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Exhibit 99.1
ACTIVISION BLIZZARD ANNOUNCES STRONG FIRST-QUARTER 2020 FINANCIAL RESULTS
Santa Monica, CA – May 5, 2020 – Activision Blizzard, Inc. (Nasdaq: ATVI) today announced first-quarter 2020 results.
“Our goal to connect the world through epic entertainment is more important to our players than ever before,” said Bobby Kotick, Chief Executive Officer of Activision Blizzard. “We delivered strong financial results for the first quarter, and are raising our full year outlook. I have been awestruck by the strength of our employees and their families during this difficult time. Whether managing healthcare or childcare, performing public service or community service, our teams around the world have shown ingenuity and resilience. In the face of so many difficulties, our employees have made certain that the joy, the engagement, and the benefits of gaming remain an effective way to help keep our 400 million players around the world connected and safe.”
Financial Metrics
Q1 | ||||||
(in millions, except EPS) | 2020 | Prior Outlook* | 2019 | |||
GAAP Net Revenues | $ | 1,788 | $ | 1,640 | $ | 1,825 |
Impact of GAAP deferralsA | $ | (266) | $ | (365) | $ | (567) |
GAAP EPS | $ | 0.65 | $ | 0.55 | $ | 0.58 |
Non-GAAP EPS | $ | 0.76 | $ | 0.66 | $ | 0.78 |
Impact of GAAP deferralsA | $ | (0.18) | $ | (0.31) | $ | (0.47) |
* Prior outlook was provided by the company on February 6, 2020 in its earnings release.
For the quarter ended March 31, 2020, Activision Blizzard’s net revenues presented in accordance with GAAP were $1.79 billion, as compared with $1.83 billion for the first quarter of 2019. GAAP net revenues from digital channels were $1.44 billion, as compared with $1.39 billion for the first quarter of 2019. GAAP operating margin was 34%. GAAP earnings per diluted share were $0.65, as compared with $0.58 for the first quarter of 2019.
For the quarter ended March 31, 2020, on a non-GAAP basis, Activision Blizzard’s operating margin was 40% and earnings per diluted share were $0.76, as compared with $0.78 for the first quarter of 2019.
For the quarter ended March 31, 2020, operating cash flow was $148 million. For the trailing twelve-month period, operating cash flow was $1.53 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.
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The increase in sales and marketing expenses for the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, was driven by an increase of $51 million in marketing spending and personnel costs, primarily associated with higher marketing costs for Call of Duty: Mobile and the Candy Crush franchise, partially offset by lower marketing costs for Sekiro: Shadows Die Twice and a decrease in bad debt provisions.
The decrease in general and administrative expenses for the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, was primarily due to a $10 million decrease in personnel costs and professional service fees.
The increase in net revenues from digital online channels for the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, was primarily due to: higher revenues recognized from Call of Duty: Modern Warfare, which was released in October 2019, as compared to Call of Duty: Black Ops 4, which was released in October 2018; and revenues recognized from Call of Duty: Mobile, which was released in October 2019.
The income tax expense of $99 million for the three months ended March 31, 2020 reflects an effective tax rate of 16%, which is lower than the effective tax rate of 21% for the three months ended March 31, 2019.
These increases were partially offset by: marketing costs, service provider fees such as digital storefront fees (e.g. fees retained by Apple and Google for our sales on their platforms) and server bandwidth fees, and software royalties for Call of Duty: Mobile in the current quarter with no such costs in the prior-year quarter; and higher product development costs driven by higher personnel bonuses as a result of strong business performance.
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Activision Blizzard, Inc. provided additional information to their SEC Filing as exhibits
Ticker: ATVI
CIK: 718877
Form Type: 10-Q Quarterly Report
Accession Number: 0001628280-20-006454
Submitted to the SEC: Tue May 05 2020 4:31:55 PM EST
Accepted by the SEC: Tue May 05 2020
Period: Tuesday, March 31, 2020
Industry: Prepackaged Software