UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):  February 8, 2018

            ACTIVISION BLIZZARD, INC.              

(Exact Name of Registrant as Specified in Charter)

Registrant’s telephone number, including area code:  (310) 255-2000

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨                Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨                Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨                Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨                Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Certain Information Not Filed.  The information in Item 2.02 of this Form 8-K and Exhibit 99.1 attached to this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such Item 2.02 or such Exhibit 99.1 or any of the information contained therein be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 2.02.                              Results of Operations and Financial Condition.

On February 8, 2018, Activision Blizzard, Inc. (the “Company”) issued a press release announcing results for the Company for the fiscal quarter and year ended December 31, 2017. A copy of the press release is attached hereto as Exhibit 99.1. As previously announced, the Company is hosting a conference call and webcast in conjunction with that release.

Item 8.01.                              Other Events.

Cash Dividend.  On February 8, 2018, the Company’s Board of Directors established a record date of March 30, 2018 and a payment date of May 9, 2018 for a cash dividend of $0.34 per share of the Company’s outstanding common stock.

Item 9.01.                              Financial Statements and Exhibits.

(d)  Exhibits

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

3

Exhibit 99.1

ACTIVISION BLIZZARD ANNOUNCES

FOURTH-QUARTER AND 2017 FINANCIAL RESULTS

Record Quarterly and Full-Year Revenues

Record Full-Year Digital, Mobile and In-Game Revenues

Record Full-Year Operating Cash Flow of $2.2 Billion

Santa Monica, CA – February 8, 2018 – Activision Blizzard, Inc. (Nasdaq: ATVI) today announced fourth-quarter and 2017 results.

“This was a record quarter to cap off a record year for Activision Blizzard,” said Bobby Kotick, Chief Executive Officer of Activision Blizzard. “In 2017, our community reached new milestones for engagement, our business delivered record revenues and cash flows, and we made important progress in building future growth opportunities such as the Overwatch League™. We couldn’t be more excited for the opportunities ahead in 2018 to continue serving our players and fans.”

Financial Metrics:

* Prior outlook was provided by the company on November 2, 2017 in its earnings release.

** GAAP EPS includes incremental expense ($1.03 for the fourth quarter and $1.04 for the full year 2017) due to the impact of significant discrete tax-related items, including amounts related to changes in tax laws (including a reasonable estimate of the impact of the Tax Cuts and Jobs Act enacted in December 2017, as provided for in accordance with Securities and Exchange Commission guidance), and amounts related to the potential or final resolution of tax positions, and other unusual or unique tax-related items and activities. Activision Blizzard will provide additional information relating to these items in our Form 10-K for the year ending December 31, 2017.

For the year ended December 31, 2017, Activision Blizzard’s net revenues presented in accordance with GAAP were a record $7.02 billion, as compared with $6.61 billion for 2016. GAAP net revenues from digital channels were a record $5.48 billion. GAAP operating margin was 19%. For the year ended December 31, 2017, Activision Blizzard recognized approximately $1.04 per share in

1

Activision Blizzard Announces Q4 2017 Financial Results

incremental GAAP expense due to the impact of significant discrete tax-related items, primarily related to the impact of the Tax Cuts and Jobs Act enacted in December 2017. GAAP earnings per diluted share were $0.36, which would have been a record $1.39 when adjusted to exclude significant discrete tax-related items, as compared with $1.28 for 2016. On a non-GAAP basis, Activision Blizzard’s operating margin was 33% and earnings per diluted share were a record $2.21, as compared with $2.18 for 2016.

For the quarter ended December 31, 2017, Activision Blizzard’s net revenues presented in accordance with GAAP were an all-quarter record $2.04 billion, as compared with $2.01 billion for the fourth quarter of 2016. GAAP net revenues from digital channels were $1.43 billion. GAAP operating margin was 11%. For the quarter ended December 31, 2017, Activision Blizzard recognized approximately $1.03 per share in incremental GAAP expense due to the impact of significant discrete tax-related items, primarily related to the impact of the Tax Cuts and Jobs Act enacted in December 2017. GAAP loss per share was $0.77, or earnings per diluted share of $0.27 when adjusted to exclude significant discrete tax-related items, as compared with earnings per diluted share of $0.33 for the fourth quarter of 2016. On a non-GAAP basis, Activision Blizzard’s operating margin was 25% and earnings per diluted share were $0.49, as compared with $0.65 for the fourth quarter of 2016.

Activision Blizzard generated a record $2.21 billion in operating cash flow for the year ended December 31, 2017, as compared to $2.16 billion for 2016. For the quarter, operating cash flows were $1.16 billion.

Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results.

Operating Metric:

Net bookings is an operating metric that is defined as the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others.

For the year ended December 31, 2017, Activision Blizzard’s net bookingsB were a record $7.16 billion, as compared with $6.60 billion for 2016. Net bookingsB from digital channels were a record $5.43 billion, as compared with $5.22 billion for 2016.

For the quarter ended December 31, 2017, Activision Blizzard’s net bookingsB were an all-quarter record $2.64 billion, as compared with $2.45 billion for the fourth quarter of 2016. Net bookingsB from digital channels were an all-quarter record $1.62 billion, as compared with $1.52 billion for the fourth quarter of 2016.

Selected Business Highlights:

Activision Blizzard’s success in 2017 shows the enduring nature of our franchises, and that our communities value innovation and new experiences from our inspired teams.

2

Activision Blizzard Announces Q4 2017 Financial Results

Audience Reach

·                 Activision Blizzard had 385 million Monthly Active Users (MAUs)C in the quarter, up from 384 million last quarter.

·                 King had 290 million MAUsC, down 1% quarter-over-quarter, while time spent per player reached a record of 37 minutes per day. MAUs C for the Candy CrushTM franchise grew slightly quarter-over-quarter while also driving increased time spent per player.

·                 Activision had 55 million MAUsC for the quarter, up 12% quarter-over-quarter and matching its prior quarterly record, driven by the successful launches of Call of Duty®: WWII and Destiny 2. For the year, Activision had the top two-grossing console game releases in North America and two of the top-five grossing console game releases worldwide.1

·                 Activision’s Call of Duty: WWII was the top-grossing console game of the year globally1, with the franchise’s biggest launch quarter sell-through on current-generation consoles. The game set a Sony PlayStation milestone as the biggest day 1 digital release ever.2 Call of Duty has been the number one franchise globally for 8 of the last 9 years.1

·                 Activision and Bungie’s Destiny 2 was the second-highest-grossing console game in North America for the year1, had the largest PC launch in Activision history based on units, and had a higher attach rate on its first expansion than Destiny 1.

·                 Activision’s Crash BandicootTM N. Sane Trilogy was the number one-selling remastered collection in PS4 history.1

·                 Blizzard had 40 million MAUsC for the quarter. While down sequentially, this is the 6th quarter in a row with 40 million or more MAUsC, primarily driven by Overwatch® and Hearthstone®.

Deep Engagement

·                 For the second quarter in a row, players spent over 50 minutes per day in Activision, Blizzard, and King games, in line with some of the most engaging online connected platforms in the world.

·                 The inaugural season of the Overwatch League started on January 10 with 12 world-class team owners from across the globe, multiple league and team-level sponsors, a premium viewing experience and a robust distribution strategy. In its first week, the Overwatch League reached more than 10 million unique viewers across the world with an average audience of more than 280,000 on a per minute basis.

·                 The Call of Duty World League, which kicked off in December, has sold out each of its World League Global Open events. The launch event in Dallas had more than double the viewership hours of last year’s launch event.

Player Investment

·                 Activision Blizzard delivered a fourth-quarter record of over $1 billion of in-game net bookingsB, and an annual record of over $4 billion of in-game net bookingsB.

3

Activision Blizzard Announces Q4 2017 Financial Results

·                 King grew segment revenues and operating income year-over-year, delivered record mobile net bookingsB in 2017, and increased its average net bookingsB per paying user by a double-digit percentage year-over-year. This quarter, King had two of the top-10 highest-grossing titles in the U.S. mobile app stores for the seventeenth quarter in a row, with Candy Crush Saga™ and Candy Crush Soda SagaTM at #1 and #2, respectively.3 The Candy Crush franchise grew consumer spend sequentially for the fourth quarter in a row.

·                 Activision delivered record segment operating income of over $1 billion with record operating margin of 38%. Activision offered compelling downloadable content offerings, including Zombies Chronicles for Call of Duty: Black Ops III, Destiny 2’s expansion pass, Call of Duty: WWII’s season pass, and additional live features, services and content.

·                 Blizzard delivered record segment revenues and operating income for a year with no major game release, as they continued to deliver continuous content across franchises including Overwatch, Hearthstone, and World of Warcraft®.

Company Outlook:

Net bookingsB (operating metric) is expected to be $7.45 billion for 2018 and $1.28 billion for the first quarter of 2018.

Currency Assumptions for 2018 Outlook:

·                 $1.20 USD/Euro for current outlook (vs. average of $1.12 for 2017 and $1.11 for 2016); and

·                 $1.37 USD/British Pound Sterling for current outlook (vs. average of $1.30 for 2017 and $1.36 for 2016).

·                 Note: Our financial guidance includes the forecasted impact of our FX cash flow hedging program.

Capital Allocation:

The Board of Directors declared a cash dividend of $0.34 per common share, payable on May 9, 2018 to shareholders of record at the close of business on March 30, 2018, which represents a 13% increase from 2017. Additionally, the Board of Directors authorized over $1 billion of further debt paydown during 2018.

4

Activision Blizzard Announces Q4 2017 Financial Results

Conference Call:

Today at 4:30 p.m. EST, Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the quarter ended December 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 888-515-2235 in the U.S. with passcode 1423198.

About Activision Blizzard:

Activision Blizzard, Inc., a member of the Fortune 500 and 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™,  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.

Please see the “Investor Relations” area of www.activisionblizzard.com for answers to frequently asked questions regarding the upcoming adoption in the first quarter of 2018 of ASC 606, a new accounting standard related to GAAP revenue recognition.

1 Based on data from the NPD Group, GfK, GSD and internal estimates.

2 Based on blog.us.playstation.com.

3 U.S. ranking for Apple App Store and Google Play Store combined, per App Annie Intelligence for fourth quarter 2017.

A 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, along with, for the purposes of EPS, the related cost of revenues deferrals treatment and the related tax impacts. Internally, management excludes the impact of this change in deferred revenues and related cost of revenues when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. Management believes this is appropriate because doing so enables an analysis of performance based on the timing of actual transactions with our customers. In addition, management believes excluding the change in deferred revenues and the related cost of revenues provides a much more timely indication of trends in our operating results.

B Net bookings is an operating metric that is defined as the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others.

5

Activision Blizzard Announces Q4 2017 Financial Results

C Monthly Active User (“MAU”) Definition: We monitor MAUs as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period. An individual who accesses two of our games would be counted as two users. In addition, due to technical limitations, for Activision and King, an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users. For Blizzard, an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user.

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:

·      expenses related to stock-based compensation;

·      the amortization of intangibles from purchase price accounting;

·      fees and other expenses related to the King acquisition, inclusive of related debt financings, and refinancing of long-term debt, including penalties and the write off of unamortized discount and deferred financing costs;

·      restructuring charges;

·      other non-cash charges from reclassification of certain cumulative translation adjustments into earnings as required by GAAP;

·      the income tax adjustments associated with any of the above items (tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results); and

·      significant discrete tax-related items, including amounts related to changes in tax laws (including the Tax Cuts and Jobs Act enacted in December 2017), amounts related to the potential or final resolution of tax positions, and other unusual or unique tax-related items and activities.

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

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

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

6

Activision Blizzard Announces Q4 2017 Financial Results

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, including the impact of tax items thereon; 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 risks, 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: 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 diversion of management time and attention to issues relating to the operations of our acquired or newly started businesses; 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; litigation risks and associated costs; protection of proprietary rights; shifts in consumer spending trends; capital market risks; the impact of 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.

Activision Blizzard, Inc.

Investors and Analysts:

ir@activisionblizzard.com

or

Press:

pr@activisionblizzard.com

###

(Tables to Follow)

7

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.

8

9

1 Excludes deferral and amortization of share-based compensation expense.

2 Includes the net effects of capitalization, deferral, and amortization of share-based compensation expense.

10

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

SUPPLEMENTAL CASH FLOW INFORMATION

(Amounts in millions)

1 Non-GAAP free cash flow represents operating cash flow minus capital expenditures.

2 TTM represents trailing twelve months.  Operating Cash Flow for the three months ended March 31, 2015, three months ended June 30, 2015, and three months ended September 30, 2015 was $223 million, $144 million, and $(171) million, respectively.  Capital Expenditures for the three months ended March 31, 2015, three months ended June 30, 2015, and three months ended September 30, 2015, was $21 million, $28 million, and $46 million, respectively.

11

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, primarily severance costs.

5                     Reflects the impact of significant discrete tax-related items, including amounts related to changes in tax laws (including a reasonable estimate of the impact of the Tax Cuts and Jobs Act enacted in December 2017, as provided for in accordance with Securities and Exchange Commission guidance), amounts related to the potential or final resolution of tax positions, and/or other unusual or unique tax-related items and activities. Activision Blizzard will provide additional information in our forthcoming Form 10-K for the year ending December 31, 2017.

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 pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

The GAAP and non-GAAP earnings per share information is presented as calculated.  The sum of these measures, as presented, may differ due to the impact of rounding.

12