Activision Blizzard Inc. (NASDAQ:ATVI)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes showed a fluctuating trend over the observed period. Starting at $1,379 million in 2018, it decreased to $980 million in 2019, indicating a significant decline. However, the figure rebounded sharply in 2020 to $2,485 million, followed by a decrease to $2,162 million in 2021. In 2022, NOPAT increased slightly to $2,208 million, reflecting a general upward trend after 2019 despite intermittent declines.

Invested Capital

Invested capital steadily increased from $16,084 million in 2018 to a peak of $22,243 million in 2021. In 2022, there was a noticeable decline to $19,837 million. The overall pattern suggests a growth in capital investment over most years, with a reduction in the final year noted.

Return on Invested Capital (ROIC)

The return on invested capital exhibited variability throughout the period. Beginning at 8.57% in 2018, ROIC dipped to its lowest point of 5.75% in 2019. It then showed a strong recovery to 12.22% in 2020, followed by a slight decline to 9.72% in 2021. In 2022, ROIC improved again to 11.13%, indicating an overall positive trend in efficiency of capital utilization despite fluctuations.

Operating Profit Margin (OPM)

The operating profit margin demonstrated a generally positive trend between 2018 and 2020, rising from 20.28% to a peak of 35.95%. However, from 2020 onwards, the margin experienced a gradual decline, dropping to 32.01% in 2021 and further to 30.5% in 2022. Despite this decrease, the margin in 2022 remained substantially higher than the levels observed in 2018 and 2019.

Turnover of Capital (TO)

The turnover of capital exhibited relative stability with minor fluctuations over the five-year period. It started at 0.44 in 2018, decreased to 0.37 in 2019, briefly increased to 0.41 in 2020, declined again to 0.37 in 2021, and rose once more to 0.43 in 2022. Overall, the ratio remained within a narrow range, indicating consistent efficiency in utilizing capital.

1 – Effective Cash Tax Rate (CTR)

The measure of 1 minus the effective cash tax rate showed considerable variability during the period. It was highest in 2018 at 96.25%, sharply decreased to 67.22% in 2019, before increasing again to over 80% from 2020 through 2022, with values of 82.3%, 82.06%, and 85.17% respectively. This pattern suggests fluctuations in the cash tax burden, with a notable reduction in 2019 followed by a relative stabilization at higher levels in subsequent years.

Return on Invested Capital (ROIC)

The return on invested capital fluctuated throughout the timeframe. It began at 8.57% in 2018, decreased to a low of 5.75% in 2019, increased markedly to 12.22% in 2020, then declined to 9.72% in 2021, before rising again to 11.13% in 2022. This series of changes indicates variable profitability in relation to capital invested, with 2020 marking the highest return and 2019 the lowest point.

Net Operating Profit Before Taxes (NOPBT)

There was a moderate increase in NOPBT from 1433 million USD in 2018 to 1458 million USD in 2019. A significant growth occurred in 2020, reaching 3020 million USD, nearly doubling the prior year's figure. Subsequently, NOPBT declined to 2635 million USD in 2021 and further marginally decreased to 2592 million USD in 2022, indicating a retreat from the peak achieved in 2020 but stability in the last two years.

Adjusted Net Revenues

Adjusted net revenues exhibited variability across the years. After a decrease from 7064 million USD in 2018 to 6371 million USD in 2019, revenues sharply increased to 8400 million USD in 2020. In 2021, revenues slightly decreased to 8232 million USD, followed by a rebound to 8498 million USD in 2022. This pattern suggests a recovery after a dip in 2019, culminating in a generally upward trend post-2019.

Operating Profit Margin (OPM)

The operating profit margin showed improvement from 20.28% in 2018 to 22.88% in 2019. It then rose substantially to 35.95% in 2020, indicating enhanced operational efficiency or profitability during that period. In 2021, the margin decreased to 32.01%, followed by a further decline to 30.5% in 2022. Despite these decreases, the margin remained well above the 2018-2019 levels, signifying sustained improved profitability relative to earlier years.

Adjusted Net Revenues

Adjusted net revenues exhibited variability over the five-year period. Starting at 7,064 million US dollars in 2018, there was a decline to 6,371 million in 2019. This was followed by a significant increase to 8,400 million in 2020. Subsequent years saw a slight decrease to 8,232 million in 2021, with a modest recovery to 8,498 million in 2022. Overall, the trend reveals fluctuations with a general upward trajectory from 2019 onward.

Invested Capital

Invested capital demonstrated a consistent upward trend from 2018 through 2021, rising from 16,084 million US dollars to a peak of 22,243 million in 2021. However, in 2022, invested capital decreased to 19,837 million, indicating a reduction in invested resources after steady growth over the previous years.

Turnover of Capital (TO)

The turnover of capital ratio varied throughout the period, reflecting changes in operational efficiency relative to invested capital. The ratio started at 0.44 in 2018, dropped to 0.37 in 2019, then increased to 0.41 in 2020. It decreased again to 0.37 in 2021 before rising to 0.43 in 2022. These fluctuations suggest varying degrees of efficiency in utilizing invested capital to generate adjusted net revenues, with the highest turnover in 2018 and a nearly comparable level in 2022.

The financial data reveals a notable progression in the key metrics under review over the five-year period.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT shows an overall increasing trend with some fluctuations. Starting at 1,433 million US dollars in 2018, it rose modestly to 1,458 million in 2019. A significant jump occurred in 2020, when NOPBT more than doubled to 3,020 million US dollars. Following this peak, the figure slightly decreased in 2021 to 2,635 million and held steady in 2022 at 2,592 million. This pattern suggests a period of strong growth culminating in 2020, followed by stabilization at a high level.

Cash Operating Taxes

Cash operating taxes exhibit a different trend relative to NOPBT. Starting relatively low at 54 million US dollars in 2018, the amount rose sharply to 478 million in 2019 and increased marginally to 535 million in 2020. Afterward, cash operating taxes decreased to 473 million in 2021 and further declined to 384 million in 2022. This indicates that despite higher profits in 2020, the cash taxes paid did not follow the same upward trajectory in subsequent years, showing a reduction in absolute cash tax obligations.

Effective Cash Tax Rate (CTR)

The effective cash tax rate displays significant volatility across the period. Starting at a very low 3.75% in 2018, it surged to 32.78% in 2019, before declining to 17.7% in 2020. It then remained relatively stable, registering 17.94% in 2021 and a further decline to 14.83% in 2022. This fluctuation in tax rates suggests variations in tax management strategies, tax legislation impact, or differences in taxable income identification relative to reported operating profits.

In summary, the data indicates a strong growth phase in operating profitability culminating in 2020, coupled with a non-linear response in taxation amounts and rates. The decrease in the effective tax rate after 2019 amidst elevated profitability points to potentially effective tax planning or changing tax environments. The reduction in cash taxes paid after 2020, despite high profits, aligns with this observation and reflects an improved tax efficiency in recent years.