Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Activision Blizzard Inc., EBITDA calculation
US$ in millions
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 performance between 2018 and 2022 exhibits a cyclical trajectory, characterized by a significant peak in operational earnings during the 2020-2021 period followed by a sharp contraction in 2022.
- EBITDA Trajectory
- Earnings before interest, tax, depreciation and amortization showed an initial decline from US$ 3,015 million in 2018 to US$ 2,276 million in 2019. A strong growth phase followed, with values rising to US$ 3,161 million in 2020 and peaking at US$ 3,712 million in 2021. This upward trend reversed abruptly in 2022, with EBITDA falling to US$ 2,171 million, the lowest level recorded during the five-year period.
- Operational Profitability and Asset Charges
- A narrowing gap is observed between EBIT and EBITDA over the analyzed timeframe. In 2018, the difference—representing depreciation and amortization—was US$ 998 million. This figure decreased steadily, reaching US$ 440 million in 2021 and further declining to US$ 319 million in 2022, suggesting a reduction in non-cash operational charges.
- Correlation Across Profitability Metrics
- A high degree of synchronization exists between EBITDA, EBIT, EBT, and Net Income. All four metrics experienced a dip in 2019, a two-year expansion through 2021, and a simultaneous decrease in 2022. Net income followed this pattern closely, rising from US$ 1,503 million in 2019 to a peak of US$ 2,699 million in 2021, before receding to US$ 1,513 million in 2022.
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Enterprise Value to EBITDA Ratio, Current
Activision Blizzard Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 64,602) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 2,171) |
| Valuation Ratio | |
| EV/EBITDA | 29.76 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Alphabet Inc. | 22.67 |
| Comcast Corp. | 3.61 |
| Meta Platforms Inc. | 17.91 |
| Netflix Inc. | 9.97 |
| Walt Disney Co. | 11.73 |
| EV/EBITDA, Sector | |
| Media & Entertainment | 36.53 |
| EV/EBITDA, Industry | |
| Communication Services | 27.77 |
Based on: 10-K (reporting date: 2022-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
Activision Blizzard Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 52,063) | 56,646) | 69,660) | 41,750) | 30,634) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 2,171) | 3,712) | 3,161) | 2,276) | 3,015) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 23.98 | 15.26 | 22.04 | 18.34 | 10.16 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Alphabet Inc. | 14.66 | 18.08 | — | — | — | |
| Comcast Corp. | 9.60 | 8.45 | — | — | — | |
| Meta Platforms Inc. | 12.19 | 10.85 | — | — | — | |
| Netflix Inc. | 8.40 | 9.51 | — | — | — | |
| Walt Disney Co. | 17.80 | 34.53 | 60.13 | — | — | |
| EV/EBITDA, Sector | ||||||
| Media & Entertainment | 12.91 | 14.62 | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Communication Services | 11.74 | 11.57 | — | — | — | |
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).
3 2022 Calculation
EV/EBITDA = EV ÷ EBITDA
= 52,063 ÷ 2,171 = 23.98
4 Click competitor name to see calculations.
The Enterprise Value to EBITDA (EV/EBITDA) ratio exhibited significant volatility and an overall upward trend between 2018 and 2022. The ratio expanded from 10.16 in 2018 to a peak of 23.98 in 2022, indicating a substantial increase in the market valuation of the business relative to its operational cash flow generation over the five-year period.
- Enterprise Value Trends
- Enterprise Value experienced rapid growth in the early part of the period, rising from 30,634 million US$ in 2018 to a peak of 69,660 million US$ in 2020. Following this peak, a downward trajectory was observed, with the value contracting to 56,646 million US$ in 2021 and further declining to 52,063 million US$ by the end of 2022.
- EBITDA Performance
- Earnings before interest, tax, depreciation, and amortization showed inconsistent performance. After a decline in 2019 to 2,276 million US$, EBITDA recovered and grew steadily to a five-year peak of 3,712 million US$ in 2021. However, a sharp contraction occurred in 2022, with EBITDA falling to 2,171 million US$, the lowest level recorded in the analyzed period.
- EV/EBITDA Ratio Dynamics
- The ratio increased sharply from 2018 to 2020, driven primarily by the surge in Enterprise Value. A temporary correction occurred in 2021, where the ratio fell to 15.26 as a result of peak EBITDA performance coinciding with a reduction in Enterprise Value. The most pronounced expansion occurred in 2022, where the ratio reached 23.98; this spike was driven by a significant decrease in EBITDA, which outweighed the simultaneous decline in Enterprise Value.
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