Activision Blizzard, Inc. (NASDAQ:ATVI) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 04:30 pm ET

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Activision Blizzard, Inc. (NASDAQ:ATVI) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Dennis Durkin

how the business is positioned for a return to growth in 2020.

Now on to the numbers. For Q4 on a GAAP basis, we expect net revenues of $1.81 billion, including GAAP deferrals of $834 million. We expect net bookings of $2.65 billion. We expect product costs, game operations and distribution expenses of 25%. And operating expenses including software amortization of 56%. And GAAP only restructuring-related charges of $42 million. We expect GAAP tax rate of 33%. GAAP and non-GAAP share count of $774 million and EPS of $0.29. For Q4, on a non-GAAP basis, we expect product costs, game operations and distribution expenses of 25%. And operating expenses, including software amortization of 48%. We expect a non-GAAP tax rate of 30% and non-GAAP EPS of $0.43, which includes GAAP deferrals of $0.72.

On a GAAP basis for 2019, we expect net bookings of $6.32 billion, including GAAP deferrals of $10 million. We expect net bookings of $6.33 billion. Product costs, game operations and distribution expenses of 25%. Operating expenses including software amortization of 51%, and a GAAP only restructuring and related charge of $150 million. We expect the GAAP tax rate of 21%, GAAP and non-GAAP share count of $772 million, and EPS of $1.56. For 2019, on a non-GAAP basis, we expect product costs, game operations, and distribution expenses of 25%, and operating expenses including software amortization of 43%. We expect non-GAAP tax rate of 20%, and non-GAAP EPS of $2.13, which includes GAAP deferrals of $0.04.

So in summary, our early success for World of Warcraft Classic, Modern Warfare and Call of Duty mobile speaks volumes about the value and potential of our large durable and broad portfolio of fully owned intellectual property. And with the significant announcements we made at BlizzCon last week, you now can understand why we have been so excited about what's in our pipeline for the coming years. While it's not easy, creating and sustaining interactive entertainment franchises like ours is one of the biggest and largest growth opportunities in all of media and our stable of enduring franchises gives us a strong foundation to build upon. We are encouraged by our recent progress in a number of franchises, as well as the green shoots across the rest of our portfolio. We can and will continue to maintain the disciplined operating focus that has characterized our company for many years. We remain confident that executing against our plan will position us to deliver strong results and shareholder value over the long-term.

Now I welcome our business leaders Jay, Humam and Rob as they join us for the Q&A portion of the call. Operator?