Activision Blizzard reported that its Q2 bookings hit $1.64 billion, slightly better than expected by analysts, while earnings hit the mark exactly.

The company said that its Activision, Blizzard and King divisions all grew in the second quarter compared to the first quarter, and it touted a strong slate for the second half. Microsoft has announced it expects its $68.5 billion acquisition of Activision Blizzard will be approved by regulators in the current fiscal year ending June 30, 2023. In after-hours trading, the stock is up slightly at $80.32 a share.

“Our acquisitions this past quarter of Proletariat and Peltarion further boost our development resources, including our artificial intelligence and machine learning capabilities,” said Bobby Kotick, CEO of Activision Blizzard, in a statement. “Even in a challenging economic environment, with so many companies announcing hiring freezes and layoffs, our development headcount grew 25% year-over-year as of the end of the second quarter. Our talented teams are planning to release exciting new Call of Duty, World of Warcraft and Overwatch content later this year. Of course, we look forward to completing our pending $95 per share all-cash transaction with Microsoft as soon as possible.”

The company’s previously announced titles are still coming in on schedule, with Call of Duty: Modern Warfare II releasing on October 28 as a sequel to 2019’s Modern Warfare, the most successful Call of Duty title to date. Call of Duty: Warzone 2.0 is also coming later this year, with no specific date yet.


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World of Warcraft: Wrath of the Lich King Classic is releasing on September 26, and World of Warcraft: Dragonflight is coming as an expansion for the modern game later this year. Overwatch 2 is planned to launch in early access on the PC and console on October 4 with a free-to-play live service model.

“Activision Blizzard’s overall net bookings (non-GAAP revenue) were better than we forecast by 8%,” said Michael Pachter, an analyst at Wedbush Securities. ” King came in spot on our forecast (missed by $1 million), but Activision Publishing beat by $50 million and Blizzard by $100 million. I can’t say how much of that is Diablo Immortal (probably only $25 million or so), but those are very good numbers.”

Pachter added, “The important takeaway is that King in-game purchase revenues were up 6% year-over-year, and it has widely been reported that mobile games are suffering.  I have been skeptical of the “data” services, as I think they make this stuff up as they go, and King’s performance proves them wrong.  More importantly, advertising revenue was up by more than 20%, and once again, skeptics predicted a miss. Only Zynga has material mobile revenue and ad revenue (now part of Take-Two), so that report should be interesting.”

Mobile games

Diablo: Immortal.
Diablo: Immortal.

In mobile games, Activision Blizzard touted the successful June launch of Diablo Immortal, a high-end free-to-play mobile game that hit the top of the game download charts in more than 100 countries. It also ranked in the top-10 grossing games in the U.S. app stores for the month of June. The company didn’t say how much revenue Diablo Immortal generated. Sensor Tower estimated that Diablo Immortal hit $100 million in revenue in the first eight weeks.

King’s segment revenue and operating income grew year-over-year, driven by Candy Crush, King’s largest franchise. King’s in-game net bookings increased 6% year-over-year, reflecting strong execution across live operations and user acquisition.

Time spent within Candy Crush again grew year-over-year, franchise payer numbers grew by a double-digit percentage year-over-year, and Candy Crush was the top-grossing game franchise in the U.S. app stores for the 20th consecutive quarter.

Activision Blizzard said its developer headcount in Q2 grew by 25% year-over-year, and it acquired two companies to continue delivering engaging content, including the acquisition of Boston-based Proletariat, maker of Spellbreak, to expand its World of Warcraft team.

And in June, King acquired software company Peltarion to accelerate the use of AI and machine learning technology in serving its community more engaging content.

More financial details

Call of Duty: Modern Warfare II aims for realism in night or day.
Call of Duty: Modern Warfare II aims for realism in night or day.

For the quarter ended June 30, 2022, Activision Blizzard’s GAAP net revenues were $1.64 billion, as compared with $2.30 billion for the second quarter of 2021. GAAP net revenues from digital channels were $1.47 billion.

GAAP operating margin was 21%. GAAP earnings per diluted share was 36 cents, as compared with $1.12 for the second quarter of 2021. On a non-GAAP basis, Activision Blizzard’s operating margin was 28% and earnings per diluted share was 48 cents, as compared with $1.20 for the second quarter of 2021.

Activision Blizzard generated $198 million in operating cash flow for the quarter as compared with $388 million for the second quarter of 2021.

For the quarter ended June 30, 2022, Activision Blizzard’s net bookings were $1.64 billion, as compared with $1.92 billion for the second quarter of 2021. In-game net bookings were $1.20 billion, as compared with $1.32 billion for the second quarter of 2021.

For the quarter ended June 30, 2022, overall Activision Blizzard monthly active users (MAUs)D were 361 million.

Based on the current pipeline, the company said total segment operating income is expected to increase modestly in the third quarter versus the second quarter, and to return to year-over-year growth in the fourth quarter.

Activision Blizzard is dealing with a big lawsuit alleging sexual harassment at the company. The company said it remains committed to becoming the most welcoming, inclusive company in the industry and continues to implement previously announced initiatives to strengthen our practices and policies. In the second quarter, Activision Blizzard said it added experienced diversity, equity and inclusion leaders in key positions across the organization.

In July, the company launched Level Up U, a 12-week program that prepares talented individuals from inside and outside the industry to become full-time game developers. Level Up U is the first major program funded through a $250 million investment over 10 years announced last October to accelerate opportunities in gaming and technology for under-represented communities.

Junker Queen is a new tank in Overwatch 2.
Junker Queen is a new tank in Overwatch 2.

The company said Activision’s expanded studios also continue to make strong progress on an innovative mobile experience that will extend Warzone to the largest and fastest growing platform. Across the Call of Duty ecosystem, the teams are well positioned to support these launches with substantial live operations while also continuing development of new premium content planned for 2023 and beyond, the company said.

Activision’s second quarter segment revenue and operating income declined year-over-year, reflecting lower engagement for the Call of Duty franchise, but grew versus the first quarter. Call of Duty net bookings on console and PC grew sequentially in the second quarter, following gameplay improvements and seasonal content across Call of Duty: Vanguard and Call of Duty: Warzone that the company said were well-received by players. Net bookings for Call of Duty: Mobile were consistent with the first quarter.

Diablo IV, the next-generation installment in the action RPG series, is planned for launch on PC and console in 2023. The title will support cross-play and cross-progression across platforms and is designed to be the foundation for a live service, providing ongoing storytelling and new content.

During the second quarter, Blizzard unveiled Warcraft: Arclight Rumble, a mobile strategy game set in the Warcraft universe. Public testing of the game is underway in select regions.

Blizzard’s second quarter segment revenue and operating income were lower year-over-year but higher versus the first quarter. World of Warcraft net bookings declined versus a year-ago quarter that included the launch of Burning Crusade Classic, offsetting year-over-year growth for Hearthstone and the contribution from the June launch of Diablo Immortal.

King’s advertising business grew over 20% year-over-year, despite intensifying macro headwinds through the quarter, as the team continued to carefully ramp ad volume on the King network.

Cash and short-term investments at the end of the second quarter stood at $10.8 billion, and Activision Blizzard ended the quarter with a net cashE position of approximately $7.1 billion.justments made.

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