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Activision Blizzard net revenue passes $2 billion in Q3

With $2.07 billion in GAAP net revenue for the quarter ending September 30, Activision Blizzard beats both its prior outlook and Q3 2020's results.

From a financial standpoint, Activision Blizzard is on the up. The company reported increases in both net revenue, alongside year-over-year revenue gains for the Blizzard and King segments and year-to-date records for Activision.

Looking at Activision Blizzard as a whole, the company reported an operating cash flow of $521 million, up from $196 million the year prior. GAAP net revenues came in at $2.07 billion for the quarter ending September 30, 2021, beating both its forecast of $1.97 billion and Q3 2020's $1.95 billion in net revenue.

As is often the case, the overwhelming majority of that net revenue came from digital sources: $1.85 billion for just that three month period. Shifting to instead look at net bookings (which is equal to net revenue minus deferrals that come into play from microtransactions, licensing fees, and other sources), Activision Blizzard reported $1.88 billion in net bookings, up year-over-year from $1.77 billion. For both this year and the year before, $1.2 billion of each is attributed to "in-game net bookings", or net bookings relating to DLC and microtransactions.

The Activision segment was the only of the Activision, Blizzard, and King trio to not report gains in net revenue on a year-over-year basis, something Activision Blizzard attributes to a strong showing from Tony Hawk's Pro Skater 1+2 the year prior, slowing income from Call of Duty ahead of a new game launch, and last year's shelter-in-place-driven increases. Instead, the company calls out the Activision segment's "new record [revenue] on a year-to-date basis", meaning Q1, Q2, and Q3 combined.

Candy Crush-maker King, meanwhile, saw a 22 percent increase in segment revenue year-over-year, a new quarterly record for the mobile-minded subsidiary. In-game net bookings for the for the Candy Crush brand and monthly active users across the King portfolio both saw year-over-year increases as well.

Of course, these financial gains come during turbulent times for the company, and especially so for the Blizzard part of its business. While Blizzard's segment revenue grew 20 percent year-over-year, the company's investor call brought the news that recently appointed Blizzard co-lead Jen Oneal has announced her impending departure from the company, as well of the announcement of delays for both Overwatch 2 and Diablo IV.

Oneal's exit, planned for the end of this year, follows only a handful of days behind news of BlizzCon's 2022 cancellation and Activision Blizzard's failed attempt to pause the DFEH lawsuit concerning its workplace culture.

Activision Blizzard has, in the months since that lawsuit first started to spin up, broadcast its attempts at rectifying its allegedly "frat boy" studio culture, including firings of 20 employees over conduct, a new "zero-tolerance" harassment policy, and CEO Bobby Kotick's pledge to take a significant paycut until conditions improve.

The press release announcing Q3's results carries that spirit forward into its financial reporting as well. A section dedicated to Activision Blizzard's "Commitment to a Safe, Inclusive Working Environment" mentions the above initiatives, as well as others noted in a late October statement from Kotick.

However Kotick, as vocalized in this quarter's investor call, seemed rightly skeptical that the first, initial steps taken over the last few months will completely sweep Activision Blizzard's seemingly years-long issues with sex-based discrimination and harassment under the rug.

"We expect that we'll continue to face challenging and negative media attention regardless of our progress," said Kotick. "But we are determined to stay focused on providing great opportunities and the very best work environment for our talented employees to deliver the very best games for our players and to continue to provide superior returns for our shareholders."

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