Activision Blizzard Call of Duty: Modern Warfare Record Sales but Expenses Soar

Video game publisher Activision Blizzard reported better than expected fourth quarter earnings after the close Monday and updated on a pending acquisition of the company by Microsoft Corporation ($MSFT). Activision Blizzard ended the fourth quarter with 389 million monthly active users. Released in October “Call of Duty: Modern Warfare II” was the fastest-selling title in the history of the franchise. $ATVI saw growth from World of Warcraft Classic and core games include Overwatch, Call of Duty, and Candy Crush mobile games.

Call of Duty Modern Warfare 2

Activision Blizzard Q4 2022 Earnings


  • GAAP earnings 78 cents per share, down 22% from the same period last year and under consensus forecast of $1.51 per share.
  • On a non-GAAP basis, operating income was $569 million, down 40.9% year over year.
  • Adjusted revenues, which exclude deferrals, rose 43.4% to $3.57 billion, ahead of analysts’ estimates of a $3.16 billion.
  • In game net bookings rose 46.8% to $1.82 billion
  • For the quarter ended Dec 31, 2022, overall Monthly Active Users (MAUs) were 389 million, up 4.9% year over year.
  • Net bookings jumped 43.4% year over year to $3.56 billion.
  • In-game net bookings were $1.81 billion, up 46.5% year over year.
  • Launches in October and November, including Call of Duty: Modern Warfare II, Warzone 2.0 and World of Warcraft: Dragonflight, helped the company’s top-line growth in the fourth quarter.
  • “Overwatch”, which launched in 2016, saw a year-over-year increase in engagement.
  • Product sales (30.9% of revenues) amounted to $721 million, up 11.8% year over year.
  • In-game subscriptions and other revenues (69.1% of revenues) increased 6.3% to $1.61 billion.
  • Digital online revenues of $1.96 billion were up 10.4% from the year-ago quarter.
  • Activision Blizzard reported retail channel sales of $114 million, which fell 8.8% year over year.
  • Other revenues declined 1.2% year over year to $255 million.

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Costs Increased 47.1%

  • Product development expenses jumped 127.3% year over year to $400 million.
  • Sales and marketing expenses were up 48.1% year over year to $400 million.
  • General and administrative expenses were $231 million, up 120% year over year.
  • Total costs and expenses on a non-GAAP basis increased 47.1% year over year to $1.76 billion in the reported quarter.

“We ended 2022 with record quarterly net bookings as we delivered on our mission to bring epic joy to players,” said CEO Bobby Kotick. “I’m grateful to our talented and hardworking teams for their many successes entertaining our hundreds of millions of players around the world.”

Revenue Based on Platforms

  • Revenues from mobile and ancillary (40.6% of revenues) rose 13.8% year over year to $948 million.
  • Revenues from consoles (23.9% of revenues) declined 3.1% year over year to $558 million.
  • PC revenues (24.6% of revenues) increased 15.5% year over year to $573 million.
  • Other revenues declined 1.2% year over year to $255 million.

Revenue Based on Geography

  • Revenues from the Americas (51.9% of revenues) improved 8.9% year over year to $1.21 billion.
  • Europe, the Middle East and Africa revenues (31.8% of revenues) were down 1.2% year over year to $742 million.
  • Revenues from the Asia Pacific (16.3% of revenues) jumped 27% year over year to $381 million.

Activision (54.9% of revenues) revenues jumped 60% year over year to $1.85 billion. The division had 111 million MAUs as of Dec 31, 2022, up 3.7% year over year. In the fourth quarter, Activision saw its Call of Duty: Modern Warfare II game deliver the highest opening-quarter sell through in the history of the gaming franchise. The game crossed the $1-billion mark within 10 days of its late-October launch.

Blizzard (23.5% of revenues) revenues totaled $794 million, up 89.5% from the year-ago quarter’s levels. Blizzard had 45 million MAUs as of Dec 31, 2022, up 87.5% year over year. Blizzard reported its highest quarter net bookings to date, thanks to growth in its Warcraft game and in Overwatch and Diablo.

Activision Diablo Immortal
  • In the last three months of 2022, Overwatch 2 pulled in more than $100 million in net bookings. Warcraft and Diablo also each pulled in more than $100 million in net bookings in the fourth quarter.
  • King’s (21.6% of revenues) revenues of $727 million increased 6.3% year over year. MAUs were 233 million as of Dec 31, 2022, down 2.9% year over year.

Balance Sheet & Cash Flow

  • As of Dec 31, 2022, cash and cash equivalents were $7.1 billion compared with $7.7 billion as of Sep 30, 2022.
  • Long-term debt, as of Dec 31, 2022, was $3.61 billion, unchanged from the figure reported as of Sep 30, 2022.
  • Activision Blizzard generated $1.12 billion in operating cash flow for the quarter compared with $661 million for the fourth quarter of 2021.
  • Non-GAAP free cash flow jumped 72% year over year to $1.09 billion.
  • On a trailing 12-month basis, free cash flow decreased 9% to $2.12 billion.


  • Activision Blizzard sees “last least” a high teens year-on-year percentage growth rate for GAAP revenues, with mid-teens level gains for net bookings.  

“Our experts have noted a broader flight to quality from gamers over the past year, but believe that Activision Blizzard is well positioned to be a winner of this trend given the strength of its two key franchises, ‘Call of Duty’ and ‘World of Warcraft’,” said Third Bridge analyst Nicholas Cauley.”

“The number of released titles during the holiday season has increased the competition for consumer spending, which has tightened at the same time,” he added. “Our experts anticipate a slight drop in ARPU but believe engagement will still remain strong.”

Gaming has many components, investors and game makers alike realize its games aren’t always winning this battle, hence the stock price volatility in this sector. The earnings call focus on the launch and plans of games and an update on the health of the gaming industry. Fortnite shook the whole industry up with its off the charts success.

Given you can only play so many games, the sucking up of gaming hours by Fortnite has affected all the competing gaming companies. When you are playing Fortnite you are not playing Activision Blizzard titles like Call of Duty and World of Warcraft or mobile games from King. The question is how much, and for how long? 

Microsoft Update

Activision is being acquired by Microsoft for $68.7 billion, or $95 per share but which faces pushback from regulators around the world, including Britain’s Competition and Markets Authority, which launched a detail probe into the deal last September. Provisional findings from the CMA are expected in the coming days.

“We look forward to continuing to release epic entertainment in service of our global community of players as a part of Microsoft, one of the world’s most admired companies,” Kotick said. “We continue to expect that our transaction will close in Microsoft’s current fiscal year ending June 2023.”

Source: ATVI, TradersCommunity,

From The TradersCommunity News Desk