Activision Blizzard Announces Better-than-expected First Quarter 2012 Financial Results

*Prior Outlook was provided by the company on February 9, 2012 in its earnings release

For the quarter ended March 31, 2012, Activision Blizzard's GAAP net revenues were $1.17 billion, as compared with $1.45 billion for the first quarter of 2011. On a non-GAAP basis, the company's net revenues were $587 million, as compared with $755 million for the first quarter of 2011. For the first quarter, GAAP net revenues from digital channels represented 27% of the company's total revenues. On a non-GAAP basis, net revenues from digital channels were 51%.

For the quarter ended March 31, 2012, Activision Blizzard's GAAP earnings per diluted share were $0.33, as compared with $0.42 for the first quarter of 2011. On a non-GAAP basis, the company's earnings per diluted share were $0.06, as compared with $0.13 for the first quarter of 2011.

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.

Bobby Kotick, Chief Executive Officer, Activision Blizzard, said, "Our better-than-expected first-quarter performance was driven by global consumer demand for Activision Publishing's Call of Duty®: Modern Warfare® 3, and Skylanders Spyro's Adventures(TM), as well as Blizzard Entertainment's World of Warcraft® which remains the #1 subscription-based MMORPG in the world. Through March 31, players have logged more than 1.6 billion hours of online gameplay of Activision Publishing's Call of Duty: Modern Warfare 3,(4) and for the quarter in North America and Europe, including the accessory packs and figures, Skylanders Spyro's Adventures was the #3 best-selling game overall in dollars across all platforms.(2) Based on our internal estimates, we believe that Skylander's toys sales in the first quarter exceeded those of Star Wars, the #1 action figure line.(3) Additionally, Activision Publishing's Call of Duty Elite service continues to grow and currently has more than 10 million registered users including more than two million annual premium members, an increase of approximately 33% from January 31, 2012."(4)

Kotick added, "On May 15 Blizzard Entertainment will release the highly anticipated Diablo® III and we are proud to report that pre-orders for the game worldwide have set a new record for Blizzard.(1) For the remainder of 2012 and beyond, our product pipeline includes some of the most innovative games we have ever developed for our established franchises, including Blizzard Entertainment's World of Warcraft: Mists of Pandaria(TM), StarCraft® II: Heart of the Swarm(TM) and all new MMORPG game, as well as Activision Publishing's Skylander's Giants(TM), Call of Duty: Black Ops 2 and a new universe from Bungie. We also continue to expand our service platforms, Blizzard Entertainment's Battle.net® and Activision Publishing's Call of Duty Elite, grow our global footprint into new markets and strengthen our development resources for the future. Our high-quality brands, industry leading operational capabilities and solid balance sheet should enable us to continue to take full advantage of the opportunities afforded by the expanding interactive entertainment market and deliver continued superior returns to our shareholders."

Selected Business Highlights:

As of March 31, 2012, the Call of Duty franchise had approximately 40 million monthly active users.(4)

Players have logged more than 1.6 billion hours of online gameplay of Call of Duty: Modern Warfare 3 through March 31, 2012.(4)

As of April 30, 2012, more than 10 million gamers have registered for Call of Duty Elite, including more than two million premium annual memberships the company has sold for the online service.(4)

In North America and Europe, including accessory packs and figures, Skylanders Spyro's Adventure was the #3 best-selling game overall in dollars across all platforms for the first quarter of 2012 and the #1 selling kids' title in dollars in the quarter.(2)

On April 5, 2012, Activision Publishing expanded the reach of the Skylanders franchise with the debut of Skylanders Cloud Patrol(TM), an entirely new gaming experience for iPhone, iPad and iPod touch users.

For the first quarter, Activision Blizzard had two top-10 PC titles in North America and Europe with Activision Publishing's Call of Duty: Modern Warfare 3 and Blizzard Entertainment's StarCraft II: Wings of Liberty®.(2)

On March 20, 2012, Blizzard Entertainment announced that they renewed their license with NetEase for the distribution of World of Warcraft in mainland China. The new license will continue for an additional three years following the expiration of the current license agreement.

On March 21, 2012, Blizzard Entertainment launched the World of Warcraft: Mists of Pandaria beta test.

During the first quarter, Activision Blizzard purchased an aggregate of 22 million shares of its common stock for an aggregate purchase price of approximately $261 million.

Activision Blizzard will pay a cash dividend of $0.18 per common share on May 16, 2012 to shareholders of record at the close of business on March 21, 2012. This represents a 9% increase over the dividend that was paid in 2011.

On March 5, 2012, Activision Blizzard, Inc. announced that Microsoft veteran Dennis Durkin has been named Chief Financial Officer of the company. Durkin assumes the position from Thomas Tippl, who had been serving in the Chief Financial Officer position on an interim basis since his promotion to Chief Operating Officer in 2010.

Company Outlook

In April 2012, Activision Publishing released Call of Duty: Modern Warfare 3 Content Collection #1, a compilation of content previously released to Call of Duty Elite premium members and on the Xbox 360® video game and entertainment system from Microsoft, for Sony's PlayStation 3 computer entertainment system. The company also released PROTOTYPE 2 for the Xbox 360 video game and entertainment system from Microsoft, PlayStation®3 computer entertainment system and Windows PC.

During the quarter, Activision Publishing also expects to release two additional games based on feature films, BATTLESHIP®, which is slated for release on May 15, 2012 and The Amazing Spider-Man(TM), which is slated for release on June 26, 2012. Each game will be released for the Xbox 360® video game and entertainment system from Microsoft, Sony's PlayStation®3 computer entertainment system, Wii(TM) system from Nintendo, the Nintendo 3DS(TM) and Nintendo DS(TM) hand-held system.

Additionally, Blizzard Entertainment expects to release Diablo III, the next chapter in its critically acclaimed action role-playing game series, on May 15, 2012.

Based on better-than-expected first quarter results, the company is raising its calendar year net revenue and earnings per share outlook.