Today Activision Blizzard announced its financial results for the second quarter of the year, and they're very strong, featuring growth across the board. I
It's worth mentioning that the company doesn't use the traditional financial calendar, so its second quarter is from April 1 to June 30, 2023.
According to the documents, net revenue was $2.207 billion, with net bookings at $2.46 billion, up 50% year-on-year. Operating income was up 70% year-on-year.
CEO Bobby Kotick delivered the traditional statement boasting a "record quarter" for Blizzard, which was over $1 billion in net bookings for the first time.
This quarter, our talented teams delivered strong performance for our players and shareholders. We delivered a 50% year-over-year increase in net bookings, operating income growth over 70%, earnings per share growth over 80%, and a record quarter for Blizzard with over $1 billion in net bookings for the first time.
Most importantly, we continue to set new standards of excellence for workplace culture and provide joy and connection to hundreds of millions of players around the world.
While we continue to have concerns about the economy and growing industry competition, we remain focused on the long-term opportunities ahead and completing our merger with Microsoft.
Incidentally, we also read that (as predicted) the deadline for the merger with Microsoft has been extended to October 18, including amended conditions as follows. That being said, considering how the termination fees have been arranged, it appears that the parties expect the merger to possibly close by the end of August.
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.
Below you can read a series of business highlights.
Activision revenue grew 17% year-on-year, while operating income grew 80% year-on-year, driven by the Call of Duty franchise. Season 3 has been the highest-grossing to date for Modern Warfare II. The company claims a "strong community response" to gameplay enhancements and the new BlackCell battle pass
The company also mentions that development for the next COD is "proceeding well" and it's slated to release between October and December.
Revenue for Blizzard grew over 160% year-on-year, while operating income nearly tripled year-on-year. Diablo IV was played by 10 million players in June, which is a record among all Blizzard games in the same time frame after release.
Net bookings for Diablo Immortal reached their highest since January in June, while engagement for Overwatch 2 dropped.
We hear that the company expects strong financial results all the way to the end of the year thanks to the success of the Diablo franchise and growth in live services across the board. For the full year, the company expects at least high-teens year-on-year growth for revenue and high-single digit year-on-year growth for operating income.
- 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 of Duty: 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.
- 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 many years 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: Arclight Rumble™, 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.
- King segment revenue grew 9% year-over-year to a new quarterly record, equivalent to 10% year-over-year growth on a constant 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 include contestants 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 stores1 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 and partner 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.
If you want to compare, you can check out Activision Blizzard's financial results for the previous quarter, published in April.