For the quarter ended March 31, 2017, Activision Blizzard’s net revenues presented in accordance with GAAP were a Q1 record of $1.73 billion, as compared with $1.46 billion for the first quarter of 2016, an increase of 19%. GAAP net revenues from digital channels were a Q1 record of $1.39 billion, growing 50% year-over-year. GAAP operating margin was 29%. GAAP earnings per diluted share were an all-time quarterly record $0.56, as compared with $0.48 for the first quarter of 2016, an increase of 17%.

For the quarter ended March 31, 2017, on a non-GAAP (redefined) basis, Activision Blizzard’s operating margin was 43% and earnings per diluted share were an all-time quarterly record $0.72, as compared with $0.58 for the first quarter of 2016, an increase of 24%.

For the quarter, operating cash flows were a Q1 record of $411 million, up 22% year-over-year.

Please refer to the tables at the end of this press release for a reconciliation of the company’s GAAP and non-GAAP (redefined) results.

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, “This quarter we delivered record revenues, earnings per share and cash flow, and over-performed guidance.”

Kotick added, “Among the drivers of our results was Overwatch^®, which now has over 30 million players globally. The Overwatch League™ is gaining momentum and we’re excited to offer our community of players the best professional league experience. Destiny 2 and Call of Duty^®: WWII are also coming later this year, and both reveals have been very well received by fans.”

Selected Business Highlights:

Audience Reach

• Activision Blizzard had 431 million Monthly Active Users (MAUs)^A in the quarter.
• Blizzard had the biggest Q1 online player community in its history with MAUs^A of 41 million, up 58% year-over-year. Overwatch continues to be Blizzard’s fastest growing new franchise, reaching over 30 million players globally less than a year after launch. Overwatch is now the 8^th billion-dollar franchise in Activision Blizzard’s portfolio. Hearthstone^® MAUs^A grew year-over-year and quarter-over-quarter, despite no content releases in the first quarter, and recently surpassed the 70 million registered player milestone life-to-date.
• Activision had 48 million MAUs^A in the first quarter, down year-over-year primarily due to expected softness from last year’s Infinite Warfare™ release. Activision expects to release Call of Duty: WWII on November 3, 2017. Last week’s reveal was the most watched livestream in Call of Duty history, and the reveal trailer became the fastest video to reach 10 million views in Call of Duty history. Though early, initial pre-orders for Call of Duty: WWII are off to a very strong start. Activision and its partners at Bungie expect to release Destiny 2 on September 8, 2017 and welcome PC players into the Destiny universe for the first time. Response to the Destiny 2 reveal was very encouraging, and pre-orders are off to a very strong start.

• King had 342 million MAUs^A for the quarter, down year-over-year, but with better per user engagement and investment. King had two of the top 10 highest-grossing titles in the U.S. mobile app stores for the fourteenth quarter in a row.¹

Deep Engagement

• Blizzard had record first-quarter time spent, up a double-digit percentage year-over-year. In late January, Overwatch had its fourth seasonal event, Year of the Rooster, to celebrate the lunar new year. The event drove engagement records for the game. Blizzard launched a fifth seasonal event in April, Uprising, including a player-versus-environment game mode which drew record time spent. With a regular content and feature update cadence, World of Warcraft^® time spent grew year-over-year in the first quarter. Hearthstone set a new all-time Daily Active Users (DAUs)^B record last month with the release of a new expansion, Journey to Un’Goro™. In April, Blizzard also launched Heroes of the Storm^® 2.0, bringing players back into the game.
• King’s time spent per DAU^B is now a record 35 minutes a day, up quarter-over-quarter and year-over-year. King’s DAU^B to MAU^A ratio is at its highest point since 2013, and DAUs^B were steady quarter-over-quarter.

Player Investment

• Blizzard’s revenues from in-game content grew more than 25% year-over-year, driven by revenues from World of Warcraft in-game content and continued strength of Overwatch customization items.
• Activision expects to release a new content offering for Call of Duty: Black Ops 3 fans, Zombies Chronicles, on May 16, 2017. The remastered collection of the franchise’s most beloved Zombies content will be available first on PlayStation 4.
• King’s first-quarter gross bookings^C per paying user grew for the 7^th quarter in a row to a new record. The Candy Crush™ franchise showed continued stability with mobile bookings up quarter-over-quarter. Also, King has entered into a promising publishing partnership with PlayStudios to enter the social casino genre.