Activision Blizzard, Inc

Good afternoon and welcome to the Activision Blizzard third quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Hickey, Senior Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today for Activision Blizzard's third quarter 2021 conference call. With us are Bobby Kotick, CEO, Daniel Allegre, President and COO, and Armin Zirza, CFO. And for Q&A, Rob Kostic, Mikey Barra, and Haman Saknini, The leaders of Activision, Blizzard, and King, respectively, will also join us. I would like to remind everyone that during this call, we will be making statements that are not historical facts. The forward-looking statements in this presentation are based on information available to the company as of the date of this presentation. And while we believe them to be true, they ultimately may prove to be incorrect. A number of factors could cause the company's actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. These include the impact of the COVID-19 pandemic, the risk factors discussed in our SEC filings, including our 2020 annual report on Form 10-K and third quarter 2021 Form 10-Q, and those on the slide that is shown. The company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after today, November 2, 2021. We will present both GAAP and non-GAAP financial measures during this call. We provide non-GAAP financial measures, which excludes the impact of expenses related to stock-based compensation, the amortization of intangible assets and expenses related to acquisitions, including legal fees, costs, expenses, and accruals, expenses related to debt financings and refinancings, restructuring and related charges, the associated tax benefit of these excluded items, and significant discrete tax-related items, including amounts related to changes in tax laws, amounts related to the potential final resolution of tax positions, and other unusual or unique tax-related items and activities. These non-GAAP measures are not intended to be considered in isolation from, as a substitute for, or superior to our GAAP results. We encourage investors to consider all measures before making an investment decision. Please refer to our earnings release, which is posted on www.activisionblizzard.com, to refer GAAP to non-GAAP reconciliation and further explanation with respect to our non-GAAP measures. There is an earnings presentation, which you can access with the webcast, and which will be posted to the website following the call. And now, I'd like to introduce our CEO, Bobby Kotick.

Thank you, Chris, and thank you all for joining us today. As I said during our last earnings call, I want Activision Blizzard to be the leader in our industry for workplace culture. Since then, the leadership team and I have been hard at work listening to employees and implementing meaningful changes. I'd like to review the actions we've taken over the past few months with you today. As we've made clear in certain instances relating to workplace culture, we should have done a better job ensuring our values were embraced across all parts of the company. Over the last few years, we've been focused on the improvements that are necessary to become a model workplace. We are, of course, taking these actions because any single instance of wrongful conduct at our company is unacceptable. But these actions we're taking are also the right ones for our business success. We can't achieve our business ambitions without the very best talent. People with the talents we need have more alternatives for highly paid work opportunities than ever before. If we don't constantly evolve as a great place to work, we won't retain or attract the talent we need to realize our tremendous potential. As a company, we have more opportunities ahead of us than I've seen in almost all the years I've led the company. The success we've achieved thus far is the result of an overwhelmingly large number of extraordinarily talented people with high integrity and good values focused on delivering great games to our players, which has resulted in superior shareholder returns. This company and many of its leaders and so many of our talented employees, past and present, have shown strength of will dedicated to the achievement of bold aspirations. Our commitment to make Activision Blizzard the most welcoming and inclusive company in the world will be accomplished the same way our industry leadership has been accomplished. Focus and commitment, persistence, strength of will, the unwavering ambition of truly talented people with equally unwavering integrity, and the continuous commitment to improvement. In September, we announced a comprehensive agreement with the U.S. Equal Opportunity Commission which is subject to court approval to strengthen policies and programs intended to further improve the prevention of harassment, discrimination, and related content. As part of this agreement, we'll establish an $18 million fund to compensate those who have experienced such behavior at our company. With respect to pay equity, another critically important issue that we have always worked hard to ensure we achieve We recently disclosed to employees the results of a review of 2020 pay equity error company, which was conducted by an independent research firm. The US analysis showed that women on average earned slightly more than men for comparable work in 2020. And we're committed to compensation remaining equitable for men and women performing comparable work always. Last week, we also announced a number of important new workplace initiatives. We announced the zero tolerance harassment policy company-wide. This includes tougher rules and greater consistency across the organization to make certain reports are always properly and promptly handled. Now, any Activision Blizzard employee found through our new investigative processes and resources to have retaliated against anyone for making a compliance complaint will be terminated immediately. In many other instances of workplace misconduct, we will no longer rely on written warnings. Terminations will be the outcome, including in most cases of harassment based on any legally protected category. Future employment contracts and equity awards will state that termination for these reasons will result in immediate forfeiture of future compensation. Another is our pledge to increase the percentage of women and non-binary people in our workforce by 50%. Today, approximately 23% of our global employee population identifies as women or non-binary. So within the next five years, and hopefully faster, we will seek to increase our percentage of women and non-binary professionals to more than one-third across the entire company. To further this commitment, we'll be investing an additional $250 million over the next 10 years in initiatives that foster expanded opportunities in gaming and technology for underrepresented communities. Additionally, based on feedback from many employees, we are waiving required arbitration of future individual sexual harassment and discrimination claims. That means for any employee who chooses not to arbitrate an individual claim of sexual harassment, unlawful discrimination, or related retaliation arising in the future, the company will waive any obligation to do so. As we report regularly on our progress and our financial results, you'll continue to hear more about our workplace initiatives, which we firmly believe will help us remain one of the world's most successful entertainment companies. I want to thank our employees for their continued commitment to each other, the company, and our players. For those employees past and present who have been brave enough to step forward and share their stories, we continue to be committed to investigating all claims thoroughly and holding people accountable. For those employees who have shared feedback, thoughts, suggestions, concerns, and complaints, and there are many of you, we hope you can see from our actions that we are listening. We are evolving our organization through your ideas and active participation in their execution. And for those employees who have worked tirelessly to deliver great experiences to our players, your resilience in these challenging times is inspiring. We expect that we'll continue to face challenging and negative media attention regardless of our progress, but we are determined to stay focused on providing great opportunities and the very best work environments for our talented employees to deliver the very best game for our players and to continue to provide superior returns for our shareholders. Thank you for your participation today. And now I'll turn the call over to Daniel to share the results of our operations for the last quarter.