SANTA MONICA, Calif.–(BUSINESS WIRE)–Feb. 3, 2022-- Activision Blizzard, Inc. (Nasdaq: ATVI) today announced fourth-quarter and 2021 results.
“I’m so incredibly proud of our teams for their commitment and passion as we continued to engage the world through epic entertainment in 2021,” said Bobby Kotick, CEO of Activision Blizzard. “As we look to the future, with Microsoft’s scale and resources, we will be better equipped to grow existing franchises, launch new potential franchises and unlock the rich library of games we have assembled over 40 years. Our 370 million players around the world and workplace excellence remain our focus. For investors, our recently announced transaction is the culmination of three decades of providing superior shareholder returns.”
(in millions, except EPS) 2021 Prior
Outlook* 2020 2021 2020
GAAP Net Revenues $2,163 $2,020 $2,413 $8,803 $8,086
Impact of GAAP deferralsA $324 $763 $638 ($449) $333
GAAP EPS $0.72 $0.54 $0.65 $3.44 $2.82
Non-GAAP EPS $1.01 $0.62 $0.76 $4.08 $3.21
Impact of GAAP deferralsA $0.24 $0.67 $0.45 ($0.36) $0.26
- Prior outlook was provided by the company on November 2, 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 year ended December 31, 2021, Activision Blizzard’s net revenues presented in accordance with GAAP were $8.80 billion, as compared with $8.09 billion for 2020. GAAP net revenues from digital channels were $7.66 billion. GAAP operating margin was 37%. GAAP earnings per diluted share was $3.44, as compared with $2.82 for 2020. On a non-GAAP basis, Activision Blizzard’s operating margin was 44% and earnings per diluted share was $4.08, as compared with $3.21 for 2020.
For the quarter ended December 31, 2021, Activision Blizzard’s net revenues presented in accordance with GAAP were $2.16 billion, as compared with $2.41 billion for the fourth quarter of 2020. GAAP net revenues from digital channels were $1.78 billion. GAAP operating margin was 32%. GAAP earnings per diluted share was $0.72, as compared with $0.65 for the fourth quarter of 2020. On a non-GAAP basis, Activision Blizzard’s operating margin was 45% and earnings per diluted share was $1.01, as compared with $0.76 for the fourth quarter of 2020.
Activision Blizzard generated $2.41 billion in operating cash flow for the year ended December 31, 2021, as compared with $2.25 billion for 2020. For the quarter, operating cash flow was $661 million, as compared with $1.14 billion for the fourth quarter of 2020.
Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results.
For the year ended December 31, 2021, Activision Blizzard’s net bookingsB were $8.35 billion, as compared with $8.42 billion for 2020. In-game net bookingsC were $5.10 billion, as compared with $4.85 billion for 2020.
For the quarter ended December 31, 2021, Activision Blizzard’s net bookingsB were $2.49 billion, as compared with $3.05 billion for the fourth quarter of 2020. In-game net bookingsC were $1.24 billion, as compared with $1.32 billion for the fourth quarter of 2020.
For the quarter ended December 31, 2021, overall Activision Blizzard Monthly Active Users (MAUs)D were 371 million.
As announced on January 18, 2022, Microsoft plans to acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard’s stockholder approval. The transaction, which is expected to close in Microsoft’s fiscal year ending June 30 2023, has been approved by the boards of directors of both Activision Blizzard and Microsoft.
Conference Call and Earnings Presentation
In light of the pending transaction with Microsoft, and as is customary during the pendency of an acquisition, Activision Blizzard will not be hosting a conference call, issuing an earnings presentation, or providing financial guidance in conjunction with its fourth quarter 2021 earnings release. For further detail and discussion of our financial performance please refer to our upcoming Annual Report on Form 10-K for the year ended December 31, 2021.
Selected Business Highlights
Activision Blizzard delivered record full-year GAAP results in 2021, growing GAAP revenue 9% year-over-year, GAAP operating profit 19% year-over-year and GAAP EPS 22% year-over-year, building on very strong results in the prior year. Net bookings were broadly consistent year-over-year, again following very strong growth in 2020.
While fourth quarter 2021 GAAP revenue was ahead of our guidance provided on November 2, 2021, fourth quarter net bookings were below our prior outlook, primarily due to lower than expected performance in the Activision segment, which offset record performance at King. Activision Blizzard’s mobile net bookings grew 18% year-over-year and represented 33% of total net bookings in the fourth quarter.
Fourth quarter GAAP EPS was ahead of our prior outlook. Non-GAAP EPS reflected a $0.16 benefit from the implementation of changes to our compensation plans, primarily to enhance equity ownership for employees and bring our employee equity compensation more in line with current industry practice.
Growing our developer base remains a strategic priority for the company. We continued to increase our developer headcount in the fourth quarter and added hundreds of talented professionals in 2021. Our teams are executing against an exciting pipeline of content planned for 2022. Activision expects to drive renewed expansion in the Call of Duty® franchise later in the year with groundbreaking all-new experiences. Blizzard is planning substantial new content for key franchises, and King expects to build on its momentum with further innovative live operations across its portfolio.
Activision Blizzard is committed to ensuring an inclusive and safe working environment for its employees, and in the fourth quarter continued to implement previously announced initiatives to strengthen its practices and policies. The company also announced the conversion of nearly 500 temporary workers to full-time employees at Activision Publishing studios, along with securing increased wages and expanded paid time off benefits for a large portion of temporary workers.
Call of Duty net bookings on console and PC declined year-over-year in the fourth quarter, reflecting lower premium sales for Call of Duty: Vanguard versus the year ago title and lower engagement in Call of Duty: Warzone™. Fourth quarter in-game player investment on console and PC remained well above the level seen prior to the March 2020 launch of Warzone.
Development on this year’s premium and Warzone experiences is being led by Activision’s renowned Infinity Ward studio. The team is working on the most ambitious plan in franchise history, with industry-leading innovation and a broadly appealing franchise setting.
Call of Duty Mobile net bookings grew year-over-year in the fourth quarter, driven by continued contribution from the game in China. For the full year, Call of Duty Mobile net bookings grew strongly, with 2021 worldwide consumer spending on the title exceeding $1 billion.
Studio expansion has continued to add development resources worldwide as plans continue for ongoing live operations and new, unannounced titles in the Call of Duty universe.
Within the Warcraft franchise, fourth quarter World of WarcraftTM reach and engagement continued to benefit from the combination of the Modern game and Classic under a single subscription. In 2021, World of Warcraft delivered its strongest engagement and net bookings outside of a Modern expansion year in a decade. Hearthstone ® fourth quarter net bookings grew year-over-year, driven by a steady cadence of new content.
Blizzard is planning substantial new content for the Warcraft franchise in 2022, including new experiences in World of Warcraft and Hearthstone, and getting all-new mobile Warcraft content into players’ hands for the first time.
In the Diablo franchise**, Diablo II: ResurrectedTM** sold through more units from its September release until the year end than any other Activision Blizzard remaster over an equivalent period. On mobile, Diablo Immortal TM concluded its public testing with positive feedback.
Blizzard is making strong progress on its pipeline, including new experiences in Warcraft, ongoing development in Diablo and Overwatch, and an exciting new IP.
King’s in-game net bookings grew 14% year-over-year to a new record in the fourth quarter, driven by 20% year-over-year growth for Candy CrushTM, King’s largest franchise. Candy Crush was the top-grossing game franchise in the U.S. app stores1 for the 18th consecutive quarter.
Hours played across the King portfolio again grew year-over-year in the fourth quarter, with players responding positively to a more frequent cadence of compelling in-game content and events for key titles. King’s payer numbers grew by a double-digit percentage versus the year ago quarter.
King’s advertising business grew rapidly in the fourth quarter to reach a new high. For 2021, advertising revenue grew over 60% year-over-year.
Having passed the $1 billion annual operating income milestone in 2021, the King business is entering 2022 with strong momentum. Its teams are focused on continuing to deliver engaging features and events alongside robust live operations and disciplined user acquisition in the coming quarters.
Balance Sheet and Dividend
Cash and short-term investments at the end of the fourth quarter stood at $10.6 billion, and Activision Blizzard ended the quarter with a net cash position of approximately $7.0 billion.
The Board of Directors declared a cash dividend of $0.47 per common share, payable on May 6, 2022 to shareholders of record at the close of business on April 15, 2022.
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™, Warcraft®, Overwatch®, 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.