[May 04, 2017] |
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Activision Blizzard Announces Better-Than-Expected and Record First-Quarter 2017 Financial Results
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced
better-than-expected and record first-quarter 2017 results.
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First Quarter
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Prior
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(in millions, except EPS)
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2017
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Outlook*
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2016
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GAAP Net Revenues
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$
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1,726
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$
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1,550
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$
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1,455
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Impact of GAAP deferrals
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$
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(530)
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$
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(500)
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$
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(547)
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GAAP EPS
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$
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0.56
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$
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0.25
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$
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0.48
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Non-GAAP (redefined) EPS**
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$
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0.72
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$
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0.51
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$
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0.58
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Impact of GAAP deferrals
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$
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(0.41)
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$
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(0.33)
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$
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(0.35)
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* Prior outlook was provided by the company on February 9, 2017 in its
earnings release.
** "Non-GAAP (redefined)" includes the net effect of revenue deferrals
accounting treatment on certain of our online enabled products. Please
refer to our July 29, 2016 call and materials for additional information.
For the quarter ended March 31, 2017, Activision Blizzard's net revenues
presented in accordance with GAAP were a Q1 record of $1.73 billion, as
compared with $1.46 billion for the first quarter of 2016, an increase
of 19%. GAAP net revenues from digital channels were a Q1 record of
$1.39 billion, growing 50% year-over-year. GAAP operating margin was
29%. GAAP earnings per diluted share were an all-time quarterly record
$0.56, as compared with $0.48 for the first quarter of 2016, an increase
of 17%.
For the quarter ended March 31, 2017, on a non-GAAP (redefined) basis,
Activision Blizzard's operating margin was 43% and earnings per diluted
share were an all-time quarterly record $0.72, as compared with $0.58
for the first quarter of 2016, an increase of 24%.
For the quarter, operating cash flows were a Q1 record of $411 million,
up 22% year-over-year.
Please refer to the tables at the end of this press release for a
reconciliation of the company's GAAP and non-GAAP (redefined) results.
Bobby Kotick, Chief Executive Officer of Activision Blizzard, said,
"This quarter we delivered record revenues, earnings per share and cash
flow, and over-performed guidance."
Kotick added, "Among the drivers of our results was Overwatch®,
which now has over 30 million players globally. The Overwatch League™ is
gaining momentum and we're excited to offer our community of players the
best professional league experience. Destiny 2 and Call
of Duty®: WWII are also
coming later this year, and both reveals have been very well received by
fans."
Selected Business Highlights:
Audience Reach
-
Activision Blizzard had 431 million Monthly Active Users (MAUs)A in
the quarter.
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Blizzard had the biggest Q1 online player community in its history
with MAUsA of 41 million, up 58% year-over-year. Overwatch
continues to be Blizzard's fastest growing new franchise, reaching
over 30 million players globally less than a year after launch. Overwatch
is now the 8th billion-dollar franchise in Activision
Blizzard's portfolio. Hearthstone®
MAUsA grew year-over-year and quarter-over-quarter,
despite no content releases in the first quarter, and recently
surpassed the 70 million registered player milestone life-to-date.
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Activision had 48 million MAUsA in the first quarter, down
year-over-year primarily due to expected softness from last year's Infinite
Warfare™ release. Activision expects to release Call
of Duty: WWII on November 3, 2017. Last week's reveal was the
most watched livestream in Call of Duty history, and the
reveal trailer became the fastest video to reach 10 million views in Call
of Duty history. Though early, initial pre-orders for Call
of Duty: WWII are off to a very strong start. Activision and
its partners at Bungie expect to release Destiny 2
on September 8, 2017 and welcome PC players into the Destiny
universe for the first time. Response to the Destiny 2
reveal was very encouraging, and pre-orders are off to a very strong
start.
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King had 342 million MAUsA for the quarter, down
year-over-year, but with better per user engagement and investment.
King had two of the top 10 highest-grossing titles in the U.S. mobile
app stores for the fourteenth quarter in a row.1
Deep Engagement
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Blizzard had record first-quarter time spent, up a double-digit
percentage year-over-year. In late January, Overwatch
had its fourth seasonal event, Year of the Rooster, to
celebrate the lunar new year. The event drove engagement records for
the game. Blizzard launched a fifth seasonal event in April, Uprising,
including a player-versus-environment game mode which drew record time
spent. With a regular content and feature update cadence, World
of Warcraft® time spent grew
year-over-year in the first quarter. Hearthstone set a
new all-time Daily Active Users (DAUs)B record last month
with the release of a new expansion, Journey to Un'Goro™.
In April, Blizzard also launched Heroes of the Storm®
2.0, bringing players back into the game.
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King's time spent per DAUB is now a record 35 minutes a
day, up quarter-over-quarter and year-over-year. King's DAUB
to MAUA ratio is at its highest point since 2013, and DAUsB
were steady quarter-over-quarter.
Player Investment
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Blizzard's revenues from in-game content grew more than 25%
year-over-year, driven by revenues from World of Warcraft in-game
content and continued strength of Overwatch customization
items.
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Activision expects to release a new content offering for Call of
Duty: Black Ops 3 fans, Zombies Chronicles,
on May 16, 2017. The remastered collection of the franchise's most
beloved Zombies content will be available first on PlayStation 4.
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King's first-quarter gross bookingsC per paying user grew
for the 7th quarter in a row to a new record. The Candy
Crush™ franchise showed continued stability with mobile
bookings up quarter-over-quarter. Also, King has entered into a
promising publishing partnership with PlayStudios to enter the social
casino genre.
Company Outlook:
(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 2017
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Net Revenues
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$
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6,100
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6,100
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230
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EPS
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$
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0.88
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1.80
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0.08
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Fully Diluted Shares*
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767
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767
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Q2 2017
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Net Revenues
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$
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1,425
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1,425
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(225
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)
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EPS
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$
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0.15
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0.38
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(0.11
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)
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Fully Diluted Shares*
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764
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764
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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 metrics as previously defined, you would add the impact of GAAP
deferrals to the Non-GAAP (redefined) metrics.
Currency Assumptions for 2017 Outlook:
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$1.09 USD/Euro for current outlook (vs. average of $1.11 for 2016 and
$1.11 for 2015); and
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$1.28 USD/British Pound Sterling for current outlook (vs. average of
$1.36 for 2016 and $1.53 for 2015).
Debt Repayment and Cash Dividend:
During the first quarter, we prepaid $500 million of our term loan.
Also, the company declared a cash dividend of $0.30 per common share to
be paid on May 10th to shareholders of record at the close of business
on March 30, 2017.
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, 2017 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 888-510-1785 in the U.S. with passcode
5731344.
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
hundreds of millions of monthly active users around the world through
franchises including Activision's Call of Duty®, Destiny and
Skylanders®, Blizzard Entertainment's World of Warcraft®, Overwatch®,
Hearthstone®, Diablo®, StarCraft®, and Heroes of the Storm®, and King's
Candy Crush™, Pet Rescue™, Bubble Witch™ 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 U.S. ranking for Apple App Store and Google Play Store
combined, per App Annie Intelligence for first quarter 2017.
A Monthly Active User ("MAU") Definition: We monitor
MAUs as a key measure of the overall size of our user base. MAUs are the
number of individuals who 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, for Activision Publishing and King, an individual who plays
the same game on two platforms or devices in the relevant period would
be counted as two users. For Blizzard, 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 Daily Active Users ("DAU") Definition: DAUs are
defined and measured using the same methodology as we use for MAUs but
on a daily basis.
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: In accordance with the updated Compliance and Disclosure
Interpretations issued by the SEC staff on May 17, 2016, beginning with
the reporting of our second-quarter 2016 results, we have reported our
financial results and provided our outlook using GAAP and non-GAAP
(redefined). We have historically provided Non-GAAP (as previously
defined) financial measures. 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. Please see
materials from July 29, 2016 call for further details.
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 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 refinancing of long-term debt, including
penalties and the write off of unamortized discount and deferred
financing costs;
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restructuring charges;
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other non-cash charges from reclassification of certain cumulative
translation adjustments into earnings as required by GAAP; and
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the income tax adjustments associated with any of the above items (tax
impact on Non-GAAP pre-tax income is calculated under the same
accounting principles applied to the GAAP pre-tax income under ASC
740, which employs an annual effective tax rate method to the results).
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 herein that are not historical facts are
forward-looking statements, including, but not limited to, statements
about (1) projections of revenues, expenses, income or loss, earnings or
loss per share, cash flow or other financial items; (2) statements of
our plans and objectives, including those related to releases of
products and services; (3) statements of future financial or operating
performance; and (4) 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: the diversion of management time and attention to issues relating to
the operations of our acquired or newly started businesses; sales levels
of Activision Blizzard's titles, products and services; 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 platforms; the amount of our debt and the limitations
imposed by the covenants in the agreements governing our debt; the
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, products and services; risks
relating to the expansion into new businesses, including the potential
impact on our existing businesses; changing business models within the
video game industry, including digital delivery of content and the
increased prevalence of free-to-play games; product delays or defects;
competition, including from 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; the impact of 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, 2016.
The forward-looking statements in this press release are based on
information available to the company at this time 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.
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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in millions, except per share data)
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Three Months Ended March 31,
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2017
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2016
|
|
|
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Net revenues
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|
|
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Product sales
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$
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509
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|
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$
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645
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Subscription, licensing, and other revenues 1
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1,217
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|
|
810
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Total net revenues
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|
1,726
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|
|
1,455
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|
|
|
|
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Costs and expenses
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|
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Cost of revenues-product sales:
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|
|
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Product costs
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|
143
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|
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169
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Software royalties, amortization, and intellectual property licenses
|
|
88
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|
|
128
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Cost of revenues-subscription, licensing, and other:
|
|
|
|
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Game operations and distribution costs
|
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232
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|
|
142
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Software royalties, amortization, and intellectual property licenses
|
|
122
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|
|
52
|
Product development
|
|
225
|
|
|
175
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Sales and marketing
|
|
246
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|
|
168
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General and administrative
|
|
177
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|
|
160
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Total costs and expenses
|
|
1,233
|
|
|
994
|
|
|
|
|
|
Operating income
|
|
493
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|
|
461
|
|
|
|
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Interest and other expense (income), net
|
|
40
|
|
|
52
|
|
|
|
|
|
Income before income tax expense
|
|
453
|
|
|
409
|
|
|
|
|
|
Income tax expense
|
|
27
|
|
|
46
|
|
|
|
|
|
Net income
|
|
$
|
426
|
|
|
$
|
363
|
|
|
|
|
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Basic earnings per common share 2
|
|
$
|
0.57
|
|
|
$
|
0.49
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Weighted average common shares outstanding
|
|
749
|
|
|
735
|
|
|
|
|
|
Diluted earnings per common share 2
|
|
$
|
0.56
|
|
|
$
|
0.48
|
Weighted average common shares outstanding assuming dilution
|
|
761
|
|
|
749
|
|
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 less than a
million and approximately 4 million for the three months ended March
31, 2017, and 2016, respectively. For the three months ended March
31, 2017, net income attributable to Activision Blizzard, Inc.
common shareholders used to calculate earnings per common share,
assuming dilution, was $426 million, as compared to total net income
of $426 million, for the same period. 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 $360 million, as compared to total net income
of $363 million, for the same period.
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|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
3,248
|
|
|
$
|
3,245
|
|
Accounts receivable, net
|
|
|
344
|
|
|
732
|
|
Inventories, net
|
|
|
48
|
|
|
49
|
|
Software development
|
|
|
370
|
|
|
412
|
|
Other current assets
|
|
|
346
|
|
|
392
|
|
Total current assets
|
|
|
4,356
|
|
|
4,830
|
|
Software development
|
|
|
74
|
|
|
54
|
|
Property and equipment, net
|
|
|
245
|
|
|
258
|
|
Deferred income taxes, net
|
|
|
371
|
|
|
283
|
|
Other assets
|
|
|
439
|
|
|
401
|
|
Intangible assets, net
|
|
|
1,673
|
|
|
1,858
|
|
Goodwill
|
|
|
9,763
|
|
|
9,768
|
|
Total assets
|
|
|
$
|
16,921
|
|
|
$
|
17,452
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
150
|
|
|
$
|
222
|
|
Deferred revenues
|
|
|
1,153
|
|
|
1,628
|
|
Accrued expenses and other liabilities
|
|
|
936
|
|
|
806
|
|
Total current liabilities
|
|
|
2,239
|
|
|
2,656
|
|
Long-term debt, net
|
|
|
4,393
|
|
|
4,887
|
|
Deferred income taxes, net
|
|
|
41
|
|
|
44
|
|
Other liabilities
|
|
|
812
|
|
|
746
|
|
Total liabilities
|
|
|
7,485
|
|
|
8,333
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
Common stock
|
|
|
-
|
|
|
-
|
|
Additional paid-in capital
|
|
|
10,555
|
|
|
10,442
|
|
Treasury stock
|
|
|
(5,563
|
)
|
|
(5,563
|
)
|
Retained earnings
|
|
|
5,069
|
|
|
4,869
|
|
Accumulated other comprehensive loss
|
|
|
(625
|
)
|
|
(629
|
)
|
Total shareholders' equity
|
|
|
9,436
|
|
|
9,119
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
16,921
|
|
|
$
|
17,452
|
|
|
|
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, 2017
|
|
|
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
|
|
|
$
|
1,726
|
|
|
$
|
143
|
|
|
$
|
88
|
|
|
$
|
232
|
|
|
$
|
122
|
|
|
$
|
225
|
|
|
$
|
246
|
|
|
$
|
177
|
|
|
$
|
1,233
|
|
Share-based compensation1
|
|
|
-
|
|
|
-
|
|
|
(4
|
)
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
(4
|
)
|
|
(13
|
)
|
|
(33
|
)
|
Amortization of intangible assets2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(111
|
)
|
|
-
|
|
|
(77
|
)
|
|
(2
|
)
|
|
(190
|
)
|
Fees and other expenses related to the King Acquisition3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4
|
)
|
|
(4
|
)
|
Restructuring costs4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(11
|
)
|
|
(11
|
)
|
Other non-cash charges5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(16
|
)
|
|
(16
|
)
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
1,726
|
|
|
$
|
143
|
|
|
$
|
84
|
|
|
$
|
232
|
|
|
$
|
11
|
|
|
$
|
213
|
|
|
$
|
165
|
|
|
$
|
131
|
|
|
$
|
979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues6
|
|
|
$
|
(530
|
)
|
|
$
|
(58
|
)
|
|
$
|
(68
|
)
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
Net Income
|
|
Basic Earnings per Share
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
$
|
493
|
|
|
$
|
426
|
|
|
$
|
0.57
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation1
|
|
|
33
|
|
|
33
|
|
|
0.04
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets2
|
|
|
190
|
|
|
190
|
|
|
0.25
|
|
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to the King Acquisition3
|
|
|
4
|
|
|
9
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs4
|
|
|
11
|
|
|
11
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
Other non-cash charges5
|
|
|
16
|
|
|
16
|
|
|
0.02
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impacts from items above7
|
|
|
-
|
|
|
(139
|
)
|
|
(0.18
|
)
|
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
747
|
|
|
$
|
546
|
|
|
$
|
0.73
|
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues6
|
|
|
$
|
(396
|
)
|
|
$
|
(310
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(0.41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
Includes expenses related to share-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 and integration costs.
|
4
|
|
|
|
Reflects restructuring charges incurred, primarily severance costs.
|
5
|
|
|
|
Reflects a non-cash accounting charge to reclassify certain
cumulative translation losses into earnings due to the substantial
liquidation of certain of our foreign entities.
|
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 effects of
taxes.
|
7
|
|
|
|
Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP (redefined) pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results.
|
The GAAP and non-GAAP (redefined) earnings per share information is
presented as calculated. The sum of these measures, as presented, may
differ due to the impact of rounding.
For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 749 million,
participating securities of less than a million, and dilutive shares of
12 million during the three months ended March 31, 2017.
|
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 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
|
|
|
$
|
1,455
|
|
|
$
|
169
|
|
|
$
|
128
|
|
|
$
|
142
|
|
|
$
|
52
|
|
|
$
|
175
|
|
|
$
|
168
|
|
|
$
|
160
|
|
|
$
|
994
|
|
Share-based compensation1
|
|
|
-
|
|
|
-
|
|
|
(8
|
)
|
|
-
|
|
|
-
|
|
|
(10
|
)
|
|
(3
|
)
|
|
(23
|
)
|
|
(44
|
)
|
Amortization of intangible assets2
|
|
|
-
|
|
|
-
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(46
|
)
|
|
-
|
|
|
(33
|
)
|
|
(1
|
)
|
|
(82
|
)
|
Fees and other expenses related to the King Acquisition3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(34
|
)
|
|
(34
|
)
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
1,455
|
|
|
$
|
169
|
|
|
$
|
119
|
|
|
$
|
141
|
|
|
$
|
6
|
|
|
$
|
165
|
|
|
$
|
132
|
|
|
$
|
102
|
|
|
$
|
834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues4
|
|
|
$
|
(547
|
)
|
|
$
|
(83
|
)
|
|
$
|
(88
|
)
|
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(178
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
Net Income
|
|
Basic Earnings per Share
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
|
$
|
461
|
|
|
$
|
363
|
|
|
$
|
0.49
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation1
|
|
|
44
|
|
|
44
|
|
|
0.06
|
|
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets2
|
|
|
82
|
|
|
82
|
|
|
0.11
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to the King Acquisition3
|
|
|
34
|
|
|
34
|
|
|
0.05
|
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impacts from items above5
|
|
|
-
|
|
|
(82
|
)
|
|
(0.11
|
)
|
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (redefined) Measurement
|
|
|
$
|
621
|
|
|
$
|
441
|
|
|
$
|
0.59
|
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred revenues and related cost of revenues4
|
|
|
$
|
(369
|
)
|
|
$
|
(268
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
Includes expenses related to share-based compensation.
|
2
|
|
|
|
Reflects amortization of intangible assets from purchase price
accounting.
|
3
|
|
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.
|
4
|
|
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.
|
5
|
|
|
|
Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP (redefined) pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results.
|
The GAAP and non-GAAP (redefined) 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 March 31, 2016, net income attributable to Activision Blizzard,
Inc. common shareholders used to calculate non-GAAP (redefined) earnings
per common share, assuming dilution, was $438 million, as compared to
total net income of $441 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 14 million during the three months ended March 31, 2016.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended March 31, 2017 and 2016
(Amounts in millions)
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
|
$ Increase (Decrease)
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
% of Total1
|
|
Amount
|
|
% of Total1
|
|
|
Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
$
|
1,386
|
|
|
80
|
%
|
|
$
|
926
|
|
|
64
|
%
|
|
$
|
460
|
|
|
50
|
%
|
Retail channels
|
|
|
270
|
|
|
16
|
|
|
482
|
|
|
33
|
|
|
(212
|
)
|
|
(44
|
)
|
Other3
|
|
|
70
|
|
|
4
|
|
|
47
|
|
|
3
|
|
|
23
|
|
|
49
|
|
Total consolidated net revenues
|
|
|
$
|
1,726
|
|
|
100
|
%
|
|
$
|
1,455
|
|
|
100
|
%
|
|
$
|
271
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
|
$
|
(320
|
)
|
|
|
|
$
|
(129
|
)
|
|
|
|
|
|
|
Retail channels
|
|
|
(206
|
)
|
|
|
|
(418
|
)
|
|
|
|
|
|
|
Other3
|
|
|
(4
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
$
|
(530
|
)
|
|
|
|
$
|
(547
|
)
|
|
|
|
|
|
|
|
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.
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended March 31, 2017 and 2016
(Amounts in millions)
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
|
$ Increase (Decrease)
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
% of Total1
|
|
Amount
|
|
% of Total1
|
|
|
Net Revenues by Platform
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
$
|
615
|
|
|
36
|
%
|
|
$
|
765
|
|
|
53
|
%
|
|
$
|
(150
|
)
|
|
(20)
|
%
|
PC
|
|
|
566
|
|
|
33
|
|
|
400
|
|
|
27
|
|
|
166
|
|
|
42
|
|
Mobile and ancillary2
|
|
|
475
|
|
|
28
|
|
|
243
|
|
|
17
|
|
|
232
|
|
|
95
|
|
Other3
|
|
|
70
|
|
|
4
|
|
|
47
|
|
|
3
|
|
|
23
|
|
|
49
|
|
Total consolidated net revenues
|
|
|
$
|
1,726
|
|
|
100
|
%
|
|
$
|
1,455
|
|
|
100
|
%
|
|
$
|
271
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Console
|
|
|
$
|
(375
|
)
|
|
|
|
$
|
(437
|
)
|
|
|
|
|
|
|
PC
|
|
|
(147
|
)
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
Mobile and ancillary2
|
|
|
(4
|
)
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
Other3
|
|
|
(4
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
$
|
(530
|
)
|
|
|
|
$
|
(547
|
)
|
|
|
|
|
|
|
|
1
|
|
|
The percentages of total are presented as calculated. Therefore, the
sum of these percentages, as presented, may differ due to the impact
of rounding.
|
2
|
|
|
Net revenues from mobile and ancillary include revenues from mobile
devices, as well as non-platform specific game related revenues,
such as standalone sales of toys and accessories from the Skylanders
franchise and other physical merchandise and accessories.
|
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.
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended March 31, 2017 and 2016
(Amounts in millions)
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
|
$ Increase (Decrease)
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
% of Total1
|
|
Amount
|
|
% of Total1
|
|
|
Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
$
|
929
|
|
|
54
|
%
|
|
$
|
753
|
|
|
52
|
%
|
|
$
|
176
|
|
|
23
|
%
|
EMEA2
|
|
|
554
|
|
|
32
|
|
|
521
|
|
|
36
|
|
|
33
|
|
|
6
|
|
Asia Pacific
|
|
|
243
|
|
|
14
|
|
|
181
|
|
|
12
|
|
|
62
|
|
|
34
|
|
Total consolidated net revenues
|
|
|
$
|
1,726
|
|
|
100
|
%
|
|
$
|
1,455
|
|
|
100
|
%
|
|
$
|
271
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred revenues3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
$
|
(309
|
)
|
|
|
|
$
|
(293
|
)
|
|
|
|
|
|
|
EMEA2
|
|
|
(162
|
)
|
|
|
|
(194
|
)
|
|
|
|
|
|
|
Asia Pacific
|
|
|
(59
|
)
|
|
|
|
(60
|
)
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
|
$
|
(530
|
)
|
|
|
|
$
|
(547
|
)
|
|
|
|
|
|
|
|
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.
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended March 31, 2017 and 2016
(Amounts in millions)
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2017
|
|
March 31, 2016
|
|
$ Increase (Decrease)
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
% of Total1
|
|
Amount
|
|
% of Total1
|
|
|
Segment net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
$
|
215
|
|
|
19
|
%
|
|
$
|
360
|
|
|
42
|
%
|
|
$
|
(145
|
)
|
|
(40)
|
%
|
Blizzard3
|
|
|
441
|
|
|
39
|
|
|
294
|
|
|
34
|
|
|
147
|
|
|
50
|
|
King4
|
|
|
474
|
|
|
42
|
|
|
207
|
|
|
24
|
|
|
267
|
|
|
129
|
|
Reportable segments total
|
|
|
1,130
|
|
|
100
|
%
|
|
861
|
|
|
100
|
%
|
|
269
|
|
|
31
|
|
Reconciliation to consolidated net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segments5
|
|
|
66
|
|
|
|
|
47
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues6
|
|
|
530
|
|
|
|
|
547
|
|
|
|
|
|
|
|
Consolidated net revenues
|
|
|
$
|
1,726
|
|
|
|
|
$
|
1,455
|
|
|
|
|
$
|
271
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
|
$
|
24
|
|
|
|
|
$
|
99
|
|
|
|
|
$
|
(75
|
)
|
|
(76)
|
%
|
Blizzard3
|
|
|
166
|
|
|
|
|
86
|
|
|
|
|
80
|
|
|
93
|
|
King4
|
|
|
166
|
|
|
|
|
67
|
|
|
|
|
99
|
|
|
148
|
|
Reportable segments total
|
|
|
356
|
|
|
|
|
252
|
|
|
|
|
104
|
|
|
41
|
|
Reconciliation to consolidated operating income and
consolidated income before income tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segments5
|
|
|
(5
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
Net effect from certain revenues deferrals accounting treatment6
|
|
|
396
|
|
|
|
|
369
|
|
|
|
|
|
|
|
Share-based compensation expense
|
|
|
(33
|
)
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
(190
|
)
|
|
|
|
(82
|
)
|
|
|
|
|
|
|
Fees and other expenses related to the King Acquisition7
|
|
|
(4
|
)
|
|
|
|
(34
|
)
|
|
|
|
|
|
|
Restructuring costs8
|
|
|
(11
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
Other non-cash charges9
|
|
|
(16
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
|
493
|
|
|
|
|
461
|
|
|
|
|
32
|
|
|
7
|
|
Interest and other expense (income), net
|
|
|
40
|
|
|
|
|
52
|
|
|
|
|
|
|
|
Consolidated income before income tax expense
|
|
|
$
|
453
|
|
|
|
|
$
|
409
|
|
|
|
|
$
|
44
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin from total reportable segments
|
|
|
31.5
|
%
|
|
|
|
29.3
|
%
|
|
|
|
|
|
|
|
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.
|
7
|
|
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.
|
8
|
|
|
|
Reflects restructuring charges incurred, primarily severance costs.
|
9
|
|
|
|
Reflects a non-cash accounting charge to reclassify certain
cumulative translation losses into earnings due to the substantial
liquidation of certain of our foreign entities.
|
Our operating segments are consistent with the manner our operations are
reviewed and managed by our Chief Executive Officer, who is our chief
operating decision maker ("CODM"). The CODM reviews segment performance
exclusive of: the impact of the change in deferred revenues and related
cost of revenues with respect to certain of our online-enabled games;
share-based compensation expense; amortization of intangible assets as a
result of purchase price accounting; fees and other expenses (including
legal fees, costs, expenses and accruals) related to acquisitions and
financings; certain restructuring costs; and other non-cash charges.
Our operating segments are also consistent with our internal
organization structure, the way we assess operating performance and
allocate resources, and the availability of separate financial
information. We do not aggregate operating segments.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
EBITDA and Adjusted EBITDA
For the Trailing Twelve Months Ended March 31, 2017
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve Months Ended
|
|
|
|
June 30, 2016
|
|
September 30, 2016
|
|
December 31, 2016
|
|
March 31, 2017
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income1
|
|
|
$
|
151
|
|
|
$
|
199
|
|
|
$
|
254
|
|
|
$
|
426
|
|
|
$
|
1,030
|
|
Interest and other expense (income), net
|
|
|
66
|
|
|
53
|
|
|
43
|
|
|
40
|
|
|
202
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
10
|
|
|
82
|
|
|
-
|
|
|
92
|
|
Provision for income taxes1
|
|
|
16
|
|
|
32
|
|
|
46
|
|
|
27
|
|
|
121
|
|
Depreciation and amortization
|
|
|
233
|
|
|
243
|
|
|
246
|
|
|
224
|
|
|
946
|
|
EBITDA
|
|
|
466
|
|
|
537
|
|
|
671
|
|
|
717
|
|
|
2,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense2
|
|
|
41
|
|
|
33
|
|
|
40
|
|
|
33
|
|
|
147
|
|
Fees and other expenses related to the King Acquisition3
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
16
|
|
Restructuring costs4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11
|
|
|
11
|
|
Other non-cash charges5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
16
|
|
|
16
|
|
Adjusted EBITDA (redefined)
|
|
|
$
|
511
|
|
|
$
|
574
|
|
|
$
|
715
|
|
|
$
|
781
|
|
|
$
|
2,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred net revenues and related cost of revenues6
|
|
|
$
|
108
|
|
|
$
|
33
|
|
|
$
|
238
|
|
|
$
|
(396
|
)
|
|
$
|
(17
|
)
|
|
1
|
|
|
|
We recognized $24 million, $12 million, $18 million, and $69 million
of excess tax benefits from share-based payments as an income tax
benefit in the provision for income taxes for the three months ended
June 30, 2016, September 30, 2016, December 31, 2016, and March 31,
2017, respectively.
|
2
|
|
|
|
Includes expenses related to share-based compensation.
|
3
|
|
|
|
Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.
|
4
|
|
|
|
Reflects restructuring charges incurred, primarily severance costs.
|
5
|
|
|
|
Reflects a non-cash accounting charge to reclassify certain
cumulative translation losses into earnings due to the substantial
liquidation of certain of our foreign entities.
|
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.
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(Amounts in millions)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
March 31,
|
|
Year over Year % Increase (Decrease)
|
|
|
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
2017
|
|
Cash Flow Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow
|
|
|
|
$
|
337
|
|
|
$
|
503
|
|
|
$
|
456
|
|
|
$
|
859
|
|
|
$
|
411
|
|
|
22
|
%
|
Capital Expenditures
|
|
|
|
27
|
|
|
44
|
|
|
28
|
|
|
37
|
|
|
21
|
|
|
(22
|
)
|
Non-GAAP Free Cash Flow1
|
|
|
|
310
|
|
|
459
|
|
|
428
|
|
|
822
|
|
|
390
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow - TTM2
|
|
|
|
1,373
|
|
|
1,732
|
|
|
2,359
|
|
|
2,155
|
|
|
2,229
|
|
|
62
|
|
Capital Expenditures - TTM2
|
|
|
|
117
|
|
|
133
|
|
|
115
|
|
|
136
|
|
|
130
|
|
|
11
|
|
Non-GAAP Free Cash Flow - TTM2
|
|
|
|
$
|
1,256
|
|
|
$
|
1,599
|
|
|
$
|
2,244
|
|
|
$
|
2,019
|
|
|
$
|
2,099
|
|
|
67
|
%
|
|
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 June 30, 2015, three months ended September 30,
2015, and three months ended December 31, 2015, was $144 million,
$(171) million, and $1,063 million, respectively. Capital
Expenditures for the three months ended June 30, 2015, three months
ended September 30, 2015, and three months ended December 31, 2015,
was $28 million, $46 million, and $16 million, respectively.
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
Outlook for the Three Months Ending June 30, 2017 and Year
Ending December 31, 2017
GAAP to Non-GAAP (redefined) Reconciliation
(Amounts in millions, except per share data)
|
|
|
|
|
Outlook for the
|
|
Outlook for the
|
|
|
|
Three Months Ending
|
|
Year Ending
|
|
|
|
June 30, 2017
|
|
December 31, 2017
|
|
|
|
|
|
|
Net Revenues1
|
|
|
$
|
1,425
|
|
|
$
|
6,100
|
|
Change in deferred revenues2
|
|
|
$
|
(225
|
)
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Diluted Share (GAAP)
|
|
|
$
|
0.15
|
|
|
$
|
0.88
|
|
Excluding the impact of:
|
|
|
|
|
|
Share-based compensation3
|
|
|
0.06
|
|
|
0.23
|
|
Amortization of intangible assets4
|
|
|
0.24
|
|
|
0.99
|
|
Fees and other expenses related to the King Acquisition5
|
|
|
0.01
|
|
|
0.03
|
|
Restructuring costs6
|
|
|
-
|
|
|
0.04
|
|
Other non-cash charges7
|
|
|
-
|
|
|
0.02
|
|
Income tax impacts from items above8
|
|
|
(0.07
|
)
|
|
(0.38
|
)
|
Earnings Per Diluted Share (Non-GAAP redefined)
|
|
|
$
|
0.38
|
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of deferred net revenues and related cost of revenues
on Earnings Per Diluted Share9
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.08
|
|
|
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 share-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 integration costs.
|
6
|
|
|
|
Reflects our planned restructuring charges, primarily severance
costs.
|
7
|
|
|
|
Reflects a non-cash accounting charge incurred during the three
months ended March 31, 2017 to reclassify certain cumulative
translation losses into earnings due to the substantial
liquidation of certain of our foreign entities.
|
8
|
|
|
|
Reflects the income tax impacts associated with the above items. Due
to the inherent uncertainties in share price and option exercise
behavior, we do not generally forecast excess tax benefits or tax
shortfalls.
|
9
|
|
|
|
Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effect of
taxes.
|
The per share adjustments and the GAAP and Non-GAAP (redefined) 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/20170504006637/en/
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