Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Activision Blizzard Inc., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Federal	269)	189)	206)	136)	(228)
State	28)	35)	92)	24)	(15)
Foreign	102)	229)	218)	323)	280)
Current	399)	453)	516)	483)	37)
Federal	(324)	73)	(84)	781)	(98)
State	(28)	12)	(10)	(16)	106)
Foreign	184)	(73)	(3)	(1,118)	19)
Deferred	(168)	12)	(97)	(353)	27)
Income tax expense	231)	465)	419)	130)	64)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Activision Blizzard Inc. current decreased from 2020 to 2021 and from 2021 to 2022.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Activision Blizzard Inc. deferred increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.
Income tax expense	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Activision Blizzard Inc. income tax expense increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Activision Blizzard Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
U.S. federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
State taxes, net of federal benefit	1.00%	2.00%	2.00%	1.00%	2.00%
Research and development credits	-4.00%	-2.00%	-3.00%	-2.00%	-2.00%
Foreign earnings taxed at different rates	-4.00%	-4.00%	-4.00%	-7.00%	-11.00%
Foreign-derived intangible income	-3.00%	-1.00%	-2.00%	0.00%	0.00%
Change in tax reserves	1.00%	1.00%	2.00%	6.00%	14.00%
Audit settlements	0.00%	0.00%	0.00%	3.00%	-6.00%
Change in tax legislation	0.00%	-2.00%	-1.00%	0.00%	-3.00%
Change in valuation allowance	1.00%	0.00%	2.00%	1.00%	3.00%
Intra-entity IP Transfer	0.00%	0.00%	-1.00%	-14.00%	0.00%
Other	0.00%	0.00%	0.00%	-1.00%	0.00%
Effective tax rate, before U.S. Tax Reform Act	13.00%	15.00%	16.00%	8.00%	18.00%
U.S. Tax Reform Act	0.00%	0.00%	0.00%	0.00%	-15.00%
Effective tax rate	13.00%	15.00%	16.00%	8.00%	3.00%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Effective tax rate, before U.S. Tax Reform Act	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Activision Blizzard Inc. effective tax rate, before U.S. Tax Reform Act decreased from 2020 to 2021 and from 2021 to 2022.

Activision Blizzard Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Deferred revenue	324)	210)	274)	119)	136)
Tax attributes carryforwards	191)	143)	123)	93)	81)
Share-based compensation	47)	46)	51)	54)	69)
Intangibles	1,333)	1,458)	1,287)	1,289)	43)
U.S. deferred taxes on foreign earnings	—)	—)	—)	—)	263)
Capitalized software development expenses	52)	—)	21)	67)	—)
Other	136)	141)	160)	156)	79)
Deferred tax assets	2,083)	1,998)	1,916)	1,778)	671)
Valuation allowance	(305)	(278)	(228)	(181)	(61)
Deferred tax assets, net of valuation allowance	1,778)	1,720)	1,688)	1,597)	610)
Intangibles	(171)	(158)	(147)	(142)	(140)
Capitalized software development expenses	—)	(10)	—)	—)	(57)
U.S. deferred taxes on foreign earnings	(491)	(603)	(577)	(594)	—)
Other	(72)	(78)	(63)	(73)	(26)
Deferred tax liabilities	(734)	(849)	(787)	(809)	(223)
Net deferred tax assets (liabilities)	1,044)	871)	901)	788)	387)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Activision Blizzard Inc. deferred tax assets increased from 2020 to 2021 and from 2021 to 2022.
Deferred tax assets, net of valuation allowance	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Activision Blizzard Inc. deferred tax assets, net of valuation allowance increased from 2020 to 2021 and from 2021 to 2022.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Activision Blizzard Inc. net deferred tax assets (liabilities) decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Activision Blizzard Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
	Deferred tax assets, net	1,201)	1,377)	1,318)	1,293)	403)
	Deferred tax liabilities, net	158)	506)	418)	505)	18)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Deferred tax assets, net	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Activision Blizzard Inc. deferred tax assets, net increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.
Deferred tax liabilities, net	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Activision Blizzard Inc. deferred tax liabilities, net increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Activision Blizzard Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Adjustment to Total Assets
Total assets (as reported)	27,383)	25,056)	23,109)	19,845)	17,835)
Less: Noncurrent deferred tax assets, net	1,201)	1,377)	1,318)	1,293)	403)
Total assets (adjusted)	26,182)	23,679)	21,791)	18,552)	17,432)
Adjustment to Total Liabilities
Total liabilities (as reported)	8,140)	7,457)	8,072)	7,040)	6,478)
Less: Noncurrent deferred tax liabilities, net	158)	506)	418)	505)	18)
Total liabilities (adjusted)	7,982)	6,951)	7,654)	6,535)	6,460)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	19,243)	17,599)	15,037)	12,805)	11,357)
Less: Net deferred tax assets (liabilities)	1,044)	871)	901)	788)	387)
Shareholders’ equity (adjusted)	18,199)	16,728)	14,136)	12,017)	10,970)
Adjustment to Net Income
Net income (as reported)	1,513)	2,699)	2,197)	1,503)	1,813)
Add: Deferred income tax expense (benefit)	(168)	12)	(97)	(353)	27)
Net income (adjusted)	1,345)	2,711)	2,100)	1,150)	1,840)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Activision Blizzard Inc., Financial Data: Reported vs. Adjusted

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Activision Blizzard Inc., adjusted financial ratios

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net Profit Margin
Reported net profit margin	20.10%	30.66%	27.17%	23.16%	24.17%
Adjusted net profit margin	17.87%	30.80%	25.97%	17.72%	24.53%
Total Asset Turnover
Reported total asset turnover	0.27	0.35	0.35	0.33	0.42
Adjusted total asset turnover	0.29	0.37	0.37	0.35	0.43
Financial Leverage
Reported financial leverage	1.42	1.42	1.54	1.55	1.57
Adjusted financial leverage	1.44	1.42	1.54	1.54	1.59
Return on Equity (ROE)
Reported ROE	7.86%	15.34%	14.61%	11.74%	15.96%
Adjusted ROE	7.39%	16.21%	14.86%	9.57%	16.77%
Return on Assets (ROA)
Reported ROA	5.53%	10.77%	9.51%	7.57%	10.17%
Adjusted ROA	5.14%	11.45%	9.64%	6.20%	10.56%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Activision Blizzard Inc. adjusted net profit margin ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Activision Blizzard Inc. adjusted total asset turnover ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Activision Blizzard Inc. adjusted financial leverage ratio decreased from 2020 to 2021 but then slightly increased from 2021 to 2022.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Activision Blizzard Inc. adjusted ROE improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Activision Blizzard Inc. adjusted ROA improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Activision Blizzard Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	1,513)	2,699)	2,197)	1,503)	1,813)
Net revenues	7,528)	8,803)	8,086)	6,489)	7,500)
Profitability Ratio
Net profit margin¹	20.10%	30.66%	27.17%	23.16%	24.17%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	1,345)	2,711)	2,100)	1,150)	1,840)
Net revenues	7,528)	8,803)	8,086)	6,489)	7,500)
Profitability Ratio
Adjusted net profit margin²	17.87%	30.80%	25.97%	17.72%	24.53%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Net profit margin = 100 × Net income ÷ Net revenues
= 100 × 1,513 ÷ 7,528 = 20.10%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Net revenues
= 100 × 1,345 ÷ 7,528 = 17.87%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Activision Blizzard Inc. adjusted net profit margin ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net revenues	7,528)	8,803)	8,086)	6,489)	7,500)
Total assets	27,383)	25,056)	23,109)	19,845)	17,835)
Activity Ratio
Total asset turnover¹	0.27	0.35	0.35	0.33	0.42
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net revenues	7,528)	8,803)	8,086)	6,489)	7,500)
Adjusted total assets	26,182)	23,679)	21,791)	18,552)	17,432)
Activity Ratio
Adjusted total asset turnover²	0.29	0.37	0.37	0.35	0.43

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Total asset turnover = Net revenues ÷ Total assets
= 7,528 ÷ 27,383 = 0.27

² Adjusted total asset turnover = Net revenues ÷ Adjusted total assets
= 7,528 ÷ 26,182 = 0.29

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Activision Blizzard Inc. adjusted total asset turnover ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets	27,383)	25,056)	23,109)	19,845)	17,835)
Shareholders’ equity	19,243)	17,599)	15,037)	12,805)	11,357)
Solvency Ratio
Financial leverage¹	1.42	1.42	1.54	1.55	1.57
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	26,182)	23,679)	21,791)	18,552)	17,432)
Adjusted shareholders’ equity	18,199)	16,728)	14,136)	12,017)	10,970)
Solvency Ratio
Adjusted financial leverage²	1.44	1.42	1.54	1.54	1.59

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= 27,383 ÷ 19,243 = 1.42

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 26,182 ÷ 18,199 = 1.44

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Activision Blizzard Inc. adjusted financial leverage ratio decreased from 2020 to 2021 but then slightly increased from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	1,513)	2,699)	2,197)	1,503)	1,813)
Shareholders’ equity	19,243)	17,599)	15,037)	12,805)	11,357)
Profitability Ratio
ROE¹	7.86%	15.34%	14.61%	11.74%	15.96%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	1,345)	2,711)	2,100)	1,150)	1,840)
Adjusted shareholders’ equity	18,199)	16,728)	14,136)	12,017)	10,970)
Profitability Ratio
Adjusted ROE²	7.39%	16.21%	14.86%	9.57%	16.77%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 1,513 ÷ 19,243 = 7.86%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × 1,345 ÷ 18,199 = 7.39%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Activision Blizzard Inc. adjusted ROE improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	1,513)	2,699)	2,197)	1,503)	1,813)
Total assets	27,383)	25,056)	23,109)	19,845)	17,835)
Profitability Ratio
ROA¹	5.53%	10.77%	9.51%	7.57%	10.17%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	1,345)	2,711)	2,100)	1,150)	1,840)
Adjusted total assets	26,182)	23,679)	21,791)	18,552)	17,432)
Profitability Ratio
Adjusted ROA²	5.14%	11.45%	9.64%	6.20%	10.56%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 1,513 ÷ 27,383 = 5.53%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,345 ÷ 26,182 = 5.14%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Activision Blizzard Inc. adjusted ROA improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Activision Blizzard Inc. (NASDAQ:ATVI)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Activision Blizzard Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Activision Blizzard Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)