Activision Blizzard, Inc. (Nasdaq: ATVI) today announced record second-quarter 2020 results. "Our mission to connect and engage the world through epic entertainment has never been more meaningful," said Bobby Kotick, Chief Executive Officer of Activision Blizzard. "Our 400 million players continue to experience fun, joy and accomplishment through our games. Our record engagement resulted in greater revenue and earnings per share than previously forecast. While economic uncertainty could have an impact on our near-term results, the initiatives that drove our growth for the first half of the year should also provide the foundation for long-term growth."

For the quarter ended June 30, 2020, Activision Blizzard's net revenues presented in accordance with GAAP were $1.93 billion, as compared with $1.40 billion for the second quarter of 2019. GAAP net revenues from digital channels were $1.59 billion, as compared with $1.09 billion for the second quarter of 2019. GAAP operating margin was 39%. GAAP earnings per diluted share were $0.75, as compared with $0.43 for the second quarter of 2019.For the quarter ended June 30, 2020, on a non-GAAP basis, Activision Blizzard's operating margin was 42% and earnings per diluted share were $0.81, as compared with $0.53 for the second quarter of 2019.

For the quarter ended June 30, 2020, operating cash flow was $768 million. For the trailing twelve-month period, operating cash flow was $2.14 billion.

Please refer to the tables at the back of this press release for a reconciliation of the company's GAAP and non-GAAP results.

Operating Metrics
For the quarter ended June 30, 2020, Activision Blizzard's net bookings were $2.08 billion, as compared with $1.21 billion for the second quarter of 2019. Net bookings from digital channels were $1.82 billion, as compared with $1.01 billion for the second quarter of 2019. In-game net bookings were $1.37 billion, as compared with $778 million for the second quarter of 2019.

For the quarter ended June 30, 2020, overall Activision Blizzard Monthly Active Users (MAUs) were 428 million.

Selected Business Highlights
Activision Blizzard exceeded its second quarter outlook. Strong execution against our three strategic growth drivers of expanding audience reach, engagement and player investment enabled us to serve fantastic experiences to an enlarged gaming audience, against a backdrop of demand tailwinds from shelter-at-home. Each of our key franchises delivered better-than-expected results, with growth led by the Call of Duty franchise following the launch of Warzone. The increased investment and successful initiatives that fueled the strong second quarter results position us to continue delighting our global communities, and to deliver sustained greater financial performance.

Activision

• Activision had 125 million MAUs in the second quarter.
• Call of Duty: Warzone has reached over 75 million players to date. In the first full quarter since Warzone launched, hours played in the Modern Warfare universe increased eight-fold year-over-year, driven by both existing and new players.
• Modern Warfare added more players outside of a launch quarter to the premium Call of Duty experience than ever before, with the majority coming through upgrades from Warzone. On PC, life-to-date consumption for Modern Warfare is more than double that of the prior title.
• Call of Duty in-game net bookings more than doubled quarter-over-quarter and were around five times higher than the year-ago quarter, reaching a new quarterly record.
• Call of Duty Mobile saw strong sequential growth in engagement and player investment, benefiting from both shelter-in-place tailwinds and the team's ongoing work to further optimize gameplay, monthly seasonal content and the in-game economy. The game climbed the top-grossing charts in US app stores, with each of the three seasons in Q2 generating more net bookings per day than the prior.

Blizzard

• Blizzard had 32 million MAUs in the second quarter.
• World of Warcraft reach and engagement once again increased sequentially, as shelter-at-home conditions further boosted the franchise's strong trajectory. The Shadowlands expansion saw an enthusiastic response from players in its public testing, with pre-sales accelerating even further ahead of its release in the fourth quarter. Franchise engagement is the highest in a decade at this point ahead of an expansion.
• Hearthstone's Ashes of Outland expansion launched alongside a new hero class, as the expanded team continued to accelerate the pace of innovative content in the franchise.
• Overwatch engagement grew year-over-year, including among returning players.

King

• King had 271 million MAUs in the second quarter.
• King delivered strong increases in reach and engagement amidst shelter-at-home conditions at the start of the quarter. While these tailwinds moderated in the second half of the quarter, MAUs remained higher year-over-year, driven by the Candy CrushTM franchise.
• Candy Crush franchise MAUs grew by a double-digit percentage year-over-year. Payer conversion grew year-over-year and Candy Crush was once again the top-grossing franchise in the U.S. mobile app stores.
• King announced it will be bringing Activision's beloved Crash franchise to the mobile platform with Crash Bandicoot: On the Run!, an ambitious new take on the runner category with deep social and resource management elements.
• Advertising net bookings grew strongly year-over-year, accelerating through the quarter even against the backdrop of ongoing headwinds in the digital advertising sector.

Company Outlook
Our business continues to experience strong momentum, even as tailwinds from shelter-in-place moderate in certain parts of the world. In the second half of the year, we expect to launch major new content into key franchises with meaningfully larger audiences than we have seen previously, creating the opportunity for strong financial performance. The full extent of the impact of the COVID-19 pandemic on our business, operations, and financial results will depend on numerous evolving factors that we are not able to fully predict at this time, and we remain mindful of risks and uncertainties related to global economic weakness, rising unemployment, pressures on the retail channel, pricing and other potential factors. We continue to believe we are being prudent in our guidance to account for these risks, and see the potential for overperformance if these risks do not materialize. Overall, even with this backdrop, we are raising our outlook for net revenues, net bookings and EPS for the year, more than passing through the Q2 outperformance.

Net bookings are expected to be $7.625 billion for 2020 and $1.65 billion for the third quarter of 2020.

Capital Allocation
The company paid a cash dividend of $0.41 per common share, up 11% year-over-year, on May 6, 2020 to shareholders of record at the close of business on April 15, 2020. Cash payments totaled $316 million.

Conference Call
Today at 4:30 p.m. EDT, Activision Blizzard's management will host a conference call and webcast to discuss the company's results for the quarter ended June 30, 2020 and management's outlook for the remainder of the calendar year. The company welcomes all members of the financial and media communities and other interested parties to visit https://investor.activision.com to listen to the conference call via live Webcast or to listen to the call live by dialing into 866-777-2509 in the U.S. We encourage participants to pre-register for the conference call using the following link http://dpregister.com/10145881. A replay of the call will also be available after the call's conclusion and archived for one year at https://investor.activision.com/events.cfm.