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Activision Blizzard Q2 CY2023 Financial Results

MarcoP90

MarcoP90

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Second Quarter Net Bookings Grew 50% Year-Over-Year

Second Quarter GAAP Operating Income and Segment Operating Income Each Grew Over 70% Year-Over-Year

Blizzard Delivered Its First $1B Net Bookings Quarter and Record Segment Operating Income, Driven by the Successful Launch of Diablo IV

Merger Agreement with Microsoft Extended to October 18, 2023 In Return for Higher Termination Fee, New Commercial Arrangements. Activision Blizzard Board Declares $0.99 Per Share Dividend.
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About the timeline extension for the acqusition deal from Microsoft

As announced on January 18, 2022, Microsoft plans to acquire Activision Blizzard for $95.00 per share in an all-cash transaction. The transaction has been approved by the boards of directors of both Activision Blizzard and Microsoft and by Activision Blizzard’s stockholders.

On July 18, 2023, Activision Blizzard and Microsoft entered into an agreement waiving certain rights to terminate the merger agreement if the merger has not been consummated prior to October 18, 2023. The terms of the agreement include an increase in the termination fee payable to Activision Blizzard from $3.0 billion to $3.5 billion if the transaction is terminated after August 29, 2023, and to $4.5 billion if the transaction is terminated after September 15, 2023. The agreement also includes amendments to Activision Blizzard’s commercial Xbox arrangements with Microsoft, valued at up to $250 million for each of fiscal years 2023 and 2024. The agreement further enables Activision Blizzard to declare and pay one regular cash dividend for fiscal year 2023 of up to $0.99 per share, prior to and not contingent on the closing of the transaction. Please refer to our Current Report on Form 8-K filed on July 19, 2023 for further detail.

Also on July 18, 2023, the Company’s Board of Directors declared a cash dividend of $0.99 per share of the Company’s outstanding common stock, payable on August 17, 2023, to shareholders of record at the close of business on August 2, 2023 from cash on hand.
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Selected Business Highlights

Activision Blizzard continued to connect and engage the world through epic entertainment in the second quarter. Our talented teams delivered compelling content across platforms, geographies and business models, delighting our communities and driving strong financial results. Net bookings grew 50% year-over-year in the second quarter, while GAAP operating income and segment operating income each grew over 70% year-over-year. Each of our business units grew net bookings year-over-year in the second quarter. Blizzard delivered its first $1 billion net bookings quarter following the record-setting launch of Diablo® IV, Blizzard’s fastest-selling title to date. Player investment in live operations content drove 17% year-over-yearnet bookings growth for Activision and another quarterly net bookings record at King. Activision Blizzard in-game net bookings grew 30% year-over-year in the second quarter, and represent over 60% of total net bookings over the last 12 months. Net bookings on the mobile platform grew 4% year-over-year, and represent approximately 40% of total net bookings over the last 12 months. We expect to deliver strong financial performance for the full year, driven by the successful reinvigoration of the Diablo franchise and growth in live operations across the company. We do remain cognizant of risks, including those related to our execution, the consumer spending environment, and the labor market, and we are forecasting our second half content releases prudently. We continue to expect at least high-teens year-over-year growthfor GAAP revenue in 2023, and at least high-single digit year-over-year growth in net bookings and total segment operating income for the year. This outlook does not incorporate potential financial benefits included in the Microsoft extension announced today.
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Activision

  • Activision segment revenue grew 17% year-over-year in the second quarter, while operating income increased over 80% year-over-year, driven by growth across the Call of Duty® franchise.
  • Net bookings on PC and console grew strongly year-over-year, as players continued to engage and invest in the Call ofDuty: Modern Warfare® II universe. Premium Call of Duty sales grew sharply year-over-year. Second quarter in-game net bookings were higher than both the first quarter and the year ago period, with Season 3 being the highest-grossing Modern Warfare II in-game season to date, driven by a strong community response to gameplay enhancements and the new BlackCell battle pass offering. Our teams are looking forward to releasing additional seasons of new content and ongoing community updates in the coming months.
  • Call of Duty Mobile engagement and net bookings were stable year-over-year, with the team continuing to see a positive response to enhancements to the player experience and optimization of live operations. Lifetime worldwide consumer spending on Call of Duty Mobile since its October 2019 launch passed $3 billion in the second quarter.
  • Call of Duty approaches its 20-year anniversary in October with around 90 million monthly players, with over half of all engagement on the mobile platform. Activision’s teams are hard at work on major new installments in the franchise slated for the fourth quarter. Development of this year's full annual premium release on PC and console is proceeding well. Call of Duty: Warzone Mobile™, an ambitious, internally developed mobile game tightly integrated with the PC and console experience, continues to progress through regional testing.
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Blizzard

  • In the second quarter, Blizzard segment revenue grew over 160% year-over-year and operating income more than tripled year-over-year, each setting new quarterly records, driven by the launch of Diablo IV.As of the end of the second quarter, Diablo IV had sold-through more units than any other Blizzard title at an equivalent stage of release. Over 10 million players experienced Diablo IV in June, playing for over 700 million hours, and retention trends for the title are particularly strong.
  • The launch of Diablo IV marks the start of a live service plan designed to deeply engage the Diablo community and create opportunities for continued player investment. July 20 sees the release of Diablo IV’s first quarterly season, Season of the Malignant, bringing new themes, content, and fresh gameplay to the community. Blizzard’s teams are also making strong progress on expansions that will deliver major new features and continue the game’s acclaimed narrative for manyyears to come.
  • Following the launch of Diablo IV, Blizzard also saw increased engagement in Diablo Immortal ™, with June monthly net bookings for the mobile and PC title reaching the highest level since January. Elsewhere on mobile, Warcraft: ArclightRumble ™, an action strategy game internally developed at Blizzard, continues to progress through testing ahead of its regional soft launch.
  • Blizzard continued to engage the Overwatch® and Warcraft® communities with live operations in the second quarter. While engagement and player investment in Overwatch 2 declined sequentially in the quarter, the Overwatch team is looking forward to the August 10 release of Overwatch 2: Invasion. This will be the largest seasonal update yet, planned to include new PVE Story Missions, a new game mode, and a new hero progression system as well as an additional hero.
  • The World of Warcraft® team is delivering more content faster than ever before following the November release of the Dragonflight™ expansion for the Modern game, and subscriber retention in the West remains higher than at the equivalent stage of recent Modern expansions.
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King

  • King segment revenue grew 9% year-over-year to a new quarterly record, equivalent to 10% year-over-year growth on aconstant currency basisE, again driven by strong execution across Candy Crush™ live operations and user acquisition. Segment operating income was slightly lower year-over-year due to increased investment in marketing, which is expected to contribute to operating income growth in future quarters.
  • In-game net bookings increased 10% year-over-year. The spring Candy Crush All Stars tournament, the first to includecontestants from multiple continents, drove particularly strong year-over-year growth in installs and player investment in the Candy Crush franchise in April. Candy Crush payer numbers again grew year-over-year in the second quarter, and Candy Crush was the top-grossing game franchise in the U.S. app stores for the 24th quarter in a row.
  • In the second quarter King saw further benefits from the acquisition of Peltarion, an AI technology company acquired in June 2022. Peltarion’s machine learning technology is helping King to accelerate the production and testing of Candy Crush live operations and to offer more relevant game content to players. King is now working on additional use cases involving generative AI to assist its developers in accelerating their workflow.
  • King’s advertising business grew year-over-year in the second quarter, with growth across direct brand advertisers andpartner networks. Direct sales benefited from the rollout of innovative new ad formats and success in targeting new verticals, while indirect growth was driven by enhancements to our platform and the ramp of new partners.
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Previous threads

CY2022

Q1 - https://www.installbaseforum.com/fo...report-revenue-22-yoy-mau-53-million-yoy.731/
Q3 - https://www.installbaseforum.com/fo...on-blizzard-q3-cy2022-financial-results.1189/
Q4 - https://www.installbaseforum.com/fo...on-blizzard-q4-cy2022-financial-results.1361/
 
Pretty much everything is doing amazing and up YOY except Overwatch. They really fumbled with OW2, wonder if it can recover?
 
fiendcode said:
Pretty much everything is doing amazing and up YOY except Overwatch. They really fumbled with OW2, wonder if it can recover?
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I feel like a lot of the problems really tainted Overwatch 2. the whole reason there even is an "overwatch 2", they flushed that shit down the toilet

Overwatch Mobile, when?
 
I see so much negativity with Diablo 4 but it really is a 'gamer-brain' echo chamber. I assume Blizzard is making changes based on play data, designing the game for the silent majority instead of YouTube content creators. Great result for D4 and it boosted Diablo Immortal as well.
 
FinalLarry said:
I see so much negativity with Diablo 4 but it really is a 'gamer-brain' echo chamber. I assume Blizzard is making changes based on play data, designing the game for the silent majority instead of YouTube content creators. Great result for D4 and it boosted Diablo Immortal as well.
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I've been playing Path of Exile for 11 years now, and every once in a while there is massive outrage because of nerfs etc.

What likely happened with the Season 1 patch is that Blizzard nerfed the base game because the season content is going to provide some massive power creep which easily outweighs the nerfs. This also happened in PoE several times and in the end everything was mostly fine.
 
Nice improvement YOY. Diablo 4 really did lift the whole company. Well, Blizzards share at least.
 
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