Press Release Details

SANTA MONICA, Calif.--(BUSINESS WIRE)--Nov. 2, 2021-- Activision Blizzard, Inc. (Nasdaq: ATVI) today announced third-quarter 2021 results.

“I’m pleased to report strong third quarter results ahead of our prior outlook,” said Bobby Kotick, CEO of Activision Blizzard. “We are excited about this week’s Call of Duty launch and expect continued success in the fourth quarter. I want to thank our employees for their continued commitment to each other, the company, and our players. We look forward to sharing progress updates on our workplace initiatives, alongside our business performance.”

Financial Metrics

		Q3
(in millions, except EPS)		2021		Prior Outlook*		2020
GAAP Net Revenues		$2,070		$1,970		$1,954
Impact of GAAP deferralsA		($190)		($120)		($187)
GAAP EPS		$0.82		$0.64		$0.78
Non-GAAP EPS		$0.89		$0.75		$0.88
Impact of GAAP deferralsA		($0.17)		($0.10)		($0.17)

* Prior outlook was provided by the company on August 3, 2021 in its earnings release.

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

For the quarter ended September 30, 2021, Activision Blizzard’s net revenues presented in accordance with GAAP were $2.07 billion, as compared with $1.95 billion for the third quarter of 2020. GAAP net revenues from digital channels were $1.85 billion. GAAP operating margin was 40%. GAAP earnings per diluted share was $0.82, as compared with $0.78 for the third quarter of 2020. On a non-GAAP basis, Activision Blizzard’s operating margin was 43% and earnings per diluted share was $0.89, as compared with $0.88 for the third quarter of 2020.

For the quarter, operating cash flow was $521 million, as compared with $196 million for the third quarter of 2020. For the trailing twelve-month period, operating cash flow was $2.89 billion.

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

Operating Metrics

For the quarter ended September 30, 2021, Activision Blizzard’s net bookings^B were $1.88 billion, as compared with $1.77 billion for the third quarter of 2020. In-game net bookings^C were $1.20 billion consistent with the third quarter of 2020.

For the quarter ended September 30, 2021, overall Activision Blizzard Monthly Active Users (MAUs)^D were 390 million.

Commitment to a Safe, Inclusive Working Environment

We are committed to becoming the most welcoming, inclusive company in our industry. We are taking further steps to advance our commitment with greater impact, transparency, and urgency.

• We are adding staff and resources to our ethics and compliance and employee relations teams. We are continuing to thoroughly investigate each and every claim and complaint that we receive. As a result of this process, more than 20 individuals have exited the company in recent months.
• We are implementing a zero-tolerance harassment policy across Activision Blizzard that will be applied consistently. Our goal is to have the strictest harassment and non-retaliation policies of any employer.
• Based on feedback from employees, we are waiving required arbitration of future individual sexual harassment and discrimination claims.
• We have introduced the goal of increasing the percentage of women and non-binary people in our workforce by 50% within the next five years, to more than one-third across the entire company.
• We plan to invest an additional $250 million over the next 10 years in initiatives that foster expanded opportunities in gaming and technology for under-represented communities.
• To help us continue to recruit, retain and promote employees from all backgrounds and identities, we are implementing the requirement for a diverse slate of candidates for all full-time open positions.
• A review of 2020 U.S. pay equity at our company conducted by an independent firm showed that women on average earned slightly more than men for comparable work in 2020. We are committed to compensation remaining equitable for men and women performing comparable work in 2021, and beyond.

In September we announced a comprehensive agreement with the U.S. Equal Employment Opportunity Commission, which is subject to court approval, to strengthen policies and programs intended to further improve the prevention of harassment, discrimination, and related conduct. As part of the agreement, we will establish an $18 million fund to compensate those who have experienced such behavior at our company and elect to participate.

The company continues to monitor the progress of its business units, franchise teams, and functional leaders with respect to workplace initiatives. We will continue to provide regular updates to all stakeholders.

Selected Business Highlights

Activision Blizzard’s third quarter results were above our outlook. Third quarter monthly active users^D were consistent with the year-ago level, even as regions continued to re-open, while net bookings^B and operating income grew year-over-year. This performance again illustrates the structural expansion that our talented and passionate teams have driven in our largest franchises as they created new ways for players to interact with our intellectual properties, including free-to-play experiences. We continue to increase investment in creative talent so that we can grow and delight the communities for each of our key franchises.

Activision

• The Call of Duty^® ecosystem sustained reach, engagement, and player investment well above levels seen prior to the introduction of free-to-play experiences across console, PC, and mobile.
• Activision segment revenue grew year-over-year to a new record on a year-to-date basis. Segment revenue was lower year-over-year in the third quarter due to the launch of Tony Hawk’s^TM Pro Skater^TM 1 + 2 in the year ago quarter and declines in Call of Duty against a quarter that benefited from shelter-at-home mandates and the early ramp of Warzone^TM.
• Activision had 119 million MAUs^D in the third quarter. MAUs^D in the Call of Duty franchise were consistent year-over-year on console and PC and grew on mobile.
• On console and PC, Call of Duty MAUs^D and time spent exhibited very similar retention from Q2 to Q3 as our experiences in prior years.
• In-game player investment on console and PC remained well above the level seen prior to the Warzone launch, at approximately three times the level of Q3 2019.
• Strong conversion from free-to-play drove premium sales higher than in any third quarter prior to the launch of Warzone.
• For Call of Duty Mobile, net bookings grew over 40% year-over-year in the third quarter, driven by double digit growth in the West and a continued contribution from the game in China.
• Call of Duty: Vanguard will release on November 5, followed by the roll out of Call of Duty: Warzone Pacific, the biggest update to the Warzone experience since launch, on December 2.

Blizzard

• Blizzard segment revenue grew 20% year-over-year in the third quarter, driven by the successful launch of Diablo^® II: Resurrected^TM. Blizzard had 26 million MAUs^D in the third quarter.
• For Diablo, our plan to enter an era of unprecedented content scale for the franchise has experienced a strong start with the September release of Diablo II: Resurrected, the return of one of the most acclaimed titles in PC gaming history. First week sales of the title were the highest recorded for a remaster from the company.
• On mobile, Diablo^® Immortal^TM is in public testing, and remains on track for release in the first half of next year.
• World of Warcraft^® reach and engagement continues to benefit from the combination of the Modern game and Classic under a single subscription. World of Warcraft is on track to deliver its strongest engagement and net bookings outside of a Modern expansion year in a decade.
• Hearthstone^® net bookings were stable year-over-year in the third quarter. In October, the team launched Mercenaries^TM, an innovative role-playing mode that gives existing, returning and new Hearthstone players an entirely new way to play the game.

King

• King segment revenue grew 22% year-over-year to a new quarterly record, with very strong year-over-year trends for both in-app purchases and advertising. King had 245 million MAUs^D in the third quarter.
• Hours played across the King portfolio grew year-over-year in the third quarter, with players responding positively to a more frequent cadence of compelling in-game content and events for key titles. Payer numbers grew by a double-digit percentage versus the year ago quarter.
• In-game net bookings for Candy Crush^TM grew over 20% year-over-year, with Candy Crush once again the top-grossing game franchise in the U.S. app stores¹.
• At the end of the third quarter King launched the Candy Crush All Stars U.S. tournament which has driven meaningful increases in installs, game rounds played and in-app purchases in recent weeks.
• King has been accelerating and refining content delivery in Farm Heroes^TM, its second largest franchise. This work continued to bear fruit in the third quarter, and in-game net bookings have grown around 20% year-over-year on a year-to-date basis.
• King’s advertising business grew robustly, with quarterly revenue growing sequentially and year-over-year to a new high. Both volume and pricing grew strongly year-over-year, benefiting from the team’s growing relationships with demand partners and the ongoing ramp of new categories of advertisers.

Company Outlook

(in millions, except EPS)		GAAP Outlook		Non-GAAP Outlook		Impact of GAAP deferralsA
CY 2021
Net Revenues		$8,660		$8,660		($10)
EPS		$3.27		$3.70		$0.06
Fully Diluted Shares		784		784
Q4 2021
Net Revenues		$2,020		$2,020		$763
EPS		$0.54		$0.62		$0.67
Fully Diluted Shares		785		785

Net bookings^B are expected to be $8.65 billion for 2021 and $2.78 billion for the fourth quarter of 2021.

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 September 30, 2021 and management’s outlook for the remainder of 2021. The company welcomes all members of the financial and media communities and other interested parties to visit https://investor.activision.com to listen to the conference call via live Webcast or to listen to the call live by dialing into 866-777-2509 in the U.S. We encourage participants to pre-register for the conference call using the following link https://dpregister.com/sreg/10160435/ed92e6c0be. A replay of the call will also be available after the call's conclusion and archived for one year at https://investor.activision.com/events.cfm.

About Activision Blizzard

Our mission, to connect and engage the world through epic entertainment has never been more important. Through communities rooted in our video game franchises we enable hundreds of millions of people to experience joy, thrill and achievement. We enable social connections through the lens of fun, and we foster purpose and a sense of accomplishment through healthy competition. Like sport, but with greater accessibility, our players can find purpose and meaning through competitive gaming. Video games, unlike any other social or entertainment media, have the ability to break down the barriers that can inhibit tolerance and understanding. Celebrating differences is at the core of our culture and ensures we can create games for players of diverse backgrounds in the 190 countries our games are played.

As a member of the Fortune 500 and as a component company of the S&P 500, we have an extraordinary track record of delivering superior shareholder returns for over 30 years.

Our enduring franchises are some of the world’s most popular, including Call of Duty®, Crash Bandicoot™, World of Warcraft®, Overwatch®, Hearthstone®, Diablo®, StarCraft®, Candy Crush™, Bubble Witch™, Pet Rescue™ and Farm Heroes™. Our sustained success has enabled the company to support corporate social responsibility initiatives that are directly tied to our franchises. As an example, our Call of Duty Endowment has helped find employment for over 90,000 veterans.

Learn more information about Activision Blizzard and how we connect and engage the world through epic entertainment on the company's website, www.activisionblizzard.com.

¹ Based on App Annie Intelligence.

^A Net effect of accounting treatment from revenue deferrals on certain of our online-enabled products. Since certain of our games are hosted online or include significant online functionality that represents a separate performance obligation, we defer the transaction price allocable to the online functionality from the sale of these games and then recognize the attributable revenues over the relevant estimated service periods, which are generally less than a year. The related cost of revenues is deferred and recognized as an expense as the related revenues are recognized. Impact from changes in deferrals refers to the net effect from revenue deferrals accounting treatment for the purposes of revenues, along with, for the purposes of EPS, the related cost of revenues deferrals treatment and the related tax impacts. Internally, management excludes the impact of this change in deferred revenues and related cost of revenues when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. Management believes this is appropriate because doing so enables an analysis of performance based on the timing of actual transactions with our customers. In addition, management believes excluding the change in deferred revenues and the related cost of revenues provides a much more timely indication of trends in our operating results.

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

^C In-game net bookings primarily includes the net amount of downloadable content and microtransactions sold during the period, and is equal to in-game net revenues excluding the impact from deferrals.

^D Monthly Active User (“MAU”) Definition: We monitor MAUs as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period. An individual who accesses two of our games would be counted as two users. In addition, due to technical limitations, for Activision and King, an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users. For Blizzard, an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user. In certain instances, we rely on third parties to publish our games. In these instances, MAU data is based on information provided to us by those third parties, or, if final data is not available, reasonable estimates of MAUs for these third-party published games.

Non-GAAP Financial Measures: As a supplement to our financial measures presented in accordance with U.S. 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 share-based compensation;
• the amortization of intangibles from purchase price accounting;
• fees and other expenses related to acquisitions, including related debt financings, and refinancing of long-term debt, including penalties and the write off of unamortized discount and deferred financing costs;
• restructuring and related charges;
• other non-cash charges from reclassification of certain cumulative translation adjustments into earnings as required by GAAP;
• the income tax adjustments associated with any of the above items (tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results); and
• significant discrete tax-related items, including amounts related to changes in tax laws, amounts related to the potential or final resolution of tax positions, and other unusual or unique tax-related items and activities.

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

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

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

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 or services, restructuring activities, and employee retention and recruitment; (3) statements of future financial or operating performance, including the impact of tax items thereon; and (4) statements of assumptions underlying such statements. Activision Blizzard, Inc. generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “aims,” “believes,” “may,” “might,” “expects,” “intends,” “seeks,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming,” and the negative version of these words and other similar words and expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risks, reflect management’s current expectations, estimates, and projections about our business, and are inherently uncertain and difficult to predict.

We caution that a number of important factors, many of which are beyond our control, could cause our actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. Such factors include, but are not limited to: the ongoing global impact of a novel strain of coronavirus which emerged in December 2019 (“COVID-19”) (including, without limitation, the potential for significant short- and long-term global unemployment and economic weakness and a resulting impact on global discretionary spending; potential strain on the retailers, distributors, and manufacturers who sell our physical products to customers and the platform providers on whose networks and consoles certain of our games are available; effects on our ability to release our content in a timely manner; effects on the operations of our professional esports leagues; the impact of large-scale intervention by the Federal Reserve and other central banks around the world, including the impact on interest rates; increased demand for our games due to stay-at-home orders and curtailment of other forms of entertainment, which may not be sustained and is likely to fluctuate as stay-at-home orders are reduced, lifted and/or reinstated; macroeconomic impacts arising from the long duration of the COVID-19 pandemic, including labor shortages and supply chain disruptions; and volatility in foreign exchange rates); our ability to consistently deliver popular, high-quality titles in a timely manner, which has been made more difficult as a result of the COVID-19 pandemic; competition; concentration of revenue among a small number of franchises; our ability to satisfy the expectations of consumers with respect to our brands, games, services, and/or business practices; our ability to attract, retain, and motivate skilled personnel; rapid changes in technology and industry standards; increasing importance of revenues derived from digital distribution channels; risks associated with the retail sales business model; the continued growth in the scope and complexity of our business; substantial influence of third-party platform providers over our products and costs; success and availability of video game consoles manufactured by third parties, including our ability to predict the consoles that will be most successful in the marketplace and develop commercially-successful products for those consoles; risks associated with the free-to-play business model, including our dependence on a relatively small number of consumers for a significant portion of revenues and profits from any given game; our ability to realize the expected benefits of, and effectively implement and manage, our restructuring actions; difficulties in integrating acquired businesses or otherwise realizing the anticipated benefits of strategic transactions; the seasonality in the sale of our products; risks relating to behavior of our distributors, retailers, development, and licensing partners, or other affiliated third parties that may harm our brands or business operations; risks associated with our use of open source software; risks and uncertainties of conducting business outside the United States (the “U.S.”), including the recently enacted Chinese regulation that further limits the number of hours per week children under the age of 18 can play video games; risks associated with undisclosed content or features that may result in consumers’ refusal to buy or retailers’ refusal to sell our products; risks associated with objectionable consumer- or other third-party-created content; reliance on servers and networks to distribute and operate our games and our proprietary online gaming service; data breaches and other cybersecurity risks; significant disruption during our live events; risks related to the impacts of catastrophic events, including the susceptibility of some of our primary operating locations to earthquakes; provisions in our corporate documents that may make it more difficult for any person to acquire control of our company; risks and costs associated with legal proceedings, including the impact of the complaint filed by the California Department of Fair Employment and Housing alleging violations of the California Fair Employment and Housing Act and the California Equal Pay Act and separate investigations and complaints by other parties and regulators related to certain employment practices and related disclosures; court approval of our settlement agreement with the Equal Employment Opportunity Commission (“EEOC”) and successful implementation of the requirements of the agreement with the EEOC; intellectual property claims; increasing regulation in key territories; regulation relating to the Internet, including potential harm from laws impacting “net neutrality”; regulation concerning data privacy, including China’s recently passed Personal Information Protection Law; scrutiny regarding the appropriateness of our games’ content, including ratings assigned by third parties; changes in tax rates or exposure to additional tax liabilities, as well as the outcome of current or future tax disputes; fluctuations in currency exchange rates; impacts of changes in financial accounting standards; insolvency or business failure of any of our business partners, which has been magnified as a result of the COVID-19 pandemic; risks associated with our reliance on discretionary spending; 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, 2020 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.

The forward-looking statements contained herein are based on information available to Activision Blizzard, Inc. as of the date of this filing, and we assume no obligation to update any such forward-looking statements. Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained herein primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and may cause actual results to differ materially from current expectations.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in millions, except per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Net revenues
Product sales		$	423			$	408			$	1,666			$	1,484
In-game, subscription, and other revenues1		1,647				1,546				4,974				4,190
Total net revenues		2,070				1,954				6,640				5,674
Costs and expenses
Cost of revenues—product sales:
Product costs		120				101				375				357
Software royalties, amortization, and intellectual property licenses		72				37				272				152
Cost of revenues—in-game, subscription, and other:
Game operations and distribution costs		307				290				925				819
Software royalties, amortization, and intellectual property licenses		28				41				87				115
Product development		329				274				1,016				802
Sales and marketing		244				238				727				722
General and administrative		143				186				614				529
Restructuring and related costs		3				9				46				39
Total costs and expenses		1,246				1,176				4,062				3,535
Operating income		824				778				2,578				2,139
Interest and other expense (income), net		65				25				52				55
Loss on extinguishment of debt		—				31				—				31
Income before income tax expense		759				722				2,526				2,053
Income tax expense		120				118				391				365
Net income		$	639			$	604			$	2,135			$	1,688
Basic earnings per common share		$	0.82			$	0.78			$	2.75			$	2.19
Weighted average common shares outstanding		778				772				777				771
Diluted earnings per common share		$	0.82			$	0.78			$	2.72			$	2.17
Weighted average common shares outstanding assuming dilution		783				779				784				777

1

In-game, subscription, and other revenues represent revenues from microtransactions and downloadable content, World of Warcraft subscriptions, licensing royalties from our products and franchises, and other miscellaneous revenues.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
		September 30, 2021				December 31, 2020
Assets
Current assets
Cash and cash equivalents		$	9,718			$	8,647
Accounts receivable, net		585				1,052
Software development		227				352
Other current assets		681				514
Total current assets		11,211				10,565
Software development		349				160
Property and equipment, net		171				209
Deferred income taxes, net		1,400				1,318
Other assets		632				641
Intangible assets, net		449				451
Goodwill		9,765				9,765
Total assets		$	23,977			$	23,109
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable		$	248			$	295
Deferred revenues		844				1,689
Accrued expenses and other liabilities		924				1,116
Total current liabilities		2,016				3,100
Long-term debt, net		3,607				3,605
Deferred income taxes, net		433				418
Other liabilities		971				949
Total liabilities		7,027				8,072
Shareholders' equity
Common stock		—				—
Additional paid-in capital		11,640				11,531
Treasury stock		(5,563		)		(5,563		)
Retained earnings		11,460				9,691
Accumulated other comprehensive loss		(587		)		(622		)
Total shareholders’ equity		16,950				15,037
Total liabilities and shareholders’ equity		$	23,977			$	23,109

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
SUPPLEMENTAL CASH FLOW INFORMATION
(Amounts in millions)
		Three Months Ended
		September 30,				December 31,				March 31,				June 30,				September 30,				Year over Year
		2020				2020				2021				2021				2021				% Increase (Decrease)
Cash Flow Data
Operating Cash Flow		$	196			$	1,140			$	844			$	388			$	521			166	%
Capital Expenditures		24				22				22				14				23				(4	)
Non-GAAP Free Cash Flow1		$	172			$	1,118			$	822			$	374			$	498			190
Operating Cash Flow - TTM2		$	2,030			$	2,252			$	2,948			$	2,568			$	2,893			43
Capital Expenditures - TTM2		93				78				81				82				81				(13	)
Non-GAAP Free Cash Flow1 - TTM2		$	1,937			$	2,174			$	2,867			$	2,486			$	2,812			45	%

1		Non-GAAP free cash flow represents operating cash flow minus capital expenditures.
2		TTM represents trailing twelve months. Operating Cash Flow for three months ended December 31, 2019, three months ended March 31, 2020, and three months ended June 30, 2020, were $918 million, $148 million, and $768 million, respectively. Capital Expenditures for the three months ended December 31, 2019, three months ended March 31, 2020, and three months ended June 30, 2020, were $37 million, $19 million, and $13 million, respectively.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Three Months Ended September 30, 2021		Net Revenues			Cost of Revenues— Product Sales: Product Costs			Cost of Revenues— Product Sales: Software Royalties and Amortization			Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs			Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization			Product Development			Sales and Marketing			General and Administrative			Restructuring and related costs			Total Costs and Expenses
GAAP Measurement		$	2,070		$	120		$	72		$	307		$	28		$	329		$	244		$	143		$	3		$	1,246
Share-based compensation1		—			—			(3		)	(1		)	—			(32		)	(8		)	(20		)	—			(64		)
Amortization of intangible assets2		—			—			—			—			—			—			—			(2		)	—			(2		)
Restructuring and related costs3		—			—			—			—			—			—			—			—			(3		)	(3		)
Non-GAAP Measurement		$	2,070		$	120		$	69		$	306		$	28		$	297		$	236		$	121		$	—		$	1,177
Net effect of deferred revenues and related cost of revenues4		$	(190	)	$	(4	)	$	(33	)	$	1		$	—		$	—		$	—		$	—		$	—		$	(36	)
		Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement		$	824		$	639		$	0.82		$	0.82
Share-based compensation1		64			64			0.08			0.08
Amortization of intangible assets2		2			2			—			—
Restructuring and related costs3		3			3			—			—
Income tax impacts from items above5		—			(9		)	(0.01		)	(0.01		)
Non-GAAP Measurement		$	893		$	699		$	0.90		$	0.89
Net effect of deferred revenues and related cost of revenues4		$	(154	)	$	(133	)	$	(0.17	)	$	(0.17	)

1		Includes expenses related to share-based compensation.
2		Reflects amortization of intangible assets from purchase price accounting.
3		Reflects restructuring initiatives, primarily severance and other restructuring-related 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 pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Nine Months Ended September 30, 2021		Net Revenues			Cost of Revenues— Product Sales: Product Costs			Cost of Revenues— Product Sales: Software Royalties and Amortization			Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs			Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization			Product Development			Sales and Marketing			General and Administrative			Restructuring and related costs			Total Costs and Expenses
GAAP Measurement		$	6,640		$	375		$	272		$	925		$	87		$	1,016		$	727		$	614		$	46		$	4,062
Share-based compensation1		—			—			(14		)	(2		)	—			(66		)	(16		)	(161		)	—			(259		)
Amortization of intangible assets2		—			—			—			—			(3		)	—			—			(5		)	—			(8		)
Restructuring and related costs3		—			—			—			—			—			—			—			—			(46		)	(46		)
Non-GAAP Measurement		$	6,640		$	375		$	258		$	923		$	84		$	950		$	711		$	448		$	—		$	3,749
Net effect of deferred revenues and related cost of revenues4		$	(773	)	$	(34	)	$	(177	)	$	—		$	—		$	—		$	—		$	—		$	—		$	(211	)
		Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement		$	2,578		$	2,135		$	2.75		$	2.72
Share-based compensation1		259			259			0.33			0.33
Amortization of intangible assets2		8			8			0.01			0.01
Restructuring and related costs3		46			46			0.06			0.06
Income tax impacts from items above5		—			(39		)	(0.05		)	(0.05		)
Non-GAAP Measurement		$	2,891		$	2,409		$	3.10		$	3.07
Net effect of deferred revenues and related cost of revenues4		$	(562	)	$	(469	)	$	(0.60	)	$	(0.59	)

1		Includes expenses related to share-based compensation.
2		Reflects amortization of intangible assets from purchase price accounting.
3		Reflects restructuring initiatives, primarily severance and other restructuring-related 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 pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Three Months Ended September 30, 2020		Net Revenues			Cost of Revenues— Product Sales: Product Costs			Cost of Revenues— Product Sales: Software Royalties and Amortization			Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs			Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization			Product Development			Sales and Marketing			General and Administrative			Restructuring and related costs			Total Costs and Expenses
GAAP Measurement		$	1,954		$	101		$	37		$	290		$	41		$	274		$	238		$	186		$	9		$	1,176
Share-based compensation1		—			—			(2		)	—			—			(12		)	(5		)	(34		)	—			(53		)
Amortization of intangible assets2		—			—			—			—			(12		)	—			—			(4		)	—			(16		)
Restructuring and related costs3		—			—			—			—			—			—			—			—			(9		)	(9		)
Non-GAAP Measurement		$	1,954		$	101		$	35		$	290		$	29		$	262		$	233		$	148		$	—		$	1,098
Net effect of deferred revenues and related cost of revenues4		$	(187	)	$	(15	)	$	(15	)	$	(5	)	$	(2	)	$	—		$	—		$	—		$	—		$	(37	)
		Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement		$	778		$	604		$	0.78		$	0.78
Share-based compensation1		53			53			0.07			0.07
Amortization of intangible assets2		16			16			0.02			0.02
Restructuring and related costs3		9			9			0.01			0.01
Loss on extinguishment of debt5		—			31			0.04			0.04
Income tax impacts from items above6		—			(30		)	(0.04		)	(0.04		)
Non-GAAP Measurement		$	856		$	683		$	0.88		$	0.88
Net effect of deferred revenues and related cost of revenues4		$	(150	)	$	(130	)	$	(0.16	)	$	(0.17	)

1		Includes expenses related to share-based compensation.
2		Reflects amortization of intangible assets from purchase price accounting.
3		Reflects restructuring initiatives, primarily severance and other restructuring-related 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 loss on extinguishment of debt from financing activities.
6		Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except per share data)
Nine Months Ended September 30, 2020		Net Revenues			Cost of Revenues— Product Sales: Product Costs			Cost of Revenues— Product Sales: Software Royalties and Amortization			Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs			Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization			Product Development			Sales and Marketing			General and Administrative			Restructuring and related costs			Total Costs and Expenses
GAAP Measurement		$	5,674		$	357		$	152		$	819		$	115		$	802		$	722		$	529		$	39		$	3,535
Share-based compensation1		—			—			(8		)	(1		)	—			(30		)	(17		)	(82		)	—			(138		)
Amortization of intangible assets2		—			—			—			—			(55		)	—			—			(7		)	—			(62		)
Restructuring and related costs3		—			—			—			—			—			—			—			—			(39		)	(39		)
Non-GAAP Measurement		$	5,674		$	357		$	144		$	818		$	60		$	772		$	705		$	440		$	—		$	3,296
Net effect of deferred revenues and related cost of revenues4		$	(306	)	$	(72	)	$	(82	)	$	8		$	9		$	—		$	—		$	—		$	—		$	(137	)
		Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement		$	2,139		$	1,688		$	2.19		$	2.17
Share-based compensation1		138			138			0.18			0.18
Amortization of intangible assets2		62			62			0.08			0.08
Restructuring and related costs3		39			39			0.05			0.05
Loss on extinguishment of debt5		—			31			0.04			0.04
Income tax impacts from items above6		—			(52		)	(0.07		)	(0.07		)
Non-GAAP Measurement		$	2,378		$	1,906		$	2.47		$	2.45
Net effect of deferred revenues and related cost of revenues4		$	(169	)	$	(148	)	$	(0.19	)	$	(0.19	)

1		Includes expenses related to share-based compensation.
2		Reflects amortization of intangible assets from purchase price accounting.
3		Reflects restructuring initiatives, primarily severance and other restructuring-related 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 loss on extinguishment of debt from financing activities.
6		Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results.
The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
Three Months Ended		September 30, 2021																$ Increase / (Decrease)
		Activision				Blizzard				King				Total				Activision				Blizzard				King				Total
Segment Net Revenues
Net revenues from external customers		$	641			$	478			$	652			$	1,771			$	(132	)		$	85			$	116			$	69
Intersegment net revenues1		—				15				—				15				—				(3		)		—				(3		)
Segment net revenues		$	641			$	493			$	652			$	1,786			$	(132	)		$	82			$	116			$	66
Segment operating income		$	244			$	188			$	303			$	735			$	(101	)		$	55			$	55			$	9
Operating Margin														41.2		%
		September 30, 2020
		Activision				Blizzard				King				Total
Segment Net Revenues
Net revenues from external customers		$	773			$	393			$	536			$	1,702
Intersegment net revenues1		—				18				—				18
Segment net revenues		$	773			$	411			$	536			$	1,720
Segment operating income		$	345			$	133			$	248			$	726
Operating Margin														42.2		%
Nine Months Ended		September 30, 2021																$ Increase / (Decrease)
		Activision				Blizzard				King				Total				Activision				Blizzard				King				Total
Segment Net Revenues
Net revenues from external customers		$	2,321			$	1,347			$	1,896			$	5,564			$	36			$	83			$	309			$	428
Intersegment net revenues1		—				62				—				62				—				—				—				—
Segment net revenues		$	2,321			$	1,409			$	1,896			$	5,626			$	36			$	83			$	309			$	428
Segment operating income		$	1,049			$	537			$	755			$	2,341			$	(39	)		$	4			$	140			$	105
Operating Margin														41.6		%
		September 30, 2020
		Activision				Blizzard				King				Total
Segment Net Revenues
Net revenues from external customers		$	2,285			$	1,264			$	1,587			$	5,136
Intersegment net revenues1		—				62				—				62
Segment net revenues		$	2,285			$	1,326			$	1,587			$	5,198
Segment operating income		$	1,088			$	533			$	615			$	2,236
Operating Margin														43.0		%

1

Intersegment revenues reflect licensing and service fees charged between segments.

Our operating segments are consistent with the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). The CODM reviews segment performance exclusive of: the impact of the change in deferred revenues and related cost of revenues with respect to certain of our online-enabled games; share-based compensation expense; amortization of intangible assets as a result of purchase price accounting; fees and other expenses (including legal fees, costs, expenses and accruals) related to acquisitions, associated integration activities, and financings; certain restructuring and related costs; and other non-cash charges. See the following page for the reconciliation tables of segment revenues and operating income to consolidated net revenues and consolidated income before income tax expense.

Our operating segments are also consistent with our internal organization structure, the way we assess operating performance and allocate resources, and the availability of separate financial information. We do not aggregate operating segments.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OPERATING SEGMENTS INFORMATION
(Amounts in millions)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Reconciliation to consolidated net revenues:
Segment net revenues		$	1,786			$	1,720			$	5,626			$	5,198
Revenues from non-reportable segments1		109				65				303				232
Net effect from recognition (deferral) of deferred net revenues2		190				187				773				306
Elimination of intersegment revenues3		(15		)		(18		)		(62		)		(62		)
Consolidated net revenues		$	2,070			$	1,954			$	6,640			$	5,674
Reconciliation to consolidated income before income tax expense:
Segment operating income		$	735			$	726			$	2,341			$	2,236
Operating income (loss) from non-reportable segments1		4				(20		)		(12		)		(27		)
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues2		154				150				562				169
Share-based compensation expense		(64		)		(53		)		(259		)		(138		)
Amortization of intangible assets		(2		)		(16		)		(8		)		(62		)
Restructuring and related costs4		(3		)		(9		)		(46		)		(39		)
Consolidated operating income		824				778				2,578				2,139
Interest and other expense (income), net		65				25				52				55
Loss on extinguishment of debt		—				31				—				31
Consolidated income before income tax expense (benefit)		$	759			$	722			$	2,526			$	2,053

1		Includes other income and expenses outside of our reportable segments, including our distribution business and unallocated corporate income and expenses.
2		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.
3		Intersegment revenues reflect licensing and service fees charged between segments.
4		Reflects restructuring initiatives, primarily severance and other restructuring-related costs.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY DISTRIBUTION CHANNEL
(Amounts in millions)
		Three Months Ended
		September 30, 2021							September 30, 2020							$ Increase (Decrease)				% Increase (Decrease)
		Amount				% of Total1			Amount				% of Total1
Net Revenues by Distribution Channel
Digital online channels2		$	1,852			89	%		$	1,753			90	%		$	99			6	%
Retail channels		69				3			117				6			(48		)		(41	)
Other3		149				7			84				4			65				77
Total consolidated net revenues		$	2,070			100	%		$	1,954			100	%		$	116			6
Change in deferred revenues4
Digital online channels2		$	(164	)					$	(148	)
Retail channels		(27		)					(39		)
Other3		1							—
Total changes in deferred revenues		$	(190	)					$	(187	)
		Nine Months Ended
		September 30, 2021							September 30, 2020							$ Increase (Decrease)				% Increase (Decrease)
		Amount				% of Total1			Amount				% of Total1
Net Revenues by Distribution Channel
Digital online channels2		$	5,883			89	%		$	4,782			84	%		$	1,101			23	%
Retail channels		354				5			509				9			(155		)		(30	)
Other3		403				6			383				7			20				5
Total consolidated net revenues		$	6,640			100	%		$	5,674			100	%		$	966			17
Change in deferred revenues4
Digital online channels2		$	(590	)					$	(1	)
Retail channels		(192		)					(295		)
Other3		9							(10		)
Total changes in deferred revenues		$	(773	)					$	(306	)

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 downloadable content, microtransactions, subscriptions, and products, as well as licensing royalties.
3		Net revenues from Other primarily includes revenues from our distribution business, the Overwatch League, and the Call of Duty League.
4		Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY PLATFORM
(Amounts in millions)
		Three Months Ended
		September 30, 2021							September 30, 2020							$ Increase (Decrease)				% Increase (Decrease)
		Amount				% of Total1			Amount				% of Total1
Net Revenues by Platform
Console		$	523			25	%		$	695			36	%		$	(172	)		(25	)%
PC		578				28			514				26			64				12
Mobile and ancillary2		820				40			661				34			159				24
Other3		149				7			84				4			65				77
Total consolidated net revenues		$	2,070			100	%		$	1,954			100	%		$	116			6
Change in deferred revenues4
Console		$	(114	)					$	(129	)
PC		(80		)					(45		)
Mobile and ancillary2		3							(13		)
Other3		1							—
Total changes in deferred revenues		$	(190	)					$	(187	)
		Nine Months Ended
		September 30, 2021							September 30, 2020							$ Increase (Decrease)				% Increase (Decrease)
		Amount				% of Total1			Amount				% of Total1
Net Revenues by Platform
Console		$	2,061			31	%		$	1,944			34	%		$	117			6	%
PC		1,827				28			1,494				26			333				22
Mobile and ancillary2		2,349				35			1,853				33			496				27
Other3		403				6			383				7			20				5
Total consolidated net revenues		$	6,640			100	%		$	5,674			100	%		$	966			17
Change in deferred revenues4
Console		$	(530	)					$	(301	)
PC		(253		)					(27		)
Mobile and ancillary2		1							32
Other3		9							(10		)
Total changes in deferred revenues		$	(773	)					$	(306	)

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 physical merchandise and accessories.
3		Net revenues from Other primarily includes revenues from our distribution business, the Overwatch League, and the Call of Duty League.
4		Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
NET REVENUES BY GEOGRAPHIC REGION
(Amounts in millions)
		Three Months Ended
		September 30, 2021							September 30, 2020							$ Increase (Decrease)				% Increase (Decrease)
		Amount				% of Total1			Amount				% of Total1
Net Revenues by Geographic Region
Americas		$	1,166			56	%		$	1,127			58	%		$	39			3	%
EMEA2		619				30			589				30			30				5
Asia Pacific		285				14			238				12			47				20
Total consolidated net revenues		$	2,070			100	%		$	1,954			100	%		$	116			6
Change in deferred revenues3
Americas		$	(136	)					$	(86	)
EMEA2		(63		)					(75		)
Asia Pacific		9							(26		)
Total changes in deferred revenues		$	(190	)					$	(187	)
		Nine Months Ended
		September 30, 2021							September 30, 2020							$ Increase (Decrease)				% Increase (Decrease)
		Amount				% of Total1			Amount				% of Total1
Net Revenues by Geographic Region
Americas		$	3,819			58	%		$	3,188			56	%		$	631			20	%
EMEA2		2,045				31			1,770				31			275				16
Asia Pacific		776				12			716				13			60				8
Total consolidated net revenues		$	6,640			100	%		$	5,674			100	%		$	966			17
Change in deferred revenues3
Americas		$	(475	)					$	(106	)
EMEA2		(260		)					(159		)
Asia Pacific		(38		)					(41		)
Total changes in deferred revenues		$	(773	)					$	(306	)

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 EMEA consist of the Europe, Middle East, and Africa geographic regions.
3		Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA
(Amounts in millions)
																		Trailing Twelve Months Ended
		December 31, 2020				March 31, 2021				June 30, 2021				September 30, 2021				September 30, 2021
GAAP Net Income		$	508			$	619			$	876			$	639			$	2,642
Interest and other expense (income), net		31				30				(43		)		65				83
Provision for income taxes		55				146				126				120				447
Depreciation and amortization		45				33				28				27				133
EBITDA		639				828				987				851				3,305
Share-based compensation expense1		80				151				43				64				338
Restructuring and related costs2		55				30				13				3				101
Adjusted EBITDA		$	774			$	1,009			$	1,043			$	918			$	3,744
Change in deferred net revenues and related cost of revenues3		$	407			$	(132	)		$	(276	)		$	(154	)		$	(155	)

1		Includes expenses related to share-based compensation.
2		Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
3		Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliation
(Amounts in millions, except per share data)
		Outlook for the				Outlook for the
		Three Months Ending				Year Ending
		December 31, 2021				December 31, 2021
Net Revenues1		$	2,020			$	8,660
Change in deferred revenues2		$	763			$	(10	)
Earnings Per Diluted Share (GAAP)		$	0.54			$	3.27
Excluding the impact of:
Share-based compensation3		0.09				0.42
Amortization of intangible assets4		—				0.01
Restructuring and related costs5		0.01				0.06
Income tax impacts from items above6		(0.01		)		(0.06		)
Earnings Per Diluted Share (Non-GAAP)		$	0.62			$	3.70
Net effect of deferred net revenues and related cost of revenues on Earnings Per Diluted Share7		$	0.67			$	0.06

1		Net Revenues represents the revenue outlook for both GAAP and Non-GAAP as they are measured the same.
2		Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products.
3		Reflects expenses related to share-based compensation.
4		Reflects amortization of intangible assets from purchase price accounting.
5		Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
6		Reflects the income tax impacts associated with the above items. Due to the inherent uncertainties in share price and option exercise behavior, we do not generally forecast excess tax benefits or tax shortfalls.
7		Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effect of taxes.
		The per share adjustments and the GAAP and Non-GAAP earnings per share information are presented as calculated. Therefore, the sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OPERATING METRICS
(Amounts in millions)
Net Bookings1
		Three Months Ended September 30,															Nine Months Ended September 30,
		2021				2020				$ Increase (Decrease)				% Increase (Decrease)			2021				2020				$ Increase (Decrease)				% Increase (Decrease)
Net bookings1		$	1,880			$	1,767			$	113			6	%		$	5,867			$	5,368			$	499			9	%
In-game net bookings2		$	1,198			$	1,200			$	(2	)		—	%		$	3,859			$	3,529			$	330			9	%

1 We monitor net bookings as a key operating metric in evaluating the performance of our business because it enables an analysis of performance based on the timing of actual transactions with our customers and provides more timely indications of trends in our operating results. Net bookings is the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others. Net bookings is equal to net revenues excluding the impact from deferrals.

2 In-game net bookings primarily includes the net amount of downloadable content and microtransactions sold during the period, and is equal to in-game net revenues excluding the impact from deferrals.

Monthly Active Users3
		September 30, 2020			December 31, 2020			March 31, 2021			June 30, 2021			September 30, 2021
Activision		111			128			150			127			119
Blizzard		30			29			27			26			26
King		249			240			258			255			245
Total MAUs		390			397			435			408			390

3 We monitor monthly active users (“MAUs”) as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period. An individual who accesses two of our games would be counted as two users. In addition, due to technical limitations, for Activision and King, an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users. For Blizzard, an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user. In certain instances, we rely on third parties to publish our games. In these instances, MAU data is based on information provided to us by those third parties, or, if final data is not available, reasonable estimates of MAUs for these third-party published games.

 

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Activision Blizzard, Inc.
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Source: Activision Blizzard, Inc.