Activision Blizzard, Inc. (NASDAQ:ATVI) Q4 2020 Earnings Conference Call February 4, 2021 4:30 PM ET Company Participants Christopher Hickey - Senior Vice President of Investor Relations Bobby Kotick - Chief Executive Officer Daniel Alegre - President & Chief Operating Officer Dennis Durkin - Chief Financial Officer Rob Kostich - President of Activision Jay Allen Brack - President Conference Call Participants Tyler Parker - KeyBanc Capital Markets Eric Sheridan - UBS Kunaal Malde - Atlantic Equities Colin ...

Activision Blizzard, Inc. (NASDAQ:ATVI) Q3 2020 Earnings Conference Call October 29, 2020 4:30 PM ET Company Participants Christopher Hickey - Senior Vice President of Investor Relations Bobby Kotick - Chief Executive Officer Daniel Alegre - President & Chief Operating Officer Dennis Durkin - Chief Financial Officer Rob Kostich - President of Activision Humam Sakhnini - President of King Conference Call Participants Ryan Gee - Barclays Matthew Thornton - Truist Securities Michael J. Hickey - The Benchmark C ...

Q3 2020 Financial Performance - Q3 GAAP revenues reached $1.95 billion, exceeding the guidance of $1.80 billion[10] - Q3 net bookings amounted to $1.77 billion, surpassing the guidance of $1.65 billion[10] - Q3 GAAP EPS hit a record of $0.78, compared to the guidance of $0.64[10] - Q3 non-GAAP EPS also reached a record of $0.88, exceeding the guidance of $0.75[10] Key Franchises Performance - Call of Duty, World of Warcraft, and Candy Crush are each projected to generate over $1 billion in net bookings this year[11] - Call of Duty console and PC in-game net bookings were four times higher year-over-year[16] - King delivered robust double-digit year-over-year growth in advertising net bookings[21] Monthly Active Users (MAUs) - Activision had 111 million MAUs[16] - Blizzard had 30 million MAUs[19] - King had 249 million MAUs[21] Segment Results - Activision's Q3 net revenues were $773 million, with a 45% operating margin[23] - Blizzard's Q3 net revenues were $411 million, with a 32% operating margin[23] - King's Q3 net revenues were $536 million, with a 46% operating margin[23] Balance Sheet - Cash and investments as of September 30, 2020, were $7.60 billion[28] - Gross debt as of September 30, 2020, was $3.65 billion[28]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-15839 ACTIVISION BLIZZARD, INC. (Exact name of registrant as specified in its charter) Delaware 95-4803544 (State or ot ...

Activision Blizzard, Inc. (NASDAQ:ATVI) Q2 2019 Results Conference Call August 4, 2020 4:30 PM ET Company Participants Christopher Hickey - SVP, IR Bobby Kotick - CEO Daniel Alegre - President and COO Dennis Durkin - CFO and President, Emerging Businesses Rob Kostich - President, Activision J. Allen Brack - President, Blizzard Humam Sakhnini - President, King Conference Call Participants Eric Sheridan - UBS Doug Creutz - Cowen Alex Giaimo - Jefferies Yung Kim - Piper Sandler Mario Lu - Barclays Brian Nowak ...

Table of Contents Common Stock, par value $0.000001 per share ATVI The Nasdaq Global Select Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2020 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-15839 ACTIVISION BLIZZARD, INC. (Exact name o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2020 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-15839 ACTIVISION, RIV | --- | --- | --- | --- | --- | --- | --- | |---------------------------------------------------------- ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) Activision Blizzard is a global interactive entertainment company focused on expanding audience reach, engagement, and player investment through key franchises like Call of Duty, Candy Crush, and World of Warcraft - The company's business strategy is built on three strategic pillars: expanding audience reach, driving deep consumer engagement, and providing more opportunities for player investment[13](index=13&type=chunk) - The business is structured into three reportable segments: Activision Publishing, Inc. (primarily console), Blizzard Entertainment, Inc. (primarily PC), and King Digital Entertainment (primarily mobile)[17](index=17&type=chunk)[20](index=20&type=chunk)[22](index=22&type=chunk) 2019 Top Franchise Revenue Contribution | Franchise | Percentage of 2019 Net Revenues | | :--- | :--- | | Call of Duty, Candy Crush, World of Warcraft (collectively) | 67% | 2019 Significant Customer Revenue Contribution | Customer | Percentage of 2019 Net Revenues | | :--- | :--- | | Apple | 17% | | Google | 13% | | Sony | 11% | [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from franchise dependence, platform reliance, intense competition, data privacy, cybersecurity, and global events - A significant portion of revenues and profits are derived from a small number of popular franchises, with Call of Duty, Candy Crush, and World of Warcraft collectively accounting for approximately **67% of net revenues in 2019**[65](index=65&type=chunk) - The business is highly dependent on third-party platforms like Sony, Microsoft, Nintendo, Apple, and Google, which have substantial influence over product costs, release schedules, and distribution terms[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - The company is subject to evolving data privacy laws such as the EU's GDPR and the California Consumer Privacy Act (CCPA), with non-compliance potentially leading to significant fines and reputational damage[155](index=155&type=chunk)[156](index=156&type=chunk) - Cybersecurity attacks, data breaches, or system disruptions pose a significant risk, potentially leading to software piracy, disclosure of sensitive customer or employee information, and reputational harm[162](index=162&type=chunk) - Large-scale medical emergencies, such as the 2019 coronavirus outbreak, could negatively impact employee productivity, consumer health, and live esports events, potentially harming the business[169](index=169&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) The company primarily leases its corporate and segment headquarters globally, owning only two European warehouses for distribution - The company's principal corporate and Activision headquarters are in a **150,000 sq. ft. leased space** in Santa Monica, CA[173](index=173&type=chunk) - Blizzard's headquarters are in a **740,000 sq. ft. leased space** in Irvine, CA, and King's headquarters are in a **68,000 sq. ft. leased space** in London, UK[174](index=174&type=chunk) - The only facilities owned by the company are two European warehouses in Germany and the Netherlands, utilized by the Distribution segment[176](index=176&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) In 2019, the company settled a transfer pricing dispute with the French Tax Authority, incurring a $54 million tax expense - The company settled a transfer pricing dispute with the French Tax Authority (FTA) covering tax years 2011 through 2018[177](index=177&type=chunk) - The settlement resulted in a **$54 million tax expense** recognized in the period ended December 31, 2019, and a payment of **€161 million (approx. $179 million)** in January 2020[177](index=177&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq, pays annual dividends, and authorized a $1.5 billion stock repurchase program Annual Cash Dividends Paid Per Share | Year | Per Share Amount | | :--- | :--- | | 2020 (Declared) | $0.41 | | 2019 | $0.37 | | 2018 | $0.34 | | 2017 | $0.30 | - In January 2019, the Board of Directors authorized a stock repurchase program for up to **$1.5 billion of common stock**, valid until February 13, 2021, with no shares repurchased under this program to date[189](index=189&type=chunk) [Selected Financial Data](index=30&type=section&id=Item%206.%20Selected%20Financial%20Data) This section summarizes five years of consolidated financial data, showing a decline in 2019 net revenues and net income from 2018 Selected Financial Data (2015-2019) | Metric (in millions, except per share data) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net revenues** | $6,489 | $7,500 | $7,017 | $6,608 | $4,664 | | **Net income** | $1,503 | $1,848 | $273 | $966 | $892 | | **Diluted net income per share** | $1.95 | $2.40 | $0.36 | $1.28 | $1.19 | | **Operating cash flows** | $1,831 | $1,790 | $2,213 | $2,155 | $1,259 | | **Total assets** | $19,845 | $17,890 | $18,668 | $17,452 | $15,246 | | **Long-term debt, net** | $2,675 | $2,671 | $4,390 | $4,887 | $4,074 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2019, net revenues and operating income declined due to franchise performance and restructuring costs, while MAUs increased significantly 2019 vs. 2018 Financial Highlights | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Consolidated Net Revenues | $6.5B | $7.5B | -13% | | Consolidated Operating Income | $1.6B | $2.0B | -19% | | Diluted EPS | $1.95 | $2.40 | -18.8% | | Operating Cash Flows | $1.83B | $1.79B | +2% | Net Bookings Performance (2018 vs. 2019) | Metric (in millions) | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net bookings | $6,388 | $7,262 | $(874) | | In-game net bookings | $3,366 | $4,203 | $(837) | - The decrease in 2019 net bookings was primarily due to lower performance from Blizzard's Hearthstone and World of Warcraft, and Activision's Destiny franchise (due to the sale of publishing rights)[214](index=214&type=chunk) - Average Monthly Active Users (MAUs) increased to **409 million in Q4 2019**, up from 316 million in Q3 2019, primarily driven by the successful launch of Call of Duty: Mobile[220](index=220&type=chunk) - In 2019, the company implemented a restructuring plan to refocus resources on its largest opportunities, resulting in approximately **$132 million in restructuring and related costs**[235](index=235&type=chunk)[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages foreign currency and interest rate risks through derivatives and fixed-rate debt, with currency fluctuations posing the primary exposure - The company is exposed to foreign currency risk as a substantial portion of international revenues and expenses are denominated in local currencies like the euro and British pound[366](index=366&type=chunk) - To mitigate currency risk, the company periodically uses derivative contracts, primarily forward contracts with maturities of less than one year[367](index=367&type=chunk) - A hypothetical adverse **10% movement** in foreign currency exchange rates would have resulted in a theoretical decline of approximately **$133 million in net income** for the year ended December 31, 2019[372](index=372&type=chunk) - Interest rate risk is primarily related to the investment portfolio, as all outstanding debt is at fixed rates, and this risk was not considered material as of December 31, 2019[373](index=373&type=chunk)[374](index=374&type=chunk) [Financial Statements and Supplementary Data](index=62&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for the fiscal year ended December 31, 2019, and related notes [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors concluded that the company's disclosure controls and internal control over financial reporting were effective - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[379](index=379&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2019[382](index=382&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=64&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's 2020 Proxy Statement - Required information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2020 Annual Meeting of Shareholders[388](index=388&type=chunk) [Executive Compensation](index=64&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's 2020 Proxy Statement - Required information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2020 Annual Meeting of Shareholders[389](index=389&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=64&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's 2020 Proxy Statement - Required information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2020 Annual Meeting of Shareholders[390](index=390&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=64&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's 2020 Proxy Statement - Required information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2020 Annual Meeting of Shareholders[391](index=391&type=chunk) [Principal Accounting Fees and Services](index=64&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's 2020 Proxy Statement - Required information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2020 Annual Meeting of Shareholders[392](index=392&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=65&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed with the Form 10-K - This item lists the financial statements, financial statement schedules, and exhibits filed with the Form 10-K[394](index=394&type=chunk)[395](index=395&type=chunk)[396](index=396&type=chunk)