Better-Than-Expected Q1 Results

SANTA MONICA, Calif .– (BUSINESS WIRE) –Activision Blizzard, Inc. (Nasdaq: ATVI) today announced first-quarter 2019 results.

"We started the year with strong disciplines and exceeded our prior outlook for the first quarter. "Bobby Kotick, Chief Executive Officer of Activision Blizzard, said" We are increasing investment in our biggest franchises to better deliver against our growth potential, and I am pleased with our progress. " "We're continuing to enhance our leadership position in exporters. The second season of the Overwatch League ™ has seen call for our professional, city-based call of Duty® league franchises. We have sold the first five call teams in Atlanta, Dallas, New York, Paris and Toronto to owners of the partnerships.

Financial Metrics

(in millions, except EPS)   2019   Prior Outlook *   2018
GAAP Net Revenues $ 1,825   $ 1,715   $ 1,965

Impact of GAAP deferralsA

($ 567) ($ 540) ($ 581)
GAAP EPS $ 0.58 $ 0.39 $ 0.65
Non-GAAP EPS $ 0.78 $ 0.63 $ 0.78
Impact of GAAP deferralsA ($ 0.47) ($ 0.43) ($ 0.40)

* Prior outlook was provided by the company 12, in its earnings release.


For the quarter ended March 31, 2019, Activision Blizzard's net revenues presented in accordance with GAAP were $ 1.83 billion, compared with $ 1.97 billion for the first quarter of 2018. GAAP net revenues from digital channels were $ 1.39 billion. GAAP operating margin was 31%. GAAP earnings for diluted share were $ 0.58, as compared with $ 0.65 for the first quarter of 2018.

For the quarter ended March 31, 2019, on a non-GAAP basis, Activision Blizzard's operating margin was 41% and earnings per diluted share were

For the quarter ended March 31, 2019, operating cash flow was $ 450 million. For the trailing twelve-month period, operating cash flow was $ 1.71 billion.

GAAP and non-GAAP results, please refer to the tables below.

Operating Metrics

For the quarter ended March 31, 2019, Activision Blizzard's net bookingsB were $ 1.26 billion, compared with $ 1.38 billion for the first quarter of 2018. Net bookingsB from digital channels were $ 1.07 billion, compared with $ 1.21 billion for the first quarter of 2018.

Selected Business Highlights

Activision Blizzard outperformed our first quarter outlook. The foundation for future growth. The foundation for future growth. The Company is increasing development for our biggest, internally-owned franchises, for both upfront releases and in-game content, as well as investing in platform expansion on PC and mobile and new geographies. We are seeing strong momentum in our exports and in-game advertising initiatives. While we expect all the work underway to bear fruit in the future, the company remains focused on delivering near-term, reporting first quarter net revenues, net bookingsB and EPS ahead of our prior outlook.

Audience Reach

  • Activision Blizzard had 345 million Monthly Active Users (MAUs)C in the quarter, with 41 million at Activision, 32 million at Blizzard, and 272 million at King.
  • King MAUsC were up sequentially for the second quarter in a row driven by the Candy Crush ™ franchise where MAUsC again grew quarter-over-quarter and year-over-year. Candy Crush Friends Saga ™ continues to attract both new players to the franchise.
  • Sekiro ™: Shadows The Twice launched in March to 90-plus Metacritic scores. The game sold through more than two million copies worldwide in less than 10 days.

Deep Engagement

  • For each of Activision, Blizzard, and King, spent daily time for user increased year-over-year. For the Company overall, average time spent was approximately 50 minutes.
  • Daily time spent for across the player Candy Crush franchise reached a new high, driving the King network to a record of 38 minutes.
  • Call of Duty: Black Ops 4's core player base remains highly engaged, with total hours played and spent daily time for player growing double-digits versus Call of Duty: WWII.
  • The Company's professional Call of Duty city-based league is off to a strong start, selling its first five franchise teams. In Atlanta, Dallas, New York, Paris and Toronto, we are partnering with existing Overwatch League team owners who have a first-hand experience of our export strategy and capabilities and recognize the scale of the opportunity for a global call of duty.
  • The second season of the Overwatch League commenced in February to sell-out crowds at the Blizzard Arena. Viewer hours for the second season are over 30

Player Investment

  • Activision Blizzard delivered approximately $ 800 million of in-game net bookingsB in the first quarter.
  • For the twenty-second quarter in a row, King of the Top-10 highest grossing titles in the US mobile app stores.1

Company Outlook

(in millions, except EPS)  







Impact of GAAP


CY 2019

Net Revenues $ 6,025 $ 6,025 $ 275
EPS $ 1.18 $ 1.85 $ 0.25
Fully Diluted Shares 774 774

Q2 2019

Net Revenues $ 1,315 $ 1,315 ($ 165)
EPS $ 0.21 $ 0.35 ($ 0.12)
Fully Diluted Shares   771   771    

Net bookingsB are expected to be $ 6.30 billion for 2019 and $ 1.15 billion for the second quarter of 2019.


Currency Assumptions for 2019 Outlook:

  • $ 1.19 USD / Euro for current outlook (vs. average of $ 1.12 for 2018, $ 1.12 for 2017, and $ 1.11 for 2016); and
  • $ 1.33 USD / British Pound Sterling for current outlook (vs. average of $ 1.30 for 2018, $ 1.30 for 2017 and $ 1.36 for 2016).
  • Notes: Our financial guidance includes the forecasted impact of our FX hedging program.

Capital Allocation

The Board of Directors declared a cash dividend of $ 0.37 for common share, payable on May 9, 2019 to shareholders of the business record on March 28, 2019, which represents 9% increase from 2018.

Conference Call

Today at 4: 30 pm EDT, Activision Blizzard's management will host a conference call and webcast to discuss the company's results for the quarter ended March 31, 2019 and management's outlook for the remainder of the calendar year. The company welcomes all members of the financial and media communities and other interested parties to visit to listen to the conference call via 888-394-8218 in the US with passcode 8315973. A replay of the call will also be available after the call's conclusion

About Activision Blizzard

Activision Blizzard, Inc., a member of the Fortune 500 and S&P 500, is a leading standalone interactive entertainment company. We delight hundreds of millions of monthly active users around the world through franchises including Activision's Call of Duty®, Spyro ™, and Crash ™, Blizzard Entertainment's World of Warcraft®, Overwatch®, Hearthstone®, Diablo®, StarCraft®, and Heroes of the Storm®, and King's Candy Crush ™, Bubble Witch ™, and Farm Heroes ™. The company is one of the Fortune "100 Best Companies To Work For®." Headquartered in Santa Monica, California, Activision Blizzard has operations throughout the world. More information about Activision Blizzard and its products can be found on the company's website,

1 US ranking for Apple App Store and Google Play Store combined, for App Annie Intelligence for first quarter of 2019.

A Net effect of accounting treatment from revenue deferrals on certain of our online-enabled products. We are here to help you find out more about online services. generally less than a year. The related cost of revenues is recognized and recognized as an expense. Impact of changes in deferrals refers to the net effect of revenue deferrals of the treatment of revenues, of the purposes of EPS, of the related deferrals of treatment and of the related tax impacts. Internationally, management excludes the impact of this change in revenues from revenues and related 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 in the reduction of revenues and in the revenues of our operating system.

B Net bookings is a network of products and services. impact from deferrals.

C Monthly Active User ("MAU") Definition: We monitor MAUs as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular month. We calculate average MAUs in a period by adding the total number of months. An individual who accessed two of our games would be counted as two users. In addition, two 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 a single user platform.

Non-GAAP Financial Measures: As a supplement to our financial measures in accordance with US 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 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 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, operating margin and guidance both including (in accordance with GAAP) and excluding (non-GAAP) certain items. The following is an example of foreign currency rate fluctuations. In addition, Activision Blizzard provides EBITDA (defined as GAAP net income (loss) before interest (income) expense, income tax, 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 appropriate in any given reporting period:

  • expenses related to stock-based compensation;
  • the amortization of intangibles from purchase price accounting;
  • fees and other expenses related to King acquisition, long-term debt, refinancing of long-term debt, including penalties
  • 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 the above items (non-GAAP tax on income tax is calculated on the basis of the GAAP pre-tax income under ASC 740, which uses an annual effective tax rate method to the results); and
  • significant discrete tax-related items, including the Tax Cuts and Jobs Act, enacted in December 2017, 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 Activation Blizzard's financial and operating performance. In particular, the measures facilitated comparisons of operating performance with periods of time and with the help of investors to better understand the operating results of Activision Blizzard by excluding certain items that may be indicative of the company's core business, operating results, or future outlook. Additionally, we consider quantitative and qualitative factors in assessing the impact of items that may be significant or that could affect an ongoing financial and business performance or trends. Internationally, management uses these non-GAAP financial measures, assessing the company's operating results, and measuring compliance with the company's debt-financing concept, as well as in planning and forecasting.

Activision Blizzard's non-GAAP financial measures, 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 similar named measures, but exclude different items, which may provide investors with comparable views of Activision's performance in relation to other companies.

Blizzard's GAAP, as well as non-GAAP, results and outlook - ADAP 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 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 (3) statements of future financial or operating performance, including the impact of tax items thereon; and (4) statements of assumptions underlying such statements. The company uses words such as "outlook," "forecast," "will," "could," "should," "would," "to be," "plan," "plans," "believes," "may , "" Might, "" expects, "" intends, "" intends as, "" anticipates, "" estimate, "" future, "" positioned, "potential," "project," "remain," scheduled, "" Set to, "" subject to, "upcoming," and other similar expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risks, estimates of expectations, estimates, and projections about our business, and are inherently uncertain and difficult to predict.

We caution that a number of relevant factors could cause future events and other future events to differ from those expressed in any forward-looking statements. Such factors include, but are not limited to: our ability to consistently deliver popular, high-quality titles in a timely manner; ability to satisfy consumers' expectations with respect to our brands, games, services, and / or business practices; concentration of revenue among a small number of titles; the growth of the business of the new business; the development of the business of the new business; the development of the business of the new business; our ability to realize our predicted restructuring plans; increasing importance of revenues derived from digital distribution channels; risks associated with the retail sales business model; substantial influence of third-party platform providers over our products and costs; success and availability of video game consoles manufactured by third parties; risks associated with the free business model; risks and costs associated with legal proceedings; changes in tax rates or exposure to additional tax liabilities, as well as the outcome of current or future tax disputes; rapid changes in technology and industry standards; competition, including from other forms of entertainment; our ability to sell products at assumed pricing levels; our ability to attract, retain, and motivate skilled personnel; reliance on external developers for the development of some of our software products; the amount of debt and the limitations imposed by the covenants in the agreements governing our debt; counterparty risks relating to customers, licensees, licensors, and manufacturers; intellectual property claims; piracy and unauthorized copying of our products; risks and uncertainties of conducting business outside the US; fluctuations in currency exchange rates; increasing regulation of our business, products, and distribution in key territories; compliance with continuously evolving laws and regulations concerning data privacy; potential data breaches and other cybersecurity risks; 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, 2018.

The forward-looking statements assume no obligation to update any such forward-looking statements. These statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are guarantees of future performance and risks, uncertainties, and other factors.

(Tables to Follow)




(Amounts in millions, except for share data)

      Three Months Ended March 31,
2019     2018

Net revenues

Product sales $ 656 $ 720
Subscription, licensing, and other revenues 1 1,169   1,245
Total net revenues 1,825 1,965
Costs and expenses
Cost of revenues — product sales:
Product costs 152 162
Software royalties, amortization, and intellectual property licenses 111 146
Cost of revenues — subscription, licensing, and other:
Game operations and distribution costs 239 270
Software royalties, amortization, and intellectual property licenses 61 84
Product development 249 259
Sales and marketing 207 251
General and administrative 179 198
Restructuring and related costs 57  
Total costs and expenses 1,255   1,370
Operating income 570 595
Interest and other expense (income), net 3   28
Income before income tax expense 567 567
Income tax expense 120 67
Net income $ 447   $ 500
Basic earnings for common share $ 0.58 $ 0.66
Weighted average common shares outstanding 764 759
Diluted earnings for common share $ 0.58 $ 0.65
Weighted average common shares outstanding assuming dilution 770 770
1       Subscription, licensing, and other revenues represent revenues from World of Warcraft subscriptions, licensing royalties from our products and franchises, downloadable content, microtransactions, and other miscellaneous revenues.




(Amounts in millions)

      March 31, 2019 1     December 31, 2018 2
Current assets
Cash and cash equivalents $ 4,696 $ 4,225
Accounts receivable, net 594 1,035
Inventories, net 45 43
Software development 184 264
Other current assets 518   539  
Total current assets 6,037 6,106
Software development 80 65
Property and equipment, net 264 282
Deferred income taxes, net 373 458
Other assets 751 482
Intangible assets, net 680 735
Goodwill 9,763   9,762  
Total assets $ 17,948   $ 17,890  
Liabilities and Shareholders Equity
Current liabilities
Payable accounts $ 166 $ 253
Deferred revenues 931 1,493
Accrued expenses and other liabilities 1,198   896  
Total current liabilities 2,295 2,642
Long-term debt, net 2,672 2,671
Deferred income taxes, net 22 18
Other liabilities 1,363   1,167  
Total liabilities 6,352   6,498  
Shareholders equity
Common stock
Additional paid-in capital 11,004 10,963
Treasury stock (5,563 ) (5,563 )
Retained earnings 6,757 6,593
Accumulated other comprehensive loss (602 ) (601 )
Total shareholders' equity 11,596   11,392  
Total liabilities and shareholders' equity $ 17,948   $ 17,890  



We adopted a new lease accounting standard in the first quarter of 2019. The new lease accounting standard increased our “Other assets,” “Accrued expenses and other liabilities,” and “Other liabilities” as of March 31, 2019. Refer to our Form 10-Q for the three months ended March 31, 2019 for additional information.




During the three months ended 31, 2019, we identified an amount which should have been recorded in the fourth quarter of 2018 to reduce the income tax expense by $ 35 million. 2018-K for the year ending December 10, 31. Our balance sheet as of December 2019, 31, as presented above has been revised to reflect the correction. Refer to our Form 2018-Q for the three months ended March 10, 31, for additional information.




(Amounts in millions, except for share data)

Three Months Ended March 31, 2019       Net Revenues   Cost of Revenues - Product Sales: Product Costs   Cost of Revenues - Product Sales: Software Royalties and Amortization   Cost of Revenues - Subs / Lic / Other: Game Operations and Distribution Costs   Cost of Revenues - Subs / Lic / Other: Software Royalties and Amortization   Product Development   Sales and Marketing   General and Administrative   Restructuring and related costs   Total Costs and Expenses
GAAP Measurement       $ 1,825   $ 152   $ 111   $ 239   $ 61   $ 249   $ 207   $ 179   $ 57   $ 1,255
Share-based compensation1 (10 ) (20 ) (4 ) (29 ) (63 )
Amortization of intangible assets2 (53 ) (1 ) (54 )
Restructuring and related costs3                                 (57 )   (57 )
Non-GAAP Measurement $ 1,825     $ 152     $ 101     $ 239     $ 8     $ 229     $ 203     $ 149     $     $ 1,081  
Net effect of deferred revenues and related cost of revenues4 $ (567 ) $ (53 ) $ (66 ) $ (6 ) $ (1 ) $ $ $ $ $ (126 )
Operating Income   Net Income   Basic Earnings for Share   Diluted Earnings for Share
GAAP Measurement $ 570 $ 447 $ 0.58 $ 0.58
Share-based compensation1 63 63 0.08 0.08
Amortization of intangible assets2 54 54 0.07 0.07
Restructuring and related costs3 57 57 0.07 0.07
Income tax impacts from items above5     (18 )   (0.02 )   (0.02 )
Non-GAAP Measurement $ 744     $ 603     $ 0.79     $ 0.78  
Net effect of deferred revenues and related cost of revenues4 $ (441 ) $ (361 ) $ (0.47 ) $ (0.47 )


Activision Blizzard, Inc.

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