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 operating discipline and exceeded our prior outlook for the first quarter. We are increasing investment in our biggest franchises to better deliver against our growth potential, and I am pleased with our progress,” said Bobby Kotick, Chief Executive Officer of Activision Blizzard. “We’re continuing to enhance our leadership position in esports. The second season of the Overwatch League™ has seen strong growth in viewership, and we’re seeing enthusiastic demand for our professional, city-based Call of Duty® league franchises. We have already sold the first five Call of Duty teams in Atlanta, Dallas, New York, Paris and Toronto to owners who recognize the scale of the opportunity from their partnerships with us on the Overwatch League.”

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 on February 12, 2019 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, as 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 per 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 $0.78, as compared with $0.78 for the first quarter of 2018.

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.

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 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, as compared with $1.21 billion for the first quarter of 2018.

Selected Business Highlights

Activision Blizzard outperformed our first quarter outlook. Over the last three months, the Company made progress against the plan outlined in our February earnings call to reinforce 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 also seeing strong momentum in our esports and in-game advertising initiatives. While we expect all the work underway to bear fruit in the future, the Company remains focused on delivering in the 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 former and new players to the franchise.
  • Sekiro™: Shadows Die 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, daily time spent per user increased year-over-year. For the Company overall, average time spent was approximately 50 minutes.
  • Daily time spent per player across the 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 daily time spent per 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 first-hand experience of our esports strategy and capabilities and recognize the scale of the opportunity for a global Call of Duty league.
  • The second season of the Overwatch League commenced in February to sell-out crowds at the Blizzard Arena. Viewership hours for the second season to date are over 30% higher than in the first season.

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 had two of the top-10 highest grossing titles in the U.S. 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).
  • Note: 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 per common share, payable on May 9, 2019 to shareholders of record at the close of business on March 28, 2019, which represents a 9% increase from 2018.

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 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 live Webcast or to listen to the call live by dialing into 888-394-8218 in the U.S. with passcode 8315973. A replay of the call will also be available after the call’s conclusion and archived for one year at

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 U.S. ranking for Apple App Store and Google Play Store combined, per App Annie Intelligence for first quarter of 2019.

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 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 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.

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 stock-based compensation;
  • the amortization of intangibles from purchase price accounting;
  • fees and other expenses related to the King acquisition, 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 (including the Tax Cuts and Jobs Act enacted in December 2017), 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 and services and restructuring activities; (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 generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “plans,” “believes,” “may,” “might,” “expects,” “intends,” “intends as,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming,” and other similar expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic 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 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: our ability to consistently deliver popular, high-quality titles in a timely manner; our ability to satisfy the expectations of consumers with respect to our brands, games, services, and/or business practices; concentration of revenue among a small number of titles; the continued growth in the scope and complexity of our business, including the diversion of management time and attention to issues relating to the operations of our newly acquired or started businesses and the potential impact of our expansion into new businesses on our existing businesses; our ability to realize the expected financial and operational benefits of, and effectively manage, our recently announced 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-to-play business model, including dependence on a relatively small number of consumers for a significant portion of revenues and profits from any given game; 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 development of some of our software products; the amount of our 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 U.S.; fluctuations in currency exchange rates; increasing regulation of our business, products, and distribution in key territories; compliance with continually 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 in this press release are based on information available to the company at this time and we assume no obligation to update any such forward-looking statements. Although these forward-looking statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and may cause actual results to differ materially from current expectations.

(Tables to Follow)




(Amounts in millions, except per 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 per common share $ 0.58 $ 0.66
Weighted average common shares outstanding 764 759
Diluted earnings per 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
Accounts payable $ 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 March 31, 2019, we identified an amount which should have been recorded in the fourth quarter of 2018 to reduce income tax expense by $35 million. We will revise our 2018 financial statements to correct this matter in our Annual Report on Form 10-K for the year ending December 31, 2019. Our balance sheet as of December 31, 2018, as presented above has been revised to reflect the correction. Refer to our Form 10-Q for the three months ended March 31, 2019, for additional information.




(Amounts in millions, except per 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 per Share   Diluted Earnings per 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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