For the quarter ended March 31, 2009, Activision Blizzard's GAAP net revenues were $981 million, and its non-GAAP net revenues were $724 million. The company's prior GAAP net revenue outlook for the quarter was $860 million. On a non-GAAP basis, the company's net revenue outlook was $550 million.
For the quarter ended March 31, 2009, Activision Blizzard's reported GAAP earnings per diluted share was $0.14, and the company's non-GAAP earnings per diluted share was $0.08. The company's prior GAAP earnings per diluted share outlook was $0.08. On a non-GAAP basis, the company's earnings per diluted share outlook was $0.03.
The company reports results on both a GAAP and a non-GAAP basis. Please refer to the tables at the back of this press release for a reconciliation of the company's GAAP and non-GAAP results.
Robert Kotick, CEO of Activision Blizzard, stated, "Our better-than-expected first quarter results were driven by strong global consumer response to the Call of Duty(R) and Guitar Hero(R) franchises and Blizzard Entertainment's World of Warcraft(R), despite challenging economic times. For the quarter, we were the #1 third-party console and handheld publisher in North America and the #1 third-party publisher for the Nintendo Wii platform worldwide, according to The NPD Group, Charttrack and Gfk."
Kotick continued, "During the remainder of the year, we plan to release our strongest video game slate, based on some of the industry's most profitable franchises. We are raising our calendar year 2009 financial outlook. Additionally, we expect to deliver record calendar year non-GAAP operating margins of 25%. Our high-quality franchise portfolio, industry leading operational capabilities and solid balance sheet should enable us to take full advantage of the opportunities afforded by the expanding interactive entertainment market and enable us to deliver continued superior returns to our shareholders."
For the quarter ended March 31, 2009 according to The NPD Group, Charttrack and Gfk, Call of Duty and Guitar Hero remained two of the top-five best-selling franchises in the U.S. and Europe. Additionally, Activision Blizzard had two of the top-five best-selling titles across all platforms in the U.S. and Europe.
Other business highlights are as follows:
- Guitar Hero World Tour was the #1 best-selling third-party title in the U.S. across all platforms in dollars, according to The NPD Group.
- In the U.S. and Europe, Guitar Hero World Tour was the #1 best-selling third-party title in dollars for the Nintendo Wii and the only third-party game to rank as a top-five best seller for the platform, according to The NPD Group, Charttrack and Gfk.
- Blizzard Entertainment's World of Warcraft: Wrath of the Lich King remained the #1 PC game in dollars in the U.S. for the quarter, according to The NPD Group.
- Activision Blizzard had three of the top-10 best-selling PC titles in dollars in the U.S., according to The NPD Group.
- For the quarter, European sales for the Guitar Hero franchise grew 84% year over year, according to Charttrack and Gfk.
- As of April 10, 2009, Activision Publishing's Crash Bandicoot Nitro Kart was the #1 paid "app" for the iPhone of all time, according to Apple(R).
- On February 24, 2009, Activision Publishing announced an agreement with Corus Entertainment Inc.'s Nelvana Enterprises to develop and distribute video games based on the breakout hit toy and wildly popular action animated television series Bakugan.
- As of March 31, 2009, Activision Blizzard had purchased $439 million, or approximately 45 million shares, of common stock at an average price of $9.76, under its $1 billion stock repurchase program.
- On April 6, 2009, Activision Publishing acquired 7 Studios whose experience will enable Activision Publishing to broaden its development capabilities in the music-based genre.
- On April 16, 2009, Blizzard Entertainment announced that its World of Warcraft will be licensed to an affiliated company of NetEase.com, Inc. in mainland China for a term of 3 years following the expiration of the game's current license agreement.
During the quarter, Activision Publishing strengthened its senior management team with the appointment of Dan Rosensweig as President and Chief Executive Officer of RedOctane, the business unit which develops the blockbuster Guitar Hero(R) franchise and soon to be released DJ Hero. Mr. Rosensweig brings significant experience to Activision Publishing having served as Chief Operating Officer of Yahoo! from 2002 through 2006, where he oversaw the company's worldwide operations including its product development, marketing, and advertising sales and the development and introduction of innovative new Internet advertising formats.
Additionally, Activision Blizzard named Thomas Tippl as Chief Corporate Officer in addition to his position as Chief Financial Officer. Mr. Tippl succeeds Bruce Hack, who has stepped down from the position following the successful business combination of Activision, Inc. and Vivendi Games, Inc.
For the second quarter of calendar year 2009, Activision Publishing expects to release three games inspired by theatrical motion pictures, X-Men Origins, Transformers: Revenge of the Fallen and Ice Age: Dawn of the Dinosaurs, as well as a new third-person action game Prototype, Guitar Hero: Smash Hits, a compilation of the most popular songs from previous Guitar Hero games that will now be playable as a full band experience and Guitar Hero On Tour: Modern Hits for the Nintendo DS.
Due to current macroeconomic conditions, Activision Blizzard's outlook is subject to significant risks and uncertainties including declines in demand for its products, fluctuations in foreign exchange rates, and counterparty risks relating to customers, licensees, licensors and manufacturers. The company's outlook is also based on assumptions about sell through rates for its products, the new slate of products and progress in integrating operations following the company's recent business combination between Activision, Inc. and Vivendi Games, Inc. As a result of these and other factors, including any complications related to the transition of Blizzard Entertainment's World of Warcraft in China from the current licensee to NetEase, actual results may deviate materially from the outlook presented below.
For calendar 2009, Activision Blizzard is raising its outlook for GAAP net revenues to $4.3 billion, and GAAP earnings per diluted share of $0.24, as compared to the company's prior calendar year 2009 GAAP outlook of $4.2 billion in net revenues and $0.22 earnings per diluted share. On a non-GAAP basis, the company now expects net revenues of $4.8 billion for the calendar year, as compared to its prior non-GAAP net revenue outlook of $4.7 billion. The revenue outlook includes a reduction in revenue from the company's lower margin distribution and co-publishing businesses and a negative year-over-year impact from a stronger dollar. On a constant exchange rate basis, however, the company expects another year of non-GAAP net revenue growth. The company's non-GAAP earnings per diluted share are expected to be $0.63 for the calendar year, as compared with its prior non-GAAP calendar year outlook of $0.61 earnings per diluted share.
For the second quarter 2009, Activision Blizzard expects GAAP net revenues of $1.0 billion, and GAAP earnings per diluted share of $0.10. On a non-GAAP basis, the company expects net revenues of $775 million and $0.06 earnings per diluted share for the second quarter.