Name: Activision Blizzard Inc. (NASDAQ:ATVI) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

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Activision Blizzard Inc., consolidated income statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Product sales	1,642)	2,311)	2,350)	1,975)	2,255)
In-game, subscription, and other revenues	5,886)	6,492)	5,736)	4,514)	5,245)
Net revenues	7,528)	8,803)	8,086)	6,489)	7,500)
Product costs	(519)	(649)	(705)	(656)	(719)
Software royalties and amortization	(231)	(346)	(269)	(240)	(371)
Product sales	(750)	(995)	(974)	(896)	(1,090)
Game operations and distribution costs	(1,324)	(1,215)	(1,131)	(965)	(1,028)
Software royalties and amortization	(148)	(107)	(155)	(233)	(399)
In-game, subscription, and other	(1,472)	(1,322)	(1,286)	(1,198)	(1,427)
Cost of revenues	(2,222)	(2,317)	(2,260)	(2,094)	(2,517)
Gross profit	5,306)	6,486)	5,826)	4,395)	4,983)
Product development	(1,421)	(1,337)	(1,150)	(998)	(1,101)
Sales and marketing	(1,217)	(1,025)	(1,064)	(926)	(1,062)
General and administrative	(1,001)	(788)	(784)	(732)	(822)
Restructuring and related costs	3)	(77)	(94)	(132)	(10)
Operating income	1,670)	3,259)	2,734)	1,607)	1,988)
Interest expense from debt	(108)	(108)	(99)	(90)	(140)
Interest income	165)	5)	21)	79)	65)
Realized and unrealized gain (loss) on equity investment	(1)	28)	3)	38)	—)
Other income (expense)	18)	(20)	(12)	(1)	4)
Other income (expense), net	182)	13)	12)	116)	69)
Loss on extinguishment of debt	—)	—)	(31)	—)	(40)
Income before income tax expense	1,744)	3,164)	2,616)	1,633)	1,877)
Income tax expense	(231)	(465)	(419)	(130)	(64)
Net income	1,513)	2,699)	2,197)	1,503)	1,813)

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).

Financial performance between 2018 and 2022 is characterized by a period of significant growth peaking in 2021, followed by a notable contraction in 2022. Net revenues reached a high of 8,803 million US dollars in 2021 before declining to 7,528 million US dollars in 2022, effectively returning to 2018 levels. This volatility is mirrored in net income, which climbed from 1,503 million US dollars in 2019 to a peak of 2,699 million US dollars in 2021, before falling to 1,513 million US dollars in 2022.

Revenue Composition and Trends: The revenue model is heavily weighted toward in-game, subscription, and other revenues, which consistently outperform traditional product sales. While product sales exhibited a downward trend, falling from 2,255 million US dollars in 2018 to 1,642 million US dollars in 2022, the recurring revenue streams peaked in 2021 at 6,492 million US dollars. The reliance on digital and subscription-based income provided a more stable revenue base during the 2020-2021 growth phase.
Gross Profitability and Cost of Revenues: Gross profit margins saw a marked expansion during the 2020 and 2021 fiscal years, coinciding with the increase in net revenues. Gross profit rose from 4,395 million US dollars in 2019 to 6,486 million US dollars in 2021. However, the 2022 period showed a compression in gross profit to 5,306 million US dollars, driven by the decline in total revenues despite a slight reduction in the overall cost of revenues to 2,222 million US dollars.
Operating Expense Analysis: Operating expenses demonstrate a steady upward trajectory regardless of revenue fluctuations. Product development costs increased consistently each year, rising from 1,101 million US dollars in 2018 to 1,421 million US dollars in 2022. General and administrative expenses also saw a significant increase in 2022, reaching 1,001 million US dollars. This inverse relationship between declining revenues and rising operating costs contributed to a sharp decrease in operating income in 2022.
Operating and Net Income Efficiency: Operating income peaked in 2021 at 3,259 million US dollars but experienced a steep decline to 1,670 million US dollars in 2022, representing a reduction of nearly 49%. While interest income spiked to 165 million US dollars in 2022, providing a small cushion to the bottom line, it was insufficient to offset the operational downturn. Net income margins remained positive but retreated to 2019 levels by the end of the analyzed period.

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