SANTA MONICA, Calif.--(BUSINESS WIRE)--Activision Blizzard, Inc. (Nasdaq: ATVI) today announced better-than-expected financial results for the first quarter of 2015.

First Quarter Prior (in millions, except EPS) 2015 Outlook* 2014 GAAP Net Revenues $ 1,278 $ 1,140 $ 1,111 EPS $ 0.53 $ 0.37 $ 0.40 Non-GAAP Net Revenues $ 703 $ 640 $ 772 EPS $ 0.16 $ 0.05 $ 0.19 *Prior outlook was provided by the company on February 5, 2015 in its earnings release.

For the quarter ended March 31, 2015, Activision Blizzard’s GAAP net revenues were $1.28 billion, as compared with $1.11 billion for the first quarter of 2014. On a non-GAAP basis, the company’s net revenues were $703 million, as compared with $772 million for the first quarter of 2014. For the first quarter, GAAP net revenues from digital channels were a record $581 million and represented a Q1 record 45% of the company’s total revenues. On a non-GAAP basis, net revenues from digital channels were a Q1 record $538 million and represented a record 76% of the company’s total revenues.

For the quarter ended March 31, 2015, Activision Blizzard’s GAAP earnings per diluted share were a record $0.53, as compared with $0.40 for the first quarter of 2014. On a non-GAAP basis, the company’s earnings per diluted share were $0.16, as compared with $0.19 for the first quarter of 2014.

On a constant FX basis, non-GAAP revenues and EPS were flat year-over-year, despite a lighter Q1 slate this year, given strong trends with ongoing monetization.

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

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, “This quarter, we were recognized by FORTUNE as one of the ‘100 Best Companies to Work For®.’ Our biggest accomplishment remains our ability to attract and retain so many talented, capable, driven and hard-working people with an unyielding commitment to excellence.”

Kotick added, “Our talented teams around the world continue to create experiences that inspire our audiences. In the last 12 months, we had over 150 million active users around the world who played our games for more than 12 billion hours and spectators who watched over a billion hours of linear programming based on our games. In the past year, Activision Blizzard’s communities grew by more than 25%.”

Kotick continued, “This deepening level of engagement with a widening base of players across our franchises is what drove another successful quarter. We delivered better-than-expected Q1 results, increased our 2015 non-GAAP revenue outlook to $4.425 billion and earnings per share outlook to $1.20. Last quarter, on a non-GAAP basis, we delivered record higher-margin digital revenues of over half a billion dollars – a Q1 record on an absolute basis and an all-time high on a percentage basis.”

Selected Business Highlights:

Activision Publishing’s Destiny and Blizzard Entertainment’s Hearthstone ® : Heroes of Warcraft ™ combined now have more than 50 million registered players and nearly $1 billion in non-GAAP revenues 1 life-to-date.

and Blizzard Entertainment’s combined now have more than 50 million registered players and nearly $1 billion in non-GAAP revenues life-to-date. Activision Publishing had the biggest Q1 online player community in its history, up a double digit percentage year over year. Activision Publishing also had 2 of the top 5 videogame franchises in North America and Europe year-to-date and continues to have 3 of the top 5 next generation games life-to-date – with Call of Duty: Advanced Warfare remaining the No. 1 title, as it has since its launch six months ago. 2 Including toys, Skylanders was also the No. 1 console franchise and title globally in Q1, outsold the No. 1 action figure line globally, and was the No. 1 kids console franchise and title globally. 3

remaining the No. 1 title, as it has since its launch six months ago. Including toys, was also the No. 1 console franchise and title globally in Q1, outsold the No. 1 action figure line globally, and was the No. 1 kids console franchise and title globally. Activision Publishing’s Call of Duty franchise Q1 sales increased by a double-digit percentage year-over-year due to the strong sell-through of Call of Duty: Advanced Warfare and growing online revenues per user across the franchise. There has been early success of the new micro-transaction offerings which have helped drive increased engagement and monetization.

franchise Q1 sales increased by a double-digit percentage year-over-year due to the strong sell-through of and growing online revenues per user across the franchise. There has been early success of the new micro-transaction offerings which have helped drive increased engagement and monetization. On March 29, 2015, the company held its third annual Call of Duty® Championship , presented by Xbox, the biggest eSports first-person action tournament of the year where 32 professional teams competed for $1 million.

, presented by Xbox, the biggest eSports first-person action tournament of the year where 32 professional teams competed for $1 million. In January, Activision Publishing’s Call of Duty Online entered open beta in China, in partnership with Tencent. The open beta marks an historic first for the Call of Duty franchise as it expands into the world’s largest gaming market.

entered open beta in China, in partnership with Tencent. The open beta marks an historic first for the franchise as it expands into the world’s largest gaming market. Activision Publishing’s Destiny continues to have strong engagement, with active players playing about 3 hours per day, along with strong digital sales and expansion attach rates. Additionally, Destiny was awarded Game of the Year by the British Academy of Film and Television Arts, a prestigious addition to the 31 Game of the Year awards that Destiny has been honored with to date.

continues to have strong engagement, with active players playing about 3 hours per day, along with strong digital sales and expansion attach rates. Additionally, was awarded Game of the Year by the British Academy of Film and Television Arts, a prestigious addition to the 31 Game of the Year awards that has been honored with to date. Blizzard Entertainment had the largest Q1 online player community in its history, up a double digit percentage year over year despite no major launches in the quarter. As expected and consistent with our experience following prior expansions, we saw a decline in the World of Warcraft subscriber number. Subscribers ended the quarter at 7.1 million. World of Warcraft ’s revenue performance at constant FX has been more stable, driven by continued strong uptake on value added services, and price increases in select regions, which partially offset subscriber declines, particularly in the East. World of Warcraft remains the No. 1 subscription-based MMORPG in the world.

and consistent with our experience following prior expansions, we saw a decline in the subscriber number. Subscribers ended the quarter at 7.1 million. ’s revenue performance at constant FX has been more stable, driven by continued strong uptake on value added services, and price increases in select regions, which partially offset subscriber declines, particularly in the East. remains the No. 1 subscription-based MMORPG in the world. Blizzard Entertainment’s Heroes of the Storm ™ , which has had over 11 million beta sign-ups, entered closed beta in January. The Founder’s Pack, released in the quarter for $39.99, granted immediate access to the beta, along with a selection of heroes, skins and more.

, which has had over 11 million beta sign-ups, entered closed beta in January. The Founder’s Pack, released in the quarter for $39.99, granted immediate access to the beta, along with a selection of heroes, skins and more. Blizzard Entertainment’s Hearthstone: Heroes of Warcraft had steady engagement and revenues quarter over quarter, despite no new content releases this quarter. This was driven by sustained pickup of the Goblins vs Gnomes ™ expansion content, which was released in the previous quarter.

had steady engagement and revenues quarter over quarter, despite no new content releases this quarter. This was driven by sustained pickup of the expansion content, which was released in the previous quarter. On March 31, 2015, Blizzard Entertainment kicked off closed beta testing for StarCraft® II: Legacy of the Void™, the third installment of the company’s real-time strategy sequel. Legacy of the Void will be a standalone product that doesn’t require any prior releases, so it will be easier than ever for players to get into the game and experience all of the latest content.

Company Outlook:

On April 14, 2015, Activision Publishing unveiled Guitar Hero ® Live , bringing back the pop culture phenomenon that previously reached over 40 million players in North America and Europe, and was the fastest console franchise to reach $1 billion. 4 The re-imagined experience will be available on consoles, tablets, and mobile phones this fall.

, bringing back the pop culture phenomenon that previously reached over 40 million players in North America and Europe, and was the fastest console franchise to reach $1 billion. The re-imagined experience will be available on consoles, tablets, and mobile phones this fall. On April 26, 2015, Activision Publishing and Treyarch revealed the highly anticipated Call of Duty: Black Ops III . The sequel to the most played series in Call of Duty history will be available on November 6. The company also announced an upcoming multiplayer Beta, a first for Call of Duty on next generation consoles. Fans who pre-order the game now will get access to the Beta.

. The sequel to the most played series in history will be available on November 6. The company also announced an upcoming multiplayer Beta, a first for on next generation consoles. Fans who pre-order the game now will get access to the Beta. On April 2, 2015, Blizzard Entertainment released Blackrock Mountain, the second Hearthstone: Heroes of Warcraft Adventure. Additionally, on April 14, the game was released on iOS ® and Android ™ mobile phones. The smartphone release helped propel the franchise to over 30 million registered players and the #1 download spot for mobile games in more than 25 countries.

the second Adventure. Additionally, on April 14, the game was released on iOS and Android mobile phones. The smartphone release helped propel the franchise to over 30 million registered players and the #1 download spot for mobile games in more than 25 countries. On April 7, 2015, Blizzard Entertainment launched the WoW Token System, which enables World of Warcraft players to exchange game-time Tokens, purchased at $20, to other players for in-game gold. This serves the dual purpose of enabling players to pay for their subscriptions with their gold and providing players with a secure method for purchasing gold in-game.

players to exchange game-time Tokens, purchased at $20, to other players for in-game gold. This serves the dual purpose of enabling players to pay for their subscriptions with their gold and providing players with a secure method for purchasing gold in-game. On April 23, 2015, Blizzard Entertainment and NetEase, Inc. announced that Sanctuary’s gates have been thrown open to all Chinese heroes, as open beta testing for Blizzard Entertainment's award-winning action role-playing game Diablo® III: Reaper of Souls ™ has gone live in China. Approximately 3 million people signed up to play the beta in China, and the game has already sold 1 million units across two offerings: the Premium Package for approximately $32 (RMB198) and the Digital Deluxe Package for approximately $64 (RMB388).

™ has gone live in China. Approximately 3 million people signed up to play the beta in China, and the game has already sold 1 million units across two offerings: the Premium Package for approximately $32 (RMB198) and the Digital Deluxe Package for approximately $64 (RMB388). On June 2, 2015, Blizzard Entertainment expects to launch Heroes of the Storm after an open beta testing period commencing May 19. The release follows on the heels of the epic finale of the Heroes of the Dorm ™ collegiate eSports tournament, which was aired live during primetime on April 26 on ESPN2, the network’s first-ever live telecast of a collegiate eSports event. Students from more than 460 schools across the U.S. and Canada competed for hundreds of thousands of dollars in tuition and other prizes.

after an open beta testing period commencing May 19. The release follows on the heels of the epic finale of the ™ collegiate eSports tournament, which was aired live during primetime on April 26 on ESPN2, the network’s first-ever live telecast of a collegiate eSports event. Students from more than 460 schools across the U.S. and Canada competed for hundreds of thousands of dollars in tuition and other prizes. Blizzard Entertainment expects to begin beta testing for Overwatch ™ in fall 2015 .

™ in fall 2015 Blizzard Entertainment announced that its ninth BlizzCon ® will be returning to the Anaheim Convention Center on Friday, November 6 and Saturday, November 7. Tickets went on sale in two batches in April and quickly sold out.

will be returning to the Anaheim Convention Center on Friday, November 6 and Saturday, November 7. Tickets went on sale in two batches in April and quickly sold out. Given the weakening of foreign currencies versus the U.S. dollar, the company’s 2015 international revenues and earnings are expected to be translated at lower rates than in 2014. This impacts the company’s 2015 outlook as compared to 2014 actual results given approximately 50% of the company’s revenues, and a higher percentage of profits, are generated outside the U.S. See comparison table, below.

Activision Blizzard’s second quarter and calendar year 2015 outlook is, as follows:

Prior Outlook* Current Outlook GAAP Non-GAAP GAAP Non-GAAP (in millions, except EPS) Outlook Outlook Outlook Outlook CY 2015 Net Revenues $ 4,140 $ 4,400 $ 4,250 $ 4,425 EPS $ 0.89 $ 1.15 $ 0.98 $ 1.20 Fully Diluted Shares** 750 750 750 750 Q2 2015 Net Revenues N/A N/A $ 930 $ 650 EPS N/A N/A $ 0.21 $ 0.07 Fully Diluted Shares** N/A N/A 745 745

The following table compares our CY14 actual earnings per share to CY15 outlook earnings per share.

Comparison Feb 5. Non-GAAP Current Non-GAAP EPS Outlook* Outlook Change CY14 - Actuals $ 1.42 $ 1.42 – Slate / Operations (0.05) 0.01 0.06 Foreign Currency (0.14) (0.15) (0.01) Tax Rate & Share Count (0.08) (0.08) – CY15 - Outlook $ 1.15 $ 1.20 0.05

Currency Assumptions for 2015 Outlook (Q2-Q4):

$1.11 USD/Euro for current outlook (vs. $1.13 for prior outlook and a $1.33 average for 2014)

$1.54 USD/British Pound Sterling for current outlook (vs. $1.51 for prior outlook and a $1.65 average for 2014)

Note: Revenue and EPS increase if the Euro or British Pound Sterling strengthen vs. USD

* Prior outlook was provided by the company on February 5, 2015 in its earnings release ** Fully diluted weighted average shares include participating securities and dilutive options on a weighted average basis.

Debt Repayment and Cash Dividend

Activision Blizzard repaid $250 million of its outstanding Term Loan B on February 11, 2015. Additionally, the company plans to pay a cash dividend of $0.23 per common share on May 13th to shareholders of record at the close of business on March 30, 2015. The company did not make any share repurchases during the first quarter under its $750 million share repurchase authorization ending February 2017.

Conference Call

Today at 4:30 p.m. EDT, Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the quarter ended March 31, 2015 and management’s outlook for the remainder of the calendar year. The company welcomes all members of the financial and media communities and other interested parties to visit the “Investor Relations” area of www.activisionblizzard.com to listen to the conference call via live Webcast or to listen to the call live by dialing into 877-419-6594 in the U.S. with passcode 3922518.

About Activision Blizzard

Activision Blizzard, Inc. is the largest and most profitable western interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty, Call of Duty Online, Destiny, Skylanders, World of Warcraft, StarCraft, Diablo, and Hearthstone: Heroes of Warcraft. The company is one of the FORTUNE “100 Best Companies To Work For®” 2015.

Headquartered in Santa Monica, California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard develops and publishes games on all leading interactive platforms and its games are available in most countries around the world. More information about Activision Blizzard and its products can be found on the company's website, www.activisionblizzard.com.

1 Life to date, combined GAAP revenues from Hearthstone: Heroes of Warcraft and Destiny were more than $760 million. 2 The NPD Group and GfK Chart-Track, including toys and accessories 3 The NPD Group and GfK Chart-Track and Activision Blizzard internal estimates, including toys and accessories 4 The NPD Group and GfK Chart-Track

Subscriber Definition: World of Warcraft subscribers include individuals who have paid a subscription fee or have an active prepaid card to play World of Warcraft, as well as those who have purchased the game and are within their free month of access. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired prepaid cards. Subscribers in licensees' territories are defined along the same rules.

Non-GAAP Financial Measures: As a supplement to our financial measures presented in accordance with Generally Accepted Accounting Principles (“GAAP”), Activision Blizzard presents certain non-GAAP measures of financial performance. These non-GAAP financial measures are not intended to be considered in isolation from, as a substitute for, or as more important than, the financial information prepared and presented in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the company’s results of operations as determined in accordance with GAAP.

Activision Blizzard provides net revenues, net income (loss), earnings (loss) per share and operating margin data and guidance both including (in accordance with GAAP) and excluding (non-GAAP) certain items. In addition, Activision Blizzard provides EBITDA (defined as GAAP net income (loss) before interest (income) expense, income taxes, depreciation and amortization) and adjusted EBITDA (defined as non-GAAP operating margin (see non-GAAP financial measure below) before depreciation). The non-GAAP financial measures exclude the following items, as applicable in any given reporting period:

the change in deferred revenues and related cost of sales with respect to certain of the company’s online-enabled games;

expenses related to stock-based compensation;

the amortization of intangibles from purchase price accounting;

fees and other expenses (including legal fees, costs, expenses and accruals) related to the acquisition of 429 million shares of our common stock on October 11, 2013 from Vivendi, pursuant to the stock purchase agreement dated July 25, 2013 and the $4.75 billion debt financings related thereto; and

the income tax adjustments associated with any of the above items.

In the future, Activision Blizzard may also consider whether other significant non-recurring items should also be excluded in calculating the non-GAAP financial measures used by the company. Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure Activision Blizzard’s financial and operating performance. In particular, the measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard by excluding certain items that may not be indicative of the company’s core business, operating results or future outlook. Internally, management uses these non-GAAP financial measures in assessing the company’s operating results, and measuring compliance with the requirements of the company’s debt financing agreements, as well as in planning and forecasting.

Activision Blizzard’s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share, non-GAAP operating margin, and non-GAAP or adjusted EBITDA do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard’s performance in relation to other companies.

Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP, results and outlook, and by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.

In addition to the reasons stated above, which are generally applicable to each of the items Activision Blizzard excludes from its non-GAAP financial measures, there are additional specific reasons why the company believes it is appropriate to exclude the change in deferred revenues and related cost of sales with respect to certain of the company’s online-enabled games.

Since Activision Blizzard has determined that some of our games’ online functionality represents an essential component of gameplay and, as a result, a more-than-inconsequential separate deliverable, we recognize revenues attributed to these game titles over their estimated service periods, which may range from five months to a maximum of less than a year. The related cost of sales is deferred and recognized as the related revenues are recognized. Internally, management excludes the impact of this change in deferred revenues and related cost of sales in its non-GAAP financial measures when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. Management believes this is appropriate because doing so enables an analysis of performance based on the timing of actual transactions with our customers, which is consistent with the way the company is measured by investment analysts and industry data sources. In addition, excluding the change in deferred revenues and the related cost of sales provides a much more timely indication of trends in our operating results.

Cautionary Note Regarding Forward-looking Statements: The statements contained in this press release that are not historical facts are forward-looking statements, including, but not limited to, statements about (1) projections of revenues, expenses, income or loss, earnings or loss per share, cash flow or other financial items; (2) statements of our plans and objectives, including those related to product releases; (3) statements of future financial or operating performance; and (4) statements of assumptions underlying such statements. The company generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “plans,” “believes,” “may,” “might,” “expects,” “intends,” “intends as,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming” and other similar expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risk, reflect management’s current expectations, estimates and projections about our business, and are inherently uncertain and difficult to predict.

The Company cautions that a number of important factors could cause Activision Blizzard's actual future results and other future circumstances to differ materially from those expressed in any forward looking statements. Such factors include, but are not limited to: sales levels of Activision Blizzard’s titles; increasing concentration of revenue among a small number of titles; Activision Blizzard’s ability to predict consumer preferences, including interest in specific genres, and preferences among hardware platforms; the amount of our debt and the limitations imposed by the covenants in the agreements governing our debt; adoption rate and availability of new hardware (including peripherals) and related software, particularly during the console transitions; counterparty risks relating to customers, licensees, licensors and manufacturers; maintenance of relationships with key personnel, customers, financing providers, licensees, licensors, manufacturers, vendors, and third-party developers, including the ability to attract, retain and develop key personnel and developers that can create high quality titles; changing business models, including digital delivery of content and the increased prevalence of free-to-play games; product delays or defects; competition including from used games and other forms of entertainment; rapid changes in technology and industry standards; possible declines in software pricing; product returns and price protection; the identification of suitable future acquisition opportunities and potential challenges associated with geographic expansion; the seasonal and cyclical nature of the interactive game market; litigation risks and associated costs; protection of proprietary rights; shifts in consumer spending trends; capital market risks; applicable regulations; domestic and international economic, financial and political conditions and policies; tax rates and foreign exchange rates; the impact of the current macroeconomic environment; and the other factors identified in “Risk Factors” included in Part I, Item 1A of Activision Blizzard’s most recent annual report on Form 10-K.

The forward-looking statements in this presentation are based on information available to the Company as of the date of this press release and, while believed to be true when made, may ultimately prove to be incorrect. The Company may change its intention, belief or expectation, at any time 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 the original date of this press release, May 6, 2015, or to reflect the occurrence of unanticipated events.

(Tables to Follow)

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in millions, except per share data) Three Months Ended March 31, 2015 2014 Net revenues: Product sales $ 784 $ 769 Subscription, licensing and other revenues 1 494 342 Total net revenues 1,278 1,111 Costs and expenses: Cost of sales - product costs 209 225 Cost of sales - online 53 58 Cost of sales - software royalties and amortization 148 57 Cost of sales - intellectual property licenses 3 2 Product development 145 143 Sales and marketing 92 104 General and administrative 86 95 Total costs and expenses 736 684 Operating income 542 427 Interest and other expense, net 50 51 Income before income tax expense 492 376 Income tax expense 98 83 Net income $ 394 $ 293 Basic earnings per common share 2 $ 0.54 $ 0.40 Weighted average common shares outstanding 723 709 Diluted earnings per common share 2 $ 0.53 $ 0.40 Weighted average common shares outstanding assuming dilution 731 720

1 Subscription, licensing and other revenues represents revenues from World of Warcraft subscriptions, licensing royalties from our products and franchises, value-added services, downloadable content, and other miscellaneous revenues. 2 The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. We had, on a weighted-average basis, participating securities of approximately 10 million and 17 million for the three months ended March 31, 2015 and 2014, respectively. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $387 million for the three months ended March 31, 2015 as compared to total net income of $394 million for the same period. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $285 million for the three months ended March 31, 2014 as compared to total net income of $293 million for the same period.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in millions) March 31, December 31, 2015 2014 ASSETS Current assets: Cash and cash equivalents $ 4,465 $ 4,848 Short-term investments 5 10 Accounts receivable, net 208 659 Inventories, net 102 123 Software development 358 452 Intellectual property licenses 5 5 Deferred income taxes, net 365 368 Other current assets 355 444 Total current assets 5,863 6,909 Long-term investments 9 9 Software development 46 20 Intellectual property licenses 18 18 Property and equipment, net 158 157 Other assets 138 85 Intangible assets, net 28 29 Trademark and trade names 433 433 Goodwill 7,084 7,086 Total assets $ 13,777 $ 14,746 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 123 $ 325 Deferred revenues 1,161 1,797 Accrued expenses and other liabilities 615 592 Total current liabilities 1,899 2,714 Long-term debt, net 4,075 4,324 Deferred income taxes, net 124 114 Other liabilities 441 361 Total liabilities 6,539 7,513 Shareholders’ equity: Common stock --- --- Additional paid-in capital 9,968 9,924 Treasury stock (5,709 ) (5,762 ) Retained earnings 3,598 3,374 Accumulated other comprehensive income (loss) (619 ) (303 ) Total shareholders’ equity 7,238 7,233 Total liabilities and shareholders’ equity $ 13,777 $ 14,746

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES (Amounts in millions, except earnings per share data) Three Months Ended March 31, 2015 Net Revenues Cost of Sales - Product Costs Cost of Sales - Online Cost of Sales - Software Royalties and Amortization Cost of Sales - Intellectual Property Licenses Product Development Sales and Marketing General and Administrative Total Costs and Expenses GAAP Measurement $ 1,278 $ 209 $ 53 $ 148 $ 3 $ 145 $ 92 $ 86 $ 736 Less: Net effect from deferral of net revenues and related cost of sales (a) (575 ) (113 ) - (100 ) - - - - (213 ) Less: Stock-based compensation (b) - - - (4 ) - (7 ) (2 ) (10 ) (23 ) Less: Amortization of intangible assets (c) - - - - (1 ) - - - (1 ) Non-GAAP Measurement $ 703 $ 96 $ 53 $ 44 $ 2 $ 138 $ 90 $ 76 $ 499 Three Months Ended March 31, 2015 Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share GAAP Measurement $ 542 $ 394 $ 0.54 $ 0.53 Less: Net effect from deferral of net revenues and related cost of sales (a) (362 ) (295 ) (0.40 ) (0.40 ) Less: Stock-based compensation (b) 23 16 0.02 0.02 Less: Amortization of intangible assets (c) 1 1 - - Non-GAAP Measurement $ 204 $ 116 $ 0.16 $ 0.16

Three Months Ended March 31, 2014 Net Revenues Cost of Sales - Product Costs Cost of Sales - Online Cost of Sales - Software Royalties and Amortization Cost of Sales - Intellectual Property Licenses Product Development Sales and Marketing General and Administrative Total Costs and Expenses GAAP Measurement $ 1,111 $ 225 $ 58 $ 57 $ 2 $ 143 $ 104 $ 95 $ 684 Less: Net effect from deferral of net revenues and related cost of sales (a) (339 ) (95 ) - (25 ) - - - - (120 ) Less: Stock-based compensation (b) - - - (7 ) - (8 ) (2 ) (13 ) (30 ) Less: Amortization of intangible assets (c) - - - - (2 ) - - - (2 ) Non-GAAP Measurement $ 772 $ 130 $ 58 $ 25 $ - $ 135 $ 102 $ 82 $ 532 Three Months Ended March 31, 2014 Operating Income Net Income Basic Earnings per Share Diluted Earnings per Share GAAP Measurement $ 427 $ 293 $ 0.40 $ 0.40 Less: Net effect from deferral of net revenues and related cost of sales (a) (219 ) (171 ) (0.24 ) (0.23 ) Less: Stock-based compensation (b) 30 18 0.03 0.02 Less: Amortization of intangible assets (c) 2 1 - - Non-GAAP Measurement $ 240 $ 141 $ 0.19 $ 0.19

(a) Reflects the net change in deferred revenues and related cost of sales. (b) Includes expense related to stock-based compensation. (c) Reflects amortization of intangible assets from purchase price accounting. The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $113 million for the three months ended March 31, 2015 as compared to total non-GAAP net income of $116 million for the same period. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $136 million for the three months ended March 31, 2014 as compared to total non-GAAP net income of $141 million for the same period. For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 723 million, participating securities of approximately 10 million, and dilutive shares of 8 million during the three months ended March 31, 2015. For purposes of calculating earnings per share, we had, on a weighted-average basis, common shares outstanding of 709 million, participating securities of approximately 17 million, and dilutive shares of 11 million during the three months ended March 31, 2014. The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL INFORMATION For the Three Months Ended March 31, 2015 and 2014 (Amounts in millions) Three Months Ended March 31, 2015 March 31, 2014 $ Increase % Increase Amount % of Total4 Amount % of Total4 (Decrease) (Decrease) GAAP Net Revenues by Distribution Channel Retail channels $ 649 51 % $ 659 59 % $ (10 ) (2 ) % Digital online channels1 581 45 379 34 202 53 Total Activision and Blizzard 1,230 96 1,038 93 192 18 Distribution 48 4 73 7 (25 ) (34 ) Total consolidated GAAP net revenues 1,278 100 1,111 100 167 15 Change in Deferred Revenues2 Retail channels (532 ) (487 ) Digital online channels1 (43 ) 148 Total changes in deferred revenues (575 ) (339 ) Non-GAAP Net Revenues by Distribution Channel Retail channels 117 17 172 22 (55 ) (32 ) Digital online channels1 538 76 527 68 11 2 Total Activision and Blizzard 655 93 699 91 (44 ) (6 ) Distribution 48 7 73 9 (25 ) (34 ) Total non-GAAP net revenues3 $ 703 100 % $ 772 100 % $ (69 ) (9 ) %

1 Net revenues from digital online channels represent revenues from subscriptions, licensing royalties, value-added services, downloadable content, digitally distributed products, and wireless devices. 2 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred revenues. 3 Total non-GAAP net revenues presented also represents our total operating segment net revenues. 4 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL INFORMATION For the Three Months Ended March 31, 2015 and 2014 (Amounts in millions) Three Months Ended March 31, 2015 March 31, 2014 $ Increase % Increase Amount % of Total6 Amount % of Total6 (Decrease) (Decrease) GAAP Net Revenues by Segment/Platform Mix Activision and Blizzard: Online1 $ 272 21 % $ 201 18 % $ 71 35 % PC 114 9 100 9 14 14 Next-generation (PS4, Xbox One, Wii U) 434 34 108 10 326 NM Prior-generation (PS3, Xbox 360, Wii) 324 25 546 49 (222 ) (41 ) Total console2 758 59 654 59 104 16 Mobile and other5 86 7 83 7 3 4 Total Activision and Blizzard 1,230 96 1,038 93 192 18 Distribution: Total Distribution 48 4 73 7 (25 ) (34 ) Total consolidated GAAP net revenues 1,278 100 1,111 100 167 15 Change in Deferred Revenues3 Activision and Blizzard: Online1 (63 ) 26 PC 13 139 Next-generation (PS4, Xbox One, Wii U) (301 ) (76 ) Prior-generation (PS3, Xbox 360, Wii) (225 ) (428 ) Total console2 (526 ) (504 ) Mobile and other5 1 --- Total changes in deferred revenues (575 ) (339 ) Non-GAAP Net Revenues by Segment/Platform Mix Activision and Blizzard: Online1 209 30 227 29 (18 ) (8 ) PC 127 18 239 31 (112 ) (47 ) Next-generation (PS4, Xbox One, Wii U) 133 19 32 4 101 NM Prior-generation (PS3, Xbox 360, Wii) 99 14 118 15 (19 ) (16 ) Total console2 232 33 150 19 82 55 Mobile and other5 87 12 83 11 4 5 Total Activision and Blizzard 655 93 699 91 (44 ) (6 ) Distribution: Total Distribution 48 7 73 9 (25 ) (34 ) Total consolidated non-GAAP net revenues4 $ 703 100 % $ 772 100 % $ (69 ) (9 ) %

1 Revenues from online consist of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services. 2 Downloadable content and their related revenues are included in each respective console platforms and total console. 3 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred revenues. 4 Total non-GAAP net revenues presented also represent our total operating segment net revenues. 5 Revenues from mobile and other include revenues from handheld and mobile devices, as well as non-platform specific game related revenues such as standalone sales of toys and accessories products from the Skylanders franchise and other physical merchandise and accessories. 6 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL INFORMATION For the Three Months Ended March 31, 2015 and 2014 (Amounts in millions) Three Months Ended March 31, 2015 March 31, 2014 $ Increase % Increase Amount % of Total3 Amount % of Total3 (Decrease) (Decrease) GAAP Net Revenues by Geographic Region North America $ 704 55 % $ 563 51 % $ 141 25 % Europe 464 36 462 42 2 --- Asia Pacific 110 9 86 8 24 28 Total consolidated GAAP net revenues 1,278 100 1,111 100 167 15 Change in Deferred Revenues1 North America (350) (233) Europe (196) (125) Asia Pacific (29) 19 Total changes in net revenues (575) (339) Non-GAAP Net Revenues by Geographic Region North America 354 50 330 43 24 7 Europe 268 38 337 44 (69) (20) Asia Pacific 81 12 105 14 (24) (23) Total non-GAAP net revenues2 $ 703 100 % $ 772 100 % $ (69) (9) %

1 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred revenues. 2 Total non-GAAP net revenues presented also represents our total operating segment net revenues. 3 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES SEGMENT INFORMATION For the Three Months Ended March 31, 2015 and 2014 (Amounts in millions) Three Months Ended March 31, 2015 March 31, 2014 $ Increase % Increase Amount % of Total4 Amount % of Total4 (Decrease) (Decrease) Segment net revenues: Activision1 $ 303 43 % $ 237 31 % $ 66 28 % Blizzard2 352 50 462 60 (110) (24) Distribution3 48 7 73 9 (25) (34) Operating segment total 703 100 % 772 100 % (69) (9) Reconciliation to consolidated net revenues: Net effect from deferral of revenues 575 339 Consolidated net revenues $ 1,278 $ 1,111 $ 167 15 % Segment income from operations: Activision1 $ 66 32 % $ 2 1 % $ 64 NM Blizzard2 139 68 239 100 (100) (42) Distribution3 (1) --- (1) --- --- --- Operating segment total 204 100 % 240 100 % (36) (15) Reconciliation to consolidated operating income and consolidated income before income tax expense: Net effect from deferral of net revenues and related cost of sales 362 219 Stock-based compensation expense (23) (30) Amortization of intangible assets (1) (2) Consolidated operating income 542 427 115 27 Interest and other expense, net 50 51 Consolidated income before income tax expense $ 492 $ 376 $ 116 31 % Operating margin from total operating segments 29.0% 31.1%

1 Activision Publishing (“Activision”) — publishes interactive entertainment products and contents. 2 Blizzard Entertainment, Inc. (“Blizzard”) — publishes PC games and online subscription-based games in the MMORPG category. 3 Activision Blizzard Distribution (“Distribution”) — distributes interactive entertainment software and hardware products. 4 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES For the Trailing Twelve Months Ended March 31, 2015 EBITDA and Adjusted EBITDA (Amounts in millions) Trailing Twelve Months Ended June 30, 2014 September 30, 2014 December 31, 2014 March 31, 2015 March 31, 2015 GAAP Net Income (Loss) $ 204 $ (23 ) $ 361 $ 394 $ 936 Interest Expense, net 50 51 51 50 202 Provision (Benefit) for income taxes 56 (20 ) 27 98 161 Depreciation and amortization 19 22 29 20 90 EBITDA 329 30 468 562 1,389 Deferral of net revenues and related cost of sales (a) (220 ) 180 475 (362 ) 71 Stock-based compensation expense (b) 22 22 29 23 97 Fees and other expenses related to the Purchase Transaction and related debt financings (c) --- 48 (36 ) --- 13 Adjusted EBITDA $ 131 $ 280 $ 936 $ 223 $ 1,570

(a) Reflects the net change in deferred revenues and related cost of sales. (b) Includes expense related to stock-based compensation. (c) Reflects fees and other expenses (including legal fees, costs, expenses and accruals) related to the repurchase of 429 million shares of our common stock from Vivendi (the "Purchase Transaction") completed on October 11, 2013 and related debt financings. Trailing twelve months amounts are presented as calculated. Therefore, the sum of the four quarters, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES Outlook for the Quarter Ending June 30, 2015 and Year Ending December 31, 2015 GAAP to Non-GAAP Reconciliation (Amounts in millions, except per share data) Outlook for Outlook for Three Months Ending Year Ending June 30, 2015 December 31, 2015 Net Revenues (GAAP) $ 930 $ 4,250 Excluding the impact of: Change in deferred net revenues (a) (280 ) 175 Net Revenues (Non-GAAP) $ 650 $ 4,425 Earnings Per Diluted Share (GAAP) $ 0.21 $ 0.98 Excluding the impact of: Net effect from deferral in net revenues and related cost of sales (b) (0.17 ) 0.12 Stock-based compensation (c) 0.02 0.09 Amortization of intangible assets (d) - 0.01 Earnings Per Diluted Share (Non-GAAP) $ 0.07 $ 1.20