Activision Blizzard, Inc.

Q3 GAAP revenue was $2.07 billion, about $100 million above outlook. Net bookings were $1.88 billion, $30 million above August outlook. GAAP EPS was $0.82 and non-GAAP EPS was $0.89, both above guidance; Q3 EPS also benefited from a lower-than-anticipated tax rate and an unrealized loss on investments. Operating cash flow was $521 million, more than double the year-ago level, with cash and investments of approximately $10 billion and net cash of approximately $6.4 billion. Segment results: Activision revenue was $641 million and operating income was $244 million (38% margin); Blizzard revenue was $493 million, up 20% year over year, with $188 million operating income (38% margin); King revenue was $652 million, up 22% year over year, with record operating income of $303 million (46% margin). For Q4, the company guided to GAAP revenue of $2.02 billion, net bookings of $2.78 billion, GAAP EPS of $0.54, and non-GAAP EPS of $0.62. For full-year 2021, guidance was for GAAP revenue of $8.66 billion, net bookings of $8.65 billion, GAAP EPS of $3.27, and non-GAAP EPS of $3.70. Management said they are not planning for material contribution from Overwatch 2 in the outlook window and are currently not planning for material contribution from Diablo IV next year.

Bobby Kotick spent most of his remarks on workplace culture and said the company must become a model employer to attract and retain talent. He highlighted the EEOC agreement, the $18 million compensation fund, the shift to tougher discipline for misconduct, the move to waive mandatory arbitration for future sexual harassment and discrimination claims, and a plan to invest an additional $250 million over 10 years. His tone was firm and reform-oriented, with repeated emphasis that these changes are necessary both ethically and for long-term business success.

Armin Zerza said Q3 was ahead of outlook across key financial metrics, with revenue of $2.07 billion, net bookings of $1.88 billion, GAAP EPS of $0.82, and non-GAAP EPS of $0.89. He pointed to operating cash flow of $521 million, cash and investments of about $10 billion, and a net cash position of about $6.4 billion, then said capital allocation will remain balanced across investment in the business, strategic M&A, and buybacks/dividends. For Q4 and FY2021, he guided to $2.02 billion revenue and $0.54 GAAP EPS in Q4, and $8.66 billion revenue plus $3.70 non-GAAP EPS for the year, while noting the company is stepping up mobile marketing investment and expects the earnings impact to be offset by a lower tax rate. He also flagged that the delay of Blizzard titles pushes out expected financial uplift next year.

Analysts focused heavily on the workplace issues, delayed Blizzard releases, Call of Duty’s integration with Warzone, Candy Crush’s momentum under IDFA changes, and capital allocation. Management said progress on workplace reform is ongoing and will be reported quarterly and in ESG reporting, but it also warned that adverse publicity, talent competition, and turnover could hurt the business. On Overwatch 2 and Diablo IV, Mike Ybarra said the teams needed more time to finish the games and build out post-launch support, but he declined to give release dates. On capital returns, Armin Zerza said the company remains disciplined and balanced, with buybacks always under review, but did not announce any new repurchase action.