Activision Blizzard, Inc.
Activision Blizzard, Inc. (Form: 8-K, Received: 08/04/2015 16:21:54)

 

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):  August 4, 2015

 

                  ACTIVISION BLIZZARD, INC.                     

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware

 

001-15839

 

95-4803544

(State or Other Jurisdiction of
Incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

 

3100 Ocean Park Boulevard,
Santa Monica, CA

 

 

 

90405

(Address of Principal Executive
Offices)

 

 

 

(Zip Code)

 

 

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):

 

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

 

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

 

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

 

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

 



 

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 August 4, 2015, Activision Blizzard, Inc. (the “Company”) issued a press release announcing results for the Company for the fiscal quarter ended June 30, 2015. 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 9.01.                               Financial Statements and Exhibits.

 

(d)  Exhibits

 

99.1                     Press Release dated August 4, 2015 (furnished not filed)

 

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.

 

Date: August 4, 2015

ACTIVISION BLIZZARD, INC.

 

 

 

 

 

By:

 /s/ Dennis Durkin

 

 

 

 Dennis Durkin

 

 

 

 Chief Financial Officer

 

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated August 4, 2015 (furnished not filed)

 

4


Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

ACTIVISION BLIZZARD ANNOUNCES BETTER-THAN-EXPECTED

SECOND QUARTER 2015 FINANCIAL RESULTS

 

Company Increases CY 2015 Revenues and EPS Outlook Once Again

 

Company Delivered Record Q2 Non-GAAP Digital Revenues of Over $600 Million,
Growing 27% Year-Over-Year

 

Santa Monica, CA – August 4, 2015 – Activision Blizzard, Inc. (Nasdaq: ATVI) today announced better-than-expected financial results for the second quarter of 2015.

 

 

 

Second Quarter

 

 (in millions, except EPS)

 

 

2015

 

 

Prior
Outlook*

 

 

2014

 

 

  GAAP

 Net Revenues

 

$

1,044

 

$

930

 

$

970

 

 EPS

 

$

0.29

 

$

0.21

 

$

0.28

 

  Non-GAAP

 

 

 

 

 

 

 

 Net Revenues

 

$

759

 

$

650

 

$

658

 

 EPS

 

$

0.13

 

$

0.07

 

$

0.06

 

 

*Prior outlook was provided by the company on May 6, 2015 in its earnings release.

 

For the quarter ended June 30, 2015, Activision Blizzard’s GAAP net revenues were $1.04 billion, as compared with $970 million for the second quarter of 2014.   On a non-GAAP basis, the company’s net revenues were $759 million, as compared with $658 million for the second quarter of 2014.  For the second quarter, GAAP net revenues from digital channels were a Q2 record $569 million and represented a Q2 record 55% of the company’s total revenues.  On a non-GAAP basis, net revenues from digital channels were a Q2 record $611 million, growing 27% year-over-year.

 

For the quarter ended June 30, 2015, Activision Blizzard’s GAAP earnings per diluted share were $0.29, as compared with $0.28 for the second quarter of 2014.  On a non-GAAP basis, the company’s earnings per diluted share were $0.13, as compared with $0.06 for the second quarter of 2014.

 

Year-to-date non-GAAP revenues and EPS were up 2% and 12%, respectively, year-over-year (13% and 56%, respectively, at constant FX A ), given strong engagement and recurring digital monetization trends on our year-round monetizing franchises.

 

1



 

Activision Blizzard Announces Q2 2015 Financial Results

 

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

 

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, “Our strategic focus on expanding our franchise portfolio with captivating and original new intellectual property, innovating on new platforms, and expanding into new geographies is reflected in our results. We outperformed our Q2 targets and last year’s results on revenues, digital growth, and earnings per share. These strong results and the excitement for our future games have driven us to raise our full-year outlook.”

 

Kotick added, “Our audience size and the total amount of time people spend with our franchises continue to grow. In the second quarter, our monthly active users B  grew by 35% year-over-year, and the time our communities spent playing our games grew by 25% year-over-year.”

 

Kotick continued, “I want to thank our extraordinarily talented employees around the world. They pour their passions into creating the most fun and epic entertainment experiences for our audiences, and our superior financial performance is a result of their dedication.”

 

Selected Business Highlights:

 

·                  Blizzard Entertainment’s Hearthstone ® : Heroes of Warcraft™ and Heroes of the Storm , and Activision Publishing’s Destiny combined now have more than 70 million registered players and over $1.25 billion in non-GAAP revenues 1  life-to-date.

 

·                  Activision Publishing had its strongest ever second quarter engagement and digital monetization, with the most Q2 monthly active users (MAUs) B  in its history, up more than 25% year-over-year, and the largest Q2 and first half digital revenues in its history.

 

·                  Activision Publishing continues to have 2 of the top 5 videogame franchises in North America and Europe year-to-date, with Skylanders, including toys and accessories, achieving the No. 1 spot. 2  Including toys and accessories, Skylanders was the No. 1 console title and kids console title year to date, and outsold the No. 1 action figure line in North America and Europe. 2  Activision Publishing also continues to have 3 of the top 5 next-generation games life-to-date. 3

 

·                  Activision Publishing’s Call of Duty franchise Q2 non-GAAP revenues increased by a double-digit percentage year-over-year due to strong continued sell-through of Call of Duty: Advanced Warfare and growing online revenues per user across the franchise.  Season pass, downloadable content, and micro-transaction offerings have helped drive increased engagement and monetization. Call of Duty: Advanced Warfare remains the No. 1 next generation game life to date, as it has been since its launch nine months ago. 3

 

·                  Activision Publishing and Bungie released Destiny ’s highly acclaimed second expansion, House of Wolves , which had a strong attach rate and engagement.  Destiny now has over 2 billion hours of gameplay since launch, which amounts to an average 100 hours of gameplay for each of Destiny ’s over 20 million registered players.

 

2



 

Activision Blizzard Announces Q2 2015 Financial Results

 

·                  Blizzard Entertainment had the largest online player community in its history, with Q2 MAUs B  up 50% year-over-year. Though World of Warcraft ®  ended the quarter at 5.6 million subscribers C , Blizzard revenues are up year-over-year based on strong performance across the expanding Blizzard portfolio. On June 23, 2015, Blizzard Entertainment released, Fury of Hellfire , one of the largest non-expansion content updates to date for World of Warcraft . This new content helped stabilize the subscriber number towards the end of the quarter. World of Warcraft remains the No. 1 subscription-based MMORPG in the world.

 

·                  On April 2, 2015, Blizzard Entertainment launched Blackrock Mountain ™, the second Adventure for Hearthstone: Heroes of Warcraft . The release of Hearthstone on iOS and Android smartphones followed on April 14, 2015. Key engagement metrics, which were already very strong, nearly doubled year over year, largely on account of the new content and new platforms.

 

·                  Blizzard Entertainment launched Heroes of the Storm on June 2, 2015 with strong critical reception. The Eternal Conflict, a series of content additions based on the Diablo ® universe, was launched in June and is still ongoing, and players have responded with positivity and excitement. Blizzard announced in May that Heroes of the Storm had been added to the Road to BlizzCon ®  program, and major tournaments are already underway globally.

 

·                  On April 23, 2015, Sanctuary’s gates were thrown open to all Chinese heroes, as Blizzard Entertainment’s award-winning action role-playing game Diablo® III: Reaper of Souls™ went live in China. Diablo III has now sold-through over 30 million units life-to-date globally.

 

·                  Blizzard Entertainment achieved record revenues and MAUs B  in China this quarter, driven by the popularity of Diablo III, Hearthstone: Heroes of Warcraft , and Heroes of the Storm .

 

Company Outlook:

 

·                  On September 15, 2015, Activision Publishing and Bungie expect to release The Taken King , the largest update to the Destiny universe yet. The mega-expansion will include an all-new campaign, new sub-classes, a new destination, and more. Current players can digitally purchase the expansion for a suggested retail price of $39.99, while The Legendary Edition offers new players the original game, both expansion packs, and The Taken King for a suggested retail price of $59.99.

 

·                  On September 20, 2015, Activision Publishing expects to release Skylanders SuperChargers, the next installment in the franchise with all new vehicles, action figures and exclusive Nintendo characters.

 

3



 

Activision Blizzard Announces Q2 2015 Financial Results

 

·                  On October 20, 2015, Activision Publishing plans to bring back the pop culture phenomenon that previously reached over 40 million players in North America and Europe with the launch of Guitar Hero ®  Live . The new multiplayer mode, Guitar Hero TV, allows fans to play songs on multiple channels, play with and against their friends, discover new music, and choose songs on-demand. The re-imagined experience will offer two game modes and will be available on consoles, tablets, and mobile phones.

 

·                  On November 6, 2015, Activision Publishing expects to release the highly anticipated Call of Duty: Black Ops III from its award winning studio, Treyarch.  The company also announced an upcoming multiplayer Beta, a first for Call of Duty on next-generation consoles.  Fans who pre-order the game now will get access to the Beta on August 19 on Sony’s PlayStation®4, and August 26 on Microsoft’s Xbox One and PC .

 

·                 On July 15, 2015, Blizzard Entertainment kicked off pre-purchases for StarCraft ®  II: Legacy of the Void , the third installment of the company’s real-time strategy sequel. Players who pre-purchase Legacy of the Void through Battle.net ®  will have access to the ongoing beta and three prologue missions, titled “Whispers of Oblivion.” Legacy of the Void will be a standalone product that won’t require any prior releases, so it will be easier than ever for players to get into the game and experience all of the latest content. It is expected to be released in 2015.

 

·                 On July 22, 2015, Blizzard Entertainment announced The Grand Tournament , the second expansion to Hearthstone: Heroes of Warcraft , which will launch with over 130 new cards and new mechanics this month.

 

·                 A new expansion for Blizzard Entertainment’s World of Warcraft will be announced at gamescom in August 2015.

 

·                  Blizzard Entertainment expects to begin beta testing for Overwatch ™ in fall 2015 .

 

·                  Tickets to Blizzard Entertainment’s ninth BlizzCon, which will be returning to the Anaheim Convention Center on Friday, November 6, and Saturday, November 7, went on sale in two batches in April and quickly sold out. 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.

 

·                  Given the weakening of foreign currencies versus the U.S. dollar, the company’s 2015 international revenues and earnings are expected to be translated at lower rates than in 2014. This 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.

 

4



 

Activision Blizzard Announces Q2 2015 Financial Results

 

Activision Blizzard’s third quarter and calendar year 2015 outlook is, as follows:

 

 

 

 

Prior Outlook*

 

 

Current Outlook

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except
EPS)

 

 

GAAP
Outlook

 

 

 

Non-GAAP
Outlook

 

 

GAAP
Outlook

 

 

Non-GAAP
Outlook

 

CY 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

 

4,250

 

 

$

4,425

 

$

 

4,425

 

$

4,600

 

EPS

 

$

 

0.98

 

 

$

1.20

 

$

 

1.06

 

$

1.30

 

Fully Diluted Shares**

 

 

750

 

 

 

750

 

 

750

 

 

750

 

Q3 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

 

N/A

 

 

 

N/A

 

$

 

875

 

$

930

 

EPS

 

 

N/A

 

 

 

N/A

 

$

 

0.08

 

$

0.14

 

Fully Diluted Shares**

 

 

N/A

 

 

 

N/A

 

 

748

 

 

748

 

 

The following table compares our CY14 actual earnings per share to CY15 outlook earnings per share.

 

 

 

Comparison

 

 

 

 

EPS

 

 

Prior Non-GAAP Outlook*

 

 

Current Non-GAAP Outlook

 

 

 

Change

 

CY14 – Actuals

 

$

1.42

 

$

1.42

 

 

 

 

 

Slate / Operations

 

 

0.01

 

 

0.15

 

 

0.14

 

Foreign Currency

 

 

(0.15)

 

 

(0.19)

 

 

(0.04)

 

Tax Rate & Share Count

 

 

(0.08)

 

 

(0.08)

 

 

 

 

CY15 – Outlook

 

$

1.20

 

$

1.30

 

 

0.10

 

 

Currency Assumptions for 2015 Outlook (Q3-Q4):

·                  $1.10 USD/Euro for current outlook (vs. $1.11 for prior outlook* and 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

 

*   Prior outlook was provided by the company on May 6, 2015 in its earnings release.

** Fully diluted weighted average shares include participating securities and dilutive options on a weighted average basis.

 

Cash Dividend

 

Activision Blizzard paid a cash dividend of $0.23 per common share, a 15% increase year-over-year, in May 2015 to shareholders of record at the close of business on March 30, 2015, totaling $170 million.  The company did not make any share repurchases during the second quarter under its $750 million share repurchase authorization ending February 2017.

 

5



 

Activision Blizzard Announces Q2 2015 Financial Results

 

Conference Call

 

Today at 4:30 p.m. EDT, Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the quarter ended June 30, 2015 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 888-337-8197 in the U.S. with passcode 6151996 .

 

About Activision Blizzard

 

Activision Blizzard, Inc. is the largest and most profitable western interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty , Call of Duty Online, Destiny , Skylanders, World of Warcraft , StarCraft , Diablo, Hearthstone: Heroes of Warcraft, and Heroes of the Storm . The company is one of the FORTUNE “100 Best Companies To Work For®” 2015.

 

Headquartered in Santa Monica, California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard develops and publishes games on all leading interactive platforms and its games are available in most countries around the world. More information about Activision Blizzard and its products can be found on the company’s website, www.activisionblizzard.com .

 

1   Life to date, combined GAAP revenues from Hearthstone: Heroes of Warcraft, Destiny, and Heroes of the Storm were over $1 billion.

2  The NPD Group and GfK Chart-Track and Activision Blizzard internal estimates, including toys and accessories

3  The NPD Group and GfK Chart-Track

 

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. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired prepaid cards. Subscribers in licensees’ territories are defined along the same rules.

 

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.

 

6



 

Activision Blizzard Announces Q2 2015 Financial Results

 

Activision Blizzard provides net revenues, net income (loss), earnings (loss) per share and operating margin data and guidance both including (in accordance with GAAP) and excluding (non-GAAP) certain items. When relevant, the Company also provides constant FX information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. In addition, Activision Blizzard provides EBITDA (defined as GAAP net income (loss) before interest (income) expense, income taxes, depreciation and amortization) and adjusted EBITDA (defined as non-GAAP operating margin (see non-GAAP financial measure below) before depreciation).  The non-GAAP financial measures exclude the following items, as applicable in any given reporting period:

 

·                   the change in deferred revenues and related cost of sales with respect to certain of the company’s online-enabled games;

·                   expenses related to stock-based compensation;

·                   the amortization of intangibles from purchase price accounting;

·                   fees and other expenses (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 dated July 25, 2013 and the $4.75 billion debt financings related thereto; and

·                   the income tax adjustments associated with any of the above items.

 

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

 

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

 

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.

 

In addition to the reasons stated above, which are generally applicable to each of the items Activision Blizzard excludes from its non-GAAP financial measures, there are additional specific reasons why the company believes it is appropriate to exclude the change in deferred revenues and related cost of sales with respect to certain of the company’s online-enabled games.

 

Since Activision Blizzard has determined that some of our games’ online functionality represents an essential component of gameplay and, as a result, a more-than-inconsequential separate deliverable, we recognize revenues attributed to these game titles over their estimated service periods, which may range from five months to a maximum of less than a year. The related cost of sales is deferred and recognized as the related revenues are recognized. Internally, management excludes the impact of this change in deferred revenues and related cost of sales in its non-GAAP financial measures when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.  Management believes this is appropriate because doing so enables an analysis of performance based on the timing of actual transactions with our customers, which is consistent with the way the company is measured by investment analysts and industry data sources. In addition, excluding the change in deferred revenues and the related cost of sales provides a much more timely indication of trends in our operating results.

 

7



 

Activision Blizzard Announces Q2 2015 Financial Results

 

Cautionary Note Regarding Forward-looking Statements:   The statements contained in this press release that are not historical facts are forward-looking statements, including, but not limited to, statements about (1) projections of revenues, expenses, income or loss, earnings or loss per share, cash flow or other financial items; (2) statements of our plans and objectives, including those related to product releases; (3) statements of future financial or operating performance; 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: sales levels of Activision Blizzard’s titles; increasing concentration of revenue among a small number of titles; Activision Blizzard’s ability to predict consumer preferences, including interest in specific genres, and preferences among hardware platforms; the amount of our debt and the limitations imposed by the covenants in the agreements governing our debt; adoption rate and availability of new hardware (including peripherals) and related software, particularly during the console transitions; counterparty risks relating to customers, licensees, licensors and manufacturers; maintenance of relationships with key personnel, customers, financing providers, licensees, licensors, manufacturers, vendors, and third-party developers, including the ability to attract, retain and develop key personnel and developers that can create high quality titles;  changing business models, including digital delivery of content and the increased prevalence of free-to-play games; product delays or defects; competition, including from used games and other forms of entertainment; rapid changes in technology and industry standards; possible declines in software pricing; product returns and price protection; the identification of suitable future acquisition opportunities and potential challenges associated with geographic expansion; the seasonal and cyclical nature of the interactive entertainment market; litigation risks and associated costs; protection of proprietary rights; shifts in consumer spending trends; capital market risks; applicable regulations; domestic and international economic, financial and political conditions and policies; tax rates and foreign exchange rates; the impact of the current macroeconomic environment; and the other factors identified in “Risk Factors” included in Part I, Item 1A of Activision Blizzard’s most recent annual report on Form 10-K.

 

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, August 4, 2015, or to reflect the occurrence of unanticipated events.

 

###

 

(Tables to Follow)

 

For Information Contact:

 

 

 

Amrita Ahuja

Mary Osako

 

 

SVP, Investor Relations

SVP, Global Communications

 

 

(310) 255-2075

(424) 322-5166

 

 

Amrita.Ahuja@Activision.com

Mary.Osako@Activision.com

 

8



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

1

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

(Amounts in millions, except per share data)

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

 

 

 

 

 

 

 

Product sales

 

  $

528

 

  $

587

 

  $

1,311

 

$

1,357

 

Subscription, licensing and other revenues 1

 

516

 

383

 

1,011

 

724

 

Total net revenues

 

1,044

 

970

 

2,322

 

2,081

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

Cost of sales - product costs

 

156

 

187

 

364

 

412

 

Cost of sales - online

 

53

 

56

 

106

 

115

 

Cost of sales - software royalties and amortization

 

85

 

46

 

233

 

102

 

Cost of sales - intellectual property licenses

 

3

 

11

 

7

 

13

 

Product development

 

149

 

112

 

294

 

255

 

Sales and marketing

 

164

 

141

 

256

 

245

 

General and administrative

 

102

 

107

 

188

 

202

 

Total costs and expenses

 

712

 

660

 

1,448

 

1,344

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

332

 

310

 

874

 

737

 

 

 

 

 

 

 

 

 

 

 

Interest and other expense, net

 

50

 

50

 

100

 

101

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

282

 

260

 

774

 

636

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

70

 

56

 

168

 

139

 

 

 

 

 

 

 

 

 

 

 

Net income

 

  $

212

 

  $

204

 

  $

606

 

$

497

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share 2

 

  $

0.29

 

  $

0.28

 

  $

0.82

 

$

0.68

 

Weighted average common shares outstanding

 

727

 

716

 

725

 

712

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share 2

 

  $

0.29

 

  $

0.28

 

  $

0.81

 

$

0.67

 

Weighted average common shares outstanding assuming dilution

 

735

 

725

 

734

 

723

 

 

 

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 9 million and 10 million for the three and six months ended June 30, 2015, respectively, and 16 million for both the three and six months ended June 30, 2014.  For the three and six months ended June 30, 2015, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate earnings per common share, assuming dilution, was $210 million and $597 million, respectively, as compared to total net income of $212 million and $606 million, respectively, for the same periods. For the three and six months ended June 30, 2014, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate earnings per common share, assuming dilution, was $200 million and $484 million, respectively, as compared to total net income of $204 million and $497 million, respectively, for the same periods.

 



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

2

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Unaudited)

 

(Amounts in millions)

 

 

 

 

June 30,
2015

 

December 31,
2014

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

  $

4,416

 

  $

4,848

 

Short-term investments

 

105

 

10

 

Accounts receivable, net

 

201

 

659

 

Inventories, net

 

117

 

123

 

Software development

 

338

 

452

 

Intellectual property licenses

 

26

 

5

 

Deferred income taxes, net

 

346

 

368

 

Other current assets

 

502

 

444

 

Total current assets

 

6,051

 

6,909

 

Long-term investments

 

9

 

9

 

Software development

 

80

 

20

 

Intellectual property licenses

 

 

18

 

Property and equipment, net

 

179

 

157

 

Other assets

 

153

 

85

 

Intangible assets, net

 

26

 

29

 

Trademark and trade names

 

433

 

433

 

Goodwill

 

7,084

 

7,086

 

Total assets

 

  $

14,015

 

  $

14,746

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

  $

198

 

  $

325

 

Deferred revenues

 

837

 

1,797

 

Accrued expenses and other liabilities

 

510

 

592

 

Total current liabilities

 

1,545

 

2,714

 

Long-term debt, net

 

4,077

 

4,324

 

Deferred income taxes, net

 

126

 

114

 

Other liabilities

 

466

 

361

 

Total liabilities

 

6,214

 

7,513

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common stock

 

 

 

Additional paid-in capital

 

10,163

 

9,924

 

Treasury stock

 

(5,627)

 

(5,762)

 

Retained earnings

 

3,810

 

3,374

 

Accumulated other comprehensive loss

 

(545)

 

(303)

 

Total shareholders’ equity

 

7,801

 

7,233

 

Total liabilities and shareholders’ equity

 

  $

14,015

 

  $

14,746

 

 



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

3

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except per share data)

 

Three Months Ended June 30, 2015

 

Net
Revenues

 

Cost of Sales -
Product Costs

 

Cost of Sales -
Online

 

Cost of Sales -
Software
Royalties and
Amortization

 

Cost of Sales -
Intellectual
Property
Licenses

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs
and
Expenses

 

GAAP Measurement

 

  $

1,044

 

$

156

 

$

53

 

$

85

 

$

3

 

$

149

 

$

164

 

$

102

 

$

712

 

Less: Net effect from deferral of net revenues and related cost of sales 1

 

(285

 )

(59

 )

 

(45

 )

 

 

 

 

(104

 )

Less: Stock-based compensation 2

 

 

 

 

(3

 )

 

(6

 )

(2

 )

(10

 )

(21

 )

Less: Amortization of intangible assets 3

 

 

 

 

 

(1

 )

 

 

 

(1

 )

Non-GAAP Measurement

 

  $

759

 

$

97

 

$

53

 

$

37

 

$

2

 

$

143

 

$

162

 

$

92

 

$

586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic
Earnings per
Share

 

Diluted
Earnings per
Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

  $

332

 

$

212

 

$

0.29

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

Less: Net effect from deferral of net revenues and related cost of sales

 

(181

 )

(136

 )

(0.18

 )

(0.18

 )

 

 

 

 

 

 

 

 

 

 

Less: Stock-based compensation

 

21

 

16

 

0.02

 

0.02

 

 

 

 

 

 

 

 

 

 

 

Less: Amortization of intangible assets

 

1

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Measurement

 

  $

173

 

$

93

 

$

0.13

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2015

 

Net
Revenues

 

Cost of Sales -
Product Costs

 

Cost of Sales -
Online

 

Cost of Sales -
Software
Royalties and
Amortization

 

Cost of Sales -
Intellectual
Property
Licenses

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs
and
Expenses

 

GAAP Measurement

 

  $

2,322

 

$

364

 

$

106

 

$

233

 

$

7

 

$

294

 

$

256

 

$

188

 

$

1,448

 

Less: Net effect from deferral of net revenues and related cost of sales 1

 

(860

 )

(170

 )

 

(145

 )

 

 

 

 

(315

 )

Less: Stock-based compensation 2

 

 

 

 

(7

 )

 

(14

 )

(4

 )

(19

 )

(44

 )

Less: Amortization of intangible assets 3

 

 

 

 

 

(3

 )

 

 

 

(3

 )

Non-GAAP Measurement

 

  $

1,462

 

$

194

 

$

106

 

$

81

 

$

4

 

$

280

 

$

252

 

$

169

 

$

1,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic
Earnings per
Share

 

Diluted
Earnings per
Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

  $

874

 

$

606

 

$

0.82

 

$

0.81

 

 

 

 

 

 

 

 

 

 

 

Less: Net effect from deferral of net revenues and related cost of sales

 

(545

 )

(431

 )

(0.59

 )

(0.58

 )

 

 

 

 

 

 

 

 

 

 

Less: Stock-based compensation

 

44

 

32

 

0.04

 

0.04

 

 

 

 

 

 

 

 

 

 

 

Less: Amortization of intangible assets

 

3

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Measurement

 

  $

376

 

$

209

 

$

0.28

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

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 six months ended June 30, 2015, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate non-GAAP earnings per common share, assuming dilution, was $92 million and $205 million, respectively, as compared to total net income of $93 million and $209 million, respectively, for the same periods. For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 727 million, participating securities of approximately 9 million, and dilutive shares of 8 million during the three months ended June 30, 2015. For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 725 million, participating securities of approximately 10 million, and dilutive shares of 9 million during the six months ended June 30, 2015.

 



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

4

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except per share data)

 

Three Months Ended June 30, 2014

 

Net
Revenues

 

Cost of Sales -
Product Costs

 

Cost of Sales -
Online

 

Cost of Sales -
Software
Royalties and
Amortization

 

Cost of Sales -
Intellectual
Property
Licenses

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs
and
Expenses

 

GAAP Measurement

 

  $

970

 

$

187

 

$

56

 

$

46

 

$

11

 

$

112

 

$

141

 

$

107

 

$

660

 

Less: Net effect from deferral of net revenues and related cost of sales 1

 

(312

 )

(69

 )

 

(24

 )

1

 

 

 

 

(92

 )

Less: Stock-based compensation 2

 

 

 

 

(4

 )

 

(3

 )

(2

 )

(13

 )

(22

 )

Less: Amortization of intangible assets 3

 

 

 

 

 

(1

 )

 

 

 

(1

 )

Non-GAAP Measurement

 

  $

658

 

$

118

 

$

56

 

$

18

 

$

11

 

$

109

 

$

139

 

$

94

 

$

545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic
Earnings per
Share

 

Diluted
Earnings per
Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

  $

310

 

$

204

 

$

0.28

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

Less: Net effect from deferral of net revenues and related cost of sales

 

(220

 )

(174

 )

(0.24

 )

(0.23

 )

 

 

 

 

 

 

 

 

 

 

Less: Stock-based compensation

 

22

 

14

 

0.02

 

0.02

 

 

 

 

 

 

 

 

 

 

 

Less: Amortization of intangible assets

 

1

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Measurement

 

  $

113

 

$

45

 

$

0.06

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2014

 

Net
Revenues

 

Cost of Sales -
Product Costs

 

Cost of Sales -
Online

 

Cost of Sales -
Software
Royalties and
Amortization

 

Cost of Sales -
Intellectual
Property
Licenses

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs
and
Expenses

 

GAAP Measurement

 

  $

2,081

 

$

412

 

$

115

 

$

102

 

$

13

 

$

255

 

$

245

 

$

202

 

$

1,344

 

Less: Net effect from deferral of net revenues and related cost of sales 1

 

(651

 )

(163

 )

 

(49

 )

1

 

 

 

 

(211

 )

Less: Stock-based compensation 2

 

 

 

 

(11

 )

 

(10

 )

(5

 )

(27

 )

(53

 )

Less: Amortization of intangible assets 3

 

 

 

 

 

(3

 )

 

 

 

(3

 )

Non-GAAP Measurement

 

  $

1,430

 

$

249

 

$

115

 

$

42

 

$

11

 

$

245

 

$

240

 

$

175

 

$

1,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic
Earnings per
Share

 

Diluted
Earnings per
Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

  $

737

 

$

497

 

$

0.68

 

$

0.67

 

 

 

 

 

 

 

 

 

 

 

Less: Net effect from deferral of net revenues and related cost of sales

 

(440

 )

(346

 )

(0.47

 )

(0.47

 )

 

 

 

 

 

 

 

 

 

 

Less: Stock-based compensation

 

53

 

33

 

0.05

 

0.04

 

 

 

 

 

 

 

 

 

 

 

Less: Amortization of intangible assets

 

3

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Measurement

 

  $

353

 

$

186

 

$

0.25

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

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 six months ended June 30, 2014, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate non-GAAP earnings per common share, assuming dilution, was $44 million and $181 million, respectively, as compared to total net income of $45 million and $186 million, respectively, for the same periods. For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 716 million, participating securities of approximately 16 million, and dilutive shares of 9 million during the three months ended June 30, 2014. For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 712 million, participating securities of approximately 16 million, and dilutive shares of 11 million during the six months ended June 30, 2014.

 



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

5

FINANCIAL INFORMATION

For the Three and Six Months Ended June 30, 2015 and 2014

(Amounts in millions)

 

 

 

Three Months Ended

 

 

 

June 30, 2015

 

June 30, 2014

 

$ Increase

 

% Increase

 

 

 

Amount

 

% of Total 4

 

Amount

 

% of Total 4

 

(Decrease)

 

(Decrease)

 

GAAP Net Revenues by Distribution Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail channels

 

 $

414 

 

40%

 

 $

428 

 

44%

 

 $

(14)

 

(3)%

 

Digital online channels 1

 

569 

 

55   

 

476 

 

49   

 

93 

 

20    

 

Total Activision and Blizzard

 

983 

 

94   

 

904 

 

93   

 

79 

 

9    

 

Distribution

 

61 

 

6   

 

66 

 

7   

 

(5)

 

(8)   

 

Total consolidated GAAP net revenues

 

1,044 

 

100   

 

970 

 

100   

 

74 

 

8    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Deferred Revenues 2

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail channels

 

(327)

 

 

 

(317)

 

 

 

 

 

 

 

Digital online channels 1

 

42 

 

 

 

 

 

 

 

 

 

 

Total changes in deferred revenues

 

(285)

 

 

 

(312)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Revenues by Distribution Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail channels

 

87 

 

11   

 

111 

 

17   

 

(24)

 

(22)   

 

Digital online channels 1

 

611 

 

81   

 

481 

 

73   

 

130 

 

27    

 

Total Activision and Blizzard

 

698 

 

92   

 

592 

 

90   

 

106 

 

18    

 

Distribution

 

61 

 

8   

 

66 

 

10   

 

(5)

 

(8)   

 

Total non-GAAP net revenues 3

 

 $

759 

 

100%

 

 $

658 

 

100%

 

 $

101 

 

15 %

 

 

 

 

Six Months Ended

 

 

 

June 30, 2015

 

June 30, 2014

 

$ Increase

 

% Increase

 

 

 

Amount

 

% of Total 4

 

Amount

 

% of Total 4

 

(Decrease)

 

(Decrease)

 

GAAP Net Revenues by Distribution Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail channels

 

 $

1,063 

 

46%

 

 $

1,087 

 

52%

 

 $

(24)

 

(2)%

 

Digital online channels 1

 

1,150 

 

50   

 

854 

 

41   

 

296 

 

35    

 

Total Activision and Blizzard

 

2,213 

 

95   

 

1,941 

 

93   

 

272 

 

14    

 

Distribution

 

109 

 

5   

 

140 

 

7   

 

(31)

 

(22)   

 

Total consolidated GAAP net revenues

 

2,322 

 

100   

 

2,081 

 

100   

 

241 

 

12    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Deferred Revenues 2

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail channels

 

(859)

 

 

 

(804)

 

 

 

 

 

 

 

Digital online channels 1

 

(1)

 

 

 

153 

 

 

 

 

 

 

 

Total changes in deferred revenues

 

(860)

 

 

 

(651)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Revenues by Distribution Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail channels

 

204 

 

14   

 

283 

 

20   

 

(79)

 

(28)   

 

Digital online channels 1

 

1,149 

 

79   

 

1,007 

 

70   

 

142 

 

14    

 

Total Activision and Blizzard

 

1,353 

 

93   

 

1,290 

 

90   

 

63 

 

5    

 

Distribution

 

109 

 

7   

 

140 

 

10   

 

(31)

 

(22)   

 

Total non-GAAP net revenues 3

 

 $

1,462 

 

100%

 

 $

1,430 

 

100%

 

 $

32 

 

2 %

 

 

1

Net revenues from digital online channels represent revenues from digitally distributed subscriptions, licensing royalties, value-added services, downloadable content, and products.

2

We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred revenues.

3

Total non-GAAP net revenues presented also represents our total operating segment net revenues.

4

The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.

 



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

6

FINANCIAL INFORMATION

For the Three Months Ended June 30, 2015 and 2014

(Amounts in millions)

 

 

 

Three Months Ended

 

 

 

June 30, 2015

 

June 30, 2014

 

$ Increase

 

% Increase

 

 

 

Amount

 

% of Total 6

 

Amount

 

% of Total 6

 

(Decrease)

 

(Decrease)

 

GAAP Net Revenues by Segment/Platform Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

Activision and Blizzard:

 

 

 

 

 

 

 

 

 

 

 

 

 

Online 1

 

 $

221 

 

21%

 

 $

195 

 

20%

 

 $

26 

 

13%

 

PC

 

149 

 

14   

 

182 

 

19   

 

(33)

 

(18)  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Next-generation (PS4, Xbox One, Wii U)

 

317 

 

30   

 

137 

 

14   

 

180 

 

131   

 

Prior-generation (PS3, Xbox 360, Wii)

 

242 

 

23   

 

342 

 

35   

 

(100)

 

(29)  

 

Total console 2

 

559 

 

54   

 

479 

 

49   

 

80 

 

17   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile and other 3

 

54 

 

5   

 

48 

 

5   

 

 

13   

 

Total Activision and Blizzard

 

983 

 

94   

 

904 

 

93   

 

79 

 

9   

 

Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Distribution

 

61 

 

6   

 

66 

 

7   

 

(5)

 

(8)  

 

Total consolidated GAAP net revenues

 

1,044 

 

100   

 

970 

 

100   

 

74 

 

8   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Deferred Revenues 4

 

 

 

 

 

 

 

 

 

 

 

 

 

Activision and Blizzard:

 

 

 

 

 

 

 

 

 

 

 

 

 

Online 1

 

(64)

 

 

 

 

 

 

 

 

 

 

PC

 

36 

 

 

 

(51)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Next-generation (PS4, Xbox One, Wii U)

 

(152)

 

 

 

(70)

 

 

 

 

 

 

 

Prior-generation (PS3, Xbox 360, Wii)

 

(131)

 

 

 

(208)

 

 

 

 

 

 

 

Total console 2

 

(283)

 

 

 

(278)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile and other 3

 

26 

 

 

 

11 

 

 

 

 

 

 

 

Total changes in deferred revenues

 

(285)

 

 

 

(312)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Revenues by Segment/Platform Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

Activision and Blizzard:

 

 

 

 

 

 

 

 

 

 

 

 

 

Online 1

 

157 

 

21   

 

201 

 

31   

 

(44)

 

(22)  

 

PC

 

185 

 

24   

 

131 

 

20   

 

54 

 

41   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Next-generation (PS4, Xbox One, Wii U)

 

165 

 

22   

 

67 

 

10   

 

98 

 

146   

 

Prior-generation (PS3, Xbox 360, Wii)

 

111 

 

15   

 

134 

 

20   

 

(23)

 

(17)  

 

Total console 2

 

276 

 

36   

 

201 

 

31   

 

75 

 

37   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile and other 3

 

80 

 

11   

 

59 

 

9   

 

21 

 

36   

 

Total Activision and Blizzard

 

 

698 

 

92   

 

 

592 

 

90   

 

 

106

 

18   

 

Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Distribution

 

61 

 

8   

 

66 

 

10   

 

(5)

 

(8)  

 

Total consolidated non-GAAP net revenues 5

 

 $

759 

 

100%

 

 $

658 

 

100%

 

 $

101 

 

15%

 

 

1

Revenues from online consists of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services.

2

Downloadable content and their related revenues are included in each respective console platforms and total console.

3

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.

4

We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.

5

Total non-GAAP net revenues presented also represents our total operating segment net revenues.

6

The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.

 



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

7

FINANCIAL INFORMATION

For the Six Months Ended June 30, 2015 and 2014

(Amounts in millions)

 

 

 

Six Months Ended

 

 

 

June 30, 2015

 

June 30, 2014

 

$ Increase

 

% Increase

 

 

 

Amount

 

% of Total 6

 

Amount

 

% of Total 6

 

(Decrease)

 

(Decrease)

 

GAAP Net Revenues by Segment/Platform Mix

 

 

 

 

 

 

 

 

 

 

 

 

 

Activision and Blizzard:

 

 

 

 

 

 

 

 

 

 

 

 

 

Online 1

 

 $

492 

 

21%

 

 $

395 

 

19%

 

 $

97 

 

25%

 

PC

 

263 

 

11   

 

281 

 

14   

 

(18)

 

(6)  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Next-generation (PS4, Xbox One, Wii U)

 

751 

 

32   

 

245 

 

12   

 

506 

 

207   

 

Prior-generation (PS3, Xbox 360, Wii)

 

566 

 

24   

 

889 

 

43   

 

(323)

 

(36)  

 

Total console 2

 

1,317 

 

57   

 

1,134 

 

54   

 

183 

 

16   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile and other 3

 

141 

 

6   

 

131 

 

6   

 

10 

 

8   

 

Total Activision and Blizzard

 

2,213 

 

95   

 

1,941 

 

93   

 

272 

 

14   

 

Distribution:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Distribution

 

109 

 

5   

 

140 

 

7   

 

(31)

 

(22)  

 

Total consolidated GAAP net revenues

 

2,322 

 

100   

 

2,081 

 

100   

 

241 

 

12   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Deferred Revenues 4

 

 

 

 

 

 

 

 

 

 

 

 

 

Activision and Blizzard:

 

 

 

 

 

 

 

 

 

 

 

 

 

Online 1

 

(126)

 

 

 

33 

 

 

 

 

 

 

 

PC

 

48 

 

 

 

88 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Next-generation (PS4, Xbox One, Wii U)

 

(453)

 

 

 

(146)

 

 

 

 

 

 

 

Prior-generation (PS3, Xbox 360, Wii)

 

(355)

 

 

 

(637)

 

 

 

 

 

 

 

Total console 2

 

(808)

 

 

 

(783)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile and other 3