 2016, Blizzard is expected to launch its highly
anticipated World of Warcraft®
expansion, Legion™, following the Q2 release of
the Warcraft film, produced by Legendary
Pictures, in theaters worldwide. World of Warcraft
remains the No. 1 subscription-based MMORPG in the world.
-
Blizzard Entertainment announced that its tenth BlizzCon® will be
returning to the Anaheim Convention Center on Friday, November 4, and
Saturday, November 5. Thousands of tickets again sold out in a matter
of minutes.
-
Activision expects a new Skylanders®
game to launch in 2016 along with Skylanders Academy, a
new TV series celebrating the beloved kids franchise.
-
Based on its first quarter results, Activision Blizzard is raising its
full-year net revenues and earnings per share outlook. The company's
second-quarter and full-year net revenues and earnings per share
outlook are as follows:
(in millions, except EPS)
|
|
GAAP Outlook
|
|
|
Non-GAAP Outlook
|
CY 2016
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
$
|
|
6,130
|
|
|
|
$
|
|
6,275
|
EPS
|
|
$
|
|
0.69
|
|
|
|
$
|
|
1.78
|
Fully Diluted Shares*
|
|
|
|
765
|
|
|
|
|
|
765
|
Q2 2016
|
|
|
|
|
|
|
|
|
Net Revenues
|
|
$
|
|
1,425
|
|
|
|
$
|
|
1,375
|
EPS
|
|
$
|
|
0.10
|
|
|
|
$
|
|
0.38
|
Fully Diluted Shares*
|
|
|
|
755
|
|
|
|
|
|
755
|
* Fully diluted weighted average shares include participating
securities and dilutive options on a weighted average basis.
Currency Assumptions for 2016 Outlook:
-
$1.12 USD/Euro for current outlook (vs. average of $1.11 for 2015 and
$1.33 for 2014)
-
$1.45 USD/British Pound Sterling for current outlook (vs. average of
$1.53 for 2015 and $1.65 for 2014)
Debt Repayment and Cash Dividend
On February 2, 2016, the Board of Directors authorized repayments of up
to $1.5 billion of our outstanding debt during 2016. As of March 31,
2016, we have made prepayments to reduce our total outstanding term
loans by $500 million. Furthermore, the company declared a cash dividend
of $0.26 per common share to be paid on May 11th to shareholders of
record at the close of business on March 30, 2016.
Conference Call
Today at 4:30 p.m. EDT, Activision Blizzard's management will host a
conference call and Webcast to discuss the company's results for the
quarter ended March 31, 2016 and management's outlook for the remainder
of the calendar year. The company welcomes all members of the financial
and media communities and other interested parties to visit the
"Investor Relations" area of www.activisionblizzard.com
to listen to the conference call via live Webcast or to listen to the
call live by dialing into 888-631-5930 in the U.S. with passcode 3541786.
About Activision Blizzard
Activision Blizzard, Inc., a member of the S&P 500, is the world's most
successful standalone interactive entertainment company. We delight over
500 million monthly active users around the world through franchises
including Activision's Call of Duty®, Destiny and Skylanders®, Blizzard
Entertainment's World of Warcraft®, StarCraft®, Diablo® and Hearthstone®:
Heroes of Warcraft™, and King's Candy Crush™, Pet Rescue™
and Farm Heroes™. The company is one of the Fortune "100 Best
Companies To Work For®". Headquartered in Santa Monica, California,
Activision Blizzard has operations throughout the world, and its games
are played in 196 countries. More information about Activision Blizzard
and its products can be found on the company's website, www.activisionblizzard.com.
1 Based on data from the NPD Group and GfK Chart-Track 2
U.S. ranking for Apple App Store and Google Play Store, per App Annie
Intelligence for first quarter 2015
A Monthly Active User ("MAU") Definition: We
monitor MAUs as a key measure of the overall size of our user base and
their regular engagement with our portfolio of games. MAUs are the
number of individuals who played a particular game in a given month. We
calculate average MAUs in a period by adding the total number of MAUs in
each of the months in a given period and dividing by the number of
months in the period. An individual who plays two of our games would be
counted as two users. For Activision Publishing and King MAUs, an
individual who plays the same game on two platforms or devices in the
relevant period would be counted as two users due to technical
limitations. For Blizzard MAUs, an individual who plays the same game on
two platforms or devices in the relevant period would be counted as one
user.
Non-GAAP Financial Measures: As a supplement to our financial
measures presented in accordance with Generally Accepted Accounting
Principles ("GAAP"), Activision Blizzard presents certain non-GAAP
measures of financial performance. These non-GAAP financial measures are
not intended to be considered in isolation from, as a substitute for, or
as more important than, the financial information prepared and presented
in accordance with GAAP. In addition, these non-GAAP measures have
limitations in that they do not reflect all of the items associated with
the company's results of operations as determined in accordance with
GAAP.
Activision Blizzard provides net revenues, net income (loss), earnings
(loss) per share and operating margin data and guidance both including
(in accordance with GAAP) and excluding (non-GAAP) certain items. When
relevant, the Company also provides constant FX information to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. In addition,
Activision Blizzard provides EBITDA (defined as GAAP net income (loss)
before interest (income) expense, income taxes, depreciation and
amortization) and adjusted EBITDA (defined as non-GAAP operating margin
(see non-GAAP financial measure below) before depreciation). The
non-GAAP financial measures exclude the following items, as applicable
in any given reporting period:
-
the change in deferred revenues and related cost of sales with respect
to certain of the company's online-enabled games;
-
expenses related to stock-based compensation;
-
the amortization of intangibles from purchase price accounting;
-
fees and other expenses related to the King acquisition, inclusive of
related debt financings; and
-
the income tax adjustments associated with any of the above items.
In the future, Activision Blizzard may also consider whether other items
should also be excluded in calculating the non-GAAP financial measures
used by the company. Management believes that the presentation of these
non-GAAP financial measures provides investors with additional useful
information to measure Activision Blizzard's financial and operating
performance. In particular, the measures facilitate comparison of
operating performance between periods and help investors to better
understand the operating results of Activision Blizzard by excluding
certain items that may not be indicative of the company's core business,
operating results or future outlook. Internally, management uses these
non-GAAP financial measures in assessing the company's operating
results, and measuring compliance with the requirements of the company's
debt financing agreements, as well as in planning and forecasting.
Activision Blizzard's non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and the terms
non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share,
non-GAAP operating margin, and non-GAAP or adjusted EBITDA do not have a
standardized meaning. Therefore, other companies may use the same or
similarly named measures, but exclude different items, which may not
provide investors a comparable view of Activision Blizzard's performance
in relation to other companies.
In addition to the reasons stated above, which are generally applicable
to each of the items Activision Blizzard excludes from its non-GAAP
financial measures, there are additional specific reasons why the
company believes it is appropriate to exclude the change in deferred
revenues and related cost of sales with respect to certain of the
company's online-enabled games.
Since Activision Blizzard has determined that some of our games' online
functionality represents an essential component of gameplay and, as a
result, a more-than-inconsequential separate deliverable, we recognize
revenues attributed to these game titles over their estimated service
periods, which is generally less than a year. The related cost of sales
is deferred and recognized as the related revenues are recognized.
Internally, management excludes the impact of this change in deferred
revenues and related cost of sales in its non-GAAP financial measures
when evaluating the company's operating performance, when planning,
forecasting and analyzing future periods, and when assessing the
performance of its management team. Management believes this is
appropriate because doing so enables an analysis of performance based on
the timing of actual transactions with our customers, which is
consistent with the way the company is measured by investment analysts
and industry data sources. In addition, excluding the change in deferred
revenues and the related cost of sales provides a much more timely
indication of trends in our operating results.
Cautionary Note Regarding Forward-looking Statements: The
statements contained in this press release that are not historical facts
are forward-looking statements, including, but not limited to,
statements about (1) projections of revenues, expenses, income or loss,
earnings or loss per share, cash flow or other financial items; (2)
statements of our plans and objectives, including those related to
product releases; (3) statements of future financial or operating
performance; (4) statements relating to the acquisition of King and
expected impact of that transaction, including without limitation, the
expected impact on Activision Blizzard, Inc.'s future financial results;
and (5) statements of assumptions underlying such statements. The
company generally uses words such as "outlook," "forecast," "will,"
"could," "should," "would," "to be," "plan," "plans," "believes," "may,"
"might," "expects," "intends," "intends as," "anticipates," "estimate,"
"future," "positioned," "potential," "project," "remain," "scheduled,"
"set to," "subject to," "upcoming" and other similar expressions to help
identify forward-looking statements. Forward-looking statements are
subject to business and economic risk, reflect management's current
expectations, estimates and projections about our business, and are
inherently uncertain and difficult to predict.
The Company cautions that a number of important factors could cause
Activision Blizzard's actual future results and other future
circumstances to differ materially from those expressed in any forward
looking statements. Such factors include, but are not limited to:
uncertainties as to whether and when Activision Blizzard will be able to
realize the anticipated financial results from the acquisition of King;
the integration of King being more difficult, time-consuming or costly
than expected; the diversion of management time and attention to issues
relating to the operations and integration of King; sales levels of
Activision Blizzard's titles; increasing concentration of revenue among
a small number of titles; Activision Blizzard's ability to predict
consumer preferences, including interest in specific genres, and
preferences among hardware platforms; the amount of our debt and the
limitations imposed by the covenants in the agreements governing our
debt; adoption rate and availability of new hardware (including
peripherals) and related software; counterparty risks relating to
customers, licensees, licensors and manufacturers; maintenance of
relationships with key personnel, customers, financing providers,
licensees, licensors, manufacturers, vendors, and third-party
developers, including the ability to attract, retain and develop key
personnel and developers that can create high quality titles; changing
business models, including digital delivery of content and the increased
prevalence of free-to-play games; product delays or defects;
competition, including from used games and other forms of entertainment;
rapid changes in technology and industry standards; possible declines in
software pricing; product returns and price protection; the
identification of suitable future acquisition opportunities and
potential challenges associated with geographic expansion; the seasonal
and cyclical nature of the interactive entertainment market; litigation
risks and associated costs; protection of proprietary rights; shifts in
consumer spending trends; capital market risks; applicable regulations;
domestic and international economic, financial and political conditions
and policies; tax rates and foreign exchange rates; the impact of the
current macroeconomic environment; and the other factors identified in
"Risk Factors" included in Part I, Item 1A of our Annual Report on Form
10-K for the year ended December 31, 2015 and subsequent quarterly
reports on Form 10-Q.
The forward-looking statements in this press release are based on
information available to the Company and we assume no obligation to
update any such forward-looking statements. Although these
forward-looking statements are believed to be true when made, they may
ultimately prove to be incorrect. These statements are not guarantees of
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.
(Tables to Follow)
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in millions, except per share data)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
Net revenues
|
|
|
|
|
|
Product sales
|
$
|
645
|
|
|
|
|
$
|
784
|
Subscription, licensing and other revenues1
|
810
|
|
|
|
|
494
|
Net revenues
|
1,455
|
|
|
|
|
1,278
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
Cost of sales - product costs
|
247
|
|
|
|
|
209
|
Cost of sales - online
|
64
|
|
|
|
|
53
|
Cost of sales - software royalties and amortization
|
144
|
|
|
|
|
148
|
Cost of sales - intellectual property licenses
|
36
|
|
|
|
|
3
|
Product development
|
175
|
|
|
|
|
145
|
Sales and marketing
|
168
|
|
|
|
|
92
|
General and administrative
|
160
|
|
|
|
|
86
|
Total costs and expenses
|
994
|
|
|
|
|
736
|
|
|
|
|
|
|
Operating income
|
461
|
|
|
|
|
542
|
|
|
|
|
|
|
Interest and other expense (income), net
|
52
|
|
|
|
|
50
|
|
|
|
|
|
|
Income before income tax expense
|
409
|
|
|
|
|
492
|
|
|
|
|
|
|
Income tax expense
|
73
|
|
|
|
|
98
|
|
|
|
|
|
|
Net income
|
$
|
336
|
|
|
|
|
$
|
394
|
|
|
|
|
|
|
Basic earnings per common share 2
|
$
|
0.45
|
|
|
|
|
$
|
0.54
|
Weighted average common shares outstanding
|
735
|
|
|
|
|
723
|
|
|
|
|
|
|
Diluted earnings per common share 2
|
$
|
0.45
|
|
|
|
|
$
|
0.53
|
Weighted average common shares outstanding assuming dilution
|
746
|
|
|
|
|
731
|
|
|
|
|
|
|
|
1
|
|
|
Subscription, licensing and other revenues represent revenues from
World of Warcraft subscriptions, licensing royalties from our
products and franchises, value-added services, downloadable
content, micro-transactions, and other miscellaneous revenues.
|
|
2
|
|
|
The company calculates earnings per share pursuant to the
two-class method which requires the allocation of net income
between common shareholders and participating security holders. We
had, on a weighted-average basis, participating securities of
approximately 4 million and 10 million for the three months ended
March 31, 2016 and 2015, respectively. For the three months ended
March 31, 2016, net income attributable to Activision Blizzard,
Inc. common shareholders used to calculate earnings per common
share, assuming dilution, was $333 million, as compared to total
net income of $336 million, for the same period. For the three
months ended March 31, 2015, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate earnings per
common share, assuming dilution, was $387 million, as compared to
total net income of $394 million, for the same period.
|
|
|
|
|
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
|
December 31, 2015
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
2,872
|
|
|
|
|
|
$
|
1,823
|
|
Accounts receivable, net
|
|
|
|
383
|
|
|
|
|
|
679
|
|
Inventories, net
|
|
|
|
103
|
|
|
|
|
|
128
|
|
Software development
|
|
|
|
296
|
|
|
|
|
|
336
|
|
Other current assets
|
|
|
|
354
|
|
|
|
|
|
421
|
|
Total current assets
|
|
|
|
4,008
|
|
|
|
|
|
3,387
|
|
Cash in escrow
|
|
|
|
-
|
|
|
|
|
|
3,561
|
|
Software development
|
|
|
|
114
|
|
|
|
|
|
80
|
|
Property and equipment, net
|
|
|
|
246
|
|
|
|
|
|
189
|
|
Deferred income taxes, net
|
|
|
|
362
|
|
|
|
|
|
275
|
|
Other assets
|
|
|
|
316
|
|
|
|
|
|
177
|
|
Intangible assets, net
|
|
|
|
2,484
|
|
|
|
|
|
482
|
|
Goodwill
|
|
|
|
9,772
|
|
|
|
|
|
7,095
|
|
Total assets
|
|
|
|
$
|
17,302
|
|
|
|
|
|
$
|
15,246
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
150
|
|
|
|
|
|
$
|
284
|
|
Deferred revenues
|
|
|
|
1,207
|
|
|
|
|
|
1,702
|
|
Accrued expenses and other liabilities
|
|
|
|
901
|
|
|
|
|
|
625
|
|
Current portion of long-term debt
|
|
|
|
64
|
|
|
|
|
|
-
|
|
Total current liabilities
|
|
|
|
2,322
|
|
|
|
|
|
2,611
|
|
Long-term debt, net
|
|
|
|
5,777
|
|
|
|
|
|
4,074
|
|
Deferred income taxes, net
|
|
|
|
57
|
|
|
|
|
|
10
|
|
Other liabilities
|
|
|
|
798
|
|
|
|
|
|
483
|
|
Total liabilities
|
|
|
|
8,954
|
|
|
|
|
|
7,178
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
|
10,343
|
|
|
|
|
|
10,242
|
|
Treasury stock
|
|
|
|
(5,591
|
)
|
|
|
|
|
(5,637
|
)
|
Retained earnings
|
|
|
|
4,239
|
|
|
|
|
|
4,096
|
|
Accumulated other comprehensive loss
|
|
|
|
(643
|
)
|
|
|
|
|
(633
|
)
|
Total shareholders' equity
|
|
|
|
8,348
|
|
|
|
|
|
8,068
|
|
Total liabilities and shareholders' equity
|
|
|
|
$
|
17,302
|
|
|
|
|
|
$
|
15,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2016
|
|
|
|
Net Revenues
|
|
|
Cost of Sales - Product Costs
|
|
|
Cost of Sales - Online
|
|
|
Cost of Sales - Software Royalties and Amortization
|
|
|
Cost of Sales - Intellectual Property
Licenses
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
GAAP Measurement
|
|
|
|
$
|
1,455
|
|
|
|
$
|
247
|
|
|
|
$
|
64
|
|
|
|
$
|
144
|
|
|
|
$
|
36
|
|
|
|
$
|
175
|
|
|
|
$
|
168
|
|
|
|
$
|
160
|
|
|
|
$
|
994
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
|
|
(547
|
)
|
|
|
(88
|
)
|
|
|
-
|
|
|
|
(88
|
)
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(178
|
)
|
Less: Stock-based compensation2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
(10
|
)
|
|
|
(3
|
)
|
|
|
(23
|
)
|
|
|
(44
|
)
|
Less: Amortization of intangible assets3
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(16
|
)
|
|
|
(31
|
)
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
(1
|
)
|
|
|
(82
|
)
|
Less: Fees and other expenses related to acquisitions4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(34
|
)
|
|
|
(34
|
)
|
Non-GAAP Measurement
|
|
|
|
$
|
908
|
|
|
|
$
|
158
|
|
|
|
$
|
64
|
|
|
|
$
|
32
|
|
|
|
$
|
3
|
|
|
|
$
|
165
|
|
|
|
$
|
132
|
|
|
|
$
|
102
|
|
|
|
$
|
656
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
|
$
|
461
|
|
|
|
$
|
336
|
|
|
|
$
|
0.45
|
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
|
|
(369
|
)
|
|
|
(268
|
)
|
|
|
(0.36
|
)
|
|
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based compensation2
|
|
|
|
44
|
|
|
|
31
|
|
|
|
0.04
|
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amortization of intangible assets3
|
|
|
|
82
|
|
|
|
65
|
|
|
|
0.09
|
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Fees and other expenses related to acquisitions4
|
|
|
|
34
|
|
|
|
9
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measurement
|
|
|
|
$
|
252
|
|
|
|
$
|
173
|
|
|
|
$
|
0.23
|
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
Net Revenues
|
|
|
Cost of Sales - Product Costs
|
|
|
Cost of Sales - Online
|
|
|
Cost of Sales - Software Royalties and Amortization
|
|
|
Cost of Sales - Intellectual Property
Licenses
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
GAAP Measurement
|
|
|
|
$
|
1,278
|
|
|
|
$
|
209
|
|
|
|
$
|
53
|
|
|
|
$
|
148
|
|
|
|
$
|
3
|
|
|
|
$
|
145
|
|
|
|
$
|
92
|
|
|
|
$
|
86
|
|
|
|
$
|
736
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
|
|
(575
|
)
|
|
|
(113
|
)
|
|
|
-
|
|
|
|
(100
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(213
|
)
|
Less: Stock-based compensation2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
|
(23
|
)
|
Less: Amortization of intangible assets3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
Non-GAAP Measurement
|
|
|
|
$
|
703
|
|
|
|
$
|
96
|
|
|
|
$
|
53
|
|
|
|
$
|
44
|
|
|
|
$
|
2
|
|
|
|
$
|
138
|
|
|
|
$
|
90
|
|
|
|
$
|
76
|
|
|
|
$
|
499
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
|
$
|
542
|
|
|
|
$
|
394
|
|
|
|
$
|
0.54
|
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
|
|
(362
|
)
|
|
|
(295
|
)
|
|
|
(0.40
|
)
|
|
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based compensation2
|
|
|
|
23
|
|
|
|
16
|
|
|
|
0.02
|
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amortization of intangible assets3
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measurement
|
|
|
|
$
|
204
|
|
|
|
$
|
116
|
|
|
|
$
|
0.16
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
Reflects the net change in deferred revenues and related cost of
sales.
|
2
|
|
|
|
Includes expenses related to stock-based compensation.
|
3
|
|
|
|
Reflects amortization of intangible assets from purchase price
accounting.
|
4
|
|
|
|
Reflects fees and other expenses related to the acquisition of
King Digital Entertainment ("King Acquisition"), inclusive of
related debt financings.
|
The per share adjustments and the GAAP and non-GAAP earnings per
share information are presented as calculated. The sum of these
measures, as presented, may differ due to the impact of rounding.
|
|
The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. For the three
months ended March 31, 2016, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate non-GAAP
earnings per common share, assuming dilution, was $171 million, as
compared to total net income of $173 million, for the same period.
For the three months ended March 31, 2015, net income attributable
to Activision Blizzard, Inc. common shareholders used to calculate
non-GAAP earnings per common share, assuming dilution, was $113
million, as compared to total net income of $116 million, for the
same period.
|
|
For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 735 million,
participating securities of approximately 4 million, and dilutive
shares of 11 million during the three months ended March 31, 2016.
|
For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 723 million,
participating securities of approximately 10 million, and dilutive
shares of 8 million during the three months ended March 31, 2015.
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended March 31, 2016 and 2015
(Amounts in millions)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2016
|
|
|
|
|
March 31, 2015
|
|
|
|
|
$ Increase (Decrease)
|
|
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
|
% of Total1
|
|
|
|
|
Amount
|
|
|
|
% of Total1
|
|
|
|
|
|
|
|
|
GAAP Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
$
|
926
|
|
|
|
|
64
|
%
|
|
|
|
|
$
|
581
|
|
|
|
|
45
|
%
|
|
|
|
|
$
|
345
|
|
|
|
|
|
59
|
%
|
Retail channels
|
|
|
482
|
|
|
|
|
33
|
|
|
|
|
|
649
|
|
|
|
|
51
|
|
|
|
|
|
(167
|
)
|
|
|
|
|
(26
|
)
|
Other3
|
|
|
47
|
|
|
|
|
3
|
|
|
|
|
|
48
|
|
|
|
|
4
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
(2
|
)
|
Total consolidated GAAP net revenues
|
|
|
1,455
|
|
|
|
|
100
|
|
|
|
|
|
1,278
|
|
|
|
|
100
|
|
|
|
|
|
177
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
(129
|
)
|
|
|
|
|
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
|
(418
|
)
|
|
|
|
|
|
|
|
|
(532
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
(547
|
)
|
|
|
|
|
|
|
|
|
(575
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
797
|
|
|
|
|
88
|
|
|
|
|
|
538
|
|
|
|
|
76
|
|
|
|
|
|
259
|
|
|
|
|
|
48
|
|
Retail channels
|
|
|
64
|
|
|
|
|
7
|
|
|
|
|
|
117
|
|
|
|
|
17
|
|
|
|
|
|
(53
|
)
|
|
|
|
|
(45
|
)
|
Other3
|
|
|
47
|
|
|
|
|
5
|
|
|
|
|
|
48
|
|
|
|
|
7
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
(2
|
)
|
Total non-GAAP net revenues5
|
|
|
$
|
908
|
|
|
|
|
100
|
%
|
|
|
|
|
$
|
703
|
|
|
|
|
100
|
%
|
|
|
|
|
$
|
205
|
|
|
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
The percentages of total are presented as calculated. Therefore the
sum of these percentages, as presented, may differ due to the impact
of rounding.
|
2
|
|
|
Net revenues from digital online channels represent revenues from
digitally distributed subscriptions, licensing royalties,
value-added services, downloadable content, micro-transactions, and
products.
|
3
|
|
|
Net revenues from Other include revenues from our media networks,
studios, and distribution businesses.
|
4
|
|
|
We provide net revenues including (in accordance with GAAP) and
excluding (non-GAAP) the impact of changes in deferred revenues.
|
5
|
|
|
Total non-GAAP net revenues presented also represent our total
segment net revenues.
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL
INFORMATION
For the Three Months Ended March 31, 2016 and 2015
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31, 2016
|
|
|
|
March 31, 2015
|
|
|
|
$ Increase (Decrease)
|
|
|
|
% Increase (Decrease)
|
|
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
|
GAAP Net Revenues by Platform
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
|
$
|
765
|
|
|
|
53
|
%
|
|
|
|
$
|
758
|
|
|
|
59
|
%
|
|
|
|
$
|
7
|
|
|
|
|
1
|
%
|
|
PC2
|
|
|
|
400
|
|
|
|
27
|
|
|
|
|
386
|
|
|
|
30
|
|
|
|
|
14
|
|
|
|
|
4
|
|
|
Mobile and ancillary3
|
|
|
|
243
|
|
|
|
17
|
|
|
|
|
86
|
|
|
|
7
|
|
|
|
|
157
|
|
|
|
|
NM
|
|
Other4
|
|
|
|
47
|
|
|
|
3
|
|
|
|
|
48
|
|
|
|
4
|
|
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
|
Total consolidated GAAP net revenues
|
|
|
|
1,455
|
|
|
|
100
|
|
|
|
|
1,278
|
|
|
|
100
|
|
|
|
|
177
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
|
(437
|
)
|
|
|
|
|
|
|
(526
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
PC2
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
(50
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary3
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
|
(547
|
)
|
|
|
|
|
|
|
(575
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Platform
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
|
328
|
|
|
|
36
|
|
|
|
|
232
|
|
|
|
33
|
|
|
|
|
96
|
|
|
|
|
41
|
|
|
PC2
|
|
|
|
301
|
|
|
|
33
|
|
|
|
|
336
|
|
|
|
48
|
|
|
|
|
(35
|
)
|
|
|
|
(10
|
)
|
|
Mobile and ancillary3
|
|
|
|
232
|
|
|
|
26
|
|
|
|
|
87
|
|
|
|
12
|
|
|
|
|
145
|
|
|
|
|
NM
|
|
Other4
|
|
|
|
47
|
|
|
|
5
|
|
|
|
|
48
|
|
|
|
7
|
|
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
|
Total consolidated non-GAAP net revenues6
|
|
|
|
$
|
908
|
|
|
|
100
|
%
|
|
|
|
$
|
703
|
|
|
|
100
|
%
|
|
|
|
$
|
205
|
|
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 PC include revenues that were historically shown
as "Online."
|
3
|
|
|
Net revenues from mobile and ancillary include revenues from
handheld, mobile and tablet devices, as well as non-platform
specific game related revenues such as standalone sales of toys
and accessories products from the Skylanders franchise and other
physical merchandise and accessories.
|
4
|
|
|
Net revenues from Other include revenues from our media networks,
studios, and distribution businesses.
|
5
|
|
|
We provide net revenues including (in accordance with GAAP) and
excluding (non-GAAP) the impact of changes in deferred net revenues.
|
6
|
|
|
Total non-GAAP net revenues presented also represents our total
segment net revenues.
|
|
|
|
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL
INFORMATION
For the Three Months Ended March 31, 2016 and 2015
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2016
|
|
|
|
March 31, 2015
|
|
|
|
$ Increase (Decrease)
|
|
|
|
% Increase (Decrease)
|
|
|
|
|
Amount
|
|
|
|
% of Total1
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
|
GAAP Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
$
|
753
|
|
|
|
|
52
|
%
|
|
|
|
$
|
704
|
|
|
|
55
|
%
|
|
|
|
$
|
49
|
|
|
|
|
7
|
%
|
Europe
|
|
|
|
521
|
|
|
|
|
36
|
|
|
|
|
464
|
|
|
|
36
|
|
|
|
|
57
|
|
|
|
|
12
|
|
Asia Pacific
|
|
|
|
181
|
|
|
|
|
12
|
|
|
|
|
110
|
|
|
|
9
|
|
|
|
|
71
|
|
|
|
|
65
|
|
Total consolidated GAAP net revenues
|
|
|
|
1,455
|
|
|
|
|
100
|
|
|
|
|
1,278
|
|
|
|
100
|
|
|
|
|
177
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
(293
|
)
|
|
|
|
|
|
|
|
(350
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
(194
|
)
|
|
|
|
|
|
|
|
(196
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total changes in net revenues
|
|
|
|
(547
|
)
|
|
|
|
|
|
|
|
(575
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
460
|
|
|
|
|
51
|
|
|
|
|
354
|
|
|
|
50
|
|
|
|
|
106
|
|
|
|
|
30
|
|
Europe
|
|
|
|
327
|
|
|
|
|
36
|
|
|
|
|
268
|
|
|
|
38
|
|
|
|
|
59
|
|
|
|
|
22
|
|
Asia Pacific
|
|
|
|
121
|
|
|
|
|
13
|
|
|
|
|
81
|
|
|
|
12
|
|
|
|
|
40
|
|
|
|
|
49
|
|
Total non-GAAP net revenues3
|
|
|
|
$
|
908
|
|
|
|
|
100
|
%
|
|
|
|
$
|
703
|
|
|
|
100
|
%
|
|
|
|
$
|
205
|
|
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
The percentages of total are presented as calculated. Therefore the
sum of these percentages, as presented, may differ due to the impact
of rounding.
|
2
|
|
|
|
We provide net revenues including (in accordance with GAAP) and
excluding (non-GAAP) the impact of changes in deferred net revenues.
|
3
|
|
|
|
Total non-GAAP net revenues presented also represents our total
segment net revenues.
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL
INFORMATION
For the Three Months Ended March 31, 2016 and 2015
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2016
|
|
|
|
March 31, 2015
|
|
|
|
$ Increase (Decrease)
|
|
|
|
% Increase (Decrease)
|
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
|
Segment net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
|
$
|
360
|
|
|
|
40
|
%
|
|
|
|
$
|
303
|
|
|
|
43
|
%
|
|
|
|
$
|
57
|
|
|
|
|
19
|
%
|
Blizzard3
|
|
|
|
294
|
|
|
|
32
|
|
|
|
|
352
|
|
|
|
50
|
|
|
|
|
(58
|
)
|
|
|
|
(16
|
)
|
King4
|
|
|
|
207
|
|
|
|
23
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
207
|
|
|
|
|
NM
|
Other5
|
|
|
|
47
|
|
|
|
5
|
|
|
|
|
48
|
|
|
|
7
|
|
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
Segments total
|
|
|
|
908
|
|
|
|
100
|
%
|
|
|
|
703
|
|
|
|
100
|
%
|
|
|
|
205
|
|
|
|
|
29
|
|
Reconciliation to consolidated net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues
|
|
|
|
547
|
|
|
|
|
|
|
|
575
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues
|
|
|
|
$
|
1,455
|
|
|
|
|
|
|
|
$
|
1,278
|
|
|
|
|
|
|
|
177
|
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
|
$
|
99
|
|
|
|
|
|
|
|
$
|
66
|
|
|
|
|
|
|
|
$
|
33
|
|
|
|
|
50
|
%
|
Blizzard3
|
|
|
|
86
|
|
|
|
|
|
|
|
139
|
|
|
|
|
|
|
|
(53
|
)
|
|
|
|
(38
|
)
|
King4
|
|
|
|
67
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
67
|
|
|
|
|
NM
|
Other5
|
|
|
|
-
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
1
|
|
|
|
|
(100
|
)
|
Segments total
|
|
|
|
252
|
|
|
|
|
|
|
|
204
|
|
|
|
|
|
|
|
48
|
|
|
|
|
24
|
|
Reconciliation to consolidated operating income and consolidated
income before income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues and related cost of sales
|
|
|
|
369
|
|
|
|
|
|
|
|
362
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(82
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to acquisitions6
|
|
|
|
(34
|
)
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
|
|
461
|
|
|
|
|
|
|
|
542
|
|
|
|
|
|
|
|
(81
|
)
|
|
|
|
(15
|
)
|
Interest and other expense (income), net
|
|
|
|
52
|
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before income tax expense
|
|
|
|
$
|
409
|
|
|
|
|
|
|
|
$
|
492
|
|
|
|
|
|
|
|
(83
|
)
|
|
|
|
(17
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin from total operating segments
|
|
|
|
27.8
|
%
|
|
|
|
|
|
|
29.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
The percentages of total are presented as calculated. Therefore the
sum of these percentages, as presented, may differ due to the impact
of rounding.
|
2
|
|
|
|
Activision Publishing ("Activision") - publishes interactive
entertainment products and content.
|
3
|
|
|
|
Blizzard Entertainment, Inc. ("Blizzard") - publishes PC games and
online subscription-based games in the MMORPG category.
|
4
|
|
|
|
King Digital Entertainment plc ("King") - publishes interactive
mobile entertainment products.
|
5
|
|
|
|
Other includes other income and expenses from operating segments
managed outside the reportable segments, including our media
networks, studios, and distribution businesses. Other also
includes unallocated corporate income and expenses.
|
6
|
|
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
EBITDA and Adjusted EBITDA
For the Trailing Twelve Months Ended March 31, 2016
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve Months Ended
|
|
|
|
|
June 30, 2015
|
|
|
|
September 30, 2015
|
|
|
|
December 31, 2015
|
|
|
|
March 31, 2016
|
|
|
|
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
|
|
|
|
$
|
212
|
|
|
|
|
$
|
127
|
|
|
|
|
$
|
159
|
|
|
|
|
$
|
336
|
|
|
|
|
$
|
834
|
Interest Expense, net
|
|
|
|
50
|
|
|
|
|
51
|
|
|
|
|
50
|
|
|
|
|
52
|
|
|
|
|
203
|
Provision for income taxes
|
|
|
|
70
|
|
|
|
|
18
|
|
|
|
|
42
|
|
|
|
|
73
|
|
|
|
|
203
|
Depreciation and amortization
|
|
|
|
21
|
|
|
|
|
25
|
|
|
|
|
30
|
|
|
|
|
107
|
|
|
|
|
183
|
EBITDA
|
|
|
|
353
|
|
|
|
|
221
|
|
|
|
|
281
|
|
|
|
|
568
|
|
|
|
|
1,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferral of net revenues and related cost of sales1
|
|
|
|
(181
|
)
|
|
|
|
26
|
|
|
|
|
554
|
|
|
|
|
(369
|
)
|
|
|
|
30
|
Stock-based compensation expense2
|
|
|
|
21
|
|
|
|
|
28
|
|
|
|
|
22
|
|
|
|
|
44
|
|
|
|
|
115
|
Fees and other expenses related to acquisitions3
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
5
|
|
|
|
|
34
|
|
|
|
|
39
|
Adjusted EBITDA
|
|
|
|
$
|
193
|
|
|
|
|
$
|
275
|
|
|
|
|
$
|
862
|
|
|
|
|
$
|
277
|
|
|
|
|
$
|
1,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
Reflects the net change in deferred revenues and related cost of
sales.
|
2
|
|
|
Includes expenses related to stock-based compensation.
|
3
|
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings.
|
|
|
|
|
Trailing twelve months amounts are presented as calculated.
Therefore the sum of the four quarters, as presented, may differ due
to the impact of rounding.
|
|
|
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
Outlook for the Three Months Ending June 30, 2016 and Year
Ending December 31, 2016
GAAP to Non-GAAP Reconciliation
(Amounts in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Outlook for the
|
|
|
|
Outlook for the
|
|
|
|
Three Months Ending
|
|
|
|
Year Ending
|
|
|
|
June 30, 2016
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Net Revenues (GAAP)
|
|
|
$
|
1,425
|
|
|
|
|
$
|
6,130
|
Excluding the impact of:
|
|
|
|
|
|
|
|
Change in deferred revenues1
|
|
|
(50
|
)
|
|
|
|
145
|
Net Revenues (Non-GAAP)
|
|
|
$
|
1,375
|
|
|
|
|
$
|
6,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (GAAP)
|
|
|
$
|
160
|
|
|
|
|
$
|
932
|
Excluding the impact of:
|
|
|
|
|
|
|
|
Deferral of net revenues and related cost of sales2
|
|
|
11
|
|
|
|
|
150
|
Stock-based compensation3
|
|
|
51
|
|
|
|
|
187
|
Amortization of intangible assets4
|
|
|
201
|
|
|
|
|
705
|
Fees and other expenses related to acquisitions5
|
|
|
6
|
|
|
|
|
52
|
Operating Income (Non-GAAP)
|
|
|
$
|
429
|
|
|
|
|
$
|
2,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Diluted Share (GAAP)
|
|
|
$
|
0.10
|
|
|
|
|
$
|
0.69
|
Excluding the impact of:
|
|
|
|
|
|
|
|
Deferral of net revenues and related cost of sales2
|
|
|
0.02
|
|
|
|
|
0.14
|
Stock-based compensation3
|
|
|
0.04
|
|
|
|
|
0.16
|
Amortization of intangible assets4
|
|
|
0.21
|
|
|
|
|
0.72
|
Fees and other expenses related to acquisitions5
|
|
|
0.01
|
|
|
|
|
0.07
|
Earnings Per Diluted Share (Non-GAAP)
|
|
|
$
|
0.38
|
|
|
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
Reflects the net change in deferred revenues.
|
2
|
|
|
|
Reflects the net change in deferred revenues and related cost of
sales.
|
3
|
|
|
|
Reflects expenses related to stock-based compensation.
|
4
|
|
|
|
Reflects amortization of intangible assets from purchase price
accounting, including intangible assets from the King Acquisition.
|
5
|
|
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings.
|
|
|
|
|
|
The per share adjustments and the GAAP and non-GAAP earnings per
share information are presented as calculated. Therefore the sum
of these measures, as presented, may differ due to the impact of
rounding.
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160505006629/en/
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