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Activision Blizzard Announces Second Quarter 2013 Financial Results

Stocks in this article: ATVI

For the quarter ended June 30, 2013, Activision Blizzard’s GAAP earnings per diluted share were $0.28, as compared with $0.16 for the second quarter of 2012. On a non-GAAP basis, the company’s earnings per diluted share were $0.08, as compared with $0.20 for the second quarter of 2012.

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

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, “We are pleased with our second-quarter results, which confirm the preliminary results we released last week when we announced our transaction with Vivendi. The agreement we reached with Vivendi will make us an independent company and should deliver meaningful earnings per share accretion to our shareholders. Our solid performance across our franchises and strong digital sales, including continued significant growth this quarter in our Call of Duty® downloadable content business over the previous year, validate our belief that we will enter this new period of independence in a position to leverage the flexibility and focus that it provides.”

Kotick added, ”On a GAAP and non-GAAP basis, we delivered strong quarterly and first half net revenues, operating income, and earnings. Year to date, we generated a record $434 million in operating cash flow. However, despite this strength in the front half of the year, we remain cautious about the back half. The issues we previously identified, including increased competition in the second half of the year and uncertainties surrounding the console transition, remain on the horizon. We are confident that we will continue to successfully navigate industry challenges and find new opportunities to provide superior returns to our shareholders.”

Selected Business Highlights:

  • For the first six months of 2013, Activision Blizzard was the #1 third-party publisher in North America and Europe combined.¹
  • For the first six months of 2013, Activision Blizzard had the top-two best-selling games in North America and Europe combined, with Activision Publishing’s Skylanders® Giants™ and Call of Duty: Black Ops II
  • In both North America and Europe, Activision Publishing’s Skylanders Giants was the #1 best-selling console and hand-held game overall in dollars for the first six months of 2013. ¹
  • As of July 31, 2013, the Skylanders franchise has generated, life-to-date, more than $1.5 billion in worldwide retail sales. ¹
  • As of June 30, 2013, Blizzard Entertainment’s World of Warcraft® remains the #1 subscription-based MMORPG, with approximately 7.7 million subscribers.²
  • On July 25, 2013, Activision Blizzard announced that it reached an agreement under which the company will acquire approximately 429 million company shares and certain tax attributes from Vivendi, in exchange for approximately $5.83 billion in cash, or $13.60 per share acquired before taking into account any future benefit from these tax attributes. In a related transaction, ASAC II LP, an investment vehicle led by CEO Bobby Kotick and Activision Blizzard Co-Chairman Brian Kelly, will purchase approximately 172 million company shares from Vivendi for approximately $2.34 billion in cash, or $13.60 per share. Following the completion of the transactions, which are expected to close by the end of September 2013, Vivendi will no longer be the majority shareholder, but will retain a stake of approximately 83 million shares, or approximately 12%.
  • During the quarter, Activision Blizzard paid a cash dividend of $0.19 per common share, totaling $216 million, to shareholders of record at the close of business on March 20, 2013.

Company Outlook:

On July 2, 2013, Activision Publishing released Call of Duty: Black Ops II Vengeance , a downloadable map pack for the Xbox 360® video game system from Microsoft. The company expects to release Call of Duty: Black Ops II Vengeance on other platforms later in the third quarter of 2013.

On September 3, 2013, Blizzard Entertainment expects to release Diablo® III for Sony’s PlayStation® 3 computer entertainment system and the Xbox 360 video game system from Microsoft.

Based on its second quarter results, Activision Blizzard is raising its full year GAAP outlook. The company’s third quarter and full year net revenue and earnings per share outlook are as follows and do not include any potential impact from the transaction with Vivendi announced on July 25, 2013 and described above:

 

 

(in millions, except EPS)

  GAAP Outlook   Prior*

GAAP Outlook

  Non-GAAP Outlook   Prior*

Non-GAAP Outlook

 

CY 2013

Net Revenues $ 4,310 $ 4,220 $ 4,250 $ 4,250
EPS $ 0.77 $ 0.73 $ 0.82 $ 0.82
 

Q3 2013

Net Revenues $ 635 n/a $ 585 n/a
EPS $ 0.03 n/a $ 0.03 n/a

* Prior outlook was provided by the company on May 8, 2013 in its earnings release

The company estimates that, if and when completed, the recently announced transaction with Vivendi will be accretive to full year pro-forma earnings per share. For additional information and pro-forma results, please refer to the table at the back of this press release.

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