10/29/2024 | Press release | Distributed by Public on 10/29/2024 14:06
Electronic Arts Reports Strong Q2 FY25 Results
|
Three Months Ended | ||
September 30, | ||
(in $ millions, except per share amounts) | 2024 | 2023 |
Full game | 716 | 621 |
Live services and other | 1,309 | 1,293 |
Total net revenue | 2,025 | 1,914 |
Net income | 294 | 399 |
Diluted earnings per share | 1.11 | 1.47* |
Operating cash flow | 234 | 112 |
Value of shares repurchased | 375 | 325 |
Number of shares repurchased | 2.6 | 2.6 |
Cash dividend paid | 51 | 51 |
Twelve Months Ended | ||
September 30, | ||
(in $ millions) | 2024 | 2023 |
Full game | 1,917 | 2,058 |
Live services and other | 5,492 | 5,535 |
Total net revenue | 7,409 | 7,593 |
Net income | 1,046 | 993 |
Operating cash flow | 2,198 | 2,211 |
Value of shares repurchased | 1,400 | 1,300 |
Number of shares repurchased | 10.2 | 10.5 |
Three Months Ended September 30, |
Twelve Months Ended September 30, |
|||
(in $ millions) | 2024 | 2023 | 2024 | 2023 |
Total net revenue | 2,025 | 1,914 | 7,409 | 7,593 |
Change in deferred net revenue (online-enabled games) | 54 | (94) | (36) | 93 |
Total net bookings | 2,079 | 1,820 | 7,373 | 7,686 |
Andrew Uerkwitz | Justin Higgs |
Vice President, Investor Relations | Vice President, Corporate Communications |
650-674-7191 | 925-502-9253 |
[email protected] | [email protected] |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||
Unaudited Condensed Consolidated Statements of Operations | ||||
(in $ millions, except per share data) | ||||
Three Months Ended September 30, |
Six Months Ended September 30, | |||
2024 | 2023 | 2024 | 2023 | |
Net revenue | 2,025 | 1,914 | 3,685 | 3,838 |
Cost of revenue | 456 | 456 | 719 | 824 |
Gross profit | 1,569 | 1,458 | 2,966 | 3,014 |
Operating expenses: | ||||
Research and development | 648 | 602 | 1,277 | 1,198 |
Marketing and sales | 272 | 280 | 477 | 509 |
General and administrative | 197 | 173 | 377 | 336 |
Amortization of intangibles | 17 | 24 | 34 | 49 |
Restructuring | 51 | 2 | 53 | 3 |
Total operating expenses | 1,185 | 1,081 | 2,218 | 2,095 |
Operating income | 384 | 377 | 748 | 919 |
Interest and other income (expense), net | 15 | 14 | 45 | 28 |
Income before provision for (benefit from) income taxes | 399 | 391 | 793 | 947 |
Provision for (benefit from) income taxes | 105 | (8) | 219 | 146 |
Net income | 294 | 399 | 574 | 801 |
Earnings per share | ||||
Basic | 1.11 | 1.47 | 2.17 | 2.94 |
Diluted | 1.11 | 1.47 | 2.15 | 2.93 |
Number of shares used in computation | ||||
Basic | 264 | 271 | 265 | 272 |
Diluted | 266 | 272 | 267 | 273 |
Three Months Ended September 30, | ||||||
2024 Guidance (Mid-Point) | 2024 Actuals | 2023 Actuals | ||||
Variance | ||||||
Net revenue | ||||||
Net revenue | 1,950 | 75 | 2,025 | 1,914 | ||
GAAP-based financial data | ||||||
Change in deferred net revenue (online-enabled games)1
|
50 | 4 | 54 | (94) | ||
Cost of revenue | ||||||
Cost of revenue | 435 | 21 | 456 | 456 | ||
GAAP-based financial data | ||||||
Acquisition-related expenses | (10) | - | (10) | (15) | ||
Stock-based compensation | (5) | 1 | (4) | (2) | ||
Operating expenses | ||||||
Operating expenses | 1,195 | (10) | 1,185 | 1,081 | ||
GAAP-based financial data | ||||||
Acquisition-related expenses | (20) | 3 | (17) | (24) | ||
Restructuring and related charges | (65) | 13 | (52) | - | ||
Stock-based compensation | (160) | (10) | (170) | (153) | ||
Income before tax | ||||||
Income before tax | 333 | 66 | 399 | 391 | ||
GAAP-based financial data | ||||||
Acquisition-related expenses | 30 | (3) | 27 | 39 | ||
Change in deferred net revenue (online-enabled games)1
|
50 | 4 | 54 | (94) | ||
Restructuring and related charges | 65 | (13) | 52 | - | ||
Stock-based compensation | 165 | 9 | 174 | 155 | ||
Tax rate used for management reporting | 19 | % | 19 | % | 19 | % |
Earnings per share | ||||||
Basic | 0.86 | 0.25 | 1.11 | 1.47 | ||
Diluted | 0.85 | 0.26 | 1.11 | 1.47 | ||
Number of shares used in computation | ||||||
Basic | 265 | (1) | 264 | 271 | ||
Diluted | 267 | (1) | 266 | 272 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||
Unaudited Condensed Consolidated Balance Sheets | ||
(in $ millions) | ||
September 30, 2024 |
March 31, 20242
|
|
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | 2,197 | 2,900 |
Short-term investments | 366 | 362 |
Receivables, net | 1,012 | 565 |
Other current assets | 397 | 420 |
Total current assets | 3,972 | 4,247 |
Property and equipment, net | 578 | 578 |
Goodwill | 5,381 | 5,379 |
Acquisition-related intangibles, net | 346 | 400 |
Deferred income taxes, net | 2,431 | 2,380 |
Other assets | 428 | 436 |
TOTAL ASSETS | 13,136 | 13,420 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable, accrued, and other current liabilities | 1,312 | 1,276 |
Deferred net revenue (online-enabled games) | 1,475 | 1,814 |
Total current liabilities | 2,787 | 3,090 |
Senior notes, net | 1,883 | 1,882 |
Income tax obligations | 552 | 497 |
Other liabilities | 506 | 438 |
Total liabilities | 5,728 | 5,907 |
Stockholders' equity: | ||
Common stock | 3 | 3 |
Retained earnings | 7,520 | 7,582 |
Accumulated other comprehensive loss | (115) | (72) |
Total stockholders' equity | 7,408 | 7,513 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 13,136 | 13,420 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||
Unaudited Condensed Consolidated Statements of Cash Flows | ||||
(in $ millions) | ||||
Three Months Ended September 30, | Six Months Ended September 30, | |||
2024 | 2023 | 2024 | 2023 | |
OPERATING ACTIVITIES | ||||
Net income | 294 | 399 | 574 | 801 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation, amortization, accretion and impairment | 122 | 85 | 202 | 173 |
Stock-based compensation | 174 | 155 | 317 | 285 |
Change in assets and liabilities | ||||
Receivables, net | (579) | (534) | (447) | (367) |
Other assets | (78) | (22) | (20) | 74 |
Accounts payable, accrued, and other liabilities | 275 | (90) | 117 | (200) |
Deferred income taxes, net | (37) | 201 | (50) | 108 |
Deferred net revenue (online-enabled games) | 63 | (82) | (339) | (403) |
Net cash provided by operating activities | 234 | 112 | 354 | 471 |
INVESTING ACTIVITIES | ||||
Capital expenditures | (50) | (51) | (117) | (96) |
Proceeds from maturities and sales of short-term investments | 111 | 151 | 239 | 302 |
Purchase of short-term investments | (107) | (163) | (237) | (313) |
Net cash used in investing activities | (46) | (63) | (115) | (107) |
FINANCING ACTIVITIES | ||||
Proceeds from issuance of common stock | 42 | 40 | 42 | 40 |
Cash dividends paid | (51) | (51) | (101) | (103) |
Cash paid to taxing authorities for shares withheld from employees | (18) | (15) | (139) | (120) |
Common stock repurchases | (375) | (325) | (750) | (650) |
Net cash used in financing activities | (402) | (351) | (948) | (833) |
Effect of foreign exchange on cash and cash equivalents | 11 | (11) | 6 | (9) |
Change in cash and cash equivalents | (203) | (313) | (703) | (478) |
Beginning cash and cash equivalents | 2,400 | 2,259 | 2,900 | 2,424 |
Ending cash and cash equivalents | 2,197 | 1,946 | 2,197 | 1,946 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||||||||
Unaudited Supplemental Financial Information and Business Metrics | ||||||||||
(in $ millions, except per share data) | ||||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | YOY % | |||||
FY24 | FY24 | FY24 | FY25 | FY25 | Change | |||||
Net revenue | ||||||||||
Net revenue | 1,914 | 1,945 | 1,779 | 1,660 | 2,025 | 6 | % | |||
GAAP-based financial data | ||||||||||
Change in deferred net revenue (online-enabled games)1
|
(94) | 421 | (113) | (398) | 54 | |||||
Gross profit | ||||||||||
Gross profit | 1,458 | 1,416 | 1,422 | 1,397 | 1,569 | 8 | % | |||
Gross profit (as a % of net revenue) | 76 | % | 73 | % | 80 | % | 84 | % | 78 | % |
GAAP-based financial data | ||||||||||
Acquisition-related expenses | 15 | 16 | 29 | 10 | 10 | |||||
Change in deferred net revenue (online-enabled games)1
|
(94) | 421 | (113) | (398) | 54 | |||||
Stock-based compensation | 2 | 2 | 2 | 4 | 4 | |||||
Operating income | ||||||||||
Operating income | 377 | 365 | 234 | 364 | 384 | 2 | % | |||
Operating income (as a % of net revenue) | 20 | % | 19 | % | 13 | % | 22 | % | 19 | % |
GAAP-based financial data | ||||||||||
Acquisition-related expenses | 39 | 37 | 101 | 27 | 27 | |||||
Change in deferred net revenue (online-enabled games)1
|
(94) | 421 | (113) | (398) | 54 | |||||
Restructuring and related charges | - | - | 61 | 6 | 52 | |||||
Stock-based compensation | 155 | 151 | 148 | 143 | 174 | |||||
Net income | ||||||||||
Net income | 399 | 290 | 182 | 280 | 294 | (26 | %) | |||
Net income (as a % of net revenue) | 21 | % | 15 | % | 10 | % | 17 | % | 15 | % |
GAAP-based financial data | ||||||||||
Acquisition-related expenses | 39 | 37 | 101 | 27 | 27 | |||||
Change in deferred net revenue (online-enabled games)1
|
(94) | 421 | (113) | (398) | 54 | |||||
Restructuring and related charges | - | - | 61 | 6 | 52 | |||||
Stock-based compensation | 155 | 151 | 148 | 143 | 174 | |||||
Tax rate used for management reporting | 19 | % | 19 | % | 19 | % | 19 | % | 19 | % |
Diluted earnings per share | 1.47 | 1.07 | 0.67 | 1.04 | 1.11 | (24 | %) | |||
Number of shares used in computation | ||||||||||
Basic | 271 | 269 | 267 | 266 | 264 | |||||
Diluted | 272 | 271 | 270 | 268 | 266 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||||||||
Unaudited Supplemental Financial Information and Business Metrics | ||||||||||
(in $ millions) | ||||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | YOY % | |||||
FY24 | FY24 | FY24 | FY25 | FY25 | Change | |||||
QUARTERLY NET REVENUE PRESENTATIONS | ||||||||||
Net revenue by composition | ||||||||||
Full game downloads | 346 | 431 | 265 | 190 | 475 | 37 | % | |||
Packaged goods | 275 | 187 | 68 | 60 | 241 | (12 | %) | |||
Full game | 621 | 618 | 333 | 250 | 716 | 15 | % | |||
Live services and other | 1,293 | 1,327 | 1,446 | 1,410 | 1,309 | 1 | % | |||
Total net revenue | 1,914 | 1,945 | 1,779 | 1,660 | 2,025 | 6 | % | |||
Full game | 32 | % | 32 | % | 19 | % | 15 | % | 35 | % |
Live services and other | 68 | % | 68 | % | 81 | % | 85 | % | 65 | % |
Total net revenue % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
GAAP-based financial data | ||||||||||
Full game downloads | 24 | 32 | (37) | (47) | 70 | |||||
Packaged goods | 46 | 4 | (37) | (35) | 46 | |||||
Full game | 70 | 36 | (74) | (82) | 116 | |||||
Live services and other | (164) | 385 | (39) | (316) | (62) | |||||
Total change in deferred net revenue (online-enabled games) by composition1
|
(94) | 421 | (113) | (398) | 54 | |||||
Net revenue by platform | ||||||||||
Console | 1,187 | 1,229 | 1,049 | 1,005 | 1,374 | 16 | % | |||
PC & Other | 423 | 420 | 423 | 365 | 364 | (14 | %) | |||
Mobile | 304 | 296 | 307 | 290 | 287 | (6 | %) | |||
Total net revenue | 1,914 | 1,945 | 1,779 | 1,660 | 2,025 | 6 | % | |||
GAAP-based financial data | ||||||||||
Console | (35) | 377 | (94) | (328) | 108 | |||||
PC & Other | (34) | 33 | (10) | (70) | (37) | |||||
Mobile | (25) | 11 | (9) | - | (17) | |||||
Total change in deferred net revenue (online-enabled games) by platform1
|
(94) | 421 | (113) | (398) | 54 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | |||||||
Unaudited Supplemental Financial Information and Business Metrics | |||||||
(in $ millions) | |||||||
Q2 | Q3 | Q4 | Q1 | Q2 | YOY % | ||
FY24 | FY24 | FY24 | FY25 | FY25 | Change | ||
CASH FLOW DATA | |||||||
Investing cash flow | (63) | (51) | (49) | (69) | (46) | ||
Investing cash flow - TTM | (205) | (195) | (207) | (232) | (215) | (5 | %) |
Financing cash flow | (351) | (431) | (360) | (546) | (402) | ||
Financing cash flow - TTM | (1,609) | (1,622) | (1,624) | (1,688) | (1,739) | (8 | %) |
Operating cash flow | 112 | 1,264 | 580 | 120 | 234 | ||
Operating cash flow - TTM | 2,211 | 2,352 | 2,315 | 2,076 | 2,198 | (1 | %) |
Capital expenditures | 51 | 52 | 51 | 67 | 50 | ||
Capital expenditures - TTM | 191 | 195 | 199 | 221 | 220 | 15 | % |
Free cash flow3
|
61 | 1,212 | 529 | 53 | 184 | ||
Free cash flow3 - TTM
|
2,020 | 2,157 | 2,116 | 1,855 | 1,978 | (2 | %) |
Common stock repurchases | 325 | 325 | 325 | 375 | 375 | 15 | % |
Cash dividends paid | 51 | 51 | 51 | 50 | 51 | - | |
DEPRECIATION | |||||||
Depreciation expense | 49 | 48 | 50 | 51 | 51 | 4 | % |
BALANCE SHEET DATA | |||||||
Cash and cash equivalents | 1,946 | 2,742 | 2,900 | 2,400 | 2,197 | ||
Short-term investments | 359 | 362 | 362 | 366 | 366 | ||
Cash and cash equivalents, and short-term investments | 2,305 | 3,104 | 3,262 | 2,766 | 2,563 | 11 | % |
Receivables, net | 1,047 | 867 | 565 | 433 | 1,012 | (3 | %) |
STOCK-BASED COMPENSATION | |||||||
Cost of revenue | 2 | 2 | 2 | 4 | 4 | ||
Research and development | 113 | 108 | 104 | 101 | 122 | ||
Marketing and sales | 13 | 14 | 14 | 12 | 16 | ||
General and administrative | 27 | 27 | 28 | 26 | 32 | ||
Total stock-based compensation | 155 | 151 | 148 | 143 | 174 | ||
RESTRUCTURING AND RELATED CHARGES | |||||||
Restructuring | 2 | - | 59 | 2 | 51 | ||
Office space reductions | (2) | - | 2 | 4 | 1 | ||
Total restructuring and related charges | - | - | 61 | 6 | 52 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | |||
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | |||
(in $ millions) | |||
The following table provides a reconciliation of non-GAAP operating income and margin to their most directly comparable GAAP financial measure for the three months ended September 30, 2024 plus a comparison to the actuals for the three months ended September 30, 2023. | |||
Three Months Ended | |||
September 30, | |||
2024 | 2023 | YOY % Change | |
Net revenue | 2,025 | 1,914 | 6% |
GAAP operating income | 384 | 377 | 2% |
Acquisition-related expenses | 27 | 39 | |
Restructuring and related charges | 52 | - | |
Stock-based compensation | 174 | 155 | |
Non-GAAP operating income | 637 | 571 | 12% |
GAAP operating margin | 19.0% | 19.7% | |
Non-GAAP operating margin | 31.5% | 29.8% | |
Impact from change in deferred net revenue (online-enabled games) | 170 bps | (360) bps |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||||||||
GAAP Guidance to Non-GAAP Guidance | ||||||||||
(in $ millions) | ||||||||||
The following table provides GAAP to Non-GAAP reconciliation of the Company's FY25 guidance. | ||||||||||
Twelve Months Ending March 31, 2025 | ||||||||||
GAAP-Based Financial Data | GAAP-Based Financial Data | |||||||||
A | B | C | D | |||||||
GAAP Guidance Range |
Acquisition-related expenses5
|
Restructuring and related charges5
|
Stock-based compensation5
|
Non-GAAP Guidance Range = A + B +C + D |
Change in deferred net revenue (online-enabled games)5
|
|||||
Net revenue | 7,400 | to | 7,700 | - | - | - | 7,400 | to | 7,700 | 100 |
Cost of revenue | 1,530 | to | 1,560 | (40) | - | (15) | 1,475 | to | 1,505 | - |
Operating expense | 4,445 | to | 4,515 | (70) | (80) | (640) | 3,655 | to | 3,725 | - |
Operating margin | 19.3% | to | 21.1% | 150 bps | 110 bps | 870 bps | 30.7% | to | 32.1% | 90 bps to 80 bps |
Income before provision for income taxes | 1,477 | to | 1,676 | 110 | 80 | 655 | 2,322 | to | 2,521 | 100 |
Net income4
|
1,019 | to | 1,156 | |||||||
Number of shares used in computation: | ||||||||||
Diluted | 267 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES | |||||||
GAAP-Based Financial Data for Guidance | |||||||
(in $ millions) | |||||||
The following table provides supplemental information to the Company's Q3 FY25 guidance. | |||||||
Three Months Ending December 31, 2024 | |||||||
GAAP-Based Financial Data | |||||||
GAAP Guidance Range | Acquisition-related expenses | Restructuring and related charges | Stock-based compensation | Change in deferred net revenue (online-enabled games) | |||
Net revenue | 1,875 | to | 2,025 | - | - | - | 525 |
Cost of revenue | 450 | to | 480 | (10) | - | (5) | - |
Operating expense | 1,100 | to | 1,150 | (20) | (5) | (165) | - |
Income before provision for income taxes | 338 | to | 403 | 30 | 5 | 170 | 525 |
Net income4
|
226 | to | 270 | ||||
Number of shares used in computation: | |||||||
Diluted | 266 |