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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):  November 2, 2021

 

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.)

 

N/A   N/A
(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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class  Trading Symbol  Name of Each Exchange
on Which Registered
Common Stock, par value $.000001 per share  ATVI  The Nasdaq Global Select Market

  

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   ¨

 

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.  ¨

 

 

 

 

 

 

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 November 2, 2021, Activision Blizzard, Inc. (the “Company”) issued a press release announcing results for the Company for the fiscal quarter ended September 30, 2021. 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

 

99.1Press Release dated November 2, 2021 (furnished not filed)
   
 104Cover Page Interactive Data File (embedded within the Inline XBRL document

 

 

 

 

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:  November 2, 2021

 

  ACTIVISION BLIZZARD, INC.
     
  By: /s/ Armin Zerza 
    Armin Zerza
   

Chief Financial Officer

 

 

 

 

 

Exhibit 99.1

 

1

 

ACTIVISION BLIZZARD ANNOUNCES THIRD-QUARTER 2021 FINANCIAL RESULTS

 

Santa Monica, CA – November 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 bookingsB were $1.88 billion, as compared with $1.77 billion for the third quarter of 2020. In-game net bookingsC 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.

 

 

 

 

Activision Blizzard Announces Q3 2021 Financial Results 2

 

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.

 

 

 

 

Activision Blizzard Announces Q3 2021 Financial Results 3

 

Selected Business Highlights

 

Activision Blizzard’s third quarter results were above our outlook. Third quarter monthly active usersD were consistent with the year-ago level, even as regions continued to re-open, while net bookingsB 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’sTM Pro SkaterTM 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 WarzoneTM.
·Activision had 119 million MAUsD in the third quarter. MAUsD 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 MAUsD 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: ResurrectedTM. Blizzard had 26 million MAUsD 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® ImmortalTM 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 MercenariesTM, 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 MAUsD 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 CrushTM 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 HeroesTM, 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.

 

 

 

 

Activision Blizzard Announces Q3 2021 Financial Results 4

 

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 bookingsB 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.

 

 

 

 

Activision Blizzard Announces Q3 2021 Financial Results 5

 

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.

 

 

 

 

Activision Blizzard Announces Q3 2021 Financial Results 6

 

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.

 

 

 

 

Activision Blizzard Announces Q3 2021 Financial Results 7

 

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 Announces Q3 2021 Financial Results 8

 

Activision Blizzard, Inc.

 

Investors and Analysts:

ir@activisionblizzard.com

 

or

 

Press:

pr@activisionblizzard.com

 

###

 

(Tables to Follow)

 

 

 

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 9
(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 

 

1In-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 10
(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 11
(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 12
(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)                                                

 

1Includes expenses related to share-based compensation.
2Reflects amortization of intangible assets from purchase price accounting.
3Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
4Reflects 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.
5Reflects 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 13
(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)                                                

 

1Includes expenses related to share-based compensation.
2Reflects amortization of intangible assets from purchase price accounting.
3Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
4Reflects 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.
5Reflects 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 14
(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)                                                

 

1Includes expenses related to share-based compensation.
2Reflects amortization of intangible assets from purchase price accounting.
3Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
4Reflects 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.
5Reflects the loss on extinguishment of debt from financing activities.
6Reflects 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 15
(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)                                                

 

1Includes expenses related to share-based compensation.
2Reflects amortization of intangible assets from purchase price accounting.
3Reflects restructuring initiatives, primarily severance and other restructuring-related costs.
4Reflects 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.
5Reflects the loss on extinguishment of debt from financing activities.
6Reflects 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  16
(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                    

 

1Intersegment 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 17

(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 

 

1Includes other income and expenses outside of our reportable segments, including our distribution business and unallocated corporate income and expenses.

2Reflects 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.

3Intersegment revenues reflect licensing and service fees charged between segments.

4Reflects restructuring initiatives, primarily severance and other restructuring-related costs.

 

 

 

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES 

NET REVENUES BY DISTRIBUTION CHANNEL 18

(Amounts in millions)

 

   Three Months Ended 
   September 30, 2021   September 30, 2020   $ Increase   % Increase 
   Amount   % of Total1   Amount   % of Total1   (Decrease)   (Decrease) 
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   % Increase 
   Amount   % of Total1   Amount   % of Total1   (Decrease)   (Decrease) 
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)               

 

1The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding.
2Net revenues from Digital online channels represent revenues from digitally-distributed downloadable content, microtransactions, subscriptions, and products, as well as licensing royalties.
3Net revenues from Other primarily includes revenues from our distribution business, the Overwatch League, and the Call of Duty League.
4Reflects 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  19

(Amounts in millions)

 

   Three Months Ended 
   September 30, 2021   September 30, 2020   $ Increase   % Increase 
   Amount   % of Total1   Amount   % of Total1   (Decrease)   (Decrease) 
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   % Increase 
   Amount   % of Total1   Amount   % of Total1   (Decrease)   (Decrease) 
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)               

 

1The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding.
2Net 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.
3Net revenues from Other primarily includes revenues from our distribution business, the Overwatch League, and the Call of Duty League.
4Reflects 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  20

(Amounts in millions)

 

    Three Months Ended  
    September 30, 2021     September 30, 2020     $ Increase     % Increase  
    Amount     % of Total1     Amount     % of Total1     (Decrease)     (Decrease)  
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