Activision Blizzard, Inc. (Nasdaq: ATVI) today announced fourth quarter 2022 results. Bobby Kotick, CEO of Activision Blizzard, shared, "We ended 2022 with record quarterly net bookings as we delivered on our mission to bring epic joy to players. I’m grateful to our talented and hardworking teams for their many successes entertaining our hundreds of millions of players around the world. We look forward to a historic year, as we work toward merging with Microsoft. This merger will enable us to better serve our players, create greater opportunities for our employees, and allow us to succeed in an increasingly competitive global gaming industry.” Financial Metrics     Q4   CY (in millions, except EPS)   2022   2021   2022   2021 GAAP Net Revenues   $2,334   $2,163   $7,528   $8,803 Impact of GAAP deferralsA   $1,232   $324   $986   $(449)                   GAAP EPS   $0.51   $0.72   $1.92   $3.44 Non-GAAP EPS   $0.78   $1.01   $2.58   $4.08 Impact of GAAP deferralsA   $1.09   $0.24   $0.83   $(0.36) Please refer to the tables at the back of this earnings release for a reconciliation of the company’s GAAP and non-GAAP results. For the year ended December 31, 2022, Activision Blizzard’s net revenues presented in accordance with GAAP were $7.53 billion, as compared with $8.80 billion for 2021. GAAP net revenues from digital channels were $6.63 billion. GAAP operating margin was 22%. GAAP earnings per diluted share was $1.92, as compared with $3.44 for 2021. On a non-GAAP basis, Activision Blizzard’s operating margin was 30% and earnings per diluted share was $2.58, as compared with $4.08 for 2021. For the quarter ended December 31, 2022, Activision Blizzard’s net revenues presented in accordance with GAAP were $2.33 billion, as compared with $2.16 billion for the fourth quarter of 2021. GAAP net revenues from digital channels were $1.97 billion. GAAP operating margin was 16%. GAAP earnings per diluted share was $0.51, as compared with $0.72 for the fourth quarter of 2021. On a non-GAAP basis, Activision Blizzard’s operating margin was 24% and earnings per diluted share was $0.78, as compared with $1.01 for the fourth quarter of 2021. Activision Blizzard generated $2.22 billion in operating cash flow for the year ended December 31, 2022, as compared with $2.41 billion for 2021. Activision Blizzard generated $1.12 billion in operating cash flow for the quarter as compared with $661 million for the fourth quarter of 2021. Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results. Operating Metrics For the year ended December 31, 2022, Activision Blizzard’s net bookingsB were $8.51 billion, as compared with $8.35 billion for 2021. In-game net bookingsC were $5.38 billion, as compared with $5.10 billion for 2021. For the quarter ended December 31, 2022, Activision Blizzard’s net bookingsB were $3.57 billion, as compared with $2.49 billion for the fourth quarter of 2021. In-game net bookingsC were $1.82 billion, as compared with $1.24 billion for the fourth quarter of 2021. For the quarter ended December 31, 2022, overall Activision Blizzard Monthly Active Users (MAUs)D were 389 million. Microsoft transaction As announced on January 18, 2022, Microsoft plans to acquire Activision Blizzard for $95.00 per share in an all-cash transaction. The transaction has been approved by the boards of directors of both Activision Blizzard and Microsoft and by Activision Blizzard’s stockholders. The two parties are continuing to engage with regulators reviewing the transaction and are working toward closing it in Microsoft’s fiscal year ending June 30 2023, subject to obtaining required regulatory approvals and satisfaction of other customary closing conditions. Conference Call and Earnings Presentation In light of the proposed transaction with Microsoft, and as is customary during the pendency of an acquisition, Activision Blizzard will not be hosting a conference call, issuing an earnings presentation, or providing detailed quantitative financial guidance in conjunction with its fourth quarter 2022 earnings release. For further detail and discussion of our financial performance please refer to our upcoming Annual Report on Form 10-K for the year ended December 31, 2022. Selected Business Highlights Activision Blizzard delivered 43% year-over-year net bookings growth and record segment financial results in the fourth quarter. Net bookings grew 49% year-over-year on a constant currency basisE. Amid an uncertain macro environment, our focus on expanding key intellectual properties across platforms, geographies and business models positions the business for further growth. Strong execution by our talented teams enabled each of our business units to break records in the fourth quarter. At Activision, Call of Duty®: Modern Warfare® II delivered the highest opening-quarter sell-through in franchise history. Blizzard reported its highest quarterly net bookings to date, driven by strong growth for Warcraft® and the reinvigoration of Overwatch® and Diablo®. At King, Candy Crush® once again delivered a record performance. Activision Blizzard net bookings on the mobile platform grew mid-teens year-over-year while overall in-game net bookings grew 46% year-over-year. Our robust product pipeline, live game opportunity, and ongoing focus on operational discipline create a foundation for strong financial performance in 2023. While we remain cognizant of risks, including those related to our execution, economic conditions, the labor market, and exchange rates, we expect at least high-teens year-over-year growth for GAAP revenue, and at least high-single digit year-over-year growth in net bookings and total segment operating income for 2023. We also expect interest income to be significantly higher year-over-year in 2023 given the current rate environment. For the first quarter, we expect at least high-teens year-over-year growth for GAAP revenue, at least mid-teens year-over-year growth for net bookings, and at least high-single digit year-over-year growth for total segment operating income. The first quarter will see significant development and marketing investment in live operations and future releases, including the June launch of Diablo IV. In the fourth quarter we continued to invest in growing our development teams and in our goal of being the model workplace in our industry. Our game development teams grew over 25% year-over-year in 2022. We shared our latest representation update in the quarter, which showed that we increased our representation for those who identify as women or non-binary to 26% globally, as of the end of November, versus 24% a year earlier. Representation for underrepresented ethnic groups increased to 38% from 36% in the US over the same period. Activision Blizzard King Balance Sheet Service Periods for Games As we have continued to focus on delivering increased content to our players and to deliver such content more frequently through in-game updates, certain of our games are seeing player engagement and monetization over longer periods of time. This has resulted in certain expenses, including capitalized software cost amortization, and GAAP revenues being recognized over longer periods of time than in prior years. Additionally, these elongations have resulted in an increased portion of our capitalized software costs being classified as non-current on our consolidated balance sheet. For further details and discussion, refer to our upcoming Annual Report on Form 10-K for the year ended December 31, 2022. Activision Blizzard Disclosure Channels to Disseminate Information Activision Blizzard, Inc. (“Activision Blizzard”) discloses information to the public concerning Activision Blizzard, Activision Blizzard’s products, content and services, and other items through a variety of disclosure channels in order to achieve broad, non-exclusionary distribution of information to the public. Some of the information distributed through these disclosure channels may be considered material information. Investors and others are encouraged to review the information we make public in the locations below.2 This list may be updated from time to time. About Activision Blizzard Our mission, to connect and engage the world through epic entertainment, has never been more important. Through communities rooted in our video games we enable hundreds of millions of people to experience joy, thrill and achievement. We enable social connections through the lens of fun, and we foster purpose and a sense of accomplishment through healthy competition. Like sport, but with greater accessibility, our players can find purpose and meaning through competitive gaming. Video games, unlike any other social or entertainment media, have the ability to break down the barriers that can inhibit tolerance and understanding. Celebrating differences is at the core of our culture and ensures we can create games for players of diverse backgrounds in the 190 countries our games are played. As a member of the Fortune 500 and as a component company of the S&P 500, we have an extraordinary track record of delivering superior shareholder returns for over 30 years. Our sustained success has enabled the company to support corporate social responsibility initiatives that are directly tied to our games. As an example, our Call of Duty Endowment has helped find employment for over 100,000 veterans. Learn more information about Activision Blizzard and how we connect and engage the world through epic entertainment on the company's website, www.activisionblizzard.com. 1 Based on data.ai Intelligence 2 These corporate websites and social media channels, and the contents thereof, are not incorporated by reference into this press release nor deemed filed with the U.S. Securities and Exchange Commission. A Net effect of accounting treatment from revenue deferrals on certain of our online-enabled products. Since certain of our games are hosted online or include significant online functionality that represents a separate performance obligation, we defer the transaction price allocable to the online functionality from the sale of these games and then recognize the attributable revenues over the relevant estimated service periods, which are generally less than a year. The related cost of revenues is deferred and recognized as an expense as the related revenues are recognized. Impact from changes in deferrals refers to the net effect from revenue deferrals accounting treatment for the purposes of revenues, along with, for the purposes of EPS, the related cost of revenues deferrals treatment and the related tax impacts. Internally, management excludes the impact of this change in deferred revenues and related cost of revenues when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. Management believes this is appropriate because doing so enables an analysis of performance based on the timing of actual transactions with our customers. In addition, management believes excluding the change in deferred revenues and the related cost of revenues provides a much more timely indication of trends in our operating results. In the fourth quarter of 2022, the Company completed its annual assessment of the estimated service periods for players of our games. We have noted that players who purchase in-game content are playing certain of our titles, notably those in our Call of Duty and World of Warcraft offerings, for longer periods of time than in prior years as they engage with services we provide that are designed to enhance and extend gameplay. As such, we have concluded that the estimated service period for in-game revenues from such games has lengthened by approximately 3 months. Based on the carrying amount of deferred revenue and deferred cost of revenue as of September 30, 2022, the change resulted in a decrease in net revenues recognized of $103 million, a decrease in cost of revenues recognized of $9 million, and a decrease in earnings per diluted share of $0.10 during the three months ended December 31, 2022. Such amounts will now be recognized during the year ended December 31, 2023. The change in the estimated service period had no impact on net bookings, segment net revenues, or net cash provided by operating activities. B Net bookings is an operating metric that is defined as the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others, and is equal to net revenues excluding the impact from deferrals. C In-game net bookings primarily includes the net amount of downloadable content and microtransactions sold during the period, and is equal to in-game net revenues excluding the impact from deferrals. D Monthly Active User (“MAU”) Definition: We monitor MAUs as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period. An individual who accesses two of our games would be counted as two users. In addition, due to technical limitations, for Activision and King, an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users. For Blizzard, an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user. In certain instances, we rely on third parties to publish our games. In these instances, MAU data is based on information provided to us by those third parties, or, if final data is not available, reasonable estimates of MAUs for these third-party published games. E Year-over-year growth on a constant currency basis is calculated by translating current quarter local currency amounts to U.S. dollars based on prior period exchange rates. These amounts are compared to the prior period to derive constant-currency year-over-year performance. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of currency rate fluctuations. F Net cash is defined as cash and cash equivalents ($7.1B as of December 31, 2022) and short-term investments ($5.0B as of December 31, 2022) minus gross debt ($3.7B as of December 31, 2022). Non-GAAP Financial Measures: As a supplement to our financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), Activision Blizzard presents certain non-GAAP measures of financial performance. These non-GAAP financial measures are not intended to be considered in isolation from, as a substitute for, or as more important than, the financial information prepared and presented in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the company’s results of operations as determined in accordance with GAAP. Activision Blizzard provides net income (loss), earnings (loss) per share, and operating margin data and guidance both including (in accordance with GAAP) and excluding (non-GAAP) certain items. When relevant, the company also provides constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of currency rate fluctuations. In addition, Activision Blizzard provides EBITDA (defined as GAAP net income (loss) before interest (income) expense, income taxes, depreciation, and amortization) and adjusted EBITDA (defined as non-GAAP operating margin (see non-GAAP financial measure below) before depreciation). The non-GAAP financial measures exclude the following items, as applicable in any given reporting period and our outlook: In the future, Activision Blizzard may also consider whether other items should also be excluded in calculating the non-GAAP financial measures used by the company. Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure Activision Blizzard’s financial and operating performance. In particular, the measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard by excluding certain items that may not be indicative of the company’s core business, operating results, or future outlook. Additionally, we consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Internally, management uses these non-GAAP financial measures, along with others, in assessing the company’s operating results, and measuring compliance with the requirements of the company’s debt financing agreements, as well as in planning and forecasting. Activision Blizzard’s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net income, non-GAAP earnings per share, non-GAAP operating margin, and non-GAAP or adjusted EBITDA do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard’s performance in relation to other companies. Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP, results and outlook, and by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made. Cautionary Note Regarding Forward-looking Statements: The statements contained herein that are not historical facts are forward-looking statements including, but not limited to statements about: (1) projections of revenues, expenses, income or loss, earnings or loss per share, cash flow, or other financial items; (2) statements of our plans and objectives, including those related to releases of products or services; (3) statements of future financial or operating performance, including the impact of tax items thereon; (4) statements regarding the proposed transaction between Activision Blizzard and Microsoft (such transaction, “the proposed transaction with Microsoft”), including any statements regarding the expected timetable for completing the proposed transaction with Microsoft, the ability to complete the proposed transaction with Microsoft, and the expected benefits of the proposed transaction with Microsoft; and (5) statements of assumptions underlying such statements. Activision Blizzard, Inc. generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “aims,” “believes,” “may,” “might,” “expects,” “intends,” “seeks,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming,” and the negative version of these words and other similar words and expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risks, reflect management’s current expectations, estimates, and projections about our business, and are inherently uncertain and difficult to predict. We caution that a number of important factors, many of which are beyond our control, could cause our actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. Such factors include, but are not limited to: the risk that the proposed transaction with Microsoft may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the failure to satisfy the conditions to the consummation of the proposed transaction with Microsoft, including the receipt of certain governmental and regulatory approvals; the occurrence of any event, change, or other circumstance that could give rise to the termination of the Agreement and Plan of Merger, dated as of January 18, 2022, by and among Activision Blizzard, Microsoft, and Anchorage Merger Sub Inc., a wholly owned subsidiary of Microsoft (the “Merger Agreement”); the effect of the announcement or pendency of the proposed transaction with Microsoft on our business relationships, operating results, and business generally; risks that the proposed transaction with Microsoft disrupts our current plans and operations and potential difficulties in employee retention as a result of the proposed transaction with Microsoft; risks related to diverting management’s attention from ongoing business operations; the outcome of any legal proceedings that have been or may be instituted against us related to the Merger Agreement or the transactions contemplated thereby; restrictions during the pendency of the proposed transaction with Microsoft that may impact our ability to pursue certain business opportunities or strategic transactions; the global impact of the ongoing COVID-19 pandemic and other macroeconomic factors (including, without limitation, the potential for significant short- and long-term global unemployment and economic weakness and a resulting impact on global discretionary spending; potential strain on the retailers, distributors, and manufacturers who sell our physical products to customers and the platform providers on whose networks and consoles certain of our games are available; effects on our ability to release our content in a timely manner and with effective quality control; effects on our ability to prevent cyber-security incidents while our workforce is dispersed; effects on the operations of our professional esports leagues; the impact of rising interest rates as a result of large-scale intervention by the Federal Reserve and other central banks around the world and other economic factors; increased demand for our games due to stay-at-home orders and curtailment of other forms of entertainment, which may not be sustained and may fluctuate as stay-at-home orders are reduced, lifted, and/or reinstated; macroeconomic impacts arising from the long duration of the COVID-19 pandemic, including labor shortages and supply chain disruptions; and volatility in foreign exchange rates); our ability to consistently deliver popular, high-quality titles in a timely manner, which has been made more difficult as a result of the COVID-19 pandemic; our ability to satisfy the expectations of consumers with respect to our brands, games, services, and/or business practices; negative impacts on our business from concerns regarding our workplace; our ability to attract, retain, and motivate skilled personnel; competition; concentration of revenue among a small number of franchises; negative impacts from unionization or attempts to unionize by our workforce; rapid changes in technology and industry standards; increasing importance of revenues derived from digital distribution channels; our ability to manage growth in the scope and complexity of our business; substantial influence of third-party platform providers over our products and costs; success and availability of video game consoles manufactured by third parties, including our ability to predict the consoles that will be most successful in the marketplace and develop commercially-successful products for those consoles; risks associated with the free-to-play business model, including our dependence on a relatively small number of consumers for a significant portion of revenues and profits from any given game; risks and uncertainties of conducting business outside the United States (the “U.S.”), including the need for regulatory approval to operate, impacts on our business arising from the current conflict between Russia and Ukraine, the relatively weaker protection for our intellectual property rights, and the impact of cultural differences on consumer preferences; risks associated with the retail sales business model; difficulties in integrating acquired businesses or otherwise realizing the anticipated benefits of strategic transactions; the seasonality in the sale of our products; fluctuation in our recurring business; risks relating to behavior of our distributors, retailers, development, and licensing partners, or other affiliated third parties that may harm our brands or business operations; our reliance on tools and technologies owned by third parties; risks associated with our use of open source software; risks associated with undisclosed content or features that may result in consumers’ refusal to buy or retailers’ refusal to sell our products; risks associated with objectionable consumer- or other third-party-created content; outages, disruptions or degradations in our services, products, and/or technological infrastructure; data breaches, fraudulent activity, and other cybersecurity risks; significant disruption during our live events; risks related to the impacts of catastrophic events; climate change; provisions in our corporate documents that may make it more difficult for any person to acquire control of our company; ongoing legal proceedings related to workplace concerns and otherwise, including the impact of the complaint filed in 2021 by the California Civil Rights Department (formerly known as the Department of Fair Employment and Housing) alleging violations of the California Fair Employment and Housing Act and the California Equal Pay Act and separate investigations and complaints by other parties and regulators related to certain employment practices and related disclosures; successful implementation of the requirements of the court-approved consent decree with the Equal Employment Opportunity Commission; intellectual property claims; increasing regulation in key territories; regulation relating to the Internet, including potential harm from laws impacting “net neutrality;” regulation concerning data privacy, including China’s Personal Information Protection Law; scrutiny regarding the appropriateness of our games’ content, including ratings assigned by third parties; changes in tax rates and/or tax laws or exposure to additional tax liabilities; fluctuations in currency exchange rates; impacts of changes in financial accounting standards; insolvency or business failure of any of our business partners, which has been magnified as a result of the COVID-19 pandemic; risks associated with our reliance on consumer discretionary spending; risks associated with increased inflation on our costs and the impacts on consumer discretionary spending; and the other factors included in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission. The forward-looking statements contained herein are based on information available to Activision Blizzard, Inc. as of the date of this filing, and we assume no obligation to update any such forward-looking statements. Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained herein primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and may cause actual results to differ materially from current expectations. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in millions)   Three Months Ended December 31,   Year Ended December 31,   2022   2021   2022   2021 Net revenues               Product sales $ 721     $ 645   $ 1,642     $ 2,311   In-game, subscription, and other revenues   1,613       1,518     5,886       6,492   Total net revenues   2,334       2,163     7,528       8,803                   Costs and expenses               Cost of revenues—product sales:               Product costs   240       274     519       649   Software royalties and amortization   78       73     231       346   Cost of revenues—in-game, subscription, and other:               Game operations and distribution costs   376       290     1,324       1,215   Software royalties and amortization   62       20     148       107   Product development   486       321     1,421       1,337   Sales and marketing   415       299     1,217       1,025   General and administrative 1   309       174     1,001       788   Restructuring and related costs   —       30     (3 )     77   Total costs and expenses   1,966       1,481     5,858       5,544                   Operating income   368       682     1,670       3,259                   Interest expense from debt   27       27     108       108   Other (income) expense, net   (117 )     18     (182 )     (13 ) Income before income tax expense   458       637     1,744       3,164                   Income tax expense   55       73     231       465                   Net income $ 403     $ 564   $ 1,513     $ 2,699                   Basic earnings per common share $ 0.52     $ 0.72   $ 1.94     $ 3.47   Weighted average common shares outstanding   783       779     782       777                   Diluted earnings per common share $ 0.51     $ 0.72   $ 1.92     $ 3.44   Weighted average common shares outstanding assuming dilution   791       782     789       784   1 Included in the three months and year ended December 31, 2022 is $35 million for settlement of the SEC matter announced February 3, 2023. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in millions)   December 31, 2022   December 31, 2021 Assets       Current assets       Cash and cash equivalents $ 7,060     $ 10,423   Held-to-maturity investments   4,932       —   Accounts receivable, net   1,204       972   Software development   640       449   Other current assets   633       712   Total current assets   14,469       12,556   Software development   641       211   Property and equipment, net   193       169   Deferred income taxes, net   1,201       1,377   Other assets   508       497   Intangible assets, net   442       447   Goodwill   9,929       9,799   Total assets $ 27,383     $ 25,056           Liabilities and Shareholders' Equity       Current liabilities       Accounts payable $ 324     $ 285   Deferred revenues   2,088       1,118   Accrued expenses and other liabilities   1,143       1,008   Total current liabilities   3,555       2,411   Long-term debt, net   3,611       3,608   Deferred income taxes, net   158       506   Other liabilities   816       932   Total liabilities   8,140       7,457           Shareholders' equity       Common stock   —       —   Additional paid-in capital   12,260       11,715   Treasury stock   (5,563 )     (5,563 ) Retained earnings   13,171       12,025   Accumulated other comprehensive loss   (625 )     (578 ) Total shareholders’ equity   19,243       17,599   Total liabilities and shareholders’ equity $ 27,383     $ 25,056   ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in millions)   Year Ended December 31,   2022   2021 Cash flows from operating activities:       Net income $ 1,513     $ 2,699   Adjustments to reconcile net income to net cash provided by operating activities:       Deferred income taxes   (164 )     7   Non-cash operating lease cost   77       65   Depreciation and amortization   106       116   Amortization of capitalized software development costs and intellectual property licenses1   213       324   Share-based compensation expense2   462       508   Other   (31 )     (26 ) Changes in operating assets and liabilities, net of effect of business acquisitions:       Accounts receivable, net   (231 )     71   Software development and intellectual property licenses   (693 )     (426 ) Other assets   (140 )     (114 ) Deferred revenues   987       (537 ) Accounts payable   37       (7 ) Accrued expenses and other liabilities   84       (266 ) Net cash provided by operating activities   2,220       2,414           Cash flows from investing activities:       Proceeds from maturities of available-for-sale investments   213       214   Proceeds from sale of available-for-sale investments   26       66   Purchases of available-for-sale investments   (109 )     (248 ) Purchases of held-to-maturity investments   (4,899 )     —   Acquisition of business, net of cash acquired   (135 )     —   Capital expenditures   (91 )     (80 ) Other investing activities   1       (11 ) Net cash used in investing activities   (4,994 )     (59 )         Cash flows from financing activities:       Proceeds from issuance of common stock to employees   47       90   Tax payment related to net share settlements on restricted stock units   (214 )     (246 ) Dividends paid   (367 )     (365 ) Net cash used in financing activities   (534 )     (521 )         Effect of foreign exchange rate changes on cash and cash equivalents   (44 )     (48 )         Net (decrease) increase in cash and cash equivalents and restricted cash   (3,352 )     1,786           Cash and cash equivalents and restricted cash at beginning of period   10,438       8,652           Cash and cash equivalents and restricted cash at end of period $ 7,086     $ 10,438   1 Excludes deferral and amortization of share-based compensation expense. 2 Includes the net effects of capitalization, deferral, and amortization of share-based compensation expense. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES SUPPLEMENTAL CASH FLOW INFORMATION (Amounts in millions)     Three Months Ended         March 31, 2021   June 30, 2021   September 30, 2021   December 31, 2021   March 31, 2022   June 30, 2022   September 30, 2022   December 31, 2022   Year over Year % Increase (Decrease) Cash Flow Data                                     Operating Cash Flow   $ 844   $ 388   $ 521   $ 661   $ 642   $ 198   $ 257   $ 1,123   70 % Capital Expenditures     22     14     23     21     15     37     15     24   14   Non-GAAP Free Cash Flow1   $ 822   $ 374   $ 498   $ 640   $ 627   $ 161   $ 242   $ 1,099   72                                         Operating Cash Flow - TTM2   $ 2,948   $ 2,568   $ 2,893   $ 2,414   $ 2,212   $ 2,022   $ 1,758   $ 2,220   (8 ) Capital Expenditures - TTM2     81     82     81     80     73     96     88     91   14   Non-GAAP Free Cash Flow1 - TTM2   $ 2,867   $ 2,486   $ 2,812   $ 2,334   $ 2,139   $ 1,926   $ 1,670   $ 2,129   (9 ) % 1 Non-GAAP free cash flow represents operating cash flow minus capital expenditures. 2 TTM represents trailing twelve months. Operating Cash Flow for three months ended June 30, 2020, three months ended September 30, 2020, and three months ended December 31, 2020, were $768 million, $196 million, and $1,140 million, respectively. Capital Expenditures for the three months ended June 30, 2020, three months ended September 30, 2020, and three months ended December 31, 2020, were $13 million, $24 million, and $22 million, respectively. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES (Amounts in millions, except per share data) Three Months Ended December 31, 2022 Net Revenues Cost of Revenues— Product Sales: Product Costs Cost of Revenues— Product Sales: Software Royalties and Amortization Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses GAAP Measurement $ 2,334 $ 240 $ 78   $ 376   $ 62   $ 486   $ 415   $ 309   $ — $ 1,966   Share-based compensation1   —   —   (13 )   (3 )   (3 )   (86 )   (15 )   (41 )   —   (161 ) Amortization of intangible assets2   —   —   —     —     (3 )   —     —     —     —   (3 ) Partnership wind down and related costs3   —   —   —     —     —     —     —     (27 )   —   (27 ) Merger and acquisition-related fees and other expenses4   —   —   —     —     —     —     —     (10 )   —   (10 ) Non-GAAP Measurement $ 2,334 $ 240 $ 65   $ 373   $ 56   $ 400   $ 400   $ 231   $ — $ 1,765   Net effect of deferred revenues and related cost of revenues5 $ 1,232 $ 51 $ 87   $ 23   $ 12   $ —   $ —   $ —   $ — $ 173                           Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share             GAAP Measurement $ 368 $ 403 $ 0.52   $ 0.51               Share-based compensation1   161   161   0.21     0.20               Amortization of intangible assets2   3   3   —     —               Partnership wind down and related costs3   27   27   0.03     0.03               Merger and acquisition-related fees and other expenses4   10   10   0.01     0.01               Income tax impacts from items above6   —   10   0.01     0.01               Non-GAAP Measurement $ 569 $ 614 $ 0.78   $ 0.78               Net effect of deferred revenues and related cost of revenues5 $ 1,059 $ 868 $ 1.11   $ 1.09               1 Reflects expenses related to share-based compensation. 2 Reflects amortization of intangible assets from purchase price accounting. 3 Reflects expenses related to the wind down of our partnership with NetEase, Inc. ("NetEase") in China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023. 4 Reflects fees and other expenses related to our proposed transaction with Microsoft Corporation ("Microsoft"), primarily legal and advisory fees. 5 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes. 6 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results. The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES (Amounts in millions, except per share data) Year Ended December 31, 2022 Net Revenues Cost of Revenues— Product Sales: Product Costs Cost of Revenues— Product Sales: Software Royalties and Amortization Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses GAAP Measurement $ 7,528   $ 519   $ 231   $ 1,324   $ 148   $ 1,421   $ 1,217   $ 1,001   $ (3 ) $ 5,858   Share-based compensation1   —     —     (21 )   (7 )   (3 )   (224 )   (58 )   (149 )   —     (462 ) Amortization of intangible assets2   —     —     —     —     (7 )   —     —     (6 )   —     (13 ) Restructuring and related costs3   —     —     —     —     —     —     —     —     3     3   Partnership wind down and related costs4   —     —     —     —     —     —     —     (27 )   —     (27 ) Merger and acquisition-related fees and other expenses5   —     —     —     —     —     —     —     (68 )   —     (68 ) Non-GAAP Measurement $ 7,528   $ 519   $ 210   $ 1,317   $ 138   $ 1,197   $ 1,159   $ 751   $ —   $ 5,291   Net effect of deferred revenues and related cost of revenues6 $ 986   $ 24   $ 13   $ 59   $ 42   $ —   $ —   $ —   $ —   $ 138                           Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share             GAAP Measurement $ 1,670   $ 1,513   $ 1.94   $ 1.92               Share-based compensation1   462     462     0.59     0.59               Amortization of intangible assets2   13     13     0.02     0.02               Restructuring and related costs3   (3 )   (3 )   —     —               Partnership wind down and related costs4   27     27     0.03     0.03               Merger and acquisition-related fees and other expenses5   68     68     0.09     0.09               Income tax impacts from items above7   —     (46 )   (0.06 )   (0.06 )             Non-GAAP Measurement $ 2,237   $ 2,034   $ 2.60   $ 2.58               Net effect of deferred revenues and related cost of revenues6 $ 848   $ 657   $ 0.84   $ 0.83               1 Reflects expenses related to share-based compensation. 2 Reflects amortization of intangible assets from purchase price accounting. 3 Reflects restructuring initiatives. 4 Reflects expenses related to the wind down of our partnership with NetEase in China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023. 5 Reflects fees and other expenses related to our proposed transaction with Microsoft, primarily legal and advisory fees. 6 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes. 7 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results. The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES (Amounts in millions, except per share data) Three Months Ended December 31, 2021 Net Revenues Cost of Revenues— Product Sales: Product Costs Cost of Revenues— Product Sales: Software Royalties and Amortization Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses GAAP Measurement $ 2,163 $ 274   $ 73   $ 290   $ 20 $ 321   $ 299   $ 174   $ 30   $ 1,481   Share-based compensation1   —   —     (3 )   (5 )   —   (145 )   (29 )   (67 )   —     (249 ) Amortization of intangible assets2   —   —     —     —     —   —     —     (2 )   —     (2 ) Restructuring and related costs3   —   —     —     —     —   —     —     —     (30 )   (30 ) Non-GAAP Measurement $ 2,163 $ 274   $ 70   $ 285   $ 20 $ 176   $ 270   $ 105   $ —   $ 1,200   Net effect of deferred revenues and related cost of revenues4 $ 324 $ 29   $ 68   $ 6   $ 6 $ —   $ —   $ —   $ —   $ 109                           Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share             GAAP Measurement $ 682 $ 564   $ 0.72   $ 0.72               Share-based compensation1   249   249     0.32     0.32               Amortization of intangible assets2   2   2     —     —               Restructuring and related costs3   30   30     0.04     0.04               Income tax impacts from items above5   —   (57 )   (0.07 )   (0.07 )             Non-GAAP Measurement $ 963 $ 788   $ 1.01   $ 1.01               Net effect of deferred revenues and related cost of revenues4 $ 215 $ 188   $ 0.24   $ 0.24               1 Reflects expenses related to share-based compensation. 2 Reflects amortization of intangible assets from purchase price accounting. 3 Reflects restructuring initiatives, primarily severance and other restructuring-related costs. 4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes. 5 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results. The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES (Amounts in millions, except per share data) Year Ended December 31, 2021 Net Revenues Cost of Revenues— Product Sales: Product Costs Cost of Revenues— Product Sales: Software Royalties and Amortization Cost of Revenues—In- game/Subs/Other: Game Operations and Distribution Costs Cost of Revenues—In- game/Subs/Other: Software Royalties and Amortization Product Development Sales and Marketing General and Administrative Restructuring and related costs Total Costs and Expenses GAAP Measurement $ 8,803   $ 649   $ 346   $ 1,215   $ 107   $ 1,337   $ 1,025   $ 788   $ 77   $ 5,544   Share-based compensation1   —     —     (17 )   (7 )   —     (211 )   (44 )   (229 )   —     (508 ) Amortization of intangible assets2   —     —     —     —     (3 )   —     —     (7 )   —     (10 ) Restructuring and related costs3   —     —     —     —     —     —     —     —     (77 )   (77 ) Non-GAAP Measurement $ 8,803   $ 649   $ 329   $ 1,208   $ 104   $ 1,126   $ 981   $ 552   $ —   $ 4,949   Net effect of deferred revenues and related cost of revenues4 $ (449 ) $ (5 ) $ (109 ) $ 5   $ 7   $ —   $ —   $ —   $ —   $ (102 )                         Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share             GAAP Measurement $ 3,259   $ 2,699   $ 3.47   $ 3.44               Share-based compensation1   508     508     0.65     0.65               Amortization of intangible assets2   10     10     0.01     0.01               Restructuring and related costs3   77     77     0.10     0.10               Income tax impacts from items above5   —     (98 )   (0.13 )   (0.13 )             Non-GAAP Measurement $ 3,854   $ 3,196   $ 4.11   $ 4.08               Net effect of deferred revenues and related cost of revenues4 $ (347 ) $ (280 ) $ (0.36 ) $ (0.36 )             1 Reflects expenses related to share-based compensation. 2 Reflects amortization of intangible assets from purchase price accounting. 3 Reflects restructuring initiatives, primarily severance and other restructuring-related costs. 4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products, including the effects of taxes. 5 Reflects the income tax impact associated with the above items. Tax impact on non-GAAP pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income under ASC 740, which employs an annual effective tax rate method to the results. The GAAP and non-GAAP earnings per share information is presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES OPERATING SEGMENTS INFORMATION (Amounts in millions) Three Months Ended   December 31, 2022   $ Increase / (Decrease)     Activision   Blizzard   King   Total   Activision   Blizzard   King   Total Segment Net Revenues                                 Net revenues from external customers   $ 1,851   $ 747   $ 727   $ 3,325     $ 694     $ 360     $ 43     $ 1,097   Intersegment net revenues1     —     47     —     47       —       15       —       15   Segment net revenues   $ 1,851   $ 794   $ 727   $ 3,372     $ 694     $ 375     $ 43     $ 1,112                                     Segment operating income   $ 1,013   $ 311   $ 310   $ 1,634     $ 395     $ 150     $ (75 )   $ 470                                     Operating Margin                 48.5 %                                                       December 31, 2021                     Activision   Blizzard   King   Total                 Segment Net Revenues                                 Net revenues from external customers   $ 1,157   $ 387   $ 684   $ 2,228                   Intersegment net revenues1     —     32     —     32                   Segment net revenues   $ 1,157   $ 419   $ 684   $ 2,260                                                     Segment operating income   $ 618   $ 161   $ 385   $ 1,164                                                     Operating Margin                 51.5 %                                                   Year Ended   December 31, 2022   $ Increase / (Decrease)     Activision   Blizzard   King   Total   Activision   Blizzard   King   Total Segment Net Revenues                                 Net revenues from external customers   $ 3,275   $ 1,936   $ 2,785   $ 7,996     $ (203 )   $ 203     $ 205     $ 205   Intersegment net revenues1     —     76     —     76       —       (18 )     —       (18 ) Segment net revenues   $ 3,275   $ 2,012   $ 2,785   $ 8,072     $ (203 )   $ 185     $ 205     $ 187                                     Segment operating income   $ 1,317   $ 625   $ 1,121   $ 3,063     $ (350 )   $ (73 )   $ (19 )   $ (442 )                                   Operating Margin                 37.9 %                                                       December 31, 2021                     Activision   Blizzard   King   Total                 Segment Net Revenues                                 Net revenues from external customers   $ 3,478   $ 1,733   $ 2,580   $ 7,791                   Intersegment net revenues1     —     94     —     94                   Segment net revenues   $ 3,478   $ 1,827   $ 2,580   $ 7,885                                                     Segment operating income   $ 1,667   $ 698   $ 1,140   $ 3,505                                                     Operating Margin                 44.5 %                 1 Intersegment revenues reflect licensing and service fees charged between segments. Our operating segments are consistent with the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). The CODM reviews segment performance exclusive of: the impact of the change in deferred revenues and related cost of revenues with respect to certain of our online-enabled games; share-based compensation expense (including liability awards accounted for under ASC 718); amortization of intangible assets as a result of purchase price accounting; fees and other expenses (including legal fees, costs, expenses and accruals) related to acquisitions, associated integration activities, and financings; certain restructuring and related costs; and other non-cash charges. See the following page for the reconciliation tables of segment revenues and operating income to consolidated net revenues and consolidated income before income tax expense. Our operating segments are also consistent with our internal organization structure, the way we assess operating performance and allocate resources, and the availability of separate financial information. We do not aggregate operating segments. In 2021, the Company reviewed its overall compensation structure and philosophy and began implementing changes to its compensation payments for 2021, primarily to enhance equity ownership for employees and bring our employee equity compensation more in line with current industry practice. As an aspect of this change, the Company determined to settle amounts not yet paid as of December 31, 2021 under its annual performance plans in stock as opposed to cash and further to provide such incentives at no less than target performance without regard to whether target performance was achieved, resulting in a year-end share-based compensation liability of $194 million. The changes in Q4 2021 resulted in $160 million of expense related to achievement against 2021 performance targets that would have otherwise been included in our segment operating income to instead be excluded from our 2021 segment operating income as it is now part of share-based compensation, accounted for as a liability under ASC 718. The changes increased our Activision, Blizzard, King and non-reportable segment operating income by $43 million, $25 million, $65 million, and $27 million, respectively, for the three months and year ended December 31, 2021. Similarly, in 2022, the Company is expecting to pay out certain of its annual performance plans in stock as opposed to cash. The share-based compensation expense associated with the bonus programs for Activision, Blizzard, King and non-reportable segments was $19 million, $32 million, $4 million, and $3 million, respectively, for the three months ended December 31, 2022. The share-based compensation expense associated with the bonus programs for Activision, Blizzard, King and non-reportable segments was $37 million, $34 million, $16 million, and $24 million, respectively, for the year ended December 31, 2022. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES OPERATING SEGMENTS INFORMATION (Amounts in millions)     Three Months Ended December 31,   Year Ended December 31,     2022   2021   2022   2021 Reconciliation to consolidated net revenues:                 Segment net revenues   $ 3,372     $ 2,260     $ 8,072     $ 7,885   Revenues from non-reportable segments1     241       259       518       563   Net effect from recognition (deferral) of deferred net revenues2     (1,232 )     (324 )     (986 )     449   Elimination of intersegment revenues3     (47 )     (32 )     (76 )     (94 ) Consolidated net revenues   $ 2,334     $ 2,163     $ 7,528     $ 8,803                     Reconciliation to consolidated income before income tax expense:                 Segment operating income   $ 1,634     $ 1,164     $ 3,063     $ 3,505   Operating income (loss) from non-reportable segments1     (6 )     14       22       2   Net effect from recognition (deferral) of deferred net revenues and related cost of revenues2     (1,059 )     (215 )     (848 )     347   Share-based compensation expense4     (161 )     (249 )     (462 )     (508 ) Amortization of intangible assets     (3 )     (2 )     (13 )     (10 ) Restructuring and related costs5     —       (30 )     3       (77 ) Partnership wind down and related costs6     (27 )     —       (27 )     —   Merger and acquisition-related fees and other expenses7     (10 )     —       (68 )     —   Consolidated operating income     368       682       1,670       3,259   Interest expense from debt     27       27       108       108   Other (income) expense, net     (117 )     18       (182 )     (13 ) Consolidated income before income tax expense   $ 458     $ 637     $ 1,744     $ 3,164   1 Includes other income and expenses outside of our reportable segments, including our distribution business and unallocated corporate income and expenses. 2 Reflects the net effect from (deferral) of revenues and recognition of deferred revenues, along with related cost of revenues, on certain of our online-enabled products. 3 Intersegment revenues reflect licensing and service fees charged between segments. 4 Reflects expenses related to share-based compensation. 5 Reflects restructuring initiatives, primarily severance and other restructuring-related costs. 6 Reflects expenses related to the wind down of our partnership with NetEase in China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023. 7 Reflects fees and other expenses related to our proposed transaction with Microsoft, primarily legal and advisory fees. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES NET REVENUES BY DISTRIBUTION CHANNEL (Amounts in millions)   Three Months Ended   December 31, 2022   December 31, 2021   $ Increase (Decrease)   % Increase (Decrease)   Amount   % of Total1   Amount   % of Total1     Net Revenues by Distribution Channel                       Digital online channels2 $ 1,965   84 %   $ 1,780     82 %   $ 185     10 % Retail channels   114   5       125     6       (11 )   (9 ) Other3   255   11       258     12       (3 )   (1 ) Total consolidated net revenues $ 2,334   100 %   $ 2,163     100 %   $ 171     8                           Change in deferred revenues4                       Digital online channels2 $ 1,087       $ 169               Retail channels   137         151               Other3   8         4               Total changes in deferred revenues $ 1,232       $ 324                                         Year Ended   December 31, 2022   December 31, 2021   $ Increase (Decrease)   % Increase (Decrease)   Amount   % of Total1   Amount   % of Total1     Net Revenues by Distribution Channel                       Digital online channels2 $ 6,633   88 %   $ 7,663     87 %   $ (1,030 )   (13 ) % Retail channels   290   4       479     5       (189 )   (39 ) Other3   605   8       661     8       (56 )   (8 ) Total consolidated net revenues $ 7,528   100 %   $ 8,803     100 %   $ (1,275 )   (14 )                         Change in deferred revenues4                       Digital online channels2 $ 970       $ (421 )             Retail channels   3         (42 )             Other3   13         14               Total changes in deferred revenues $ 986       $ (449 )             1 The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding. 2 Net revenues from Digital online channels represent revenues from digitally-distributed downloadable content, microtransactions, subscriptions, and products, as well as licensing royalties. 3 Net revenues from Other primarily include revenues from our distribution business, the Overwatch League, and the Call of Duty League. 4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES NET REVENUES BY PLATFORM (Amounts in millions)   Three Months Ended   December 31, 2022   December 31, 2021   $ Increase (Decrease)   % Increase (Decrease)   Amount   % of Total1   Amount   % of Total1     Net Revenues by Platform                       Console $ 558   24 %   $ 576     27 %   $ (18 )   (3 ) % PC   573   25       496     23       77     16   Mobile and ancillary2   948   41       833     39       115     14   Other3   255   11       258     12       (3 )   (1 ) Total consolidated net revenues $ 2,334   100 %   $ 2,163     100 %   $ 171     8                           Change in deferred revenues4                       Console $ 679       $ 276               PC   519         25               Mobile and ancillary2   26         19               Other3   8         4               Total changes in deferred revenues $ 1,232       $ 324                                         Year Ended   December 31, 2022   December 31, 2021   $ Increase (Decrease)   % Increase (Decrease)   Amount   % of Total1   Amount   % of Total1     Net Revenues by Platform                       Console $ 1,753   23 %   $ 2,637     30 %   $ (884 )   (34 ) % PC   1,653   22       2,323     26       (670 )   (29 ) Mobile and ancillary2   3,517   47       3,182     36       335     11   Other3   605   8       661     8       (56 )   (8 ) Total consolidated net revenues $ 7,528   100 %   $ 8,803     100 %   $ (1,275 )   (14 )                         Change in deferred revenues4                       Console $ 313       $ (254 )             PC   491         (228 )             Mobile and ancillary2   168         19               Other3   13         14               Total changes in deferred revenues $ 985       $ (449 )             1 The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding. 2 Net revenues from Mobile and ancillary primarily include revenues from mobile devices. 3 Net revenues from Other primarily include revenues from our distribution business, the Overwatch League, and the Call of Duty League. 4 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES NET REVENUES BY GEOGRAPHIC REGION (Amounts in millions)   Three Months Ended   December 31, 2022   December 31, 2021   $ Increase (Decrease)   % Increase (Decrease)   Amount   % of Total1   Amount   % of Total1     Net Revenues by Geographic Region                       Americas $ 1,211   52 %   $ 1,112     51 %   $ 99     9 % EMEA2   742   32       751     35       (9 )   (1 ) Asia Pacific   381   16       300     14       81     27   Total consolidated net revenues $ 2,334   100 %   $ 2,163     100 %   $ 171     8                           Change in deferred revenues3                       Americas $ 784       $ 188               EMEA2   363         123               Asia Pacific   85         13               Total changes in deferred revenues $ 1,232       $ 324                                         Year Ended   December 31, 2022   December 31, 2021   $ Increase (Decrease)   % Increase (Decrease)   Amount   % of Total1   Amount   % of Total1     Net Revenues by Geographic Region                       Americas $ 4,208   56 %   $ 4,931     56 %   $ (723 )   (15 ) % EMEA2   2,236   30       2,797     32       (561 )   (20 ) Asia Pacific   1,084   14       1,075     12       9     1   Total consolidated net revenues $ 7,528   100 %   $ 8,803     100 %   $ (1,275 )   (14 )                         Change in deferred revenues3                       Americas $ 609       $ (288 )             EMEA2   257         (136 )             Asia Pacific   120         (25 )             Total changes in deferred revenues $ 986       $ (449 )             1 The percentages of total are presented as calculated. Therefore, the sum of these percentages, as presented, may differ due to the impact of rounding. 2 Net revenues from EMEA consist of the Europe, Middle East, and Africa geographic regions. 3 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues on certain of our online-enabled products. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES EBITDA AND ADJUSTED EBITDA (Amounts in millions)                       March 31, 2022   June 30, 2022   September 30, 2022   December 31, 2022   Trailing Twelve Months Ended December 31, 2022 GAAP Net Income $ 395     $ 280     $ 435     $ 403     $ 1,513   Interest expense from debt   27       27       27       27       108   Other income (expense), net   (13 )     (10 )     (42 )     (117 )     (182 ) Provision for income taxes   70       41       65       55       231   Depreciation and amortization   24       25       29       28       106   EBITDA   503       363       514       396       1,776                       Share-based compensation expense1   98       100       102       161       462   Restructuring and related costs2   (2 )     (3 )     2       —       (3 ) Partnership wind down and related costs3   —       —       —       27       27   Merger and acquisition-related fees and other expenses4   32       16       10       10       68   Adjusted EBITDA $ 631     $ 476     $ 628     $ 594     $ 2,330                       Change in deferred net revenues and related cost of revenues5 $ (235 )   $ (1 )   $ 25     $ 1,059     $ 848   1 Reflects expenses related to share-based compensation. 2 Reflects restructuring initiatives. 3 Reflects expenses related to the wind down of our partnership with NetEase in China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023. 4 Reflects fees and other expenses related to our proposed transaction with Microsoft, primarily legal and advisory fees. 5 Reflects the net effect from deferral of revenues and (recognition) of deferred revenues, along with related cost of revenues, on certain of our online-enabled products. Trailing twelve months amounts are presented as calculated. Therefore, the sum of the four quarters, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES OPERATING METRICS (Amounts in millions) Net Bookings1   Three Months Ended December 31,   Year Ended December 31,   2022   2021   $ Increase (Decrease)   % Increase (Decrease)   2022   2021   $ Increase (Decrease)   % Increase (Decrease) Net bookings1 $ 3,566   $ 2,487   $ 1,079   43 %   $ 8,514   $ 8,354   $ 160   2 % In-game net bookings2 $ 1,818   $ 1,241   $ 577   46 %   $ 5,382   $ 5,100   $ 282   6 % 1 We monitor net bookings as a key operating metric in evaluating the performance of our business because it enables an analysis of performance based on the timing of actual transactions with our customers and provides more timely indications of trends in our operating results. Net bookings is the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others. Net bookings is equal to net revenues excluding the impact from deferrals. 2 In-game net bookings primarily includes the net amount of downloadable content and microtransactions sold during the period, and is equal to in-game net revenues excluding the impact from deferrals.   December 31, 2021   March 31, 2022   June 30, 2022   September 30, 2022   December 31, 2022 Activision 107   100   94   97   111 Blizzard 24   22   27   31   45 King 240   250   240   240   233 Total MAUs 371   372   361   368   389 3 We monitor monthly active users (“MAUs”) as a key measure of the overall size of our user base. MAUs are the number of individuals who accessed a particular game in a given month. We calculate average MAUs in a period by adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period. An individual who accesses two of our games would be counted as two users. In addition, due to technical limitations, for Activision and King, an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users. For Blizzard, an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user. In certain instances, we rely on third parties to publish our games. In these instances, MAU data is based on information provided to us by those third parties, or, if final data is not available, reasonable estimates of MAUs for these third-party published games.   View source version on businesswire.com: https://www.businesswire.com/news/home/20230204005007/en/