Activision Blizzard Second Quarter 2023 Financial Results – $1B in Net Bookings Thanks to Diablo 4

The report also notes the extension of the Microsoft merger agreement to October 18th, declaring a $0.99 per share dividend for stockholders, while Activision Blizzard CEO Bobby Kotick made a statement citing strong performance and a record quarter.

Highlights

This quarter, Blizzard Entertainment delivered its first $1 billion in quarterly net bookings, following the record-setting launch of Diablo IV, with over 10 million players playing over 700 million hours in June.

Overall Activision Blizzard in-game net bookings grew 30% year-over-year in the second quarter, representing over 60% of total net bookings over the last 12 months, while mobile platforms grew 4% year-over-year, representing approximately 40% of total net bookings over the last 12 months. Each of the four major separate business units grew net bookings year-over-year, setting up expectations for strong financial performance over the full year, driven by Diablo and other live services.

Activision – 92 million monthly active users, down from from 98 million in Q1 2023

• 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.

Blizzard Entertainment – 26 million monthly active users, down from from 27 million in Q1 2023

• 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 – 238 million monthly active users, down from from 243 million in Q1 2023

• 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.

The report also makes note of Activision Blizzard’s continued initiatives to raise standards for workplace transparency, releasing its first annual Transparency Report containing detailed reviews of the policies, processes, and programs Activision Blizzard employs to achieve its workplace ambitions, as well as comprehensive data and details of workplace conduct.

Things are looking less positive for the controversial Overwatch League however, with total revenues comprising less than 1% of consolidated revenues. A new operating agreement will be voted on upon conclusion of the current League season.

Due to the pending acquisition by Microsoft, the financial results are presented without the usual conference call, and therefore no Q&A has taken place.