Activision today announced record fiscal year 2008 and fourth quarter results.
Net revenues for the fiscal year ended March 31, 2008 were $2.90 billion, as compared to $1.51 billion for the fiscal year ended March 31, 2007. Net income for the fiscal year was $344.9 million, or $1.10 in earnings per diluted share, as compared to net income of $85.8 million, or $0.28 in earnings per diluted share reported for the last fiscal year.
Net revenues for the fourth quarter ended March 31, 2008 were $602.5 million, as compared to $312.5 million that the company reported for the fourth quarter of the last fiscal year. For the fourth quarter, the company reported net income of $44.2 million, or earnings per diluted share of $0.14, as compared to a net loss of $14.4 million, or a loss per share of $0.05, for the fiscal year 2007 fourth quarter.
Robert Kotick, Chairman and CEO of Activision, Inc. commented, "Fiscal 2008 was the best year in our history and Q4 was the largest and most profitable non-holiday quarter, even though we did not release any new titles. During the fiscal year, we were the #1 U.S. console and handheld publisher in dollars for the first time ever, according to The NPD Group, and we grew our worldwide share of the console, handheld and PC markets year over year. We achieved record financial performance significantly growing both net revenues and earnings per share. And, we delivered a record operating margin of 16.5% on a GAAP basis, and 18.4% on a non-GAAP basis, excluding the impact of equity-based compensation, and we increased stockholders' equity by 38%."
Kotick continued, "In fiscal 2009, we expect to deliver another year of growth. We remain committed to strengthening our global leadership position by continuing to execute on our growth strategies and cost-optimization initiatives. We own or control some of the most successful brands in interactive entertainment, and we will continue to focus our resources on proven properties with broad global appeal. Our solid lineup, which includes new titles based on such blockbuster brands as Call of Duty, Guitar Hero and James Bond, should enable us to continue capitalizing on growth in interactive entertainment consumption worldwide."
Kotick added, "With respect to our pending combination with Vivendi Games, we are on track to complete our transaction, which will create the world's largest and most profitable independent video game company. We are pleased that Blizzard's business maintained its momentum, and combined with our continued business strength, we are well positioned to exceed the financial goals we have set for the combined company at the time of the deal announcement. The combination of Activision's solid portfolio and Vivendi Games proven properties should enable us to continue delivering exceptional returns to our stockholders."
Highlights:
- Activision's fiscal year results were driven by strong worldwide consumer response to Call of Duty 4: Modern Warfare, Guitar Hero III: Legends of Rock, Spider-Man 3, Shrek The Third, as well as its new licensed intellectual property TRANSFORMERS: The Game.
- Guitar Hero III: Legends of Rock was the #1 best-selling game in the U.S. and Europe in dollars during the fiscal year, according to The NPD Group, Charttrack and Gfk.
For the fiscal year, Call of Duty 4: Modern Warfare was the #2 best-selling game worldwide in units, selling more than 9 million units as of March 31, 2008, according to The NPD Group, Charttrack and Gfk.
- For the fiscal year, Call of Duty 4: Modern Warfare was the #1 best-selling PC title in dollars worldwide, according to The NPD Group, Charttrack and Gfk.
- During the fiscal year, both the Guitar Hero and Call of Duty franchises surpassed a billion dollars in life to date sales.
- Activision grew its European market share from 4.8% to 7.4% during the fiscal year, according to Charttrack and Gfk.
- According to The NPD Group, for the fourth quarter, Activision ranked as the #1 U.S. console, handheld and PC publisher in dollars.
- On December 1, 2007, Activision and Vivendi entered into a definitive agreement to combine Vivendi Games, Vivendi's interactive entertainment business - which includes Blizzard Entertainment's World of Warcraft, the world's #1 massively multiplayer online role playing game franchise with more than 10 million global subscribers - with Activision, which at closing will create the world's largest pure-play online and console game publisher. The transaction remains subject to approval by Activision's stockholders and other customary closing conditions.
Activision's plans for 2009
For the first quarter of fiscal 2009, Activision will release Enemy Territory: QUAKE WARS for Xbox 360 and Playstation 3; Kung Fu Panda, on Xbox 360, Playstation 3, PlayStation 2, Wii, Games for Windows and the Nintendo DS; Guitar Hero: On Tour for the Nintendo DS; and Guitar Hero: Aerosmith for Xbox 360, Playstation 3, PlayStation 2 and Wii.
Activision announced today that online functionality for certain key titles to be released in the December quarter of fiscal year 2009 and thereafter is expected to become a significant component of game play for certain platforms for which the company will have continuing performance obligations beyond the sale of the game. As a result, the company expects to begin recognizing a substantial amount of net revenues and costs of sales from these online-enabled games over a service period, which we currently estimate to be six months beginning the month after shipment.
Activision anticipates that a considerable amount of net revenues and costs of sales that would have been recognized in the fiscal year ending March 2009 will be recognized later in the calendar year 2009. While this will not impact the economics of Activision's business or its cash flows, these changes will have a material impact on the company's fiscal year 2009 GAAP results.
For fiscal year 2009, on a stand-alone basis, (not including Vivendi Games), Activision expects net revenues of $2.75 billion and earnings per diluted share of $0.72.
For fiscal 2009, Activision expects stand-alone non-GAAP net revenues, excluding the impact of the change in deferred revenue related to online-enabled games, to be $3.1 billion. Excluding the impact of equity-based compensation expense ($0.12 per share), one-time costs related to the Vivendi transaction ($0.07 per share) and the impact of the change in deferred net revenues and cost of sales related to online-enabled games ($0.39 per share), Activision expects stand-alone non-GAAP earnings per diluted share of $1.30.
For the first quarter, Activision expects net revenues of $500.0 million and earnings per diluted share of $0.04 on a stand-alone basis. Excluding the impact of equity-based compensation expense ($0.02 per share) and one-time costs related to the Vivendi transaction ($0.07 per share), the company's stand-alone non-GAAP earnings per diluted share outlook is expected to be $0.13.
