Activision Blizzard (ATVI)
Q3 2011 Earnings Call
November 08, 2011 4:30 pm ET
Michael Morhaime - Chief Executive Officer of Blizzard Entertainment and President Blizzard Entertainment
Thomas Tippl - Chief Operating Officer and Chief Financial Officer
Kristin Mulvihill Southey - Former Vice President of Investor Relations
Robert A. Kotick - Chief Executive Officer, President and Director
Eric Hirshberg - Chief Executive Officer of Publishing Unit
Edward S. Williams - BMO Capital Markets U.S.
Douglas Creutz - Cowen and Company, LLC, Research Division
Jeetil J. Patel - Deutsche Bank AG, Research Division
Neil A. Doshi - Citigroup Inc, Research Division
Brian J. Pitz - UBS Investment Bank, Research Division
Previous Statements by ATVI
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Kristin Mulvihill Southey
Good afternoon, and thank you all for joining us today. With me today are Bobby Kotick, CEO of Activision Blizzard; Thomas Tippl, COO and CFO of Activision Blizzard; Eric Hirshberg, CEO of Activision Publishing; and Mike Morhaime, CEO of Blizzard Entertainment.
I would like to remind everyone that during this call, we will be making statements that are not historical facts. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties. As indicated in the slide that is showing, a number of important factors could cause the company's actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements.
Such factors include, without limitation, the sales levels; increasing concentration of titles; shifts in consumer spending trends; current macroeconomic and industry conditions and conditions within the video game industry; our ability to predict consumer preferences among competing genres and hardware platforms; the seasonal and cyclical nature of our industry; changing business models, including digital delivery of content, competition, including from used games; possible declines in pricing, product returns, price protection, and product delays; adoption rate and availability of new hardware and related software; rapid changes in technology and industry standards; litigation and associated costs; protection of proprietary rights; maintenance of key relationships, including the ability to attract, retain and develop key personnel and developers that can create high-quality hit titles; counterparty risk; economic, financial and political conditions and policies; foreign exchange and tax rates; identification of acquisition opportunities; and potential challenges associated with geographic expansion.
These important factors and other factors that potentially could affect the company's financial results are described in the company's Annual Report on Form 10-K for the period ended December 31, 2010, and in the company's other SEC filings. The company may change its intentions, beliefs or expectations made at anytime and without notice, based upon any changes in such factors in the company's assumptions or otherwise. The company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after today, November 8, 2011, or to reflect the occurrence of unanticipated events.
I would also like to note that certain numbers we will be presenting today will be made on a non-GAAP basis, excluding the impact of the change in deferred net revenues and related cost of sales with respect to certain of our online-enabled games, expenses related to share-based payments, expenses related to the restructuring of our Activision Publishing operations, the amortization of intangibles and impairments of intangible assets and the associated tax benefit. Please refer to our earnings release, which is posted at www.activisionblizzard.com for a full GAAP to non-GAAP reconciliation and further explanation.
There's also a PowerPoint overview, which you can access with the webcast and which will be posted to the website following the call. In addition, we will also be posting a new 12-quarter financial overview highlighting both GAAP and non-GAAP results.
And now, I'd like to introduce our CEO, Bobby Kotick.
Robert A. Kotick
Thank you, Kristin, and thank you all for joining us today. As you can see from our quarterly results and our updated outlook, Activision Blizzard is having a year of many records. While we have powerful franchises, fantastic brand recognition and some of the industry's finest technologies and marketing skills, what enables us to achieve records every year -- the highest game rankings, record-setting sales, standout marketing programs or stellar financial results, what enables these accomplishments is a team of people around the world committed to excellence.
Our conference call is focused on our financial statement, but our balance sheet doesn't reflect the incredibly talented, driven, enthusiastic people who come to work at Activision Blizzard everyday. We're one of the worlds best entertainment companies because of the dedication and hard work of an extraordinarily accounted group of people, who are the driving force behind our superior financial performance. The passion and dedication that our teams around the globe bring to each and every project is truly remarkable.
As we assess our success this year, we're entering rarefied territory. Life-to-date sales for World of Warcraft and Call of Duty now rank with worldwide box office sales for Star Wars and Harry Potter, 2 of the most successful entertainment franchises of all time. And our industry-leading capability to develop original, globally-appealing innovative intellectual property, which we do exceptionally well, continues with Skylanders.
For the third quarter, Activision Blizzard delivered better-than-expected results driven by record revenues from online channels and the continued strength of our online-enabled franchises. Today, we're raising our 2011 revenue and EPS outlook and now expect to deliver record operating margins and earnings per share, reflecting the strength of our business and confidence in our ability to engage audiences with our uniquely immersive experiences.