[August 04, 2016] |
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Activision Blizzard Announces Better-Than-Expected and Record Second Quarter 2016 Financial Results
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced
better-than-expected financial results for the second quarter of 2016.
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Second Quarter
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(in millions, except EPS)
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2016
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Prior Outlook*
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2015
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GAAP Net Revenues
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$
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1,570
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$
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1,425
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$
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1,044
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GAAP EPS
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$
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0.17
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$
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0.10
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$
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0.29
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Non-GAAP (redefined) EPS
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$
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0.45
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$
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0.36
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$
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0.31
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For the quarter ended June 30, 2016, Activision Blizzard's net revenues
presented in accordance with Generally Accepted Accounting Principles
("GAAP") were a Q2 record $1.57 billion, as compared with $1.04 billion
for the second quarter of 2015, an increase of 50%. GAAP net revenues
from digital channels were an all-time quarterly record of $1.14
billion, up 23% quarter-over-quarter and 101% year-over-year. GAAP
earnings per diluted share were $0.17, as compared with $0.29 for the
second 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 (redefined) basis, the company's earnings
per diluted share were a Q2 record $0.45, as compared with $0.31 for the
second quarter of 2015, an increase of 45%.
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Second Quarter
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(in millions, except EPS)
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2016
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Prior Outlook*
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2015
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Non-GAAP (as previously defined) Net Revenues
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$
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1,609
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$
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1,375
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$
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759
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Non-GAAP (as previously defined) EPS
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$
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0.54
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$
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0.38
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$
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0.13
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* GAAP and "Non-GAAP (as previously defined)" outlook was previously
provided in the May 5, 2016 earnings release. "Non-GAAP (redefined)"
outlook is what would have been provided on May 5, 2016 if the company
were providing outlook based on the redefined methodology at that time.
"Non-GAAP (redefined)" includes the net effect of revenue deferrals
accounting treatment on certain of our online enabled products, which
was expected to be $0.02 per diluted share in the outlook that was
provided in the May 5, 2016 earnings release.
On a Non-GAAP (as previously defined) basis, the company's net revenues
were a Q2 record $1.61 billion, as compared with $759 million for the
second quarter of 2015, an increase of 112%. Non-GAAP (as previously
defined) net revenues from digital channels were an all-time quarterly
record of $1.40 billion, up 76% quarter-over-quarter and 129%
year-over-year. Non-GAAP (as previously defined) earnings per diluted
share were a Q2 record $0.54, as compared with $0.13 for the second
quarter of 2015, an increase of 315%. Note that we are providing these
Non-GAAP (as previously defined) measures for comparability one last
time this quarter.
Activision Blizzard generated a Q2 record $479 million in operating cash
flow for the quarter ended June 30, 2016, up 255% year-over-year. For
the trailing twelve months ended June 30, 2016, operating cash flow
totaled $1.64 billion, a 17% increase year-over-year.
Please refer to the tables at the back of this press release for a
reconciliation of the company's GAAP, non-GAAP (redefined) and non-GAAP
(as previously defined) results.
Bobby Kotick, Chief Executive Officer of Activision Blizzard, said,
"With Overwatch's incredibly successful launch, Call of Duty's record
first half performance, and Candy Crush's continued growth as key
drivers of our overall performance, we delivered a record Q2. We
exceeded our non-GAAP (as previously defined) outlook by $234 million in
revenues and $0.16 in earnings per share, and raised our full-year
outlook."
Kotick added, "The lynchpin of our current success and our future growth
is our talent. Our teams have the unique combination of passion,
entrepreneurial spirit and inspired creativity. The success of
Overwatch, our newest franchise, is a testament to this talent. I'm
grateful to our over 10,000 employees, each of whom embodies these
characteristics of our culture."
Selected Business Highlights:
Audience Reach
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Activision Blizzard had 491 million Monthly Active Users (MAUs)A in
the quarter.
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Blizzard had the biggest quarterly online player community in its
history, with MAUsA of 33 million, up 29%
quarter-over-quarter and 13% year-over-year. This reflects the
successful launch of Overwatch®
and strength across the broader portfolio, including Hearthstone®:
Heroes of Warcraft™, which had record quarterly MAUsA,
and World of Warcraft®, which
had double-digit MAUA growth quarter-over-quarter and
year-over-year.
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On May 24, 2016, Blizzard launched Overwatch which now
has over 15 million players globally, including box and digital sales,
internet game room players, and multi-user console households. In
China, Overwatch broke the previous record set by Diablo®
III as the fastest-selling PC game in the market's history.1
Overwatch also currently holds the number one position in
Korean Internet Game Rooms with over 30% share of play time.2
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Activision had the biggest second quarter online player community in
its history, with MAUsA of 49 million, up 11%
year-over-year. Activision continues to have four of the top ten games
on current-generation consoles life-to-date, including Call of
Duty®: Black Ops III at No. 1.3
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King MAUsA of 409 million declined in the quarter as
expected due to seasonal trends and launch timing. King had three of
the top-15-grossing titles in the U.S. mobile app stores for the tenth
quarter in a row.4
Deep Engagement
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Activision Blizzard's deep game experiences drove nearly 10 billion
hours of play time during Q2.
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Players have spent about 500 million hours playing Blizzard's Overwatch,
with additional content updates ahead.
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Blizzard's Hearthstone: Heroes of Warcraft had record
total quarterly time spent with the launch of the Whispers of
the Old Gods™ expansion.
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King's time spent per MAUA was up quarter-over-quarter and
year-over-year.
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Activision and its partners at Bungie launched an update in April for Destiny
which drove strong reengagement, with an increase in MAUsA and
time spent per MAUA month-over-month.
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Activision Blizzard's esports network, Major League Gaming, debuted
the Enhanced Viewer Experience (EVE) which provides viewers with match
statistics, up-to-the-minute leaderboards and situational insights
live as the competition unfolds. MLG also announced a partnership with
Facebook that includes broadcast of the "ESR" (Esports Report) on the
social network platform. MLG's inaugural broadcast on Facebook was the
June Call of Duty World League event, the Anaheim Open. Since
the December acquisition, MLG's reach on Facebook is up 700%.
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With the growth of the Call of Duty World League, Call of
Duty esports viewership increased by more than 5 times
year-over-year to 33 million views of the Stage 1 events. This year's
major events are yet to come.
Player Investment
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Activision Blizzard GAAP revenues from in-game content reached a
record of over $900 million this quarter. Activision Blizzard non-GAAP
(as previously defined) revenues from in-game content reached a record
of over $1 billion this quarterB. In-game content continues
to be a rapidly growing part of the business.
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Blizzard had its biggest segment revenue quarter and first half year,
ever. Blizzard's quarterly segment operating income nearly tripled vs.
the second quarter last year. Additionally, Blizzard had record second
quarter GAAP revenues and record quarterly non-GAAP revenues (as
previously defined) in China. Blizzard's overall performance was
driven in particular by Overwatch's outstanding launch, World
of Warcraft's strong pre-expansion momentum, with Legion
pre-purchases tracking in-line with the previous expansion, and Hearthstone:
Heroes of Warcraft's double digit revenue growth
year-over-year.
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Activision had its biggest segment operating income second quarter and
first half year, ever, with continued momentum on Call of Duty,
including on catalog sales, Season Pass, map packs and
micro-transactions, and continued engagement on Destiny.
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Gross bookingsC for King's Candy Crush™
franchise grew quarter-over-quarter and year-over-year. In addition,
King's average revenue per paying user grew quarter-over-quarter and
year-over-year, also driving year-over-year growth in King's mobile
gross bookingsC.
Company Outlook:
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On July 12, 2016, Activision released the third of four map packs for Call
of Duty: Black Ops III, delivering four multiplayer maps in
addition to an all-new Zombies experience, available first on
PlayStation 4.
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On August 2, 2016, Blizzard launched its Summer Games content for Overwatch.
The content includes a new soccer-like game mode and includes a
variety of new Summer Games-themed cosmetic content in loot boxes.
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From August 5 to August 7, 2016, MLG will host a Call of Duty World
League event in Orlando with a $100,000 prize pool.
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On August 11, 2016, Blizzard plans to release a new adventure for Hearthstone:
Heroes of Warcraft. The adventure, One Night in Karazhan™,
will offer single-player content and the ability to earn new cards for
multiplayer duels.
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On August 30, 2016, Blizzard is expected to launch its highly
anticipated World of Warcraft expansion, Legion™.
World of Warcraft remains the No. 1 subscription-based
MMORPG in the world.
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From September 2 to September 4, 2016, Activision will host
fans at Call of Duty XP. Thousands of fans will enjoy hands-on Call
of Duty: Infinite Warfare™ play, the first Call
of Duty VR experience, exhibits, developer panels, a surprise
musical guest, and more. Call of Duty XP will also host the
finals for the Call of Duty World League Championships,
where teams from around the world will compete for a $3
million prize pool.
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On September 20, Activision and Bungie plan to release Rise of
Iron, a large new expansion for the Destiny
universe. The expansion will include a new location, a new Raid, a new
Strike, more quests, weapons, and gear, and a new competitive
multiplayer mode.
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On October 16, 2016, Activision is expected to release Skylanders®:
Imaginators, an innovative new title. For the first time ever,
players will be able to create their own Skylanders characters. Skylanders™
Academy, a new TV series celebrating the beloved kids
franchise is expected to premiere on Netflix this fall.
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On November 4, 2016, Activision is expected to launch the highly
anticipated Call of Duty: Infinite Warfare. This is the
first release on a three-year development cycle from
award-winning studio, Infinity Ward. Fans will also have the
opportunity to purchase Legacy and Digital Deluxe Editions including a
remastered copy of Call of Duty: Modern Warfare®,
one of the most beloved games of the franchise.
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Blizzard's 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, but online access via the purchase of a BlizzCon Virtual
Ticket is again available for this year's show.
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King is expected to have one additional non-Candy Crush
franchise release coming towards the end of the year.
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Based on its year-to-date results, Activision Blizzard is raising its
full-year net revenues and earnings per share outlook. The company's
third-quarter and full-year net revenues and earnings per share
outlook are as follows:
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(in millions, except EPS)
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GAAP Outlook
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Non-GAAP Outlook (redefined)
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Impact of GAAP deferralsD
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CY 2016
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Net Revenues
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$
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6,400
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$
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6,400
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$
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75
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EPS
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$
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0.87
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$
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1.83
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$
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0.07
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Fully Diluted Shares*
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765
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765
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Q3 2016
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Net Revenues
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$
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1,490
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$
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1,490
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$
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45
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EPS
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$
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0.06
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$
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0.39
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$
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0.01
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Fully Diluted Shares*
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760
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760
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* Fully diluted weighted average shares include participating
securities and dilutive options on a weighted average basis.
As referenced on our July 29, 2016 call, if you would like to calculate
Non-GAAP (as previously defined) revenues and EPS, in order to do
year-over-year comparisons, you would add the impact of GAAP deferrals
to GAAP Revenues and to Non-GAAP (redefined) EPS. See footnote D for
further explanation.
Currency Assumptions for 2016 Outlook:
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$1.11 USD/Euro for current outlook (vs. average of $1.11 for 2015 and
$1.33 for 2014)
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$1.31 USD/British Pound Sterling for current outlook (vs. average of
$1.53 for 2015 and $1.65 for 2014)
Debt Repayment and Cash Dividend
In the quarter ended June 30, 2016, we made prepayments to reduce our
total outstanding term loans by $816 million. Furthermore, the company
paid a cash dividend of $0.26 per common share, a 13% increase
year-over-year, in May 2016 to shareholders of record at the close of
business on March 30, 2016, totaling $195 million.
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 June 30, 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 866-598-9332 in the U.S. with passcode
5764728.
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
nearly 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®, Hearthstone®:
Heroes of Warcraft™ and Overwatch®,
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 NetEase 2 Gametrics.com 3
Based on data from the NPD Group and GfK Chart-Track 4
U.S. ranking for Apple App Store and Google Play Store, per App Annie
Intelligence for second quarter 2016
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 that total by the number of
months in the period. An individual who plays two of our games would be
counted as two users. In addition, due to technical limitations with
respect to 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. For Blizzard MAUs, an individual who plays the
same game on two platforms or devices in the relevant period would
generally be counted as a single user.
B The difference between the GAAP and non-GAAP measurement
represents the net effect of accounting treatment from revenue deferrals
on certain of our online enabled products. In-game content is defined as
content and services that can be purchased once the player starts
playing a game, e.g. DLC such as map packs, micro-transactions such as
loot boxes or gold bars, and value added services such as paid character
boosts. It does not include subscriptions.
C Gross bookings is an operating metric that represents the
total cash spent by players in the period for the purchase of virtual
items. King uses gross bookings to evaluate its results of operations,
generate future operating plans and assess performance. Gross bookings
is the total price paid by players, which includes indirect taxes (sales
tax or value added tax etc.), platform providers fees, and King's share
of revenues.
D Net effect of accounting treatment from revenue
deferrals on certain of our online enabled products. Some of our games'
online functionality represents an essential component of gameplay and,
as a result, a more-than-inconsequential separate deliverable. As a
result, we recognize revenues attributed to these game titles over their
estimated service periods, which is 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, and together with the related cost of revenues
deferrals treatment and the related tax impacts for the purposes of EPS.
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.
Non-GAAP (as previously defined) and Non-GAAP (redefined) Financial
Measures: We provide Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this earnings
release. The only difference between the two measures is the inclusion
(Non-GAAP (redefined)) or exclusion (Non-GAAP (as previously defined))
of the impact from revenue deferrals accounting treatment on certain of
our online enabled products. We have reported our second quarter of 2016
results under Generally Accepted Accounting Principles ("GAAP"),
Non-GAAP (as previously defined) and Non-GAAP (redefined). We have
provided our outlook for the third quarter and full year of 2016 under
GAAP, and Non-GAAP (redefined). This is the last quarter we will report
Non-GAAP (as previously defined) financial measures. In accordance with
the updated Compliance and Disclosure Interpretations issued by the SEC
staff on May 17, 2016, going forward, we will only be providing results
and outlook using GAAP and Non-GAAP (redefined).
Non-GAAP (redefined) 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 income (loss), earnings (loss) per
share and operating margin data and guidance both including (in
accordance with GAAP) and excluding (non-GAAP) certain items. When
relevant, the Company also provides constant FX information to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. In addition,
Activision Blizzard provides EBITDA (defined as GAAP net income (loss)
before interest (income) expense, income taxes, depreciation and
amortization) and adjusted EBITDA (defined as non-GAAP operating margin
(see non-GAAP financial measure below) before depreciation). The
non-GAAP financial measures exclude the following items, as applicable
in any given reporting period and our outlook:
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expenses related to stock-based compensation;
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the amortization of intangibles from purchase price accounting;
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fees and other expenses related to the King acquisition, inclusive of
related debt financings, and future refinancing of long-term debt,
including penalties and the write off of unamortized discount and
deferred financing costs; and
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the income tax adjustments associated with any of the above items. We
derive the income tax adjustments commensurate with the non-GAAP
income before income tax expenses.
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, 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 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;
(5) statements about potential future debt refinancing or other capital
structure changes; and (6) 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; the outcome
of current or future tax disputes; 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)
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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
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(Amounts in millions, except per share data)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2016
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2015
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2016
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2015
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Net revenues
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Product sales
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$
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501
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$
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528
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|
|
$
|
1,145
|
|
|
|
$
|
1,311
|
Subscription, licensing and other revenues1
|
|
|
1,069
|
|
|
|
516
|
|
|
|
1,880
|
|
|
|
1,011
|
Net revenues
|
|
|
1,570
|
|
|
|
1,044
|
|
|
|
3,025
|
|
|
|
2,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues - product sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
149
|
|
|
|
147
|
|
|
|
318
|
|
|
|
349
|
Software royalties, amortization, and intellectual property licenses
|
|
|
80
|
|
|
|
70
|
|
|
|
208
|
|
|
|
211
|
Cost of revenues - subscription, licensing, and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
Game operations and distribution costs
|
|
|
241
|
|
|
|
61
|
|
|
|
383
|
|
|
|
120
|
Software royalties, amortization, and intellectual property licenses
|
|
|
128
|
|
|
|
19
|
|
|
|
180
|
|
|
|
30
|
Product development
|
|
|
249
|
|
|
|
149
|
|
|
|
424
|
|
|
|
294
|
Sales and marketing
|
|
|
322
|
|
|
|
164
|
|
|
|
490
|
|
|
|
256
|
General and administrative
|
|
|
169
|
|
|
|
102
|
|
|
|
329
|
|
|
|
188
|
Total costs and expenses
|
|
|
1,338
|
|
|
|
712
|
|
|
|
2,332
|
|
|
|
1,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
232
|
|
|
|
332
|
|
|
|
693
|
|
|
|
874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense (income), net
|
|
|
65
|
|
|
|
50
|
|
|
|
117
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense
|
|
|
167
|
|
|
|
282
|
|
|
|
576
|
|
|
|
774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
40
|
|
|
|
70
|
|
|
|
113
|
|
|
|
168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
127
|
|
|
|
$
|
212
|
|
|
|
$
|
463
|
|
|
|
$
|
606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share 2
|
|
|
$
|
0.17
|
|
|
|
$
|
0.29
|
|
|
|
$
|
0.62
|
|
|
|
$
|
0.82
|
Weighted average common shares outstanding
|
|
|
739
|
|
|
|
727
|
|
|
|
737
|
|
|
|
725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share 2
|
|
|
$
|
0.17
|
|
|
|
$
|
0.29
|
|
|
|
$
|
0.61
|
|
|
|
$
|
0.81
|
Weighted average common shares outstanding assuming dilution
|
|
|
750
|
|
|
|
735
|
|
|
|
748
|
|
|
|
734
|
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, microtransactions, 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 3
million for the three and six months ended June 30, 2016, and 9
million and 10 million for the three and six months ended June 30,
2015, respectively. For the three and six months ended June 30,
2016, net income attributable to Activision Blizzard, Inc. common
shareholders used to calculate earnings per common share, assuming
dilution, was $126 million and $460 million, respectively, as
compared to total net income of $127 million and $463 million,
respectively, for the same period. For the three and six months
ended June 30, 2015, net income attributable to Activision Blizzard,
Inc. common shareholders used to calculate earnings per common
share, assuming dilution, was $210 million and $597 million,
respectively, as compared to total net income of $212 million and
$606 million, respectively, for the same period.
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
2,271
|
|
|
|
$
|
1,823
|
|
Accounts receivable, net
|
|
|
462
|
|
|
|
679
|
|
Inventories, net
|
|
|
94
|
|
|
|
128
|
|
Software development
|
|
|
287
|
|
|
|
336
|
|
Other current assets
|
|
|
306
|
|
|
|
421
|
|
Total current assets
|
|
|
3,420
|
|
|
|
3,387
|
|
Cash in escrow
|
|
|
-
|
|
|
|
3,561
|
|
Software development
|
|
|
150
|
|
|
|
80
|
|
Property and equipment, net
|
|
|
260
|
|
|
|
189
|
|
Deferred income taxes, net
|
|
|
405
|
|
|
|
275
|
|
Other assets
|
|
|
320
|
|
|
|
177
|
|
Intangible assets, net
|
|
|
2,281
|
|
|
|
482
|
|
Goodwill
|
|
|
9,771
|
|
|
|
7,095
|
|
Total assets
|
|
|
$
|
16,607
|
|
|
|
$
|
15,246
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
176
|
|
|
|
$
|
284
|
|
Deferred revenues
|
|
|
1,238
|
|
|
|
1,702
|
|
Accrued expenses and other liabilities
|
|
|
721
|
|
|
|
625
|
|
Current portion of long-term debt, net
|
|
|
56
|
|
|
|
-
|
|
Total current liabilities
|
|
|
2,191
|
|
|
|
2,611
|
|
Long-term debt, net
|
|
|
4,977
|
|
|
|
4,074
|
|
Deferred income taxes, net
|
|
|
50
|
|
|
|
10
|
|
Other liabilities
|
|
|
835
|
|
|
|
483
|
|
Total liabilities
|
|
|
8,053
|
|
|
|
7,178
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
Common stock
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
10,425
|
|
|
|
10,242
|
|
Treasury stock
|
|
|
(5,588
|
)
|
|
|
(5,637
|
)
|
Retained earnings
|
|
|
4,366
|
|
|
|
4,096
|
|
Accumulated other comprehensive loss
|
|
|
(649
|
)
|
|
|
(633
|
)
|
Total shareholders' equity
|
|
|
8,554
|
|
|
|
8,068
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
16,607
|
|
|
|
$
|
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 June 30, 2016
|
|
|
Net Revenues
|
|
|
Cost of Revenues - Product Sales: Product
Costs
|
|
|
Cost of Revenues - Product Sales: Software Royalties
and Amortization
|
|
|
Cost of Revenues - Subs/Lic/Other: Game
Operations and Distribution Costs
|
|
|
Cost of Revenues - Subs/Lic/Other: Software Royalties
and Amortization
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
GAAP Measurement
|
|
|
$
|
1,570
|
|
|
|
$
|
149
|
|
|
|
$
|
80
|
|
|
|
$
|
241
|
|
|
|
$
|
128
|
|
|
|
$
|
249
|
|
|
|
$
|
322
|
|
|
|
$
|
169
|
|
|
|
$
|
1,338
|
|
Stock-based compensation1
|
|
|
-
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(13
|
)
|
|
|
(4
|
)
|
|
|
(17
|
)
|
|
|
(41
|
)
|
Amortization of intangible assets2
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(122
|
)
|
|
|
-
|
|
|
|
(78
|
)
|
|
|
(2
|
)
|
|
|
(203
|
)
|
Fees and other expenses related to acquisitions3
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
1,570
|
|
|
|
$
|
149
|
|
|
|
$
|
73
|
|
|
|
$
|
241
|
|
|
|
$
|
5
|
|
|
|
$
|
236
|
|
|
|
$
|
240
|
|
|
|
$
|
146
|
|
|
|
$
|
1,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues4
|
|
|
$
|
39
|
|
|
|
$
|
(44
|
)
|
|
|
$
|
(34
|
)
|
|
|
$
|
7
|
|
|
|
$
|
2
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement6
|
|
|
$
|
1,609
|
|
|
|
$
|
105
|
|
|
|
$
|
39
|
|
|
|
$
|
248
|
|
|
|
$
|
7
|
|
|
|
$
|
236
|
|
|
|
$
|
240
|
|
|
|
$
|
146
|
|
|
|
$
|
1,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
$
|
232
|
|
|
|
$
|
127
|
|
|
|
$
|
0.17
|
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation1
|
|
|
41
|
|
|
|
41
|
|
|
|
0.06
|
|
|
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets2
|
|
|
203
|
|
|
|
203
|
|
|
|
0.27
|
|
|
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to acquisitions3
|
|
|
4
|
|
|
|
5
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impacts from items above5
|
|
|
-
|
|
|
|
(35
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
480
|
|
|
|
$
|
341
|
|
|
|
$
|
0.46
|
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues4
|
|
|
$
|
108
|
|
|
|
$
|
63
|
|
|
|
$
|
0.08
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement6
|
|
|
$
|
588
|
|
|
|
$
|
404
|
|
|
|
$
|
0.54
|
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes expenses related to stock-based compensation.
|
2
|
|
Reflects amortization of intangible assets from purchase price
accounting.
|
3
|
|
Reflects fees and other expenses related to the acquisition of King
Digital Entertainment ("King Acquisition"), inclusive of related
debt financings.
|
4
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.
|
5
|
|
Reflects the income tax impact associated with the above items. We
derive the income tax impacts commensurate with the non-GAAP income
before income tax expenses.
|
6
|
|
We have provided Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this
earnings release. The only difference between the two measures is
the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as
previously defined)) of the impact from revenue deferrals
accounting treatment on certain of our online enabled products. We
reported our second quarter of 2016 results under GAAP, Non-GAAP
(as previously defined) and Non-GAAP (redefined). This is the last
quarter we will report Non-GAAP (as previously defined) financial
measures and going forward, we will only be providing GAAP and
Non-GAAP (redefined) results.
|
|
|
|
The GAAP, non-GAAP (redefined), and non-GAAP (as previously
defined) earnings per share information is 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 June 30, 2016, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate non-GAAP
(redefined) earnings per common share, assuming dilution, was $340
million, as compared to total net income of $341 million, for the
same period. For the three months ended June 30, 2016, net income
attributable to Activision Blizzard, Inc. common shareholders used
to calculate non-GAAP (as previously defined) earnings per common
share, assuming dilution, was $402 million, as compared to total net
income of $404 million, for the same period.
|
|
For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 739 million,
participating securities of approximately 3 million, and dilutive
shares of 11 million during the three months ended June 30, 2016.
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
|
(Amounts in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2016
|
|
|
Net Revenues
|
|
|
Cost of Revenues - Product Sales: Product
Costs
|
|
|
Cost of Revenues - Product Sales: Software Royalties
and Amortization
|
|
|
Cost of Revenues - Subs/Lic/Other: Game
Operations and Distribution Costs
|
|
|
Cost of Revenues - Subs/Lic/Other: Software Royalties
and Amortization
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
GAAP Measurement
|
|
|
$
|
3,025
|
|
|
|
$
|
318
|
|
|
|
$
|
208
|
|
|
|
$
|
383
|
|
|
|
$
|
180
|
|
|
|
$
|
424
|
|
|
|
$
|
490
|
|
|
|
$
|
329
|
|
|
|
$
|
2,332
|
|
Stock-based compensation1
|
|
|
-
|
|
|
|
-
|
|
|
|
(14
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(23
|
)
|
|
|
(7
|
)
|
|
|
(40
|
)
|
|
|
(85
|
)
|
Amortization of intangible assets2
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(168
|
)
|
|
|
-
|
|
|
|
(111
|
)
|
|
|
(3
|
)
|
|
|
(285
|
)
|
Fees and other expenses related to acquisitions3
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(38
|
)
|
|
|
(38
|
)
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
3,025
|
|
|
|
$
|
318
|
|
|
|
$
|
192
|
|
|
|
$
|
382
|
|
|
|
$
|
11
|
|
|
|
$
|
401
|
|
|
|
$
|
372
|
|
|
|
$
|
248
|
|
|
|
$
|
1,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues4
|
|
|
$
|
(508
|
)
|
|
|
$
|
(127
|
)
|
|
|
$
|
(122
|
)
|
|
|
$
|
3
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(247
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement6
|
|
|
$
|
2,517
|
|
|
|
$
|
191
|
|
|
|
$
|
70
|
|
|
|
$
|
385
|
|
|
|
$
|
10
|
|
|
|
$
|
401
|
|
|
|
$
|
372
|
|
|
|
$
|
248
|
|
|
|
$
|
1,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
$
|
693
|
|
|
|
$
|
463
|
|
|
|
$
|
0.62
|
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation1
|
|
|
85
|
|
|
|
85
|
|
|
|
0.12
|
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets2
|
|
|
285
|
|
|
|
285
|
|
|
|
0.38
|
|
|
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to acquisitions3
|
|
|
38
|
|
|
|
41
|
|
|
|
0.06
|
|
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impacts from items above5
|
|
|
-
|
|
|
|
(92
|
)
|
|
|
(0.12
|
)
|
|
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
1,101
|
|
|
|
$
|
782
|
|
|
|
$
|
1.06
|
|
|
|
$
|
1.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues4
|
|
|
$
|
(261
|
)
|
|
|
$
|
(205
|
)
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
(0.27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement6
|
|
|
$
|
840
|
|
|
|
$
|
577
|
|
|
|
$
|
0.78
|
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes expenses related to stock-based compensation.
|
2
|
|
Reflects amortization of intangible assets from purchase price
accounting.
|
3
|
|
Reflects fees and other expenses related to the acquisition of King
Digital Entertainment ("King Acquisition"), inclusive of related
debt financings.
|
4
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.
|
5
|
|
Reflects the income tax impact associated with the above items. We
derive the income tax impacts commensurate with the non-GAAP income
before income tax expenses.
|
6
|
|
We have provided Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this
earnings release. The only difference between the two measures is
the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as
previously defined)) of the impact from revenue deferrals
accounting treatment on certain of our online enabled products. We
reported our second quarter of 2016 results under GAAP, Non-GAAP
(as previously defined) and Non-GAAP (redefined). This is the last
quarter we will report Non-GAAP (as previously defined) financial
measures and going forward, we will only be providing GAAP and
Non-GAAP (redefined) results.
|
|
|
|
The GAAP, non-GAAP (redefined), and non-GAAP (as previously
defined) earnings per share information is 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 six months
ended June 30, 2016, net income attributable to Activision Blizzard,
Inc. common shareholders used to calculate non-GAAP (redefined)
earnings per common share, assuming dilution, was $778 million, as
compared to total net income of $782 million, for the same period.
For the six months ended June 30, 2016, net income attributable to
Activision Blizzard, Inc. common shareholders used to calculate
non-GAAP (as previously defined) earnings per common share, assuming
dilution, was $573 million, as compared to total net income of $577
million, for the same period.
|
|
For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 737 million,
participating securities of approximately 3 million, and dilutive
shares of 11 million during the six months ended June 30, 2016.
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
|
(Amounts in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2015
|
|
|
Net Revenues
|
|
|
Cost of Revenues - Product Sales: Product
Costs
|
|
|
Cost of Revenues - Product Sales: Software Royalties
and Amortization
|
|
|
Cost of Revenues - Subs/Lic/Other: Game
Operations and Distribution Costs
|
|
|
Cost of Revenues - Subs/Lic/Other: Software Royalties
and Amortization
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
GAAP Measurement
|
|
|
$
|
1,044
|
|
|
|
$
|
147
|
|
|
|
$
|
70
|
|
|
|
$
|
61
|
|
|
|
$
|
19
|
|
|
|
$
|
149
|
|
|
|
$
|
164
|
|
|
|
$
|
102
|
|
|
|
$
|
712
|
|
Stock-based compensation1
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(6
|
)
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
|
(21
|
)
|
Amortization of intangible assets2
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
1,044
|
|
|
|
$
|
147
|
|
|
|
$
|
67
|
|
|
|
$
|
61
|
|
|
|
$
|
18
|
|
|
|
$
|
143
|
|
|
|
$
|
162
|
|
|
|
$
|
92
|
|
|
|
$
|
690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues3
|
|
|
$
|
(285
|
)
|
|
|
$
|
(66
|
)
|
|
|
$
|
(57
|
)
|
|
|
$
|
8
|
|
|
|
$
|
11
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement5
|
|
|
$
|
759
|
|
|
|
$
|
81
|
|
|
|
$
|
10
|
|
|
|
$
|
69
|
|
|
|
$
|
29
|
|
|
|
$
|
143
|
|
|
|
$
|
162
|
|
|
|
$
|
92
|
|
|
|
$
|
586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
$
|
332
|
|
|
|
$
|
212
|
|
|
|
$
|
0.29
|
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation1
|
|
|
21
|
|
|
|
21
|
|
|
|
0.03
|
|
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets2
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impacts from items above4
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
354
|
|
|
|
$
|
229
|
|
|
|
$
|
0.31
|
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues3
|
|
|
$
|
(181
|
)
|
|
|
$
|
(136
|
)
|
|
|
$
|
(0.18
|
)
|
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement5
|
|
|
$
|
173
|
|
|
|
$
|
93
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes expenses related to stock-based compensation.
|
2
|
|
Reflects amortization of intangible assets from purchase price
accounting.
|
3
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.
|
4
|
|
Reflects the income tax impact associated with the above items. We
derive the income tax impacts commensurate with the non-GAAP income
before income tax expenses.
|
5
|
|
We have provided Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this
earnings release. The only difference between the two measures is
the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as
previously defined)) of the impact from revenue deferrals
accounting treatment on certain of our online enabled products. We
reported our second quarter of 2016 results under GAAP, Non-GAAP
(as previously defined) and Non-GAAP (redefined). This is the last
quarter we will report Non-GAAP (as previously defined) financial
measures and going forward, we will only be providing GAAP and
Non-GAAP (redefined) results.
|
|
|
|
The GAAP, non-GAAP (redefined), and non-GAAP (as previously
defined) earnings per share information is 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 June 30, 2015, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate non-GAAP
(redefined) earnings per common share, assuming dilution, was $226
million, as compared to total net income of $229 million, for the
same period. For the three months ended June 30, 2015, net income
attributable to Activision Blizzard, Inc. common shareholders used
to calculate non-GAAP (as previously defined) earnings per common
share, assuming dilution, was $92 million, as compared to total net
income of $93 million, for the same period.
|
|
For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 727 million,
participating securities of approximately 9 million, and dilutive
shares of 8 million during the three months ended June 30, 2015.
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
|
(Amounts in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2015
|
|
|
Net Revenues
|
|
|
Cost of Revenues - Product Sales: Product
Costs
|
|
|
Cost of Revenues - Product Sales: Software Royalties
and Amortization
|
|
|
Cost of Revenues - Subs/Lic/Other: Game
Operations and Distribution Costs
|
|
|
Cost of Revenues - Subs/Lic/Other: Software Royalties
and Amortization
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
GAAP Measurement
|
|
|
$
|
2,322
|
|
|
|
$
|
349
|
|
|
|
$
|
211
|
|
|
|
$
|
120
|
|
|
|
$
|
30
|
|
|
|
$
|
294
|
|
|
|
$
|
256
|
|
|
|
$
|
188
|
|
|
|
$
|
1,448
|
|
Stock-based compensation1
|
|
|
-
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(14
|
)
|
|
|
(4
|
)
|
|
|
(19
|
)
|
|
|
(44
|
)
|
Amortization of intangible assets2
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
2,322
|
|
|
|
$
|
349
|
|
|
|
$
|
203
|
|
|
|
$
|
120
|
|
|
|
$
|
28
|
|
|
|
$
|
280
|
|
|
|
$
|
252
|
|
|
|
$
|
169
|
|
|
|
$
|
1,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues3
|
|
|
$
|
(860
|
)
|
|
|
$
|
(176
|
)
|
|
|
$
|
(173
|
)
|
|
|
$
|
7
|
|
|
|
$
|
27
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(315
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement5
|
|
|
$
|
1,462
|
|
|
|
$
|
173
|
|
|
|
$
|
30
|
|
|
|
$
|
127
|
|
|
|
$
|
55
|
|
|
|
$
|
280
|
|
|
|
$
|
252
|
|
|
|
$
|
169
|
|
|
|
$
|
1,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
$
|
874
|
|
|
|
$
|
606
|
|
|
|
$
|
0.82
|
|
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation1
|
|
|
44
|
|
|
|
44
|
|
|
|
0.06
|
|
|
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets2
|
|
|
3
|
|
|
|
3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impacts from items above4
|
|
|
-
|
|
|
|
(13
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
921
|
|
|
|
$
|
640
|
|
|
|
$
|
0.87
|
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues3
|
|
|
$
|
(545
|
)
|
|
|
$
|
(431
|
)
|
|
|
$
|
(0.59
|
)
|
|
|
$
|
(0.58
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Measurement5
|
|
|
$
|
376
|
|
|
|
$
|
209
|
|
|
|
$
|
0.28
|
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes expenses related to stock-based compensation.
|
2
|
|
Reflects amortization of intangible assets from purchase price
accounting.
|
3
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.
|
4
|
|
Reflects the income tax impact associated with the above items. We
derive the income tax impacts commensurate with the non-GAAP income
before income tax expenses.
|
5
|
|
We have provided Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this
earnings release. The only difference between the two measures is
the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as
previously defined)) of the impact from revenue deferrals
accounting treatment on certain of our online enabled products. We
reported our second quarter of 2016 results under GAAP, Non-GAAP
(as previously defined) and Non-GAAP (redefined). This is the last
quarter we will report Non-GAAP (as previously defined) financial
measures and going forward, we will only be providing GAAP and
Non-GAAP (redefined) results.
|
|
|
|
The GAAP, non-GAAP (redefined), and non-GAAP (as previously
defined) earnings per share information is 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 six months
ended June 30, 2015, net income attributable to Activision Blizzard,
Inc. common shareholders used to calculate non-GAAP (redefined)
earnings per common share, assuming dilution, was $630 million, as
compared to total net income of $640 million, for the same period.
For the six months ended June 30, 2015, net income attributable to
Activision Blizzard, Inc. common shareholders used to calculate
non-GAAP (as previously defined) earnings per common share, assuming
dilution, was $205 million, as compared to total net income of $209
million, for the same period.
|
|
For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 725 million,
participating securities of approximately 10 million, and dilutive
shares of 9 million during the six months ended June 30, 2015.
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
For the Three and Six Months Ended June 30, 2016 and 2015
|
(Amounts in millions)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
$
|
1,141
|
|
|
|
73
|
%
|
|
|
$
|
569
|
|
|
|
55
|
%
|
|
|
$
|
572
|
|
|
|
101
|
%
|
Retail channels
|
|
|
374
|
|
|
|
24
|
|
|
|
414
|
|
|
|
40
|
|
|
|
(40
|
)
|
|
|
(10
|
)
|
Other3
|
|
|
55
|
|
|
|
4
|
|
|
|
61
|
|
|
|
6
|
|
|
|
(6
|
)
|
|
|
(10
|
)
|
Total consolidated net revenues
|
|
|
1,570
|
|
|
|
100
|
|
|
|
1,044
|
|
|
|
100
|
|
|
|
526
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
261
|
|
|
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
|
(222
|
)
|
|
|
|
|
|
(327
|
)
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
39
|
|
|
|
|
|
|
(285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Net Revenues by Distribution
Channel5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
1,402
|
|
|
|
87
|
|
|
|
611
|
|
|
|
81
|
|
|
|
791
|
|
|
|
129
|
|
Retail channels
|
|
|
152
|
|
|
|
9
|
|
|
|
87
|
|
|
|
11
|
|
|
|
65
|
|
|
|
75
|
|
Other3
|
|
|
55
|
|
|
|
3
|
|
|
|
61
|
|
|
|
8
|
|
|
|
(6
|
)
|
|
|
(10
|
)
|
Total non-GAAP (as previously defined) net revenues5
|
|
|
$
|
1,609
|
|
|
|
100
|
%
|
|
|
$
|
759
|
|
|
|
100
|
%
|
|
|
$
|
850
|
|
|
|
112
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
$
|
2,067
|
|
|
|
68
|
%
|
|
|
$
|
1,150
|
|
|
|
50
|
%
|
|
|
$
|
917
|
|
|
|
80
|
%
|
Retail channels
|
|
|
856
|
|
|
|
28
|
|
|
|
1,063
|
|
|
|
46
|
|
|
|
(207
|
)
|
|
|
(19
|
)
|
Other3
|
|
|
102
|
|
|
|
3
|
|
|
|
109
|
|
|
|
5
|
|
|
|
(7
|
)
|
|
|
(6
|
)
|
Total consolidated net revenues
|
|
|
3,025
|
|
|
|
100
|
|
|
|
2,322
|
|
|
|
100
|
|
|
|
703
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
132
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
|
(640
|
)
|
|
|
|
|
|
(859
|
)
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
(508
|
)
|
|
|
|
|
|
(860
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Net Revenues by Distribution
Channel5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
2,199
|
|
|
|
87
|
|
|
|
1,149
|
|
|
|
79
|
|
|
|
1,050
|
|
|
|
91
|
|
Retail channels
|
|
|
216
|
|
|
|
9
|
|
|
|
204
|
|
|
|
14
|
|
|
|
12
|
|
|
|
6
|
|
Other3
|
|
|
102
|
|
|
|
4
|
|
|
|
109
|
|
|
|
7
|
|
|
|
(7
|
)
|
|
|
(6
|
)
|
Total non-GAAP (as previously defined) net revenues5
|
|
|
$
|
2,517
|
|
|
|
100
|
%
|
|
|
$
|
1,462
|
|
|
|
100
|
%
|
|
|
$
|
1,055
|
|
|
|
72
|
%
|
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, microtransactions, and
products.
|
3
|
|
Net revenues from Other include revenues from our Major League
Gaming, studios, and distribution businesses.
|
4
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products,
including the effect of taxes.
|
5
|
|
We have provided Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this
earnings release. The only difference between the two measures is
the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as
previously defined)) of the impact from revenue deferrals
accounting treatment on certain of our online enabled products. We
reported our second quarter of 2016 results under GAAP, Non-GAAP
(as previously defined) and Non-GAAP (redefined). This is the last
quarter we will report Non-GAAP (as previously defined) financial
measures and going forward, we will only be providing GAAP and
Non-GAAP (redefined) results.
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
For the Three and Six Months Ended June 30, 2016 and 2015
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Net Revenues by Platform
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
$
|
650
|
|
|
|
41
|
%
|
|
|
$
|
559
|
|
|
|
54
|
%
|
|
|
$
|
91
|
|
|
|
16
|
%
|
|
PC2
|
|
|
411
|
|
|
|
26
|
|
|
|
370
|
|
|
|
35
|
|
|
|
41
|
|
|
|
11
|
|
|
Mobile and ancillary3
|
|
|
454
|
|
|
|
29
|
|
|
|
54
|
|
|
|
5
|
|
|
|
400
|
|
|
|
NM
|
|
Other4
|
|
|
55
|
|
|
|
4
|
|
|
|
61
|
|
|
|
6
|
|
|
|
(6
|
)
|
|
|
(10
|
)
|
|
Total consolidated net revenues
|
|
|
1,570
|
|
|
|
100
|
|
|
|
1,044
|
|
|
|
100
|
|
|
|
526
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
(210
|
)
|
|
|
|
|
|
(283
|
)
|
|
|
|
|
|
|
|
|
|
|
PC2
|
|
|
219
|
|
|
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary3
|
|
|
30
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
39
|
|
|
|
|
|
|
(285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Net Revenues by Platform6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
440
|
|
|
|
27
|
|
|
|
276
|
|
|
|
36
|
|
|
|
164
|
|
|
|
59
|
|
|
PC2
|
|
|
630
|
|
|
|
39
|
|
|
|
342
|
|
|
|
45
|
|
|
|
288
|
|
|
|
84
|
|
|
Mobile and ancillary3
|
|
|
484
|
|
|
|
30
|
|
|
|
80
|
|
|
|
11
|
|
|
|
404
|
|
|
|
NM
|
|
Other4
|
|
|
55
|
|
|
|
3
|
|
|
|
61
|
|
|
|
8
|
|
|
|
(6
|
)
|
|
|
(10
|
)
|
|
Total non-GAAP (as previously defined) net revenues6
|
|
|
$
|
1,609
|
|
|
|
100
|
%
|
|
|
$
|
759
|
|
|
|
100
|
%
|
|
|
$
|
850
|
|
|
|
112
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Net Revenues by Platform
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
$
|
1,415
|
|
|
|
47
|
%
|
|
|
$
|
1,317
|
|
|
|
57
|
%
|
|
|
$
|
98
|
|
|
|
7
|
%
|
|
PC2
|
|
|
811
|
|
|
|
27
|
|
|
|
755
|
|
|
|
33
|
|
|
|
56
|
|
|
|
7
|
|
|
Mobile and ancillary3
|
|
|
697
|
|
|
|
23
|
|
|
|
141
|
|
|
|
6
|
|
|
|
556
|
|
|
|
NM
|
|
Other4
|
|
|
102
|
|
|
|
3
|
|
|
|
109
|
|
|
|
5
|
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
Total consolidated net revenues
|
|
|
3,025
|
|
|
|
100
|
|
|
|
2,322
|
|
|
|
100
|
|
|
|
703
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
(648
|
)
|
|
|
|
|
|
(808
|
)
|
|
|
|
|
|
|
|
|
|
|
PC2
|
|
|
121
|
|
|
|
|
|
|
(78
|
)
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary3
|
|
|
19
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
(508
|
)
|
|
|
|
|
|
(860
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Net Revenues by Platform6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
767
|
|
|
|
30
|
|
|
|
509
|
|
|
|
35
|
|
|
|
258
|
|
|
|
51
|
|
|
PC2
|
|
|
932
|
|
|
|
37
|
|
|
|
677
|
|
|
|
46
|
|
|
|
255
|
|
|
|
38
|
|
|
Mobile and ancillary3
|
|
|
716
|
|
|
|
28
|
|
|
|
167
|
|
|
|
11
|
|
|
|
549
|
|
|
|
NM
|
|
Other4
|
|
|
102
|
|
|
|
4
|
|
|
|
109
|
|
|
|
7
|
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
Total non-GAAP (as previously defined) net revenues6
|
|
|
$
|
2,517
|
|
|
|
100
|
%
|
|
|
$
|
1,462
|
|
|
|
100
|
%
|
|
|
$
|
1,055
|
|
|
|
72
|
%
|
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 Major League
Gaming, studios, and distribution businesses.
|
5
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products,
including the effect of taxes.
|
6
|
|
We have provided Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this
earnings release. The only difference between the two measures is
the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as
previously defined)) of the impact from revenue deferrals
accounting treatment on certain of our online enabled products. We
reported our second quarter of 2016 results under GAAP, Non-GAAP
(as previously defined) and Non-GAAP (redefined). This is the last
quarter we will report Non-GAAP (as previously defined) financial
measures and going forward, we will only be providing GAAP and
Non-GAAP (redefined) results.
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
For the Three and Six Months Ended June 30, 2016 and 2015
|
(Amounts in millions)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
$
|
860
|
|
|
|
55
|
%
|
|
|
$
|
551
|
|
|
|
53
|
%
|
|
|
$
|
309
|
|
|
|
56
|
%
|
EMEA2
|
|
|
507
|
|
|
|
32
|
|
|
|
388
|
|
|
|
37
|
|
|
|
119
|
|
|
|
31
|
|
Asia Pacific
|
|
|
203
|
|
|
|
13
|
|
|
|
105
|
|
|
|
10
|
|
|
|
98
|
|
|
|
93
|
|
Total consolidated GAAP net revenues
|
|
|
1,570
|
|
|
|
100
|
|
|
|
1,044
|
|
|
|
100
|
|
|
|
526
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
(24
|
)
|
|
|
|
|
|
(198
|
)
|
|
|
|
|
|
|
|
|
|
EMEA2
|
|
|
(17
|
)
|
|
|
|
|
|
(113
|
)
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
80
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
Total changes in net revenues
|
|
|
39
|
|
|
|
|
|
|
(285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Net Revenues by Geographic Region4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
836
|
|
|
|
52
|
|
|
|
353
|
|
|
|
47
|
|
|
|
483
|
|
|
|
137
|
|
EMEA2
|
|
|
490
|
|
|
|
30
|
|
|
|
275
|
|
|
|
36
|
|
|
|
215
|
|
|
|
78
|
|
Asia Pacific
|
|
|
283
|
|
|
|
18
|
|
|
|
131
|
|
|
|
17
|
|
|
|
152
|
|
|
|
116
|
|
Total non-GAAP (as previously defined) net revenues4
|
|
|
$
|
1,609
|
|
|
|
100
|
%
|
|
|
$
|
759
|
|
|
|
100
|
%
|
|
|
$
|
850
|
|
|
|
112
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
$
|
1,613
|
|
|
|
53
|
%
|
|
|
$
|
1,255
|
|
|
|
54
|
%
|
|
|
$
|
358
|
|
|
|
29
|
%
|
EMEA2
|
|
|
1,028
|
|
|
|
34
|
|
|
|
852
|
|
|
|
37
|
|
|
|
176
|
|
|
|
21
|
|
Asia Pacific
|
|
|
384
|
|
|
|
13
|
|
|
|
215
|
|
|
|
9
|
|
|
|
169
|
|
|
|
79
|
|
Total consolidated GAAP net revenues
|
|
|
3,025
|
|
|
|
100
|
|
|
|
2,322
|
|
|
|
100
|
|
|
|
703
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
(317
|
)
|
|
|
|
|
|
(548
|
)
|
|
|
|
|
|
|
|
|
|
EMEA2
|
|
|
(211
|
)
|
|
|
|
|
|
(309
|
)
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
20
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Total changes in net revenues
|
|
|
(508
|
)
|
|
|
|
|
|
(860
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (as previously defined) Net Revenues by Geographic Region4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
1,296
|
|
|
|
51
|
|
|
|
707
|
|
|
|
48
|
|
|
|
589
|
|
|
|
83
|
|
EMEA2
|
|
|
817
|
|
|
|
32
|
|
|
|
543
|
|
|
|
37
|
|
|
|
274
|
|
|
|
50
|
|
Asia Pacific
|
|
|
404
|
|
|
|
16
|
|
|
|
212
|
|
|
|
15
|
|
|
|
192
|
|
|
|
91
|
|
Total non-GAAP (as previously defined) net revenues4
|
|
|
$
|
2,517
|
|
|
|
100
|
%
|
|
|
$
|
1,462
|
|
|
|
100
|
%
|
|
|
$
|
1,055
|
|
|
|
72
|
%
|
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
|
|
EMEA consists 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,
including the effect of taxes.
|
4
|
|
We have provided Non-GAAP (as previously defined) financial
measures and Non-GAAP (redefined) financial measures in this
earnings release. The only difference between the two measures is
the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as
previously defined)) of the impact from revenue deferrals
accounting treatment on certain of our online enabled products. We
reported our second quarter of 2016 results under GAAP, Non-GAAP
(as previously defined) and Non-GAAP (redefined). This is the last
quarter we will report Non-GAAP (as previously defined) financial
measures and going forward, we will only be providing GAAP and
Non-GAAP (redefined) results.
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
For the Three and Six Months Ended June 30, 2016 and 2015
|
(Amounts in millions)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Segment net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
$
|
332
|
|
|
|
21
|
%
|
|
|
$
|
313
|
|
|
|
45
|
%
|
|
|
$
|
19
|
|
|
|
6
|
%
|
Blizzard3
|
|
|
738
|
|
|
|
47
|
|
|
|
385
|
|
|
|
55
|
|
|
|
353
|
|
|
|
92
|
|
King4
|
|
|
484
|
|
|
|
31
|
|
|
|
-
|
|
|
|
-
|
|
|
|
484
|
|
|
|
NM
|
Reportable segments total
|
|
|
1,554
|
|
|
|
100
|
%
|
|
|
698
|
|
|
|
100
|
%
|
|
|
856
|
|
|
|
123
|
|
Reconciliation to consolidated net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segments5
|
|
|
55
|
|
|
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues6
|
|
|
(39
|
)
|
|
|
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues
|
|
|
$
|
1,570
|
|
|
|
|
|
|
$
|
1,044
|
|
|
|
|
|
|
526
|
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
$
|
88
|
|
|
|
|
|
|
$
|
57
|
|
|
|
|
|
|
$
|
31
|
|
|
|
54
|
%
|
Blizzard3
|
|
|
333
|
|
|
|
|
|
|
117
|
|
|
|
|
|
|
216
|
|
|
|
185
|
|
King4
|
|
|
176
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
176
|
|
|
|
NM
|
Reportable segments total
|
|
|
597
|
|
|
|
|
|
|
174
|
|
|
|
|
|
|
423
|
|
|
|
NM
|
Reconciliation to consolidated operating income and consolidated
income before income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segments5
|
|
|
(9
|
)
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Net effect from certain revenues deferrals accounting treatment6
|
|
|
(108
|
)
|
|
|
|
|
|
181
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
(41
|
)
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
(203
|
)
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to acquisitions7
|
|
|
(4
|
)
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
|
232
|
|
|
|
|
|
|
332
|
|
|
|
|
|
|
(100
|
)
|
|
|
(30
|
)
|
Interest and other expense (income), net
|
|
|
65
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before income tax expense
|
|
|
$
|
167
|
|
|
|
|
|
|
$
|
282
|
|
|
|
|
|
|
(115
|
)
|
|
|
(41
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin from total reportable segments
|
|
|
38.4
|
%
|
|
|
|
|
|
24.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
Segment net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
$
|
692
|
|
|
|
29
|
%
|
|
|
$
|
616
|
|
|
|
46
|
%
|
|
|
$
|
76
|
|
|
|
12
|
%
|
Blizzard3
|
|
|
1,032
|
|
|
|
43
|
|
|
|
737
|
|
|
|
54
|
|
|
|
295
|
|
|
|
40
|
|
King4
|
|
|
691
|
|
|
|
29
|
|
|
|
-
|
|
|
|
-
|
|
|
|
691
|
|
|
|
NM
|
Reportable segments total
|
|
|
2,415
|
|
|
|
100
|
%
|
|
|
1,353
|
|
|
|
100
|
%
|
|
|
1,062
|
|
|
|
78
|
|
Reconciliation to consolidated net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segments5
|
|
|
102
|
|
|
|
|
|
|
109
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues6
|
|
|
508
|
|
|
|
|
|
|
860
|
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues
|
|
|
$
|
3,025
|
|
|
|
|
|
|
$
|
2,322
|
|
|
|
|
|
|
703
|
|
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
$
|
187
|
|
|
|
|
|
|
$
|
121
|
|
|
|
|
|
|
$
|
66
|
|
|
|
55
|
%
|
Blizzard3
|
|
|
419
|
|
|
|
|
|
|
256
|
|
|
|
|
|
|
163
|
|
|
|
64
|
|
King4
|
|
|
243
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
243
|
|
|
|
NM
|
Reportable segments total
|
|
|
849
|
|
|
|
|
|
|
377
|
|
|
|
|
|
|
472
|
|
|
|
125
|
|
Reconciliation to consolidated operating income and consolidated
income before income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segments5
|
|
|
(9
|
)
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Net effect from certain revenues deferrals accounting treatment6
|
|
|
261
|
|
|
|
|
|
|
545
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
(85
|
)
|
|
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
(285
|
)
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to acquisitions7
|
|
|
(38
|
)
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
|
693
|
|
|
|
|
|
|
874
|
|
|
|
|
|
|
(181
|
)
|
|
|
(21
|
)
|
Interest and other expense (income), net
|
|
|
117
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before income tax expense
|
|
|
$
|
576
|
|
|
|
|
|
|
$
|
774
|
|
|
|
|
|
|
(198
|
)
|
|
|
(26
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin from total reportable segments
|
|
|
35.2
|
%
|
|
|
|
|
|
27.9
|
%
|
|
|
|
|
|
|
|
|
|
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 interactive
entertainment products and online subscription-based games.
|
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 Major League
Gaming, studios, and distribution businesses. Other also includes
unallocated corporate income and expenses.
|
6
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effect of
taxes.
|
7
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings.
|
|
|
|
Our segments are consistent with our internal organizational
structure, the manner in which our operations are reviewed and
managed by our Chief Executive Officer, who is our Chief Operating
Decision Maker ("CODM"), the manner in which we assess operating
performance and allocate resources, and the availability of separate
financial information. 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 products, stock-based compensation expense,
amortization of intangible assets as a result of purchase price
accounting, and fees and other expenses related to financings and
acquisitions.
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
EBITDA and Adjusted EBITDA
|
For the Trailing Twelve Months Ended June 30, 2016
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve Months Ended
|
|
|
|
September 30, 2015
|
|
|
December 31, 2015
|
|
|
March 31, 2016
|
|
|
June 30, 2016
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
|
|
|
$
|
127
|
|
|
|
$
|
159
|
|
|
|
$
|
336
|
|
|
|
$
|
127
|
|
|
|
$
|
749
|
Interest Expense, net
|
|
|
51
|
|
|
|
50
|
|
|
|
52
|
|
|
|
66
|
|
|
|
219
|
Provision for income taxes
|
|
|
18
|
|
|
|
42
|
|
|
|
73
|
|
|
|
40
|
|
|
|
173
|
Depreciation and amortization
|
|
|
25
|
|
|
|
30
|
|
|
|
107
|
|
|
|
233
|
|
|
|
395
|
EBITDA
|
|
|
221
|
|
|
|
281
|
|
|
|
568
|
|
|
|
466
|
|
|
|
1,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense1
|
|
|
28
|
|
|
|
22
|
|
|
|
44
|
|
|
|
41
|
|
|
|
135
|
Fees and other expenses related to acquisitions2
|
|
|
-
|
|
|
|
5
|
|
|
|
34
|
|
|
|
4
|
|
|
|
43
|
Adjusted EBITDA (redefined)
|
|
|
$
|
249
|
|
|
|
$
|
308
|
|
|
|
$
|
646
|
|
|
|
$
|
511
|
|
|
|
$
|
1,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred net revenues and related cost of revenues3
|
|
|
$
|
26
|
|
|
|
$
|
554
|
|
|
|
$
|
(369
|
)
|
|
|
$
|
108
|
|
|
|
$
|
319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (as previously defined)4
|
|
|
$
|
275
|
|
|
|
$
|
862
|
|
|
|
$
|
277
|
|
|
|
$
|
619
|
|
|
|
$
|
2,033
|
1
|
|
Includes expenses related to stock-based compensation.
|
2
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings.
|
3
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effect of
taxes.
|
4
|
|
We have provided Adjusted EBITDA (as previously defined) and
Adjusted EBITDA (redefined) in this earnings release. The only
difference between the two measures is the inclusion (Adjusted
EBITDA (redefined)) or exclusion (Adjusted EBITDA (as previously
defined)) of the impact from revenue deferrals accounting
treatment on certain of our online enabled products. This is the
last quarter we will report Adjusted EBITDA (as previously
defined) and going forward, we will only be providing Adjusted
EBITDA (redefined).
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
SUPPLEMENTAL FINANCIAL INFORMATION
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
June 30,
|
|
|
Year over Year % Increase (Decrease)
|
|
|
|
2015
|
|
|
2015
|
|
|
2015
|
|
|
2016
|
|
|
2016
|
|
|
Cash Flow Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow
|
|
|
$
|
135
|
|
|
|
$
|
(181
|
)
|
|
|
$
|
1,029
|
|
|
|
$
|
309
|
|
|
|
$
|
479
|
|
|
|
255
|
%
|
Capital Expenditures
|
|
|
28
|
|
|
|
46
|
|
|
|
16
|
|
|
|
27
|
|
|
|
44
|
|
|
|
57
|
|
Non-GAAP Free Cash Flow1
|
|
|
107
|
|
|
|
(227
|
)
|
|
|
1,013
|
|
|
|
282
|
|
|
|
435
|
|
|
|
307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow - TTM2
|
|
|
1,394
|
|
|
|
1,358
|
|
|
|
1,192
|
|
|
|
1,292
|
|
|
|
1,636
|
|
|
|
17
|
|
Capital Expenditures - TTM2
|
|
|
94
|
|
|
|
112
|
|
|
|
111
|
|
|
|
117
|
|
|
|
133
|
|
|
|
41
|
|
Non-GAAP Free Cash Flow - TTM2
|
|
|
$
|
1,300
|
|
|
|
$
|
1,246
|
|
|
|
$
|
1,081
|
|
|
|
$
|
1,175
|
|
|
|
$
|
1,503
|
|
|
|
16
|
%
|
1
|
|
Non-GAAP free cash flow represents operating cash flow minus capital
expenditures.
|
2
|
|
TTM represents trailing twelve months. Operating Cash Flow for the
three months ended March 31, 2015, three months ended December 31,
2014, and three months ended September 30, 2014 was $209 million,
$1,195 million, and $(145) million, respectively. Capital
Expenditures for the three months ended March 31, 2015, three months
ended December 31, 2014, and three months ended September 30, 2014
was $21 million, $17 million, and $28 million, respectively.
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
Outlook for the Three Months Ending September 30, 2016 and Year
Ending December 31, 2016
|
GAAP to Non-GAAP (redefined) Reconciliation
|
(Amounts in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Outlook for the
|
|
|
Outlook for the
|
|
|
|
Three Months Ending
|
|
|
Year Ending
|
|
|
|
September 30, 2016
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
Net Revenues1
|
|
|
$
|
1,490
|
|
|
|
$
|
6,400
|
|
Change in deferred revenues2
|
|
|
$
|
45
|
|
|
|
$
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Diluted Share (GAAP)
|
|
|
$
|
0.06
|
|
|
|
$
|
0.87
|
|
Excluding the impact of:
|
|
|
|
|
|
|
Stock-based compensation3
|
|
|
0.06
|
|
|
|
0.24
|
|
Amortization of intangible assets4
|
|
|
0.26
|
|
|
|
0.92
|
|
Fees and other expenses related to acquisitions5
|
|
|
0.12
|
|
|
|
0.18
|
|
Income tax impacts from items above6
|
|
|
(0.11
|
)
|
|
|
(0.39
|
)
|
Earnings Per Diluted Share (Non-GAAP redefined)
|
|
|
$
|
0.39
|
|
|
|
$
|
1.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred net revenues and related cost of revenues
on Earnings Per Diluted Share7
|
|
|
$
|
0.01
|
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Net Revenues represents the revenue outlook for both GAAP and
Non-GAAP (redefined) as they are measured the same.
|
2
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products.
|
3
|
|
Reflects expenses related to 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, and debts refinancing, as
well as anticipated costs associated with potential future debt
refinancings.
|
6
|
|
Reflects the income tax impacts associated with the above items. The
outlook for the year ending December 31, 2016 is benefited by $0.07
from the adoption of a new accounting standard on share based
payments. The new standard requires that all excess tax benefits and
tax deficiencies from stock-based compensation be recorded as an
income tax expense or benefit that is treated as discrete items in
the reporting period in which they occur. The $0.07 relates to the
excess tax benefits on share based payments for the six months ended
June 30, 2016. Due to the inherent uncertainties in share price and
option exercise behavior, we do not forecast excess tax benefits or
tax deficiencies.
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7
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Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effect of
taxes.
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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.
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