Activision Blizzard Earns $604 Million in Q3

By Bruce Harpham Monday, November 2, 2020

Activision Blizzard (ATVI) keeps growing. In Q3, the company reported $1.9 billion in sales, a significant increase from the $1.28 billion earned in the third quarter of 2019. Three of the company's franchises — Call of Duty, World of Warcraft, and Candy Crush — are on track to achieve $1 billion in revenue each in 2020. The company's revenues and earnings per share exceeded analyst estimates compiled by Bloomberg.

Slowing User Growth in Q3

Early in 2020, the company grew its revenues substantially. In Q2 2020, the company had 428 million monthly active users. In Q3, the company's monthly active users number fell to 390 million. From a quarter over quarter basis, the Blizzard unit did the best in losing only two million users.

Activision Blizzard is continuing to retain and grow its subscription business successfully. The Activision business unit has 111 million monthly active users compared to the Blizzard business unit, which has 30 million active users per month. In contrast, the King business unit reported 249 million active users.

Net Income Reaches a New High

In Q3, Activision Blizzard reported $604 million in quarterly net income. That figure is triple the net income reported in Q3 2019. Cost reductions mainly drive the increase in net income. Restructuring costs fell to $9 million in Q3 2020 compared to $24 million in Q3 2019.

Online Sales Drive the Business

Digital sales are continuing to grow well. In Q3 2020, the company earned 90% of its sales through digital channels. Back in Q3 2019, the company earned 79% of its revenues from digital sales. The company's ability to steadily grow revenue through digital channels mitigates the impact of closed stores and malls.

Fastest Growth in Console Game Revenue

Activision Blizzard sells games across several segments: console, PC, and mobile. While all of these units have shown growth, the Console unit shows the most significant growth. In Q3 2020, its console segment was $695 million (36% of net revenue). Console revenue grew $454 million year-over-year, while PC revenues were $514 million in Q3 2020 (26% of net revenue). The mobile platform contributed 33% of the company's revenue in Q2.

Losing International Customers in Q3

Geographically, the company continues to earn most of its revenues in the Americas, which is evidenced by Blizzard Activision’s Q3 earnings of $1.1 billion in revenue within the region—roughly even to the previous quarter. In contrast, the company's revenues for EMEA (Europe, Middle East, and Africa) fell by $26 million compared to the previous quarter.

One Business Unit Grows at 270%

While the company's overall results are impressive, one division is growing dramatically. The Activision business unit grows at 270% year over year with $345 million in revenue; this unit also contributed the most to its revenue. Some of the best-selling calls of the Activision unit include Modern Warfare, Call of Duty, and Tony Hawk.

The Blizzard division, best known for the World of Warcraft game, grew revenue at 4% year over year and had $133 million in revenue and a 32% operating margin. Blizzard is likely to grow further in November because of a planned November 23 launch of a new edition of World of Warcraft.

The company's King division earned $356 million in revenue and used $248 million in operating income. The King group, which runs games like Candy Crush, increased revenue 7% year over year. In terms of mobile game popularity, Candy Crush retains its status as one of the world's best selling mobile games. Other successful games in the division include Farm Heroes and Bubble Witch.

10 Million Fans Sign Up for 2021 Games

King isn't solely dependent on older games. The company attracted 10 million pre-registrations for Crash Bandicoot: On The Run; this game is planned for release on mobile in the spring of 2021. Based on the level of pre-registrations, the company continues to retain a highly passionate user base.

$7.6 Billion in Total Cash

As of September 30, Activision Blizzard had $7.6 billion in cash on its balance sheet. The company's stockpile of cash has grown by over $1 billion in the past quarter. At the same time, the company's debt load is growing. As of Q3, the company had $3.65 billion in debt, nearly $1 billion higher than a year ago.

Cash Flow Slows in Q3

While the company's total cash stockpile grew in Q3, its cash flow continues to have a highly seasonal quality. In Q3 2020, its cash flow fell to $196 million compared to $768 million in Q2. Historically, the company earns the most cash in Q4. In Q4 2019, the company earned nearly one billion dollars—$918 million.

About the Author

Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in, InfoWorld, Canadian Business, and other organizations. Visit for articles, interviews with tech leaders, and updates on future books.

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