Company Increases CY 2015 Revenues and EPS Outlook
Company Delivered Record Quarterly Digital Revenues, Generating
Announces Agreement to
As a result of this announcement,
Third Quarter |
|||||||||||
(in millions, except EPS) |
2015 |
Prior |
2014 |
||||||||
GAAP |
|||||||||||
Net Revenues |
$ | 990 | $ | 875 | $ | 753 | |||||
EPS | $ | 0.17 | $ | 0.08 | $ | (0.03) | |||||
Non-GAAP |
|||||||||||
Net Revenues |
$ | 1,040 | $ | 930 | $ | 1,170 | |||||
EPS | $ | 0.21 | $ | 0.14 | $ | 0.23 | |||||
*Prior outlook was provided by the company on
For the quarter ended
For the quarter ended
At constant FXA, non-GAAP revenues were down 4% and EPS was up 13% for the quarter versus prior year. Year-to-date, non-GAAP revenues and EPS were up 5% and 35%, respectively, year-over-year, given strong engagement and recurring digital trends on our year-round monetizing franchises.
Please refer to the tables at the back of this press release for a reconciliation of the company's GAAP and non-GAAP results.
Selected Business Highlights:
-
Activision Publishing had its highest ever third quarter non-GAAP operating income, driven by strong engagement and digital revenue, with Q3 monthly active users (MAUs)B up 17% year-over-year, and the largest Q3 and year-to-date digital revenues in its history.Activision Publishing continues to have 3 of the top 5 games on next-generation consoles life-to-date.2 - Activision Publishing's Call of Duty® franchise year-to-date non-GAAP revenues increased by a double-digit percentage year-over-year due to strong catalog sales of Call of Duty: Black Ops, Call of Duty: Black Ops II, and Call of Duty: Advanced Warfare, both for full game and Supply Drops. Call of Duty: Advanced Warfare remains the No. 1 game on next-generation consoles life-to-date, as it has been since its launch a year ago.2
-
On
September 15, 2015 ,Activision Publishing and Bungie released The Taken King, the largest update to the Destiny universe yet, which was enthusiastically received by fans and critics alike. Day-one downloads broke PlayStation records, day-one engagement saw the highest number of active players in Destiny's history, daily player engagement is now well above 3 hours per day and the Destiny community has climbed to over 25 million registered players. Since its launch, Destiny has become the most watched console game on Twitch. -
On
September 20, 2015 ,Activision Publishing released Skylanders® SuperChargers, the next installment in the franchise with all new vehicles, action figures and exclusive Nintendo characters. Even with increased competition, SuperChargers is one of Skylanders' highest-rated entries to date and has strong engagement, with more toys per player than last year. - Blizzard Entertainment's third quarter MAUsB were up 50% year-over-year, reflecting strong engagement with the online player community.
- World of Warcraft® subscriptions remained relatively stable, ending the quarter at 5.5 million subscribersC. Players are excited about the upcoming expansion, Legion™, which will feature a new class, customizable Artifact weapons, class order halls, and much more. World of Warcraft remains the No. 1 subscription‐based MMORPG in the world.
-
On
August 24, 2015 ,Blizzard Entertainment launched The Grand Tournament™, the second expansion for Hearthstone®: Heroes of Warcraft™, with over 130 new cards. As a result of this new content, continued strength on mobile, and continued strength across geographies, key engagement metrics grew 77% year-over-year and set a new quarterly revenue record for the franchise. -
Blizzard Entertainment brought new players into Heroes of the Storm™ with the release of The Eternal Conflict, a series of content and hero additions based on theDiablo ® universe. Blizzard also held the Heroes of the Storm regional championships as part of its Road to BlizzCon® esports series, including theAmericas Championship inLas Vegas and the Europe Championship inPrague . -
Blizzard Entertainment's Diablo III continued to bring
in new players in Q3, and in
China , the game passed the 2-million-unit milestone. -
Blizzard Entertainment began closed beta testing for Overwatch™ onOctober 27, 2015 , with over 7 million players signed-up to participate, not includingChina .
Company Outlook:
-
On
August 6, 2015 ,Blizzard Entertainment revealed Legion, the sixth expansion to World of Warcraft, including the deadly new Demon Hunter hero class and Artifacts, customizable legendary weapons that transform and grow in power as players battle. -
On
August 18, 2015 ,Activision Publishing announced Skylanders Battlecast, bringing cards to life in a free-to-play mobile card battle game. Players will be able to purchase physical card packs at retail stores or digital card packs in-game. The title is expected to launch in 2016. -
On
October 20, 2015 ,Activision Publishing brought back the pop culture phenomenon that previously reached over 40 million players inNorth America andEurope with the launch of Guitar Hero® Live. Reception from players and critics alike has been very positive. The game is designed to be a living, breathing platform to keep players engaged, and so far average time per player is nearly two hours a day. -
On
October 22, 2015 ,Activision Blizzard announced a new division that will build on the Company's competitive gaming leadership by creating all-new ways to deliver the best-in-class fan experience across games, platforms and geographies, furthering the development of its world-leading esports ecosystem. Former CEO ofESPN and theNFL Network Steve Bornstein serves as the division's Chairman and Mike Sepso, who was most recently a co-founder and president of MajorLeague Gaming (MLG), serves as its Senior Vice President. -
On
November 6, 2015 ,Activision Publishing expects to release the highly anticipated Call of Duty: Black Ops III from its award-winning studio, Treyarch. Momentum ahead of launch has been strong and engagement for Call of Duty: Black Ops II grew quarter-over-quarter again to nearly 12 million MAUsB, an unprecedented level for a game that is three years old and only available on old-generation consoles. -
On
November 6, 2015 ,Activision Blizzard will host Investor Day. Presentations by senior management will be webcast live beginning at8:30 AM PT on the events and presentations section of the Company's investor relations website at http://investor.activisionblizzard.com/events.cfm. A replay of the event will also be available. -
Blizzard Entertainment's ninth BlizzCon will be returning to the
Anaheim Convention Center onFriday, November 6 , andSaturday, November 7 . One of the biggest attractions at BlizzCon will be the culmination of this year's Road to BlizzCon esports tournaments, with the global champions for World of Warcraft, StarCraft® II, Hearthstone, and Heroes of the Storm being crowned. For the latest announcements and information, please visit www.blizzcon.com. -
On
November 10, 2015 ,Blizzard Entertainment expects to launch StarCraft II: Legacy of the Void™, the third installment of the company's real-time strategy sequel. Pre-purchases have outpaced Heart of the Swarm®, the previous installment. Legacy of the Void will be a standalone product that won't require any prior releases, so it will be easier than ever for new players to get into the game and experience all of the latest content. Players are already enjoying the prologue content. - Given the weakening of foreign currencies versus the U.S. dollar, the company's 2015 international revenues and earnings are translated at lower rates than in 2014. This also impacts the company's 2015 outlook as compared to 2014 actual results because approximately 50% of the company's revenues, and a higher percentage of profits, are generated outside the U.S. while a much higher percentage of the company's costs are incurred in the U.S. See comparison table, below.
Activision Blizzard's fourth quarter and calendar year 2015 outlook is, as follows:
Prior Outlook* | Current Outlook | ||||||||||||
(in millions, except EPS) |
GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
|||||||||
CY 2015 |
|||||||||||||
Net Revenues | $ | 4,425 | $ | 4,600 | $ | 4,530 | $ | 4,650 | |||||
EPS | $ | 1.06 | $ | 1.30 | $ | 1.07 | $ | 1.31 | |||||
Fully Diluted Shares** |
750 | 750 | 750 | 750 | |||||||||
Q4 2015 |
|||||||||||||
Net Revenues | N/A | N/A | $ | 1,218 | $ | 2,148 | |||||||
EPS | N/A | N/A | $ | 0.09 | $ | 0.82 | |||||||
Fully Diluted Shares** |
N/A | N/A |
753 |
753 | |||||||||
The following table compares our CY14 actual earnings per share to CY15 outlook earnings per share.
Comparison | |||||||||
EPS |
Prior Non-GAAP |
Current Non-GAAP |
Change | ||||||
CY14 - Actuals | $ | 1.42 | $ | 1.42 | |||||
Slate / Operations | 0.15 | 0.17 | 0.02 | ||||||
Foreign Currency | (0.19) | (0.20) | (0.01) | ||||||
Tax Rate & Share Count | (0.08) | (0.08) | |||||||
CY15 - Outlook | $ | 1.30 | $ | 1.31 | 0.01 | ||||
Currency Assumptions for 2015 Outlook (Q3-Q4):
-
$1.10 USD /Euro for current outlook and prior outlook* (vs. a$1.33 average for 2014) -
$1.54 USD /British Pound Sterling for current and prior outlook* (vs. a$1.65 average for 2014) - Note: Revenue and EPS increase if the Euro or British Pound Sterling strengthen vs. USD.
- Currency assumptions have not changed since prior outlook since actual spot rates for the Euro and British Pound Sterling have not significantly changed, however, the actual mix of our revenues has skewed more heavily towards international revenues than previously planned.
* Prior outlook was provided by the company on
** Fully diluted weighted average shares
include participating securities and dilutive options on a weighted
average basis.
Conference Call
To listen to the call, please log onto:
http://investor.activision.com/events.cfm
Or dial:
U.S. and
International: 913-312-0653
Passcode: 9960349
King will announce third quarter 2015 results and hold its conference
call for analysts and investors on
About
1 Based on 2016E IBES Consensus estimates as of
2
A Constant FX Definition: Constant FX provides current period results converted into USD using the average exchange rates from the comparative prior periods rather than the actual exchange rates in effect during the respective current periods.
B Monthly Active User (MAU) Definition: We monitor MAUs as a key measure of the overall size of our user base and their regular engagement with our portfolio of games. MAUs are the number of individuals who played a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing by the number of months in the period. An individual who plays two of our games would be counted as two users. For Activision Publishing MAUs, an individual who plays the same game on two platforms or devices in the relevant period would be counted as two users due to technical limitations. For Blizzard MAUs, an individual who plays the same game on two platforms or devices in the relevant period would be counted as one user.
C Subscriber Definition: World of Warcraft
subscribers include individuals who have paid a subscription fee or have
an active prepaid card to play World of Warcraft, as well
as those who have purchased the game and are within their free month of
access.
Non-GAAP Financial Measures: As a supplement to our financial
measures presented in accordance with Generally Accepted Accounting
Principles ("GAAP"),
- the change in deferred revenues and related cost of sales with respect to certain of the company's online-enabled games;
- expenses related to stock-based compensation;
- the amortization of intangibles from purchase price accounting;
-
fees and other expenses (including legal fees, costs, expenses and
accruals) related to the acquisition of 429 million shares of our
common stock on
October 11, 2013 from Vivendi, pursuant to the stock purchase agreement datedJuly 25, 2013 and the$4.75 billion debt financings related thereto; and - fees and other expenses related to the proposed acquisition of King Digital Entertainment plc and the debt financings related thereto; and
- the income tax adjustments associated with any of the above items.
In the future,
Activision Blizzard's non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share, non-GAAP operating margin, and non-GAAP or adjusted EBITDA do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard's performance in relation to other companies.
In addition to the reasons stated above, which are generally applicable
to each of the items
Since
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 agreement to acquire King Digital Entertainment plc and the potential impact of that proposed transaction; and (5) statements of assumptions underlying such statements. The company generally uses words such as "outlook," "forecast," "will," "could," "should," "would," "to be," "plan," "plans," "believes," "may," "might," "expects," "intends," "intends as," "anticipates," "estimate," "future," "positioned," "potential," "project," "remain," "scheduled," "set to," "subject to," "upcoming" and other similar expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risk, reflect management's current expectations, estimates and projections about our business, and are inherently uncertain and difficult to predict.
The Company cautions that a number of important factors could cause
The forward-looking statements in this presentation are based on
information available to the Company as of the date of this press
release and, while believed to be true when made, may ultimately prove
to be incorrect. The Company may change its intention, belief or
expectation, at any time and without notice, based upon any changes in
such factors, in the Company's assumptions or otherwise. The Company
undertakes no obligation to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the
original date of this press release,
|
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
(Amounts in millions, except per share data) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
|
|
||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Net revenues | |||||||||||||||||||||
Product sales | $ | 425 | $ | 337 | $ | 1,736 | $ | 1,693 | |||||||||||||
Subscription, licensing and other revenues1 | 565 | 416 | 1,576 | 1,140 | |||||||||||||||||
Total net revenues | 990 | 753 | 3,312 | 2,833 | |||||||||||||||||
Costs and expenses | |||||||||||||||||||||
Cost of sales - product costs | 195 | 156 | 560 | 568 | |||||||||||||||||
Cost of sales - online | 56 | 56 | 161 | 170 | |||||||||||||||||
Cost of sales - software royalties and amortization | 81 | 34 | 314 | 136 | |||||||||||||||||
Cost of sales - intellectual property licenses | 5 | 7 | 12 | 20 | |||||||||||||||||
Product development | 159 | 131 | 453 | 387 | |||||||||||||||||
Sales and marketing | 189 | 221 | 445 | 465 | |||||||||||||||||
General and administrative | 109 | 140 | 297 | 342 | |||||||||||||||||
Total costs and expenses | 794 | 745 | 2,242 | 2,088 | |||||||||||||||||
Operating income | 196 | 8 | 1,070 | 745 | |||||||||||||||||
Interest and other expense, net | 51 | 51 | 151 | 152 | |||||||||||||||||
Income (loss) before income tax expense (benefit) | 145 | (43 | ) | 919 | 593 | ||||||||||||||||
Income tax expense (benefit) | 18 | (20 | ) | 186 | 119 | ||||||||||||||||
Net income (loss) | $ | 127 | $ | (23 | ) | $ | 733 | $ | 474 | ||||||||||||
Basic earnings (loss) per common share 2 |
$ | 0.17 | $ | (0.03 | ) | $ | 0.99 | $ | 0.65 | ||||||||||||
Weighted average common shares outstanding | 730 | 718 | 727 | 714 | |||||||||||||||||
Diluted earnings (loss) per common share 2 |
$ | 0.17 |
$ |
(0.03 |
) |
$ | 0.98 | $ | 0.64 | ||||||||||||
Weighted average common shares outstanding assuming dilution | 739 | 718 | 736 | 725 | |||||||||||||||||
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, 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 8
million and 9 million for the three and nine months ended
|
||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
(Unaudited) | ||||||||||||
(Amounts in millions) | ||||||||||||
|
|
|||||||||||
2015 | 2014 | |||||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 4,365 | $ | 4,848 | ||||||||
Short-term investments | 154 | 10 | ||||||||||
Accounts receivable, net | 503 | 659 | ||||||||||
Inventories, net | 238 | 123 | ||||||||||
Software development | 342 | 452 | ||||||||||
Intellectual property licenses | 27 | 5 | ||||||||||
Deferred income taxes, net | 373 | 368 | ||||||||||
Other current assets | 307 | 444 | ||||||||||
Total current assets | 6,309 | 6,909 | ||||||||||
Long-term investments | 9 | 9 | ||||||||||
Software development | 73 | 20 | ||||||||||
Intellectual property licenses | — | 18 | ||||||||||
Property and equipment, net | 200 | 157 | ||||||||||
Other assets | 171 | 85 | ||||||||||
Intangible assets, net | 24 | 29 | ||||||||||
Trademark and trade names | 433 | 433 | ||||||||||
|
7,083 | 7,086 | ||||||||||
Total assets | $ | 14,302 | $ | 14,746 | ||||||||
Liabilities and Shareholders' Equity | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 309 | $ | 325 | ||||||||
Deferred revenues | 907 | 1,797 | ||||||||||
Accrued expenses and other liabilities | 394 | 592 | ||||||||||
Total current liabilities | 1,610 | 2,714 | ||||||||||
Long-term debt, net | 4,078 | 4,324 | ||||||||||
Deferred income taxes, net | 110 | 114 | ||||||||||
Other liabilities | 515 | 361 | ||||||||||
Total liabilities | 6,313 | 7,513 | ||||||||||
Shareholders' equity | ||||||||||||
Common stock | — | — | ||||||||||
Additional paid-in capital | 10,209 | 9,924 | ||||||||||
|
(5,613 | ) | (5,762 | ) | ||||||||
Retained earnings | 3,937 | 3,374 | ||||||||||
Accumulated other comprehensive loss | (544 | ) | (303 | ) | ||||||||
Total shareholders' equity | 7,989 | 7,233 | ||||||||||
Total liabilities and shareholders' equity | $ | 14,302 | $ | 14,746 | ||||||||
|
||||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES | ||||||||||||||||||||||||||||||||||
(Amounts in millions, except per share data) | ||||||||||||||||||||||||||||||||||
Three Months Ended |
Net Revenues | Cost of Sales - Product Costs | Cost of Sales - Online |
Cost of Sales - Software Royalties |
Cost of Sales - Intellectual Property Licenses | Product Development | Sales and Marketing | General and Administrative | Total Costs and Expenses | |||||||||||||||||||||||||
GAAP Measurement | $ | 990 | $ | 195 | $ | 56 | $ | 81 | $ | 5 | $ | 159 | $ | 189 | $ | 109 | $ | 794 | ||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales1 | 50 | 7 | — | 17 | — | — | — | — | 24 | |||||||||||||||||||||||||
Less: Stock-based compensation2 | — | — | (1 | ) | (4 | ) | — | (6 | ) | (2 | ) | (15 | ) | (28 | ) | |||||||||||||||||||
Less: Amortization of intangible assets3 | — | — | — | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Non-GAAP Measurement | $ | 1,040 | $ | 202 | $ | 55 | $ | 94 | $ | 4 | $ | 153 | $ | 187 | $ | 94 | $ | 789 | ||||||||||||||||
|
Operating Income | Net Income | Basic Earnings per Share | Diluted Earnings per Share | ||||||||||||||||||||||||||||||
GAAP Measurement | $ | 196 | $ | 127 | $ | 0.17 | $ | 0.17 | ||||||||||||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales | 26 | 11 | 0.01 | 0.01 | ||||||||||||||||||||||||||||||
Less: Stock-based compensation | 28 | 19 | 0.03 | 0.03 | ||||||||||||||||||||||||||||||
Less: Amortization of intangible assets | 1 | 1 | — | — | ||||||||||||||||||||||||||||||
Non-GAAP Measurement | $ | 251 | $ | 158 | $ | 0.21 | $ | 0.21 | ||||||||||||||||||||||||||
Nine Months Ended |
Net Revenues | Cost of Sales - Product Costs | Cost of Sales - Online |
Cost of Sales - |
Cost of Sales - Intellectual Property Licenses |
Product Development | Sales and Marketing | General and Administrative | Total Costs and Expenses | |||||||||||||||||||||||||||
GAAP Measurement | $ | 3,312 | $ | 560 | $ | 161 | $ | 314 | $ | 12 | $ | 453 | $ | 445 | $ | 297 | $ | 2,242 | ||||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales1 | (809 | ) | (165 | ) | — | (128 | ) | 1 | — | — | — | (292 | ) | |||||||||||||||||||||||
Less: Stock-based compensation2 | — | — | — | (10 | ) | — | (20 | ) | (7 | ) | (33 | ) | (70 | ) | ||||||||||||||||||||||
Less: Amortization of intangible assets3 | — | — | — | — | (4 | ) | — | — | — | (4 | ) | |||||||||||||||||||||||||
Non-GAAP Measurement | $ | 2,503 | $ | 395 | $ | 161 | $ | 176 | $ | 9 | $ | 433 | $ | 438 | $ | 264 | $ | 1,876 | ||||||||||||||||||
Operating Income | Net Income | Basic Earnings per Share | Diluted Earnings per Share | |||||||||||||||||||||||||||||||||
GAAP Measurement | $ | 1,070 | $ | 733 | $ | 0.99 | $ | 0.98 | ||||||||||||||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales | (517 | ) | (419 | ) | (0.57 | ) | (0.56 | ) | ||||||||||||||||||||||||||||
Less: Stock-based compensation | 70 | 50 | 0.07 | 0.07 | ||||||||||||||||||||||||||||||||
Less: Amortization of intangible assets | 4 | 3 | — | — | ||||||||||||||||||||||||||||||||
Non-GAAP Measurement | $ | 627 | $ | 367 | $ | 0.50 | $ | 0.49 | ||||||||||||||||||||||||||||
1 Reflects the net change in deferred revenues and related cost of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects amortization of intangible assets from purchase price accounting.
The per share adjustments and the GAAP and non-GAAP earnings per share information are presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.
The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. For the three and nine
months ended
|
|||||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES | |||||||||||||||||||||||||||||||||||
(Amounts in millions, except per share data) | |||||||||||||||||||||||||||||||||||
Three Months Ended |
Net Revenues | Cost of Sales - Product Costs | Cost of Sales - Online |
Cost of Sales - |
Cost of Sales - Intellectual Property Licenses | Product Development | Sales and Marketing | General and Administrative | Total Costs and Expenses | ||||||||||||||||||||||||||
GAAP Measurement | $ | 753 | $ | 156 | $ | 56 | $ | 34 | $ | 7 | $ | 131 | $ | 221 | $ | 140 | $ | 745 | |||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales1 | 417 | 80 | — | 157 | — | — | — | — | 237 | ||||||||||||||||||||||||||
Less: Stock-based compensation2 | — | — | — | (1 | ) | — | (5 | ) | (3 | ) | (13 | ) | (22 | ) | |||||||||||||||||||||
Less: Amortization of intangible assets3 | — | — | — | — | (2 | ) | — | — | — | (2 | ) | ||||||||||||||||||||||||
Less: Fees and other expenses related to the Purchase Transaction and related debt financings4 | — | — | — | — | — | — | — | (48 | ) | (48 | ) | ||||||||||||||||||||||||
Non-GAAP Measurement | $ | 1,170 | $ | 236 | $ | 56 | $ | 190 | $ | 5 | $ | 126 | $ | 218 | $ | 79 | $ | 910 | |||||||||||||||||
Operating Income | Net Income | Basic Earnings per Share | Diluted Earnings per Share | ||||||||||||||||||||||||||||||||
GAAP Measurement | $ | 8 | $ | (23 | ) | $ | (0.03 | ) | $ | (0.03 | ) | ||||||||||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales | 180 | 133 | 0.18 | 0.18 | |||||||||||||||||||||||||||||||
Less: Stock-based compensation | 22 | 14 | 0.02 | 0.02 | |||||||||||||||||||||||||||||||
Less: Amortization of intangible assets | 2 | 1 | — | — | |||||||||||||||||||||||||||||||
Less: Fees and other expenses related to the Purchase Transaction and related debt financings4 | 48 | 48 | 0.07 | 0.07 | |||||||||||||||||||||||||||||||
Non-GAAP Measurement | $ | 260 | $ | 173 | $ | 0.24 | $ | 0.23 | |||||||||||||||||||||||||||
Nine Months Ended |
Net Revenues | Cost of Sales - Product Costs | Cost of Sales - Online |
Cost of Sales - |
Cost of Sales - Intellectual Property Licenses | Product Development | Sales and Marketing | General and Administrative | Total Costs and Expenses | |||||||||||||||||||||||||||
GAAP Measurement | $ | 2,833 | $ | 568 | $ | 170 | $ | 136 | $ | 20 | $ | 387 | $ | 465 | $ | 342 | $ | 2,088 | ||||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales1 | (233 | ) | (83 | ) | — | 109 | 1 | — | — | — | 27 | |||||||||||||||||||||||||
Less: Stock-based compensation2 | — | — | — | (12 | ) | — | (17 | ) | (6 | ) | (41 | ) | (76 | ) | ||||||||||||||||||||||
Less: Amortization of intangible assets3 | — | — | — | — | (4 | ) | — | — | — | (4 | ) | |||||||||||||||||||||||||
Less: Fees and other expenses related to the Purchase Transaction and related debt financings4 | — | — | — | — | — | — | — | (48 | ) | (48 | ) | |||||||||||||||||||||||||
Non-GAAP Measurement | $ | 2,600 | $ | 485 | $ | 170 | $ | 233 | $ | 17 | $ | 370 | $ | 459 | $ | 253 | $ | 1,987 | ||||||||||||||||||
Operating Income | Net Income | Basic Earnings per Share | Diluted Earnings per Share | |||||||||||||||||||||||||||||||||
GAAP Measurement | $ | 745 | $ | 474 | $ | 0.65 | $ | 0.64 | ||||||||||||||||||||||||||||
Less: Net effect from deferral of net revenues and related cost of sales | (260 | ) | (212 | ) | (0.29 | ) | (0.29 | ) | ||||||||||||||||||||||||||||
Less: Stock-based compensation | 76 | 46 | 0.06 | 0.06 | ||||||||||||||||||||||||||||||||
Less: Amortization of intangible assets | 4 | 3 | — | — | ||||||||||||||||||||||||||||||||
Less: Fees and other expenses related to the Purchase Transaction and related debt financings4 | 48 | 48 | 0.07 | 0.07 | ||||||||||||||||||||||||||||||||
Non-GAAP Measurement | $ | 613 | $ | 359 | $ | 0.49 | $ | 0.48 | ||||||||||||||||||||||||||||
1 Reflects the net change in deferred revenues and related cost of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects amortization of intangible assets from purchase price accounting.
4 Reflects fees and other expenses (including legal fees,
costs, expenses and accruals) related to the repurchase of 429 million
shares of our common stock from Vivendi (the "Purchase Transaction")
completed on
The per share adjustments and the GAAP and non-GAAP earnings per share information are presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.
The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. For the three and nine
months ended
|
||||||||||||||||||||||||||||||||
FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||
For the Three and Nine Months Ended |
||||||||||||||||||||||||||||||||
(Amounts in millions) | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
|
|
$ Increase |
% Increase |
|||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | |||||||||||||||||||||||||||||
GAAP Net Revenues by Distribution Channel | ||||||||||||||||||||||||||||||||
Retail channels | $ |
281 |
28 |
% | $ | 171 | 23 | % | $ |
110 |
64 |
% | ||||||||||||||||||||
Digital online channels2 |
629 |
64 |
504 | 67 |
125 |
25 |
||||||||||||||||||||||||||
Total Activision and Blizzard | 910 | 92 | 675 | 90 | 235 | 35 | ||||||||||||||||||||||||||
Distribution | 80 | 8 | 78 | 10 | 2 | 3 | ||||||||||||||||||||||||||
Total consolidated GAAP net revenues | 990 | 100 | 753 | 100 | 237 | 31 | ||||||||||||||||||||||||||
Change in Deferred Revenues3 | ||||||||||||||||||||||||||||||||
Retail channels |
(18 |
) | 416 | |||||||||||||||||||||||||||||
Digital online channels2 |
68 |
1 | ||||||||||||||||||||||||||||||
Total changes in deferred revenues | 50 | 417 | ||||||||||||||||||||||||||||||
Non-GAAP Net Revenues by Distribution Channel | ||||||||||||||||||||||||||||||||
Retail channels | 263 | 25 | 587 | 50 | (324 | ) | (55 | ) | ||||||||||||||||||||||||
Digital online channels2 | 697 | 67 | 505 | 43 | 192 | 38 | ||||||||||||||||||||||||||
Total Activision and Blizzard | 960 | 92 | 1,092 | 93 | (132 | ) | (12 | ) | ||||||||||||||||||||||||
Distribution | 80 | 8 | 78 | 7 | 2 | 3 | ||||||||||||||||||||||||||
Total non-GAAP net revenues4 | $ | 1,040 | 100 | % | $ | 1,170 | 100 | % | $ | (130 | ) | (11 | )% | |||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||
|
|
$ Increase |
% Increase |
||||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | ||||||||||||||||||||||||||||||
GAAP Net Revenues by Distribution Channel | |||||||||||||||||||||||||||||||||
Retail channels | $ |
1,344 |
41 | % | $ | 1,257 | 44 | % | $ |
87 |
7 | % | |||||||||||||||||||||
Digital online channels2 |
1,779 |
54 | 1,358 | 48 |
421 |
31 |
|||||||||||||||||||||||||||
Total Activision and Blizzard | 3,123 | 94 | 2,615 | 92 | 508 | 19 | |||||||||||||||||||||||||||
Distribution | 189 | 6 | 218 | 8 | (29 | ) | (13 | ) | |||||||||||||||||||||||||
Total consolidated GAAP net revenues | 3,312 | 100 | 2,833 | 100 | 479 | 17 | |||||||||||||||||||||||||||
Change in Deferred Revenues3 | |||||||||||||||||||||||||||||||||
Retail channels |
(876 |
) | (388 | ) | |||||||||||||||||||||||||||||
Digital online channels2 |
67 |
155 | |||||||||||||||||||||||||||||||
Total changes in deferred revenues | (809 | ) | (233 | ) | |||||||||||||||||||||||||||||
Non-GAAP Net Revenues by Distribution Channel | |||||||||||||||||||||||||||||||||
Retail channels | 468 | 19 | 869 | 33 | (401 | ) | (46 | ) | |||||||||||||||||||||||||
Digital online channels2 | 1,846 | 74 | 1,513 | 58 | 333 | 22 | |||||||||||||||||||||||||||
Total Activision and Blizzard | 2,314 | 92 | 2,382 | 92 | (68 | ) | (3 | ) | |||||||||||||||||||||||||
Distribution | 189 | 8 | 218 | 8 | (29 | ) | (13 | ) | |||||||||||||||||||||||||
Total non-GAAP net revenues4 | $ | 2,503 | 100 | % | $ | 2,600 | 100 | % | $ | (97 | ) | (4 | )% | ||||||||||||||||||||
1 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.
2 Net revenues from digital online channels represent revenues from digitally distributed subscriptions, licensing royalties, value-added services, downloadable content, micro-transactions, and products.
3 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred revenues.
4 Total non-GAAP net revenues presented also represents our total operating segment net revenues.
|
|||||||||||||||||||||||||||||||||
FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||||||||||||||||
(Amounts in millions) | |||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
|
|
$ Increase |
% Increase |
||||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | ||||||||||||||||||||||||||||||
GAAP Net Revenues by Segment/Platform Mix | |||||||||||||||||||||||||||||||||
Activision and Blizzard: | |||||||||||||||||||||||||||||||||
Online2 | $ | 195 | 20 | % | $ | 205 | 27 | % | $ | (10 | ) | (5 | )% | ||||||||||||||||||||
PC | 164 | 17 | 165 | 22 | (1 | ) | (1 | ) | |||||||||||||||||||||||||
Next-generation (PS4, Xbox One, Wii U) | 245 | 25 | 109 | 14 | 136 | 125 | |||||||||||||||||||||||||||
Prior-generation (PS3, Xbox 360, Wii) | 175 | 18 | 161 | 21 | 14 | 9 | |||||||||||||||||||||||||||
Total console3 | 420 | 42 | 270 | 36 | 150 | 56 | |||||||||||||||||||||||||||
Mobile and other4 | 131 | 13 | 35 | 5 | 96 | NM | |||||||||||||||||||||||||||
Total Activision and Blizzard | 910 | 92 | 675 | 90 | 235 | 35 | |||||||||||||||||||||||||||
Distribution: | |||||||||||||||||||||||||||||||||
Total Distribution | 80 | 8 | 78 | 10 | 2 | 3 | |||||||||||||||||||||||||||
Total consolidated GAAP net revenues | 990 | 100 | 753 | 100 | 237 | 31 | |||||||||||||||||||||||||||
Change in Deferred Revenues5 | |||||||||||||||||||||||||||||||||
Activision and Blizzard: | |||||||||||||||||||||||||||||||||
Online2 | (40 | ) | 4 | ||||||||||||||||||||||||||||||
PC | 4 | (69 | ) | ||||||||||||||||||||||||||||||
Next-generation (PS4, Xbox One, Wii U) | 88 | 359 | |||||||||||||||||||||||||||||||
Prior-generation (PS3, Xbox 360, Wii) | (8 | ) | 123 | ||||||||||||||||||||||||||||||
Total console3 | 80 | 482 | |||||||||||||||||||||||||||||||
Mobile and other4 | 6 | — | |||||||||||||||||||||||||||||||
Total changes in deferred revenues | 50 | 417 | |||||||||||||||||||||||||||||||
Non-GAAP Net Revenues by Segment/Platform Mix | |||||||||||||||||||||||||||||||||
Activision and Blizzard: | |||||||||||||||||||||||||||||||||
Online2 | 155 | 15 | 209 | 18 | (54 | ) | (26 | ) | |||||||||||||||||||||||||
PC | 168 | 16 | 96 | 8 | 72 | 75 | |||||||||||||||||||||||||||
Next-generation (PS4, Xbox One, Wii U) | 333 | 32 | 468 | 40 | (135 | ) | (29 | ) | |||||||||||||||||||||||||
Prior-generation (PS3, Xbox 360, Wii) | 167 | 16 | 284 | 24 | (117 | ) | (41 | ) | |||||||||||||||||||||||||
Total console3 | 500 | 48 | 752 | 64 | (252 | ) | (34 | ) | |||||||||||||||||||||||||
Mobile and other4 | 137 | 13 | 35 | 3 | 102 | NM | |||||||||||||||||||||||||||
Total Activision and Blizzard | 960 | 92 | 1,092 | 93 | (132 | ) | (12 | ) | |||||||||||||||||||||||||
Distribution: | |||||||||||||||||||||||||||||||||
Total Distribution | 80 | 8 | 78 | 7 | 2 | 3 | |||||||||||||||||||||||||||
Total consolidated non-GAAP net revenues6 | $ | 1,040 | 100 | % | $ | 1,170 | 100 | % | $ | (130 | ) | (11 | )% | ||||||||||||||||||||
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 Revenues from online consists of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services.
3 Downloadable content and their related revenues are included in each respective console platforms and total console.
4 Revenues from mobile and other includes revenues from handheld and mobile 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.
5 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.
6 Total non-GAAP net revenues presented also represents our total operating segment net revenues.
|
|||||||||||||||||||||||||||||||||
FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||
For the Nine Months Ended |
|||||||||||||||||||||||||||||||||
(Amounts in millions) | |||||||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||
|
|
$ Increase |
% Increase |
||||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | ||||||||||||||||||||||||||||||
GAAP Net Revenues by Segment/Platform Mix | |||||||||||||||||||||||||||||||||
Activision and Blizzard: | |||||||||||||||||||||||||||||||||
Online2 | $ | 687 | 21 | % | $ | 601 | 21 | % | $ | 86 | 14 | % | |||||||||||||||||||||
PC | 427 | 13 | 447 | 16 | (20 | ) | (4 | ) | |||||||||||||||||||||||||
Next-generation (PS4, Xbox One, Wii U) | 996 | 30 | 353 | 12 | 643 | 182 | |||||||||||||||||||||||||||
Prior-generation (PS3, Xbox 360, Wii) | 741 | 22 | 1,049 | 37 | (308 | ) | (29 | ) | |||||||||||||||||||||||||
Total console3 | 1,737 | 52 | 1,402 | 49 | 335 | 24 | |||||||||||||||||||||||||||
Mobile and other4 | 272 | 8 | 165 | 6 | 107 | 65 | |||||||||||||||||||||||||||
Total Activision and Blizzard | 3,123 | 94 | 2,615 | 92 | 508 | 19 | |||||||||||||||||||||||||||
Distribution: | |||||||||||||||||||||||||||||||||
Total Distribution | 189 | 6 | 218 | 8 | (29 | ) | (13 | ) | |||||||||||||||||||||||||
Total consolidated GAAP net revenues | 3,312 | 100 | 2,833 | 100 | 479 | 17 | |||||||||||||||||||||||||||
Change in Deferred Revenues5 | |||||||||||||||||||||||||||||||||
Activision and Blizzard: | |||||||||||||||||||||||||||||||||
Online2 | (165 | ) | 36 | ||||||||||||||||||||||||||||||
PC | 52 | 18 | |||||||||||||||||||||||||||||||
Next-generation (PS4, Xbox One, Wii U) | (365 | ) | 214 | ||||||||||||||||||||||||||||||
Prior-generation (PS3, Xbox 360, Wii) | (363 | ) | (513 | ) | |||||||||||||||||||||||||||||
Total console3 | (728 | ) | (299 | ) | |||||||||||||||||||||||||||||
Mobile and other4 | 32 | 12 | |||||||||||||||||||||||||||||||
Total changes in deferred revenues | (809 | ) | (233 | ) | |||||||||||||||||||||||||||||
Non-GAAP Net Revenues by Segment/Platform Mix | |||||||||||||||||||||||||||||||||
Activision and Blizzard: | |||||||||||||||||||||||||||||||||
Online2 | 522 | 21 | 637 | 25 | (115 | ) | (18 | ) | |||||||||||||||||||||||||
PC | 479 | 19 | 465 | 18 | 14 | 3 | |||||||||||||||||||||||||||
Next-generation (PS4, Xbox One, Wii U) | 631 | 25 | 567 | 22 | 64 | 11 | |||||||||||||||||||||||||||
Prior-generation (PS3, Xbox 360, Wii) | 378 | 15 | 536 | 21 | (158 | ) | (29 | ) | |||||||||||||||||||||||||
Total console3 | 1,009 | 40 | 1,103 | 42 | (94 | ) | (9 | ) | |||||||||||||||||||||||||
Mobile and other4 | 304 | 12 | 177 | 7 | 127 | 72 | |||||||||||||||||||||||||||
Total Activision and Blizzard | 2,314 | 92 | 2,382 | 92 | (68 | ) | (3 | ) | |||||||||||||||||||||||||
Distribution: | |||||||||||||||||||||||||||||||||
Total Distribution | 189 | 8 | 218 | 8 | (29 | ) | (13 | ) | |||||||||||||||||||||||||
Total consolidated non-GAAP net revenues6 | $ | 2,503 | 100 | % | $ | 2,600 | 100 | % | $ | (97 | ) | (4 | )% | ||||||||||||||||||||
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 Revenues from online consists of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services.
3 Downloadable content and their related revenues are included in each respective console platforms and total console.
4 Revenues from mobile and other includes revenues from handheld and mobile 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.
5 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.
6 Total non-GAAP net revenues presented also represents our total operating segment net revenues.
|
||||||||||||||||||||||||||||||||
FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||
For the Three and Nine Months Ended September 30, 2015 and 2014 | ||||||||||||||||||||||||||||||||
(Amounts in millions) | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
September 30, 2015 | September 30, 2014 |
$ Increase |
% Increase |
|||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | |||||||||||||||||||||||||||||
GAAP Net Revenues by Geographic Region | ||||||||||||||||||||||||||||||||
|
$ | 495 | 50 | % | $ | 350 | 46 | % | $ | 145 | 41 | % | ||||||||||||||||||||
|
367 | 37 | 316 | 42 | 51 | 16 | ||||||||||||||||||||||||||
|
128 | 13 | 87 | 12 | 41 | 47 | ||||||||||||||||||||||||||
Total consolidated GAAP net revenues | 990 | 100 | 753 | 100 | 237 | 31 | ||||||||||||||||||||||||||
Change in Deferred Revenues2 | ||||||||||||||||||||||||||||||||
|
45 | 274 | ||||||||||||||||||||||||||||||
|
11 | 135 | ||||||||||||||||||||||||||||||
|
(6 | ) | 8 | |||||||||||||||||||||||||||||
Total changes in net revenues | 50 | 417 | ||||||||||||||||||||||||||||||
Non-GAAP Net Revenues by Geographic Region | ||||||||||||||||||||||||||||||||
|
540 | 52 | 624 | 53 | (84 | ) | (13 | ) | ||||||||||||||||||||||||
|
378 | 36 | 451 | 39 | (73 | ) | (16 | ) | ||||||||||||||||||||||||
|
122 | 12 | 95 | 8 | 27 | 28 | ||||||||||||||||||||||||||
Total non-GAAP net revenues3 | $ | 1,040 | 100 | % | $ | 1,170 | 100 | % | $ | (130 | ) | (11 | )% | |||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||
September 30, 2015 | September 30, 2014 |
$ Increase |
% Increase |
||||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | ||||||||||||||||||||||||||||||
GAAP Net Revenues by Geographic Region | |||||||||||||||||||||||||||||||||
|
$ | 1,750 | 53 | % | $ | 1,384 | 49 | % | $ | 366 | 26 | % | |||||||||||||||||||||
|
1,219 | 37 | 1,172 | 41 | 47 | 4 | |||||||||||||||||||||||||||
|
343 | 10 | 277 | 10 | 66 | 24 | |||||||||||||||||||||||||||
Total consolidated GAAP net revenues | 3,312 | 100 | 2,833 | 100 | 479 | 17 | |||||||||||||||||||||||||||
Change in Deferred Revenues2 | |||||||||||||||||||||||||||||||||
|
(502 | ) | (136 | ) | |||||||||||||||||||||||||||||
|
(298 | ) | (102 | ) | |||||||||||||||||||||||||||||
|
(9 | ) | 5 | ||||||||||||||||||||||||||||||
Total changes in net revenues | (809 | ) | (233 | ) | |||||||||||||||||||||||||||||
Non-GAAP Net Revenues by Geographic Region | |||||||||||||||||||||||||||||||||
|
1,248 | 50 | 1,248 | 48 | — | — | |||||||||||||||||||||||||||
|
921 | 37 | 1,070 | 41 | (149 | ) | (14 | ) | |||||||||||||||||||||||||
|
334 | 13 | 282 | 11 | 52 | 18 | |||||||||||||||||||||||||||
Total non-GAAP net revenues3 | $ | 2,503 | 100 | % | $ | 2,600 | 100 | % | $ | (97 | ) | (4 | )% | ||||||||||||||||||||
1 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.
2 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.
3 Total non-GAAP net revenues presented also represents our total operating segment net revenues.
|
|||||||||||||||||||||||||||||||||
FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||
For the Three and Nine Months Ended September 30, 2015 and 2014 | |||||||||||||||||||||||||||||||||
(Amounts in millions) | |||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
September 30, 2015 | September 30, 2014 |
$ Increase |
% Increase |
||||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | ||||||||||||||||||||||||||||||
Segment net revenues: | |||||||||||||||||||||||||||||||||
Activision2 | $ | 591 | 57 | % | $ | 704 | 60 | % | $ | (113 | ) | (16 | )% | ||||||||||||||||||||
Blizzard3 | 369 | 35 | 388 | 33 | (19 | ) | (5 | ) | |||||||||||||||||||||||||
Distribution4 | 80 | 8 | 78 | 7 | 2 | 3 | |||||||||||||||||||||||||||
Operating segment total | 1,040 | 100 | % | 1,170 | 100 | % | (130 | ) | (11 | ) | |||||||||||||||||||||||
Reconciliation to consolidated net revenues: | |||||||||||||||||||||||||||||||||
Net effect from deferral of net revenues | (50 | ) | (417 | ) | |||||||||||||||||||||||||||||
Consolidated net revenues | $ | 990 | $ | 753 | 237 | 31 | % | ||||||||||||||||||||||||||
Segment income from operations: | |||||||||||||||||||||||||||||||||
Activision2 | $ | 122 | $ | 95 | $ | 27 | 28 | % | |||||||||||||||||||||||||
Blizzard3 | 128 | 164 | (36 | ) | (22 | ) | |||||||||||||||||||||||||||
Distribution4 | 1 | 1 | — | — | |||||||||||||||||||||||||||||
Operating segment total | 251 | 260 | (9 | ) | (3 | ) | |||||||||||||||||||||||||||
Reconciliation to consolidated operating income and consolidated income (loss) before income tax expense (benefit) | |||||||||||||||||||||||||||||||||
Net effect from deferral of net revenues and related cost of sales | (26 | ) | (180 | ) | |||||||||||||||||||||||||||||
Stock-based compensation expense | (28 | ) | (22 | ) | |||||||||||||||||||||||||||||
Amortization of intangible assets | (1 | ) | (2 | ) | |||||||||||||||||||||||||||||
Fees and other expenses related to the Purchase Transaction and related debt financings5 | — | (48 | ) | ||||||||||||||||||||||||||||||
Consolidated operating income | 196 | 8 | 188 | NM | |||||||||||||||||||||||||||||
Interest and other expense, net | 51 | 51 | |||||||||||||||||||||||||||||||
Consolidated income (loss) before income tax expense (benefit) | $ | 145 | $ | (43 | ) | 188 | NM | ||||||||||||||||||||||||||
Operating margin from total operating segments | 24.1 | % | 22.2 | % | |||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||
September 30, 2015 | September 30, 2014 |
$ Increase |
% Increase |
||||||||||||||||||||||||||||||
Amount | % of Total1 | Amount | % of Total1 | ||||||||||||||||||||||||||||||
Segment net revenues: | |||||||||||||||||||||||||||||||||
Activision2 | $ | 1,208 | 48 | % | $ | 1,193 | 46 | % | $ | 15 | 1 | % | |||||||||||||||||||||
Blizzard3 | 1,106 | 44 | 1,189 | 46 | (83 | ) | (7 | ) | |||||||||||||||||||||||||
Distribution4 | 189 | 8 | 218 | 8 | (29 | ) | (13 | ) | |||||||||||||||||||||||||
Operating segment total | 2,503 | 100 | % | 2,600 | 100 | % | (97 | ) | (4 | ) | |||||||||||||||||||||||
Reconciliation to consolidated net revenues: | |||||||||||||||||||||||||||||||||
Net effect from deferral of net revenues | 809 | 233 | |||||||||||||||||||||||||||||||
Consolidated net revenues | $ | 3,312 | $ | 2,833 | 479 | 17 | % | ||||||||||||||||||||||||||
Segment income (loss) from operations: | |||||||||||||||||||||||||||||||||
Activision2 | $ | 244 | $ | 66 | $ | 178 | NM | ||||||||||||||||||||||||||
Blizzard3 | 383 | 548 | (165 | ) | (30 | ) | |||||||||||||||||||||||||||
Distribution4 | — | (1 | ) | 1 | (100 | ) | |||||||||||||||||||||||||||
Operating segment total | 627 | 613 | 14 | 2 | |||||||||||||||||||||||||||||
Reconciliation to consolidated operating income and consolidated income before income tax expense | |||||||||||||||||||||||||||||||||
Net effect from deferral of net revenues and related cost of sales | 517 | 260 | |||||||||||||||||||||||||||||||
Stock-based compensation expense | (70 | ) | (76 | ) | |||||||||||||||||||||||||||||
Amortization of intangible assets | (4 | ) | (4 | ) | |||||||||||||||||||||||||||||
Fees and other expenses related to the Purchase Transaction and related debt financings5 | — | (48 | ) | ||||||||||||||||||||||||||||||
Consolidated operating income | 1,070 | 745 | 325 | 44 | |||||||||||||||||||||||||||||
Interest and other expense, net | 151 | 152 | |||||||||||||||||||||||||||||||
Consolidated income before income tax expense | $ | 919 | $ | 593 | 326 | 55 | % | ||||||||||||||||||||||||||
Operating margin from total operating segments | 25.1 | % | 23.6 | % | |||||||||||||||||||||||||||||
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
3
4 Activision Blizzard Distribution ("Distribution") — distributes interactive entertainment software and hardware products.
5 Reflects fees and other expenses (including legal fees, costs, expenses and accruals) related to the repurchase of 429 million shares of our common stock from Vivendi (the "Purchase Transaction") completed on October 11, 2013 and related debt financings.
|
|||||||||||||||||||||||||||||
EBITDA and Adjusted EBITDA | |||||||||||||||||||||||||||||
For the Trailing Twelve Months Ended September 30, 2015 | |||||||||||||||||||||||||||||
(Amounts in millions) | |||||||||||||||||||||||||||||
Trailing Twelve | |||||||||||||||||||||||||||||
Months Ended | |||||||||||||||||||||||||||||
December 31, | March 31, | June 30, | September 30, | September 30, | |||||||||||||||||||||||||
2014 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||||||||
GAAP Net Income | $ | 361 | $ | 394 | $ | 212 | $ | 127 | $ | 1,094 | |||||||||||||||||||
Interest Expense, net | 51 | 50 | 50 | 51 | 202 | ||||||||||||||||||||||||
Provision for income taxes | 27 | 98 | 70 | 18 | 213 | ||||||||||||||||||||||||
Depreciation and amortization | 29 | 20 | 21 | 25 | 94 | ||||||||||||||||||||||||
EBITDA | 468 | 562 | 353 | 221 | 1,603 | ||||||||||||||||||||||||
Deferral of net revenues and related cost of sales1 | 475 | (362 | ) | (181 | ) | 26 | (42 | ) | |||||||||||||||||||||
Stock-based compensation expense2 | 29 | 23 | 21 | 28 | 101 | ||||||||||||||||||||||||
Fees and other expenses related to the Purchase Transaction and related debt financings3 | (36 | ) | — | — | — | (36 | ) | ||||||||||||||||||||||
Adjusted EBITDA | $ | 936 | $ | 223 | $ | 193 | $ | 275 | $ | 1,626 | |||||||||||||||||||
1 Reflects the net change in deferred revenues and related cost of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects fees and other expenses (including legal fees, costs, expenses and accruals) related to the repurchase of 429 million shares of our common stock from Vivendi (the "Purchase Transaction") completed on October 11, 2013 and related debt financings.
Trailing twelve months amounts are presented as calculated. Therefore the sum of the four quarters, as presented, may differ due to the impact of rounding.
|
||||||||||
Outlook for the Three Months and Year Ending December 31, 2015 | ||||||||||
GAAP to Non-GAAP Reconciliation | ||||||||||
(Amounts in millions, except per share data) | ||||||||||
Outlook for the | Outlook for the | |||||||||
Three Months Ending | Year Ending | |||||||||
December 31, 2015 | December 31, 2015 | |||||||||
Net Revenues (GAAP) | $ | 1,218 | $ | 4,530 | ||||||
Excluding the impact of: | ||||||||||
Change in deferred revenues1 |
930 |
120 |
||||||||
Net Revenues (Non-GAAP) | $ |
2,148 |
$ |
4,650 |
||||||
Earnings Per Diluted Share (GAAP) | $ | 0.09 | $ | 1.07 | ||||||
Excluding the impact of: | ||||||||||
Deferral of net revenues and related cost of sales2 | 0.68 | 0.12 | ||||||||
Stock-based compensation3 | 0.03 | 0.10 | ||||||||
Amortization of intangible assets4 | 0.01 | 0.01 | ||||||||
Fees and other expenses related to acquisitions5 |
0.01 | 0.01 | ||||||||
Earnings Per Diluted Share (Non-GAAP) | $ | 0.82 | $ | 1.31 | ||||||
1 Reflects the net change in deferred revenues.
2 Reflects the net change in deferred revenues and related cost of sales.
3 Reflects expenses related to stock-based compensation.
4 Reflects amortization of intangible assets from purchase price accounting.
5 Reflects fees and other expenses related to the proposed acquisition of King Digital Entertainment plc and the debt financings related thereto.
The per share adjustments and the GAAP and non-GAAP earnings (loss) 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/20151102007005/en/
SVP,
Investor Relations
310-255-2075
Amrita.Ahuja@Activision.com
or
SVP, Global Communications
424-322-5166
Mary.Osako@Activision.com
Source:
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