Stock Analysis on Net
Stock Analysis on Net

Activision Blizzard Inc. (NASDAQ:ATVI)

This company has been moved to the archive! The financial data has not been updated since July 31, 2023.

Common-Size Income Statement 

Activision Blizzard Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Product sales 21.81 26.25 29.06 30.44 30.07
In-game, subscription, and other revenues 78.19 73.75 70.94 69.56 69.93
Net revenues 100.00% 100.00% 100.00% 100.00% 100.00%
Product costs -6.89 -7.37 -8.72 -10.11 -9.59
Software royalties and amortization -3.07 -3.93 -3.33 -3.70 -4.95
Product sales -9.96% -11.30% -12.05% -13.81% -14.53%
Game operations and distribution costs -17.59 -13.80 -13.99 -14.87 -13.71
Software royalties and amortization -1.97 -1.22 -1.92 -3.59 -5.32
In-game, subscription, and other -19.55% -15.02% -15.90% -18.46% -19.03%
Cost of revenues -29.52% -26.32% -27.95% -32.27% -33.56%
Gross profit 70.48% 73.68% 72.05% 67.73% 66.44%
Product development -18.88 -15.19 -14.22 -15.38 -14.68
Sales and marketing -16.17 -11.64 -13.16 -14.27 -14.16
General and administrative -13.30 -8.95 -9.70 -11.28 -10.96
Restructuring and related costs 0.04 -0.87 -1.16 -2.03 -0.13
Operating income 22.18% 37.02% 33.81% 24.76% 26.51%
Interest expense from debt -1.43 -1.23 -1.22 -1.39 -1.87
Interest income 2.19 0.06 0.26 1.22 0.87
Realized and unrealized gain (loss) on equity investment -0.01 0.32 0.04 0.59 0.00
Other income (expense) 0.24 -0.23 -0.15 -0.02 0.05
Other income (expense), net 2.42% 0.15% 0.15% 1.79% 0.92%
Loss on extinguishment of debt 0.00 0.00 -0.38 0.00 -0.53
Income before income tax expense 23.17% 35.94% 32.35% 25.17% 25.03%
Income tax expense -3.07 -5.28 -5.18 -2.00 -0.85
Net income 20.10% 30.66% 27.17% 23.16% 24.17%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Revenue Composition
The share of product sales in net revenues demonstrated a consistent decline from 30.07% in 2018 to 21.81% in 2022, indicating a reduced reliance on direct product sales. Conversely, in-game, subscription, and other revenues showed an increasing trend, rising from 69.93% to 78.19% over the same period, which suggests a strategic shift toward recurring revenue models and digital content monetization.
Cost of Revenues
Product costs as a percentage of net revenues steadily decreased from -9.59% in 2018 to -6.89% in 2022, reflecting improved cost efficiency or lower product-related expenses. Software royalties and amortization costs exhibited some fluctuation but overall decreased from -4.95% in 2018 to -3.07% in 2022. Costs specifically associated with product sales decreased significantly from -14.53% to -9.96%. However, game operations and distribution costs increased notably, reaching -17.59% in 2022 after a period of relative stability, which may indicate higher operational expenditures or increased investment in distribution. Costs tied to in-game, subscription, and other revenues also increased to -19.55% in 2022 from prior years. Overall, the cost of revenues declined from -33.56% in 2018 to a low of -26.32% in 2021 before rising again to -29.52% in 2022, suggesting variability in operational cost management.
Profitability
Gross profit margins improved from 66.44% in 2018 to a peak of 73.68% in 2021, followed by a decrease to 70.48% in 2022. Operating income as a percentage of net revenues showed a similar pattern, increasing markedly from 26.51% in 2018 to 37.02% in 2021, then declining sharply to 22.18% in 2022. This indicates that while operational profitability peaked in 2021, it faced significant pressure in the subsequent year.
Operating Expenses
Product development expenses fluctuated, generally increasing and peaking at -18.88% in 2022, possibly reflecting higher investment in innovation or content creation. Sales and marketing expenses initially decreased to -11.64% in 2021 but rose substantially to -16.17% in 2022, indicating increased promotional spending. General and administrative expenses declined from -10.96% in 2018 to a low of -8.95% in 2021 before increasing sharply to -13.3% in 2022. Restructuring and related costs remained minor, with some volatility but negligible impact overall.
Financial Income and Expenses
Interest expense from debt remained relatively stable, fluctuating slightly around -1.2% to -1.87% of net revenues across the period. Interest income varied, showing an overall increase to 2.19% in 2022, which might reflect improved investment returns or higher cash balances. Gains and losses on equity investments and other income/losses were generally minor and inconsistent, with a slight positive net effect in 2022. The loss on extinguishment of debt appeared only sporadically and did not constitute a significant trend.
Income Tax and Net Income
Income before income tax expense followed the pattern of operating income, reaching a peak in 2021 and then declining in 2022. Income tax expense increased in relative terms from -0.85% in 2018 to approximately -5% in 2020 and 2021, then decreased to -3.07% in 2022, possibly reflecting changes in tax rates or benefit utilization. Net income as a percentage of net revenues increased steadily from 24.17% in 2018 to 30.66% in 2021 before dropping to 20.1% in 2022, indicating that profit margins were under pressure in the most recent year despite earlier gains.