Activision Blizzard, Inc.
Activision Blizzard, Inc. (Form: 8-K, Received: 08/03/2017 16:12:01)

 

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 3, 2017

 

 

            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):

 

¨                 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 August 3, 2017, Activision Blizzard, Inc. (the “Company”) issued a press release announcing results for the Company for the fiscal quarter ended June 30, 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 9.01.                               Financial Statements and Exhibits.

 

(d)  Exhibits

 

99.1                     Press Release dated August 3, 2017 (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 3, 2017

ACTIVISION BLIZZARD, INC.

 

 

 

 

 

By:

/s/ Spencer Neumann

 

 

 

 Spencer Neumann

 

 

 

 Chief Financial Officer

 

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated August 3, 2017 (furnished not filed) 

 

4


Exhibit 99.1

 

ACTIVISION BLIZZARD ANNOUNCES BETTER-THAN-EXPECTED

SECOND-QUARTER 2017 FINANCIAL RESULTS

 

 

Record First-Half Total Revenues and Digital Revenues

 

Company Increases CY 2017 Revenues and EPS Outlook

 

 

Announced Team Sales for the Overwatch League ,
First Major Global, City-Based Professional Esports League

 

 

Santa Monica, CA – August 3, 2017 – Activision Blizzard, Inc. (Nasdaq: ATVI) today announced better-than-expected second-quarter 2017 results.

 

 

 

Second Quarter

 

 

 

 

 

 

 

 

 

 

 

Prior

 

 

 

 

 

 

 

 

 

(in millions, except EPS)

 

2017

 

Outlook*

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Revenues

 

$

1,631

 

$

1,425

 

$

1,570

 

Impact of GAAP deferrals A

 

$

(213)

 

$

(225)

 

$

39

 

 

 

 

 

 

 

 

 

GAAP EPS

 

$

0.32

 

$

0.15

 

$

0.20

 

Non-GAAP (redefined) EPS**

 

$

0.55

 

$

0.38

 

$

0.45

 

Impact of GAAP deferrals A

 

$

(0.12)

 

$

(0.11)

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

* Prior outlook was provided by the company on May 4, 2017 in its earnings release.

** “Non-GAAP (redefined)” includes the net effect of revenue deferrals accounting treatment on certain of our online enabled products. Please refer to our July 29, 2016 call and materials for additional information.

 

For the quarter ended June 30, 2017, Activision Blizzard’s net revenues presented in accordance with GAAP were $1.63 b illion, as compared with $1.57 billion for the second quarter of 2016, an increase of 4%. GAAP net revenues from digital channels were $1.31 billion, growing 15% year-over-year. GAAP operating margin was 21%. GAAP earnings per diluted share were a Q2 record of $0.32, as compared with $0.20 for the second quarter of 2016, an increase of 60%.

 

For the quarter ended June 30, 2017, on a non-GAAP (redefined) basis, Activision Blizzard’s  operating margin was 35% and earnings per diluted share were a Q2 record of $0.55, as compared with $0.45 for the second quarter of 2016, an increase of 22%.

 

For the quarter, operating cash flows were $265 million.

 

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

 

1



 

Activision Blizzard Announces Q2 2017 Financial Results

 

 

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, “This was another strong quarter for Activision Blizzard. We exceeded our outlook and delivered record revenues for the first half of 2017.”

 

Kotick added, “Celebrating players and audiences is the foundation for our success. This quarter we announced the first team owners in the Overwatch League , the first major global, city-based professional esports league. With hundreds of hours of broadcast content ahead of us, as well as significant sponsorship and media opportunities, the Overwatch League will provide new ways for us to highlight and support the passion of esports fans and the skill of some of the world’s top Overwatch ®  players.”

 

Selected Business Highlights:

 

·                  Regular content and feature updates across the portfolio enabled deeper player engagement and therefore player investment.

 

Audience Reach

 

·                  Activision Blizzard had 407 million Monthly Active Users (MAUs) B in the quarter.

 

·                  Blizzard had the biggest quarterly online player community in its history with a record 46 million MAUs B , up 38% year-over-year. The Overwatch community continued to grow more than a year after launch, setting another all-time MAU B  record with the release of two seasonal events in the quarter. Hearthstone ®  MAUs B  grew year-over-year and quarter-over-quarter to an all-time record, driven by its expansion, Journey to Un’Goro .

 

·                  Activision had 47 million MAUs B  in the second quarter, down slightly year-over-year. The launch of Zombies Chronicles led to a MAU B  increase quarter-over-quarter in Call of Duty ® : Black Ops III . Activision also released Crash Bandicoot N. Sane Trilogy for PS4, a collection of remastered Crash Bandicoot classic titles. Despite only two days of sales on a single platform, it was the number one console title globally in June based on units. 1

 

·                  Activision and its partners at Bungie expect to release Destiny 2 on September 6, 2017 for consoles and on October 24, 2017 for PC. The Destiny 2 console Beta had more total players than the 2014 Destiny Beta, and Destiny 2 pre-orders are now above the first Destiny . Activision expects to release Call of Duty: WWII on November 3, 2017. Momentum on pre-orders and hands-on feedback have been strong.

 

·                  King had 314 million MAUs B  for the quarter, down year-over-year, but with better gross bookings C  per paying user . King had two of the top-10 highest-grossing titles in the U.S. mobile app stores for the fifteenth quarter in a row. 2

 

2



 

Activision Blizzard Announces Q2 2017 Financial Results

 

Deep Engagement

 

·                  Blizzard had Q2-record time spent. In April, Blizzard launched Uprising , an Overwatch seasonal event that included a player-versus-environment mode that drew record play time. Overwatch ’s Anniversary event in May and June also drove strong engagement with record participation in customization items. Time spent in World of Warcraft ®  grew year-over-year in the second quarter, and the Legion expansion continued to perform ahead of the prior expansion.

 

·                  King’s live operations and new content continue to drive strong engagement with steady time spent at 35 minutes per day and players engaging more frequently.

 

·                  Blizzard announced the first seven team sales for the Overwatch League , the first major global professional esports league with city-based teams, and the league is set to begin its inaugural competitive season later this year.

 

·                  Blizzard announced a live-streaming media rights partnership for esports and in-game content across a number of franchises, but excluding Overwatch League content.

 

·                  Activision’s Call of Duty World League will culminate in its Championships held in Orlando in August.

 

Player Investment

 

·                  Activision Blizzard delivered nearly $1 billion of in-game revenues in the quarter with record performance in the first half of 2017.

 

·                  King’s gross bookings C  per paying user grew for the 8 th  quarter in a row to a new record. Strong engagement and player investment led to an increase in mobile gross bookings C  year-over-year and quarter-over-quarter.

 

·                  Call of Duty: Black Ops III ’s Zombies Chronicles, Activision’s first large content drop in year two after a game launch, not only drove purchases of that specific piece of content, but also led to higher engagement and to add-on revenues for that game.

 

·                  Blizzard’s Overwatch , Hearthstone , World of Warcraft , and Diablo ®  III , which debuted new content during the quarter, drove strong in-game participation.

 

3



 

Activision Blizzard Announces Q2 2017 Financial Results

 

Company Outlook:

 

(in millions, except
EPS)

 

GAAP
Outlook

 

Non-GAAP
Outlook
(redefined)

 

Impact of GAAP
deferrals
A

 

 

 

 

 

 

 

 

 

CY 2017

 

 

 

 

 

 

 

Net Revenues

 

$

6,400

 

6,400

 

175

 

EPS

 

$

1.05

 

1.94

 

0.06

 

Fully Diluted Shares*

 

767

 

767

 

 

 

 

 

 

 

 

 

 

 

Q3 2017

 

 

 

 

 

 

 

Net Revenues

 

$

1,385

 

1,385

 

315

 

EPS

 

$

0.09

 

0.34

 

0.11

 

Fully Diluted Shares*

 

766

 

766

 

 

 

 

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

 

As referenced on our July 29, 2016 call, if you would like to calculate Non-GAAP metrics as previously defined, you would add the impact of GAAP deferrals to the Non-GAAP (redefined) metrics.

 

Currency Assumptions for 2017 Outlook:

·                  $1.12 USD/Euro for current outlook (vs. average of $1.11 for 2016 and $1.11 for 2015); and

·                  $1.30 USD/British Pound Sterling for current outlook (vs. average of $1.36 for 2016 and $1.53 for 2015).

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

 

Cash Dividend:

 

The company paid a cash dividend of $0.30 per common share, up 15% year-over-year, in May 2017 to shareholders of record at the close of business on March 30, 2017, totaling $226 million.

 

Conference Call:

 

Today at 4:30 p.m. EDT, Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the quarter ended June 30, 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 888-364-3108 in the U.S. with passcode 1183538 .

 

About Activision Blizzard:

 

Activision Blizzard, Inc., a member of the S&P 500, is the world’s most successful standalone interactive entertainment company. We delight hundreds of millions of monthly active users around the world through franchises including Activision’s Call of Duty ® , Destiny and Skylanders ® , Blizzard’s World of Warcraft ® , Overwatch ® , Hearthstone ® , Diablo ® , StarCraft ® , and Heroes of the Storm ® , and King’s Candy Crush™, Pet Rescue™, Bubble Witch™ and Farm Heroes™. The company is one of the Fortune “100 Best Companies To Work For ® ”. Headquartered in Santa Monica, California, Activision Blizzard has operations throughout the world, and its games are played in 196 countries. More information about Activision Blizzard and its products and services can be found on the company’s website, www.activisionblizzard.com .

 

1  Per NPD, GfK, GSD, and internal estimates

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

 

4



 

Activision Blizzard Announces Q2 2017 Financial Results

 

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

 

C  Gross bookings is an operating metric that represents the total cash spent by players in the period for the purchase of virtual items. King uses gross bookings to evaluate its results of operations, generate future operating plans and assess performance. Gross bookings is the total price paid by players, which includes indirect taxes (sales tax or value added tax etc.), platform providers fees, and King’s share of revenues.

 

Non-GAAP (as previously defined) and Non-GAAP (redefined) Financial Measures: In accordance with the updated Compliance and Disclosure Interpretations issued by the SEC staff on May 17, 2016, beginning with the reporting of our second-quarter 2016 results, we have reported our financial results and provided our outlook using GAAP and non-GAAP (redefined). We have historically provided Non-GAAP (as previously defined) financial measures. The only difference between the two measures is the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP (as previously defined)) of the impact from revenue deferrals accounting treatment on certain of our online enabled products. Please see materials from July 29, 2016 call for further details.

 

Non-GAAP Financial Measures: As a supplement to our financial measures presented in accordance with Generally Accepted Accounting Principles (“GAAP”), Activision Blizzard presents certain non-GAAP measures of financial performance. These non-GAAP financial measures are not intended to be considered in isolation from, as a substitute for, or as more important than, the financial information prepared and presented in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the company’s results of operations as determined in accordance with GAAP.

 

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

 

·                   expenses related to stock-based compensation;

·                   the amortization of intangibles from purchase price accounting;

 

5



 

Activision Blizzard Announces Q2 2017 Financial Results

 

·                   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; and

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

 

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

 

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

 

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

 

Cautionary Note Regarding Forward-looking Statements: The statements contained herein that are not historical facts are forward-looking statements, including, but not limited to, statements about: (1) projections of revenues, expenses, income or loss, earnings or loss per share, cash flow or other financial items; (2) statements of our plans and objectives, including those related to releases of products and services; (3) statements of future financial or operating performance; and (4) statements of assumptions underlying such statements. The company generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “plans,” “believes,” “may,” “might,” “expects,” “intends,” “intends as,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming” and other similar expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risk, reflect management’s current expectations, estimates and projections about our business, and are inherently uncertain and difficult to predict.

 

The company cautions that a number of important factors could cause Activision Blizzard’s actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. Such factors include, but are not limited to: 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;

 

6



 

Activision Blizzard Announces Q2 2017 Financial Results

 

rapid changes in technology and industry standards; possible declines in software pricing; product returns and price protection; the identification of suitable future acquisition opportunities and potential challenges associated with geographic expansion; the seasonal and cyclical nature of the interactive entertainment market; the outcome of current or future tax disputes; the impact of litigation risks and associated costs; protection of proprietary rights; shifts in consumer spending trends; capital market risks; applicable regulations; domestic and international economic, financial and political conditions and policies; tax rates and foreign exchange rates; the impact of the current macroeconomic environment; and the other factors identified in “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.

 

The forward-looking statements in this press release are based on information available to the company at this time and we assume no obligation to update any such forward-looking statements. Although these forward-looking statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and may cause actual results to differ materially from current expectations.

 

###

 

(Tables to Follow)

 

For Information Contact:

 

Amrita Ahuja

 

Mary Osako

SVP, Investor Relations

 

SVP, Global Communications

(310) 255-2075

 

(424) 322-5166

Amrita.Ahuja@ActivisionBlizzard.com

 

Mary.Osako@Activision.com

 

7



 

1

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in millions, except per share data)

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2017

 

2016

 

2017

 

2016

 

Net revenues

 

 

 

 

 

 

 

 

 

Product sales

 

  $

481

 

  $

501

 

  $

989

 

  $

1,145

 

Subscription, licensing, and other revenues 1

 

1,150

 

1,069

 

2,367

 

1,880

 

Total net revenues

 

1,631

 

1,570

 

3,356

 

3,025

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

Cost of revenues—product sales:

 

 

 

 

 

 

 

 

 

Product costs

 

130

 

149

 

273

 

318

 

Software royalties, amortization, and intellectual property licenses

 

75

 

80

 

163

 

208

 

Cost of revenues—subscription, licensing, and other:

 

 

 

 

 

 

 

 

 

Game operations and distribution costs

 

236

 

241

 

468

 

383

 

Software royalties, amortization, and intellectual property licenses

 

120

 

128

 

242

 

180

 

Product development

 

252

 

249

 

478

 

424

 

Sales and marketing

 

308

 

322

 

554

 

490

 

General and administrative

 

171

 

169

 

347

 

329

 

Total costs and expenses

 

1,292

 

1,338

 

2,525

 

2,332

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

339

 

232

 

831

 

693

 

Interest and other expense (income), net

 

46

 

65

 

85

 

117

 

Income before income tax expense

 

293

 

167

 

746

 

576

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

50

 

16

 

77

 

62

 

 

 

 

 

 

 

 

 

 

 

Net income

 

  $

243

 

  $

151

 

  $

669

 

  $

514

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share 2

 

  $

0.32

 

  $

0.20

 

  $

0.89

 

  $

0.69

 

Weighted average common shares outstanding

 

754

 

739

 

752

 

737

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share 2

 

  $

0.32

 

  $

0.20

 

  $

0.88

 

  $

0.68

 

Weighted average common shares outstanding assuming dilution

 

764

 

753

 

763

 

751

 

 

1                     Subscription, licensing, and other revenues represent revenues from World of Warcraft subscriptions, licensing royalties from our products and franchises, value-added services, downloadable content, microtransactions, and other miscellaneous revenues.

 

2                     The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. We had, on a weighted-average basis, participating securities of less than 1 million for both the three and six months ended June 30, 2017, and approximately 3 million for both the three and six months ended June 30, 2016.  For the three and six months ended June 30, 2017, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate earnings per common share, assuming dilution, was $243 million and $669 million, respectively, as compared to total net income of $243 million and $669 million, respectively, for the same period. For the three and six months ended June 30, 2016, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate earnings per common share, assuming dilution, was $150 million and $511 million, respectively, as compared to total net income of $151 million and $514 million, respectively, for the same period.

 



 

2

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in millions)

 

 

 

 

June 30,
2017

 

December 31,
2016

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

  $

3,278

 

  $

3,245

 

Accounts receivable, net

 

360

 

732

 

Inventories, net

 

51

 

49

 

Software development

 

349

 

412

 

Other current assets

 

314

 

392

 

Total current assets

 

4,352

 

4,830

 

Software development

 

104

 

54

 

Property and equipment, net

 

246

 

258

 

Deferred income taxes, net

 

398

 

283

 

Other assets

 

466

 

401

 

Intangible assets, net

 

1,479

 

1,858

 

Goodwill

 

9,763

 

9,768

 

Total assets

 

  $

16,808

 

  $

17,452

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

  $

163

 

  $

222

 

Deferred revenues

 

940

 

1,628

 

Accrued expenses and other liabilities

 

662

 

806

 

Total current liabilities

 

1,765

 

2,656

 

Long-term debt, net

 

4,387

 

4,887

 

Deferred income taxes, net

 

38

 

44

 

Other liabilities

 

903

 

746

 

Total liabilities

 

7,093

 

8,333

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common stock

 

 

 

Additional paid-in capital

 

10,606

 

10,442

 

Treasury stock

 

(5,563)

 

(5,563)

 

Retained earnings

 

5,312

 

4,869

 

Accumulated other comprehensive loss

 

(640)

 

(629)

 

Total shareholders’ equity

 

9,715

 

9,119

 

Total liabilities and shareholders’ equity

 

  $

16,808

 

  $

17,452

 

 



 

3

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)

 

 

Three Months Ended June 30, 2017

 

Net Revenues

 

Cost of Revenues
- Product Sales:
Product Costs

 

Cost of Revenues
- Product Sales:
Software
Royalties and
Amortization

 

Cost of Revenues
- Subs/Lic/Other:
Game Operations
and Distribution
Costs

 

Cost of Revenues
- Subs/Lic/Other:
Software
Royalties and
Amortization

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs and
Expenses

 

GAAP Measurement

 

 $

1,631

 

 $

130

 

 $

75

 

 $

236

 

 $

120

 

 $

252

 

 $

308

 

 $

171

 

 $

1,292

 

Share-based compensation 1

 

 

 

(3

)

 

 

(14

)

(4

)

(18

)

(39

)

Amortization of intangible assets 2

 

 

 

 

 

(114

)

 

(78

)

(2

)

(194

)

Fees and other expenses related to the King Acquisition 3

 

 

 

 

 

 

 

 

(5

)

(5

)

Other non-cash charges 4

 

 

 

 

 

 

 

 

1

 

1

 

Non-GAAP (redefined) Measurement

 

 $

1,631

 

 $

130

 

 $

72

 

 $

236

 

 $

6

 

 $

238

 

 $

226

 

 $

147

 

 $

1,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 5

 

 $

(213

)

 $

(44

)

 $

(68

)

 $

1

 

 $

3

 

 $

 

 $

 

 $

 

 $

(108

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic Earnings
per Share

 

Diluted Earnings
per Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

 $

339

 

 $

243

 

 $

0.32

 

 $

0.32

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation 1

 

39

 

39

 

0.05

 

0.05

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets 2

 

194

 

194

 

0.26

 

0.25

 

 

 

 

 

 

 

 

 

 

 

Fees and other expenses related to the King Acquisition 3

 

5

 

6

 

0.01

 

0.01

 

 

 

 

 

 

 

 

 

 

 

Other non-cash charges 4

 

(1

)

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt 6

 

 

12

 

0.02

 

0.02

 

 

 

 

 

 

 

 

 

 

 

Income tax impacts from items above 7

 

 

(75

)

(0.10

)

(0.10

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP (redefined) Measurement

 

 $

576

 

 $

418

 

 $

0.55

 

 $

0.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 5

 

 $

(105

)

  $

(86

)

 $

(0.11

)

 $

(0.12

)

 

 

 

 

 

 

 

 

 

 

 

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 a non-cash accounting charge to reclassify certain cumulative translation (gains) losses into earnings due to the substantial liquidation of certain of our foreign entities.

5                      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.

6                      Reflects the loss on extinguishment of debt from refinancing activities.

7                      Reflects the income tax impact associated with the above items. Tax impact on non-GAAP (redefined) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

 

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

 

For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 754 million, participating securities of less than 1 million, and dilutive shares of 10 million during the three months ended June 30, 2017.

 



 

4

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)

 

 

Six Months Ended June 30, 2017

 

Net Revenues

 

Cost of Revenues
- Product Sales:
Product Costs

 

Cost of Revenues
- Product Sales:
Software
Royalties and
Amortization

 

Cost of Revenues
- Subs/Lic/Other:
Game Operations
and Distribution
Costs

 

Cost of Revenues
- Subs/Lic/Other:
Software
Royalties and
Amortization

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs and
Expenses

 

GAAP Measurement

 

 $

3,356

 

 $

273

 

 $

163

 

 $

468

 

 $

242

 

 $

478

 

 $

554

 

 $

347

 

 $

2,525

 

Share-based compensation 1

 

 

 

(7

)

(1

)

 

(27

)

(7

)

(31

)

(73

)

Amortization of intangible assets 2

 

 

 

(1

)

 

(224

)

 

(155

)

(4

)

(384

)

Fees and other expenses related to the King Acquisition 3

 

 

 

 

 

 

 

 

(9

)

(9

)

Restructuring costs 4

 

 

 

 

 

 

 

 

(11

)

(11

)

Other non-cash charges 5

 

 

 

 

 

 

 

 

(15

)

(15

)

Non-GAAP (redefined) Measurement

 

 $

3,356

 

 $

273

 

 $

155

 

 $

467

 

 $

18

 

 $

451

 

 $

392

 

 $

277

 

 $

2,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 6

 

 $

(742

)

 $

(101

)

 $

(137

)

 $

(3

)

 $

 

 $

 

 $

 

 $

 

 $

(241

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic Earnings
per Share

 

Diluted Earnings
per Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

 $

831

 

 $

669

 

 $

0.89

 

 $

0.88

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation 1

 

73

 

73

 

0.10

 

0.10

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets 2

 

384

 

384

 

0.51

 

0.50

 

 

 

 

 

 

 

 

 

 

 

Fees and other expenses related to the King Acquisition 3

 

9

 

15

 

0.02

 

0.02

 

 

 

 

 

 

 

 

 

 

 

Restructuring costs 4

 

11

 

11

 

0.01

 

0.01

 

 

 

 

 

 

 

 

 

 

 

Other non-cash charges 5

 

15

 

15

 

0.02

 

0.02

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt 7

 

 

12

 

0.02

 

0.02

 

 

 

 

 

 

 

 

 

 

 

Income tax impacts from items above 8

 

 

(215

)

(0.28

)

(0.28

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP (redefined) Measurement

 

 $

1,323

 

 $

964

 

 $

1.28

 

 $

1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 6

 

 $

(501

)

 $

(395

)

 $

(0.52

)

 $

(0.51

)

 

 

 

 

 

 

 

 

 

 

 

1                      Includes expenses related to share-based compensation.

2                      Reflects amortization of intangible assets from purchase price accounting.

3                      Reflects fees and other expenses related to the King Acquisition, inclusive of related debt financings and integration costs.

4                      Reflects restructuring charges incurred, primarily severance costs.

5                      Reflects a non-cash accounting charge to reclassify certain cumulative translation (gains) losses into earnings due to the substantial liquidation of certain of our foreign entities.

6                      Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online enabled products, including the effects of taxes.

7                      Reflects the loss on extinguishment of debt from refinancing activities.

8                      Reflects the income tax impact associated with the above items. Tax impact on non-GAAP (redefined) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

 

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

 

For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 752 million, participating securities of less than 1 million, and dilutive shares of 11 million during the six months ended June 30, 2017.

 



 

5

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except per share data)

 

Three Months Ended June 30, 2016

 

Net Revenues

 

Cost of Revenues
- Product Sales:
Product Costs

 

Cost of Revenues
- Product Sales:
Software
Royalties and
Amortization

 

Cost of Revenues
- Subs/Lic/Other:
Game Operations
and Distribution
Costs

 

Cost of Revenues
- Subs/Lic/Other:
Software
Royalties and
Amortization

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs and
Expenses

 

GAAP Measurement

 

$

1,570

 

$

149

 

$

80

 

$

241

 

$

128

 

$

249

 

$

322

 

$

169

 

$

1,338

 

Share-based compensation 1

 

 

 

(6

)

 

(1

)

(13

)

(4

)

(17

)

(41

)

Amortization of intangible assets 2

 

 

 

(1

)

 

(122

)

 

(78

)

(2

)

(203

)

Fees and other expenses related to the King Acquisition 3

 

 

 

 

 

 

 

 

(4

)

(4

)

Non-GAAP (redefined) Measurement

 

$

1,570

 

$

149

 

$

73

 

$

241

 

$

5

 

$

236

 

$

240

 

$

146

 

$

1,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 4

 

$

39

 

$

(44

)

$

(34

)

$

7

 

$

2

 

$

 

$

 

$

 

$

(69

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic Earnings
per Share

 

Diluted Earnings
per Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

$

232

 

$

151

 

$

0.20

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation 1

 

41

 

41

 

0.06

 

0.05

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets 2

 

203

 

203

 

0.27

 

0.27

 

 

 

 

 

 

 

 

 

 

 

Fees and other expenses related to the King Acquisition 3

 

4

 

5

 

0.01

 

0.01

 

 

 

 

 

 

 

 

 

 

 

Income tax impacts from items above 5

 

 

(59

)

(0.08

)

(0.08

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP (redefined) Measurement

 

$

480

 

$

341

 

$

0.46

 

$

0.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 4

 

$

108

 

$

63

 

$

0.08

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

1                      Includes expenses related to share-based compensation.

2                      Reflects amortization of intangible assets from purchase price accounting.

3                      Reflects fees and other expenses related to the King Acquisition, inclusive of related debt financings and integration costs.

4                      Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online enabled products, including the effects of taxes.

5                      Reflects the income tax impact associated with the above items. Tax impact on non-GAAP (redefined) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

 

 

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

 

The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. For the three months ended June 30, 2016, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate non-GAAP (redefined) earnings per common share, assuming dilution, was $340 million, as compared to total net income of $341 million, for the same period.

 

For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 739 million, participating securities of approximately 3 million, and dilutive shares of 14 million during the three months ended June 30, 2016.

 



 

6

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except per share data)

 

Six Months Ended June 30, 2016

 

Net Revenues

 

Cost of Revenues
- Product Sales:
Product Costs

 

Cost of Revenues
- Product Sales:
Software
Royalties and
Amortization

 

Cost of Revenues
- Subs/Lic/Other:
Game Operations
and Distribution
Costs

 

Cost of Revenues
- Subs/Lic/Other:
Software
Royalties and
Amortization

 

Product
Development

 

Sales and
Marketing

 

General and
Administrative

 

Total Costs and
Expenses

 

GAAP Measurement

 

$

3,025

 

$

318

 

$

208

 

$

383

 

$

180

 

$

424

 

$

490

 

$

329

 

$

2,332

 

Share-based compensation 1

 

 

 

(14

)

 

(1

)

(23

)

(7

)

(40

)

(85

)

Amortization of intangible assets 2

 

 

 

(2

)

(1

)

(168

)

 

(111

)

(3

)

(285

)

Fees and other expenses related to the King Acquisition 3

 

 

 

 

 

 

 

 

(38

)

(38

)

Non-GAAP (redefined) Measurement

 

$

3,025

 

$

318

 

$

192

 

$

382

 

$

11

 

$

401

 

$

372

 

$

248

 

$

1,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 4

 

$

(508

)

$

(127

)

$

(122

)

$

3

 

$

(1

)

$

 

$

 

$

 

$

(247

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating
Income

 

Net Income

 

Basic Earnings
per Share

 

Diluted Earnings
per Share

 

 

 

 

 

 

 

 

 

 

 

GAAP Measurement

 

$

693

 

$

514

 

$

0.69

 

$

0.68

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation 1

 

85

 

85

 

0.12

 

0.11

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets 2

 

285

 

285

 

0.38

 

0.38

 

 

 

 

 

 

 

 

 

 

 

Fees and other expenses related to the King Acquisition 3

 

38

 

41

 

0.06

 

0.05

 

 

 

 

 

 

 

 

 

 

 

Income tax impacts from items above 5

 

 

(143

)

(0.19

)

(0.19

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP (redefined) Measurement

 

$

1,101

 

$

782

 

$

1.06

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of deferred revenues and related cost of revenues 4

 

$

(261

)

$

(205

)

$

(0.28

)

$

(0.28

)

 

 

 

 

 

 

 

 

 

 

 

1                      Includes expenses related to share-based compensation.

2                      Reflects amortization of intangible assets from purchase price accounting.

3                      Reflects fees and other expenses related to the King Acquisition, inclusive of related debt financings and integration costs.

4                      Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online enabled products, including the effects of taxes.

5                      Reflects the income tax impact associated with the above items. Tax impact on non-GAAP (redefined) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.

 

 

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

 

The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. For the six months ended June 30, 2016, net income attributable to Activision Blizzard, Inc. common shareholders used to calculate non-GAAP (redefined) earnings per common share, assuming dilution, was $778 million, as compared to total net income of $782 million, for the same period.

 

For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 737 million, participating securities of approximately 3 million, and dilutive shares of 14 million during the six months ended June 30, 2016.

 



 

7

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

 

FINANCIAL INFORMATION

 

For the Three and Six Months Ended June 30, 2017 and 2016

 

(Amounts in millions)

 

 

 

 

Three Months Ended

 

 

June 30, 2017

 

June 30, 2016

 

$ Increase

 

% Increase

 

 

Amount

 

% of Total 1

 

Amount

 

% of Total 1

 

(Decrease)

 

(Decrease)

Net Revenues by Distribution Channel

 

 

 

 

 

 

 

 

 

 

 

 

Digital online channels 2

 

$

1,309

 

80%

 

$

1,141

 

73%

 

$

168

 

15%

Retail channels

 

260

 

16

 

374

 

24

 

(114)

 

(30)

Other 3

 

62

 

4

 

55

 

4

 

7

 

13

Total consolidated net revenues

 

$

1,631

 

100%

 

$

1,570

 

100%

 

$

61

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred revenues 4

 

 

 

 

 

 

 

 

 

 

 

 

Digital online channels 2

 

$

(31)

 

 

 

$

261

 

 

 

 

 

 

Retail channels

 

(180)

 

 

 

(222)

 

 

 

 

 

 

Other 3

 

(2)

 

 

 

 

 

 

 

 

 

Total changes in deferred revenues

 

$

(213)

 

 

 

$

39

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30, 2017

 

June 30, 2016

 

$ Increase

 

% Increase

 

 

Amount

 

% of Total 1

 

Amount

 

% of Total 1

 

(Decrease)

 

(Decrease)

Net Revenues by Distribution Channel

 

 

 

 

 

 

 

 

 

 

 

 

Digital online channels 2

 

$

2,694

 

80%

 

$

2,067

 

68%

 

$

627

 

30%

Retail channels

 

529

 

16

 

856

 

28

 

(327)

 

(38)

Other 3

 

133

 

4

 

102

 

3

 

31

 

30

Total consolidated net revenues

 

$

3,356

 

100%

 

$

3,025

 

100%

 

$

331

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred revenues 4

 

 

 

 

 

 

 

 

 

 

 

 

Digital online channels 2

 

$

(350)

 

 

 

$

132

 

 

 

 

 

 

Retail channels

 

(385)

 

 

 

(640)

 

 

 

 

 

 

Other 3

 

(7)

 

 

 

 

 

 

 

 

 

Total changes in deferred revenues

 

$

(742)

 

 

 

$

(508)

 

 

 

 

 

 

 

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

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

3                     Net revenues from Other include revenues from our studios and distribution businesses, as well as revenues from Major League Gaming.

4                     Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online enabled products.

 



 

8

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

 

FINANCIAL INFORMATION

 

For the Three and Six Months Ended June 30, 2017 and 2016

 

(Amounts in millions)

 

 

 

 

Three Months Ended

 

 

June 30, 2017

 

June 30, 2016

 

$ Increase

 

% Increase

 

 

Amount

 

% of Total 1

 

Amount

 

% of Total 1

 

(Decrease)

 

(Decrease)

Net Revenues by Platform

 

 

 

 

 

 

 

 

 

 

 

 

Console

 

$

568

 

35%

 

$

650

 

41%

 

$

(82) 

 

(13)% 

PC

 

508

 

31

 

411

 

26

 

97

 

24

Mobile and ancillary 2

 

493

 

30

 

454

 

29

 

39

 

9

Other 3

 

62

 

4

 

55

 

4

 

7

 

13

Total consolidated net revenues

 

$

1,631

 

100%

 

$

1,570

 

100%

 

$

61

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred revenues 4

 

 

 

 

 

 

 

 

 

 

 

 

Console

 

$

(203)

 

 

 

$

(210)

 

 

 

 

 

 

PC

 

(15)

 

 

 

219

 

 

 

 

 

 

Mobile and ancillary 2

 

7

 

 

 

30

 

 

 

 

 

 

Other 3

 

(2)

 

 

 

 

 

 

 

 

 

Total changes in deferred revenues

 

$

(213)

 

 

 

$

39

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30, 2017

 

June 30, 2016

 

$ Increase

 

% Increase

 

 

Amount

 

% of Total 1

 

Amount

 

% of Total 1

 

(Decrease)

 

(Decrease)

Net Revenues by Platform

 

 

 

 

 

 

 

 

 

 

 

 

Console

 

$

1,182

 

35%

 

$

1,415

 

47%

 

$

(233) 

 

(16)%

PC

 

1,072

 

32

 

811

 

27

 

261

 

32

Mobile and ancillary 2

 

969

 

29

 

697

 

23

 

272

 

39

Other 3

 

133

 

4

 

102

 

3

 

31

 

30

Total consolidated net revenues

 

$

3,356

 

100%

 

$

3,025

 

100%

 

$

331

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred revenues 4

 

 

 

 

 

 

 

 

 

 

 

 

Console

 

$

(577)

 

 

 

$

(648)

 

 

 

 

 

 

PC

 

(161)

 

 

 

121

 

 

 

 

 

 

Mobile and ancillary 2

 

3

 

 

 

19

 

 

 

 

 

 

Other 3

 

(7)

 

 

 

 

 

 

 

 

 

Total changes in deferred revenues

 

$

(742)

 

 

 

$

(508)

 

 

 

 

 

 

 

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

2                      Net revenues from Mobile and ancillary include revenues from mobile devices, as well as non-platform specific game related revenues, such as standalone sales of toys and accessories from the Skylanders franchise and other physical merchandise and accessories.

3                      Net revenues from Other include revenues from our studios and distribution businesses, as well as revenues from Major League Gaming.

4                      Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online enabled products.

 



 

9

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION

For the Three and Six Months Ended June 30, 2017 and 2016

(Amounts in millions)

 

 

 

Three Months Ended

 

 

June 30, 2017

 

June 30, 2016

 

$ Increase

 

% Increase

 

 

Amount

 

% of Total 1

 

Amount

 

% of Total 1

 

(Decrease)

 

(Decrease)

Net Revenues by Geographic Region

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

858

 

53%

 

$

860

 

55%

 

$

(2)

 

—%

EMEA 2

 

538

 

33

 

507

 

32

 

31

 

6

Asia Pacific

 

235

 

14

 

203

 

13

 

32

 

16

Total consolidated net revenues

 

$

1,631

 

100%

 

$

1,570

 

100%

 

$

61

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred revenues 3

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

(129)

 

 

 

$

(24)

 

 

 

 

 

 

EMEA 2

 

(72)

 

 

 

(17)

 

 

 

 

 

 

Asia Pacific

 

(12)

 

 

 

80

 

 

 

 

 

 

Total changes in deferred revenues

 

$

(213)

 

 

 

$

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30, 2017

 

June 30, 2016

 

$ Increase

 

% Increase

 

 

Amount

 

% of Total 1

 

Amount

 

% of Total 1

 

(Decrease)

 

(Decrease)

Net Revenues by Geographic Region

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,787

 

53%

 

$

1,613

 

53%

 

$

174

 

11%

EMEA 2

 

1,092

 

33

 

1,028

 

34