Electronic Arts Inc.
10/29/2024 | Press release | Distributed by Public on 10/29/2024 14:11
Electronic Arts Reports Strong Q2 FY25 Results
Record Q2 net bookings driven by performance across EA SPORTS™ portfolio resulting in a raised full-year outlook
REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Electronic Arts (NASDAQ: EA) today announced preliminary financial results for its second quarter ended September 30, 2024.
"EA delivered another strong quarter with record Q2 net bookings, driven by our incredible teams, broad portfolio and technology leadership," said Andrew Wilson, CEO of EA. "The momentum in our business reinforces our strategic vision to deliver innovative experiences and interactive entertainment that deepens and expands engagement across our global communities."
"Q2 was another successful quarter for EA, exceeding the high end of our guidance range. As a result, we are also raising our FY25 outlook," said Stuart Canfield, CFO of EA. "We remain confident in our ability to drive long-term value creation through increased scale, driving top-line growth, improved margins, and greater cash flow as shared at our Investor Day."
Selected Operating Highlights and Metrics
- Net bookings 1 for the quarter totaled $2.079 billion, setting a Q2 record and exceeding the high end of guidance range of $2.050 billion.
- American Football is on track to exceed $1 billion in net bookings for FY25, with total hours played in Q2 up over 140% year over year, and we also saw new players in the community more than double year over year.
- Through September, College Football 25 was the best-selling HD title in North America and gives EA three of the top ten HD bestsellers in North America.
- Global Football saw live service growth across all platforms in Q2, and total franchise net bookings in FY25 are on track to grow over a record FY24.
- The Sims™ 4 continues to expand, with more than 15 million players joining the game over the past year. Increased engagement led to higher-than-expected net bookings for the franchise in Q2.
Selected Financial Highlights and Metrics
- Net revenue was $2.025 billion for the quarter.
- Net cash provided by operating activities was $234 million for the quarter and $2.198 billion for the trailing twelve months.
- EA repurchased 2.6 million shares for $375 million during the quarter under the stock repurchase program, bringing the total for the trailing twelve months to 10.2 million shares for $1.400 billion.
Dividend
EA has declared a quarterly cash dividend of $0.19 per share of the Company's common stock. The dividend is payable on December 18, 2024 to stockholders of record as of the close of business on November 27, 2024.
Quarterly Financial Highlights
|
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 |
* Diluted earnings per share includes $0.34 from a one-time non-cash tax benefit in second quarter ended September 30, 2023.
Trailing Twelve Months Financial Highlights
|
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 |
Operating Metric
The following is a calculation of our total net bookings 1 for the periods presented:
|
Three Months Ended |
Twelve Months Ended |
||||||||
|
(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 |
Business Outlook as of October 29, 2024
Fiscal Year 2025 Expectations - Ending March 31, 2025
Financial outlook metrics:
-
Net revenue is expected to be approximately $7.400 billion to $7.700 billion.
- Change in deferred net revenue (online-enabled games) is expected to be approximately $100 million.
- Net income is expected to be approximately $1.019 billion to $1.156 billion.
- Diluted earnings per share is expected to be approximately $3.82 to $4.33.
- Operating cash flow is expected to be approximately $2.075 billion to $2.275 billion.
- The Company estimates a share count of 267 million for purposes of calculating diluted earnings per share.
Operational outlook metric:
- Net bookings 1 is expected to be approximately $7.500 billion to $7.800 billion.
Third Quarter Fiscal Year 2025 Expectations - Ending December 31, 2024
Financial outlook metrics:
-
Net revenue is expected to be approximately $1.875 billion to $2.025 billion.
- Change in deferred net revenue (online-enabled games) is expected to be approximately $525 million.
- Net income is expected to be approximately $226 million to $270 million.
- Diluted earnings per share is expected to be approximately $0.85 to $1.02.
- The Company estimates a share count of 266 million for purposes of calculating diluted earnings per share.
Operational outlook metric:
- Net bookings 1 is expected to be approximately $2.400 billion to $2.550 billion.
Conference Call and Supporting Documents
Electronic Arts will host a conference call on October 29, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the second fiscal quarter ended September 30, 2024 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA's IR Website at http://ir.ea.com.
EA has posted a slide presentation with a financial model of EA's historical results and guidance on EA's IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA's IR Website.
A dial-in replay of the conference call will be available until November 5, 2024 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using conference code 5939891. An audio webcast replay of the conference call will be available for one year on EA's IR Website.
Forward-Looking Statements
Some statements set forth in this release, including the information relating to EA's expectations under the heading "Business Outlook as of October 29, 2024" and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as "anticipate," "believe," "expect," "intend," "estimate," "plan," "predict," "seek," "goal," "will," "may," "likely," "should," "could" (and the negative of any of these terms), "future" and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management's current expectations. Our actual results could differ materially from those discussed in the forward-looking statements.
Some of the factors which could cause the Company's results to differ materially from its expectations include the following: sales of the Company's products and services; the Company's ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company's ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company's sales and marketing programs; timely development and release of the Company's products and services; the Company's ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company's ability to predict consumer preferences and trends; the Company's ability to develop and implement new technology; foreign currency exchange rate fluctuations; economic and geopolitical conditions; changes in our tax rates or tax laws; and other factors described in Part II, Item 1A of Electronic Arts' latest Quarterly Report on Form 10-Q under the heading "Risk Factors", as well as in other documents we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.
These forward-looking statements are current as of October 29, 2024. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts.
While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2024.
About Electronic Arts
Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.
In fiscal year 2024, EA posted GAAP net revenue of approximately $7.6 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The Sims™, EA SPORTS™ Madden NFL, EA SPORTS™ College Football, Need for Speed™, Dragon Age™, Titanfall™, Plants vs. Zombies™ and EA SPORTS F1 ® . More information about EA is available at www.ea.com/news.
EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Dragon Age, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission.
1 Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES |
||||||||
|
Unaudited Condensed Consolidated Statements of Operations |
||||||||
|
(in $ millions, except per share data) |
||||||||
|
Three Months Ended |
Six Months Ended |
|||||||
|
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 |
Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus our guidance provided on July 30, 2024 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 Guidance |
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 |
1 The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES |
|||||
|
Unaudited Condensed Consolidated Balance Sheets |
|||||
|
(in $ millions) |
|||||
|
September 30, 2024 |
March 31, 2024 2 |
||||
|
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 |
2 Derived from audited consolidated financial statements.
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES |
|||||||||||
|
Unaudited Condensed Consolidated Statements of Cash Flows |
|||||||||||
|
(in $ millions) |
|||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||
|
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 |
1 The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
|
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 composition 1 |
(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 platform 1 |
(94 |
) |
421 |
(113 |
) |
(398 |
) |
54 |
1 The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
|
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 flow 3 |
61 |
1,212 |
529 |
53 |
184 |
||||||||||||
|
Free cash flow 3 - 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 |
3 Free cash flow is defined as Operating cash flow less Capital expenditures.
|
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 expenses 5 |
Restructuring and related charges 5 |
Stock-based compensation 5 |
Non-GAAP Guidance Range |
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 income 4 |
1,019 |
to |
1,156 |
||||||||||||
|
Number of shares used in computation: |
|||||||||||||||
|
Diluted |
267 |
4 The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.
5 The mid-point of the range has been used for purposes of presenting reconciling items to operating margin.
|
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 income 4 |
226 |
to |
270 |
||||||||
|
Number of shares used in computation: |
|||||||||||
|
Diluted |
266 |
4 The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.
Non-GAAP Financial Measures
As a supplement to the Company's financial measures presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company presents certain non-GAAP measures of financial performance, including non-GAAP operating margin and free cash flow. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the Company's results of operations as determined in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting and differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.
The non-GAAP financial measures exclude acquisition-related expenses, stock-based compensation, restructuring and related charges, and capital expenditures, as applicable in any given reporting period and our outlook. The Company may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures. Management believes that these non-GAAP financial measures provide investors with additional useful information to better understand and evaluate the Company's operating results and future prospects because they exclude certain items that may not be indicative of the Company's core business, operating results, or future outlook. These non-GAAP financial measures, with further adjustments are used by management to understand ongoing financial and business performance.
The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan, and analyze future periods. Accordingly, the Company applies the same tax rate to its management reporting financial results.
Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure.
Andrew Uerkwitz
Vice President, Investor Relations
650-674-7191
[email protected]
Justin Higgs
Vice President, Corporate Communications
925-502-9253
[email protected]