With the second financial quarter ending June 30, Activision Blizzard’s results put a strong foot forward for the rest of 2014. Their GAAP net revenues summed up to $970 million, shrinking from the $1.05 billion result in the second quarter of 2013. While that may look negative, the non-GAAP evaluation of revenue came out to $658 million, a strong growth from the $608 million of last year’s second quarter.
If we examine earnings per diluted share by GAAP, we see that 2014 and 2013 both set at $0.28. By non-GAAP, this year’s $0.06 dropped slightly from last year’s $0.08.
In layman’s terms, the GAAP value is calculated by the standard accounting guidelines. Non-GAAP calculations are adjusted, taking into account factors the company feels skew revenue numbers unfairly.
If you desire a longer form explanation of GAAP vs non-GAAP, Business Insider lays out the distinction quite well:
“GAAP is short for generally accepted accounting principles. GAAP accounting standards offer uniformity in how companies report their financial performance. However, income statements reported based on GAAP don’t always reflect the ongoing performance of a companies underlying operations. For example, a company may write-down an asset or restructure its organization. These actions usually come with large one-time costs that distort company profits. As such, a company will also provide an “adjusted” earnings number that excludes these nonrecurring items.”
The numbers are generally positive, but not wholly convincing to the skeptical GAAP mind. Bobby Kotick, Chief Executive Officer of Activision Blizzard, weighed in to dispel any misgivings and fluff the company’s expected earnings.
“Our better-than expected performance was driven by continued strong digital sales from Blizzard Entertainment’s World of Warcraft, Diablo III: Reaper of Souls and Blizzard Entertainment’s newest franchise, Hearthstone: Heroes of Warcraft, which recently launched on the iPad and continues to be well received by audiences around the world, as well as digital sales from Activision Publishing’s Call of Duty,” says Kotick. “Based on our results, we are raising our full-year outlook and we expect to grow our non-GAAP revenues year-over-year and deliver record non-GAAP earnings per share for the full year.”
The GAAP and non-GAAP numbers, while not the most impressive achievements, signal a sturdy financial position for the company. With many anticipated titles arriving this year, it seems Activision Blizzard is poised to substantially succeed.