Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Activision Blizzard Inc., profitability ratios
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).
- Gross Profit Margin
- The gross profit margin exhibited an overall upward trend from 66.44% in 2018 to a peak of 73.68% in 2021, indicating improved efficiency in production or sales processes. However, there was a notable decline to 70.48% in 2022, suggesting some pressure on cost management or pricing strategy in that year.
- Operating Profit Margin
- The operating profit margin showed a fluctuating pattern, starting at 26.51% in 2018 and slightly decreasing to 24.76% in 2019. It then increased significantly to 33.81% in 2020 and further to 37.02% in 2021, reflecting enhanced operational efficiency or reduced operating expenses during that period. Nevertheless, a sharp decrease to 22.18% occurred in 2022, which points to a potential rise in operating costs or reduced operational profitability in the most recent year.
- Net Profit Margin
- Net profit margin followed a similar trend to operating margin, with an initial decrease from 24.17% in 2018 to 23.16% in 2019, followed by a rise to 27.17% in 2020 and peaking at 30.66% in 2021. The decline to 20.1% in 2022 signifies reduced overall profitability, possibly due to increases in non-operating expenses or taxes, alongside operational challenges.
- Return on Equity (ROE)
- ROE decreased from 15.96% in 2018 to 11.74% in 2019, before recovering moderately to 14.61% in 2020 and 15.34% in 2021. The drop to 7.86% in 2022 represents a significant deterioration in profitability relative to shareholders' equity, indicating diminished efficiency in generating returns for equity investors in the latest year.
- Return on Assets (ROA)
- The ROA trend mirrors ROE but at a lower magnitude, beginning at 10.17% in 2018, declining to 7.57% in 2019, improving to 9.51% in 2020 and 10.77% in 2021, and then sharply falling to 5.53% in 2022. This decline suggests reduced effectiveness in utilizing the company's assets to generate profit during the most recent year.
Return on Sales
Return on Investment
Gross Profit Margin
Activision Blizzard Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 5,306) | 6,486) | 5,826) | 4,395) | 4,983) | |
| Net revenues | 7,528) | 8,803) | 8,086) | 6,489) | 7,500) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 70.48% | 73.68% | 72.05% | 67.73% | 66.44% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 55.38% | 56.94% | 53.58% | — | — | |
| Comcast Corp. | 68.53% | 66.96% | 68.02% | — | — | |
| Meta Platforms Inc. | 78.35% | 80.79% | 80.58% | — | — | |
| Netflix Inc. | 39.37% | 41.64% | 38.89% | — | — | |
| Take-Two Interactive Software Inc. | 56.19% | 54.49% | 50.07% | — | — | |
| Walt Disney Co. | 34.24% | 33.06% | 32.89% | 39.60% | — | |
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).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenues
= 100 × 5,306 ÷ 7,528 = 70.48%
2 Click competitor name to see calculations.
- Net Revenues
- The net revenues demonstrate a variable but overall fluctuating pattern over the observed periods. Starting at USD 7,500 million at the end of 2018, there was a notable decline to USD 6,489 million in 2019. Subsequently, revenues increased significantly to USD 8,086 million in 2020 and further rose to USD 8,803 million in 2021. However, in 2022, revenues declined again to USD 7,528 million. This indicates a recovery phase after 2019, followed by a decrease in the most recent year.
- Gross Profit
- Gross profit followed a trend broadly similar to that of net revenues but with some deviations. It started at USD 4,983 million in 2018 and decreased to USD 4,395 million in 2019. There was a significant increase to USD 5,826 million in 2020 and a continued rise to USD 6,486 million in 2021. However, in 2022, gross profit fell to USD 5,306 million. The fluctuations in gross profit align closely with the revenue changes but reflect a slightly lower margin impact in the last year.
- Gross Profit Margin
- The gross profit margin exhibited an overall upward trend from 2018 through 2021, rising from 66.44% to a peak of 73.68%. This represents improving efficiency or pricing power during this period. However, in 2022, the margin declined to 70.48%, indicating a reduction in profitability relative to revenues. Despite this drop, the margin in 2022 remained above both 2018 and 2019 levels, suggesting that the company retained a higher profit ratio over the longer term.
- Overall Insights
- Throughout the five years, the company experienced periods of both contraction and growth in revenues and gross profit. The decline in 2019 could suggest market challenges or operational issues. The strong recovery in 2020 and 2021 demonstrates resilience and possibly favorable market conditions. The subsequent decline in 2022 may indicate new challenges or market shifts. The gross profit margin’s improvement through 2021 reflects increased operational efficiency or product mix optimization, though the decrease in 2022 suggests emerging pressures on profitability. Collectively, these trends highlight a company navigating varying market dynamics with notable volatility in its financial performance over the assessed period.
Operating Profit Margin
Activision Blizzard Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 1,670) | 3,259) | 2,734) | 1,607) | 1,988) | |
| Net revenues | 7,528) | 8,803) | 8,086) | 6,489) | 7,500) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 22.18% | 37.02% | 33.81% | 24.76% | 26.51% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 26.46% | 30.55% | 22.59% | — | — | |
| Comcast Corp. | 11.56% | 17.89% | 16.89% | — | — | |
| Meta Platforms Inc. | 24.82% | 39.65% | 38.01% | — | — | |
| Netflix Inc. | 17.82% | 20.86% | 18.34% | — | — | |
| Take-Two Interactive Software Inc. | 13.51% | 18.66% | 13.77% | — | — | |
| Walt Disney Co. | 7.90% | 4.46% | -2.97% | 15.33% | — | |
| Operating Profit Margin, Sector | ||||||
| Media & Entertainment | 20.43% | 26.35% | 20.29% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Communication Services | 16.69% | 22.44% | 16.34% | — | — | |
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).
1 2022 Calculation
Operating profit margin = 100 × Operating income ÷ Net revenues
= 100 × 1,670 ÷ 7,528 = 22.18%
2 Click competitor name to see calculations.
- Operating Income
- The operating income experienced a decline from 2018 to 2019, dropping from 1,988 million USD to 1,607 million USD. It then surged significantly in 2020 to 2,734 million USD and continued to rise, reaching its peak at 3,259 million USD in 2021. However, in 2022, there was a marked decrease to 1,670 million USD, nearly halving the figure from the previous year.
- Net Revenues
- Net revenues followed a somewhat similar pattern, starting at 7,500 million USD in 2018, and decreasing in 2019 to 6,489 million USD. They rebounded strongly in 2020 to 8,086 million USD and further increased in 2021 to 8,803 million USD. By 2022, net revenues declined again to 7,528 million USD, nearly returning to the levels seen in 2018.
- Operating Profit Margin
- The operating profit margin mirrored the trends in operating income and net revenues. Beginning at 26.51% in 2018, it declined slightly to 24.76% in 2019. This was followed by a substantial increase in 2020 to 33.81%, further rising to 37.02% in 2021, indicating improved operational efficiency or profitability during this period. In 2022, the margin dropped sharply to 22.18%, representing the lowest margin in the five-year span.
Overall, the data shows a period of initial decline from 2018 to 2019, followed by strong growth and improved profitability in 2020 and 2021. This growth and margin improvement were not sustained into 2022, where both operating income and net revenues declined significantly, accompanied by a sharp drop in operating profit margin. This suggests potential challenges in maintaining the higher performance levels achieved during the earlier years of the period analyzed.
Net Profit Margin
Activision Blizzard Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,513) | 2,699) | 2,197) | 1,503) | 1,813) | |
| Net revenues | 7,528) | 8,803) | 8,086) | 6,489) | 7,500) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 20.10% | 30.66% | 27.17% | 23.16% | 24.17% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 21.20% | 29.51% | 22.06% | — | — | |
| Comcast Corp. | 4.42% | 12.17% | 10.17% | — | — | |
| Meta Platforms Inc. | 19.90% | 33.38% | 33.90% | — | — | |
| Netflix Inc. | 14.21% | 17.23% | 11.05% | — | — | |
| Take-Two Interactive Software Inc. | 11.93% | 17.46% | 13.09% | — | — | |
| Walt Disney Co. | 3.80% | 2.96% | -4.38% | 15.89% | — | |
| Net Profit Margin, Sector | ||||||
| Media & Entertainment | 15.12% | 23.17% | 17.24% | — | — | |
| Net Profit Margin, Industry | ||||||
| Communication Services | 11.47% | 18.71% | 11.50% | — | — | |
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).
1 2022 Calculation
Net profit margin = 100 × Net income ÷ Net revenues
= 100 × 1,513 ÷ 7,528 = 20.10%
2 Click competitor name to see calculations.
- Net Income
- The net income exhibited a fluctuating trend over the observed period. Starting at $1,813 million in 2018, it decreased to $1,503 million in 2019, followed by a recovery to $2,197 million in 2020 and further growth to $2,699 million in 2021. However, in 2022, net income declined sharply to $1,513 million, nearing the 2019 level. This pattern indicates volatility in profitability, with notable peaks in 2020 and 2021 but a significant downturn in the most recent year.
- Net Revenues
- Net revenues showed variability alongside net income but with somewhat different dynamics. Beginning at $7,500 million in 2018, revenues decreased to $6,489 million in 2019, surged to a peak of $8,086 million in 2020, and increased further to $8,803 million in 2021. In 2022, revenues dropped again, aligning closely with the 2018 level at $7,528 million. This suggests that revenue generation experienced notable growth in 2020 and 2021 before retreating in 2022.
- Net Profit Margin
- The net profit margin followed an overall positive trend until 2021, starting at 24.17% in 2018, slightly decreasing to 23.16% in 2019, then rising significantly to 27.17% in 2020 and peaking at 30.66% in 2021. However, it declined markedly in 2022 to 20.1%, representing the lowest margin in the five-year span. This decline in profitability relative to revenues indicates decreased operational efficiency or increased costs impacting the bottom line in the latest year.
- Summary of Trends
- The financial data reveal a cyclical performance pattern characterized by strong growth phases in 2020 and 2021, where both revenue and profitability metrics reached their highest points in the period analyzed. The subsequent decline in 2022 across net income, net revenues, and profit margin suggests challenges impacting the financial performance during that year. The sharp decrease in net profit margin particularly highlights pressure on profitability even with revenues remaining moderately high compared to earlier years. Overall, the company experienced considerable volatility, with earnings peaking in 2021 and contracting in the subsequent year.
Return on Equity (ROE)
Activision Blizzard Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,513) | 2,699) | 2,197) | 1,503) | 1,813) | |
| Shareholders’ equity | 19,243) | 17,599) | 15,037) | 12,805) | 11,357) | |
| Profitability Ratio | ||||||
| ROE1 | 7.86% | 15.34% | 14.61% | 11.74% | 15.96% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Alphabet Inc. | 23.41% | 30.22% | 18.09% | — | — | |
| Comcast Corp. | 6.63% | 14.73% | 11.66% | — | — | |
| Meta Platforms Inc. | 18.45% | 31.53% | 22.72% | — | — | |
| Netflix Inc. | 21.62% | 32.28% | 24.96% | — | — | |
| Take-Two Interactive Software Inc. | 10.97% | 17.67% | 15.93% | — | — | |
| Walt Disney Co. | 3.31% | 2.25% | -3.43% | 12.44% | — | |
| ROE, Sector | ||||||
| Media & Entertainment | 16.59% | 23.65% | 14.91% | — | — | |
| ROE, Industry | ||||||
| Communication Services | 13.31% | 20.33% | 11.51% | — | — | |
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).
1 2022 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 1,513 ÷ 19,243 = 7.86%
2 Click competitor name to see calculations.
- Net Income
- The net income experienced fluctuations over the five-year period. It decreased from 1813 million US dollars in 2018 to 1503 million US dollars in 2019, then rose significantly to 2197 million US dollars in 2020 and reached a peak of 2699 million US dollars in 2021. However, in 2022, there was a notable decline to 1513 million US dollars, indicating volatility in profitability.
- Shareholders’ Equity
- There was a steady and consistent increase in shareholders’ equity throughout the period. Starting at 11,357 million US dollars in 2018, equity grew each year without interruption, reaching 19,243 million US dollars by the end of 2022. This trend suggests continuous accumulation of net assets and potentially retained earnings.
- Return on Equity (ROE)
- The ROE showed a declining trend from 15.96% in 2018 to 11.74% in 2019, followed by a recovery to 14.61% in 2020 and further improvement to 15.34% in 2021. In 2022, ROE sharply dropped to 7.86%, reflecting a significant decrease in profitability relative to equity. This decline aligns with the lower net income in 2022 despite the increasing equity base.
Return on Assets (ROA)
Activision Blizzard Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,513) | 2,699) | 2,197) | 1,503) | 1,813) | |
| Total assets | 27,383) | 25,056) | 23,109) | 19,845) | 17,835) | |
| Profitability Ratio | ||||||
| ROA1 | 5.53% | 10.77% | 9.51% | 7.57% | 10.17% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Alphabet Inc. | 16.42% | 21.16% | 12.60% | — | — | |
| Comcast Corp. | 2.09% | 5.13% | 3.85% | — | — | |
| Meta Platforms Inc. | 12.49% | 23.72% | 18.29% | — | — | |
| Netflix Inc. | 9.24% | 11.48% | 7.03% | — | — | |
| Take-Two Interactive Software Inc. | 6.39% | 9.77% | 8.17% | — | — | |
| Walt Disney Co. | 1.54% | 0.98% | -1.42% | 5.70% | — | |
| ROA, Sector | ||||||
| Media & Entertainment | 9.05% | 13.01% | 8.04% | — | — | |
| ROA, Industry | ||||||
| Communication Services | 5.43% | 8.37% | 4.70% | — | — | |
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).
1 2022 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 1,513 ÷ 27,383 = 5.53%
2 Click competitor name to see calculations.
- Net Income
- Net income exhibited fluctuations over the analyzed periods. Starting at 1,813 million US dollars in 2018, it decreased to 1,503 million in 2019. Subsequently, there was a significant increase to 2,197 million in 2020, followed by a further rise to 2,699 million in 2021. However, in 2022, net income declined sharply to 1,513 million. This pattern suggests a period of variability with both growth and decline phases within the five-year span.
- Total Assets
- Total assets showed a consistent upward trend throughout the period. Beginning at 17,835 million US dollars in 2018, total assets increased steadily each year, reaching 27,383 million by the end of 2022. This continuous growth indicates ongoing asset accumulation and expansion of the company's resource base.
- Return on Assets (ROA)
- The return on assets percentage displayed variability aligned with net income fluctuations despite asset growth. The ROA started at 10.17% in 2018, declined to 7.57% in 2019, then rose again to 9.51% in 2020. It peaked at 10.77% in 2021 before dropping significantly to 5.53% in 2022. This trend reflects decreasing efficiency in generating profit from assets in the most recent year, despite the increase in total assets.
- Summary
- Net income and ROA volatility contrasted with steady asset growth over the five years. The decline in net income and ROA in 2022 is notable, potentially signaling challenges in profitability or operational efficiency. The steady increase in assets suggests ongoing investment or acquisition of resources, but the reduced profitability indicates these assets may not be translating into proportional income gains in the latest year.