Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Electronic Arts Reports Q3 FY22 Financial Results By: Electronic Arts Inc. via Business Wire February 01, 2022 at 16:01 PM EST Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third fiscal quarter ended December 31, 2021. “FY22 has been a year of outstanding growth for Electronic Arts, and we’re proud that our franchises were among the most-downloaded, most-played, and most popular titles over the last year and the holiday quarter,” said Andrew Wilson, CEO of Electronic Arts. “Our network of more than 540 million unique active accounts continues to expand, players are spending more time in our games, and with our amazing IP we are well-positioned for continued growth.” “Q3 was the largest quarter in the company’s history for net bookings, underlying profitability and cash generation,” said CFO Blake Jorgensen. “Our portfolio approach will enable us to deliver organic growth in the double digits this year, continue to deliver strong cash flow, and provides a strong foundation for growth as we look to the future.” Selected Operating Highlights and Metrics Net bookings1 for the trailing twelve months was $7.254 billion, up 22% year-over-year. Over the last year, the EA player network has grown to more than 540 million unique active accounts. During FY22 to date, more than 180 million monthly active accounts on average engaged in our games across all platforms. At quarter end, Apex Legends™ monthly active players were up more than 30% year-over-year. Players are spending nearly 20% more time in our games in FY22 compared to the previous year. Selected Financial Highlights and Metrics Net cash provided by operating activities was a record $1.534 billion for the quarter and $1.826 billion for the trailing twelve months. EA repurchased 2.4 million shares for $325 million during the quarter, bringing the total for the last twelve months to 9.4 million shares for $1.300 billion. EA paid a cash dividend of $0.17 per share during the quarter. Dividend EA has declared a quarterly cash dividend of $0.17 per share of the Company’s common stock. The dividend is payable on March 23, 2022 to shareholders of record as of the close of business on March 9, 2022. Quarterly Financial Highlights Three Months Ended December 31, 2021 2020 (in $ millions, except per share amounts) Full game 616 722 Live services and other 1,173 951 Total net revenue 1,789 1,673 Net income 66 211 Diluted earnings per share 0.23 0.72 Operating cash flow 1,534 1,124 Value of shares repurchased 325 326 Number of shares repurchased 2.4 2.5 The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Three Months Ended December 31, 2021 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation Total net revenue 1,789 - 788 - Cost of revenue 631 (44 ) - (1 ) Gross profit 1,158 44 788 1 Total operating expenses 1,056 (61 ) - (128 ) Operating income 102 105 788 129 Interest and other income (expense), net (11 ) - - - Income before provision for income taxes 91 105 788 129 Number of shares used in computation: Diluted 285 Trailing Twelve Months Financial Highlights Twelve Months Ended December 31, 2021 2020 (in $ millions) Full game 1,805 1,719 Live services and other 4,707 3,951 Total net revenue 6,512 5,670 Net income 640 1,179 Operating cash flow 1,826 2,061 Value of shares repurchased 1,300 695 Number of shares repurchased 9.4 5.9 The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Twelve Months Ended December 31, 2021 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation Total net revenue 6,512 - 742 - Cost of revenue 1,759 (92 ) - (5 ) Gross profit 4,753 92 742 5 Total operating expenses 3,814 (145 ) - (507 ) Operating income 939 237 742 512 Interest and other income (expense), net (49 ) - - - Income before provision for income taxes 890 237 742 512 Operating Metric The following is a calculation of our total net bookings1 for the periods presented: Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 (in $ millions) Total net revenue 1,789 1,673 6,512 5,670 Change in deferred net revenue (online-enabled games) 788 727 742 286 Net bookings 2,577 2,400 7,254 5,956 Business Outlook as of February 1, 2022 Our financial expectations for the quarter and fiscal year ending March 31, 2022 include estimates of the impact of our completed acquisitions on consolidated results and could be materially impacted as we integrate these acquisitions. Fiscal Year 2022 Expectations – Ending March 31, 2022 Financial metrics: Net revenue is expected to be approximately $6.925 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $600 million. Net income is expected to be approximately $694 million. Diluted earnings per share is expected to be approximately $2.43. Operating cash flow is expected to be approximately $1.900 billion. The Company estimates a share count of 286 million for purposes of calculating fiscal year 2022 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $7.525 billion. In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Twelve Months Ending March 31, 2022 GAAP-Based Financial Data GAAP Guidance Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation (in $ millions) Total net revenue 6,925 - 600 - Cost of revenue 1,844 (130 ) - (5 ) Operating expense 4,048 (180 ) - (525 ) Income before provision for income taxes 984 310 600 530 Net income 694 Number of shares used in computation: Diluted shares 286 Fourth Quarter Fiscal Year 2022 Expectations – Ending March 31, 2022 Financial metrics: Net revenue is expected to be approximately $1.759 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $2 million. Net income is expected to be approximately $130 million. Diluted earnings per share is expected to be approximately $0.46. The Company estimates a share count of 284 million for purposes of calculating fourth quarter fiscal 2022 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $1.761 billion. In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ending March 31, 2022 GAAP-Based Financial Data GAAP Guidance Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation (in $ millions) Total net revenue 1,759 - 2 - Cost of revenue 404 (42 ) - (1 ) Operating expense 1,086 (49 ) - (126 ) Income before provision for income taxes 259 91 2 127 Net income 130 Number of shares used in computation: Diluted shares 284 Conference Call and Supporting Documents Electronic Arts will host a conference call on February 1, 2022 at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal quarter ended December 31, 2021 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 (866) 324-3683 (domestic) or (509) 844-0959 (international), using the conference code 4063695 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 February 15, 2022 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 4063695. 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 February 1, 2022” and other information regarding EA's fiscal 2022 and other future 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: the impact of the COVID-19 pandemic, 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 among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic 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, 2021. These forward-looking statements are current as of February 1, 2022. 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 December 31, 2021. 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 December 31, 2021. 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 2021, EA posted GAAP net revenue of $5.6 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and F1®. More information about EA is available at www.ea.com/news. EA SPORTS, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall and Plants vs. Zombies are trademarks of Electronic Arts Inc. STAR WARS © & TM 2015 Lucasfilm Ltd. All rights reserved. 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. 2 For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2021. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 Net revenue 1,789 1,673 5,166 4,283 Cost of revenue 631 601 1,440 1,175 Gross profit 1,158 1,072 3,726 3,108 Operating expenses: Research and development 539 451 1,607 1,310 Marketing and sales 293 216 716 493 General and administrative 163 149 508 418 Amortization of intangibles 61 5 131 16 Total operating expenses 1,056 821 2,962 2,237 Operating income 102 251 764 871 Interest and other income (expense), net (11 ) (6 ) (39 ) (19 ) Income before provision for income taxes 91 245 725 852 Provision for income taxes 25 34 161 91 Net income 66 211 564 761 Earnings per share Basic 0.23 0.73 1.99 2.63 Diluted 0.23 0.72 1.97 2.61 Number of shares used in computation Basic 283 290 284 289 Diluted 285 292 287 292 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on November 3, 2021 for the three months ended December 31, 2021 plus a comparison to the actuals for the three months ended December 31, 2020. Three Months Ended December 31, 2021 2021 2020 Guidance Variance Actuals Actuals Net revenue Net revenue 1,750 39 1,789 1,673 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 875 (87 ) 788 727 Cost of revenue Cost of revenue 625 6 631 601 GAAP-based financial data Acquisition-related expenses (50 ) 6 (44 ) — Stock-based compensation — (1 ) (1 ) (1 ) Operating expenses Operating expenses 1,100 (44 ) 1,056 821 GAAP-based financial data Acquisition-related expenses (35 ) (26 ) (61 ) (5 ) Stock-based compensation (135 ) 7 (128 ) (110 ) Income before tax Income before tax 8 83 91 245 GAAP-based financial data Acquisition-related expenses 85 20 105 5 Change in deferred net revenue (online-enabled games)1 875 (87 ) 788 727 Stock-based compensation 135 (6 ) 129 111 Tax rate used for management reporting 18 % 18 % 18 % Earnings per share Basic 0.02 0.21 0.23 0.73 Diluted 0.02 0.21 0.23 0.72 Number of shares Basic 284 (1 ) 283 290 Diluted 287 (2 ) 285 292 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) December 31, 2021 March 31, 20212 ASSETS Current assets: Cash and cash equivalents 2,670 5,260 Short-term investments 346 1,106 Receivables, net 965 521 Other current assets 377 326 Total current assets 4,358 7,213 Property and equipment, net 522 491 Goodwill 5,389 2,868 Acquisition-related intangibles, net 1,052 309 Deferred income taxes, net 2,130 2,045 Other assets 479 362 TOTAL ASSETS 13,930 13,288 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 86 96 Accrued and other current liabilities 1,443 1,341 Deferred net revenue (online-enabled games) 2,101 1,527 Total current liabilities 3,630 2,964 Senior notes, net 1,878 1,876 Income tax obligations 326 315 Deferred income taxes, net 75 43 Other liabilities 404 250 Total liabilities 6,313 5,448 Stockholders’ equity: Common stock 3 3 Retained earnings 7,608 7,887 Accumulated other comprehensive income (loss) 6 (50 ) Total stockholders’ equity 7,617 7,840 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,930 13,288 2 Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 OPERATING ACTIVITIES Net income 66 211 564 761 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and accretion 146 46 345 123 Stock-based compensation 129 111 403 326 Change in assets and liabilities Receivables, net 56 (348 ) (390 ) (309 ) Other assets (24 ) 85 (75 ) (28 ) Accounts payable (51 ) (77 ) (9 ) 29 Accrued and other liabilities 433 341 183 245 Deferred income taxes, net — 14 (140 ) (18 ) Deferred net revenue (online-enabled games) 779 741 574 434 Net cash provided by operating activities 1,534 1,124 1,455 1,563 INVESTING ACTIVITIES Capital expenditures (48 ) (30 ) (135 ) (93 ) Proceeds from maturities and sales of short-term investments 65 670 1,193 2,088 Purchase of short-term investments (69 ) (640 ) (438 ) (2,056 ) Acquisitions, net of cash acquired 3 — (3,391 ) — Net cash used in investing activities (49 ) — (2,771 ) (61 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 3 13 44 56 Cash dividends paid (48 ) (49 ) (145 ) (49 ) Cash paid to taxing authorities for shares withheld from employees (72 ) (67 ) (193 ) (144 ) Repurchase and retirement of common stock (325 ) (326 ) (975 ) (404 ) Net cash used in financing activities (442 ) (429 ) (1,269 ) (541 ) Effect of foreign exchange on cash and cash equivalents (3 ) 18 (5 ) 43 Change in cash and cash equivalents 1,040 713 (2,590 ) 1,004 Beginning cash and cash equivalents 1,630 4,059 5,260 3,768 Ending cash and cash equivalents 2,670 4,772 2,670 4,772 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change Net revenue Net revenue 1,673 1,346 1,551 1,826 1,789 7 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Gross profit Gross profit 1,072 1,027 1,236 1,332 1,158 8 % Gross profit (as a % of net revenue) 64 % 76 % 80 % 73 % 65 % GAAP-based financial data Acquisition-related expenses — 4 22 22 44 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 1 1 1 2 1 Operating income Operating income 251 175 322 340 102 (59 %) Operating income (as a % of net revenue) 15 % 13 % 21 % 19 % 6 % GAAP-based financial data Acquisition-related expenses 5 18 62 52 105 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 111 109 125 149 129 Net income Net income 211 76 204 294 66 (69 %) Net income (as a % of net revenue) 13 % 6 % 13 % 16 % 4 % GAAP-based financial data Acquisition-related expenses 5 18 62 52 105 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 111 109 125 149 129 Tax rate used for management reporting 18 % 18 % 18 % 18 % 18 % Diluted earnings per share 0.72 0.26 0.71 1.02 0.23 (68 %) Number of diluted shares used in computation Basic 290 288 286 285 283 Diluted 292 290 289 287 285 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) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 347 185 233 337 400 15 % Packaged goods 375 65 89 280 216 (42 %) Full game 722 250 322 617 616 (15 %) Live services and other 951 1,096 1,229 1,209 1,173 23 % Total net revenue 1,673 1,346 1,551 1,826 1,789 7 % Full game 43 % 19 % 21 % 34 % 34 % Live services and other 57 % 81 % 79 % 66 % 66 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 53 (19 ) (5 ) 35 179 Packaged goods 83 (44 ) (35 ) 44 105 Full game 136 (63 ) (40 ) 79 284 Live services and other 591 207 (175 ) (54 ) 504 Total change in deferred net revenue (online-enabled games) by composition1 727 144 (215 ) 25 788 Net revenue by platform Console 1,191 879 972 1,198 1,138 (4 %) PC & Other 326 295 361 377 374 15 % Mobile 156 172 218 251 277 78 % Total net revenue 1,673 1,346 1,551 1,826 1,789 7 % GAAP-based financial data Console 619 71 (278 ) (29 ) 608 PC & Other 73 51 9 26 137 Mobile 35 22 54 28 43 Total change in deferred net revenue (online-enabled games) by platform1 727 144 (215 ) 25 788 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) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change CASH FLOW DATA Operating cash flow 1,124 371 (143 ) 64 1,534 36 % Operating cash flow - TTM 2,061 1,934 1,413 1,416 1,826 (11 %) Capital expenditures 30 31 44 43 48 60 % Capital expenditures - TTM 133 124 130 148 166 25 % Repurchase and retirement of common stock 326 325 325 325 325 — % Cash dividends paid 49 49 49 48 48 (2 %) DEPRECIATION Depreciation expense 37 38 40 39 41 11 % BALANCE SHEET DATA Cash and cash equivalents 4,772 5,260 2,838 1,630 2,670 Short-term investments 1,938 1,106 881 342 346 Cash and cash equivalents, and short-term investments 6,710 6,366 3,719 1,972 3,016 (55 %) Receivables, net 778 521 557 1,031 965 24 % STOCK-BASED COMPENSATION Cost of revenue 1 1 1 2 1 Research and development 74 71 85 101 86 Marketing and sales 11 12 12 15 14 General and administrative 25 25 27 31 28 Total stock-based compensation 111 109 125 149 129 Category: Company News View source version on businesswire.com: https://www.businesswire.com/news/home/20220131005975/en/Contacts Chris Evenden Vice President, Investor Relations 650-628-0255 cevenden@ea.com John Reseburg Vice President, Global Communications 650-628-3601 jreseburg@ea.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Electronic Arts Reports Q3 FY22 Financial Results By: Electronic Arts Inc. via Business Wire February 01, 2022 at 16:01 PM EST Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third fiscal quarter ended December 31, 2021. “FY22 has been a year of outstanding growth for Electronic Arts, and we’re proud that our franchises were among the most-downloaded, most-played, and most popular titles over the last year and the holiday quarter,” said Andrew Wilson, CEO of Electronic Arts. “Our network of more than 540 million unique active accounts continues to expand, players are spending more time in our games, and with our amazing IP we are well-positioned for continued growth.” “Q3 was the largest quarter in the company’s history for net bookings, underlying profitability and cash generation,” said CFO Blake Jorgensen. “Our portfolio approach will enable us to deliver organic growth in the double digits this year, continue to deliver strong cash flow, and provides a strong foundation for growth as we look to the future.” Selected Operating Highlights and Metrics Net bookings1 for the trailing twelve months was $7.254 billion, up 22% year-over-year. Over the last year, the EA player network has grown to more than 540 million unique active accounts. During FY22 to date, more than 180 million monthly active accounts on average engaged in our games across all platforms. At quarter end, Apex Legends™ monthly active players were up more than 30% year-over-year. Players are spending nearly 20% more time in our games in FY22 compared to the previous year. Selected Financial Highlights and Metrics Net cash provided by operating activities was a record $1.534 billion for the quarter and $1.826 billion for the trailing twelve months. EA repurchased 2.4 million shares for $325 million during the quarter, bringing the total for the last twelve months to 9.4 million shares for $1.300 billion. EA paid a cash dividend of $0.17 per share during the quarter. Dividend EA has declared a quarterly cash dividend of $0.17 per share of the Company’s common stock. The dividend is payable on March 23, 2022 to shareholders of record as of the close of business on March 9, 2022. Quarterly Financial Highlights Three Months Ended December 31, 2021 2020 (in $ millions, except per share amounts) Full game 616 722 Live services and other 1,173 951 Total net revenue 1,789 1,673 Net income 66 211 Diluted earnings per share 0.23 0.72 Operating cash flow 1,534 1,124 Value of shares repurchased 325 326 Number of shares repurchased 2.4 2.5 The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Three Months Ended December 31, 2021 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation Total net revenue 1,789 - 788 - Cost of revenue 631 (44 ) - (1 ) Gross profit 1,158 44 788 1 Total operating expenses 1,056 (61 ) - (128 ) Operating income 102 105 788 129 Interest and other income (expense), net (11 ) - - - Income before provision for income taxes 91 105 788 129 Number of shares used in computation: Diluted 285 Trailing Twelve Months Financial Highlights Twelve Months Ended December 31, 2021 2020 (in $ millions) Full game 1,805 1,719 Live services and other 4,707 3,951 Total net revenue 6,512 5,670 Net income 640 1,179 Operating cash flow 1,826 2,061 Value of shares repurchased 1,300 695 Number of shares repurchased 9.4 5.9 The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Twelve Months Ended December 31, 2021 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation Total net revenue 6,512 - 742 - Cost of revenue 1,759 (92 ) - (5 ) Gross profit 4,753 92 742 5 Total operating expenses 3,814 (145 ) - (507 ) Operating income 939 237 742 512 Interest and other income (expense), net (49 ) - - - Income before provision for income taxes 890 237 742 512 Operating Metric The following is a calculation of our total net bookings1 for the periods presented: Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 (in $ millions) Total net revenue 1,789 1,673 6,512 5,670 Change in deferred net revenue (online-enabled games) 788 727 742 286 Net bookings 2,577 2,400 7,254 5,956 Business Outlook as of February 1, 2022 Our financial expectations for the quarter and fiscal year ending March 31, 2022 include estimates of the impact of our completed acquisitions on consolidated results and could be materially impacted as we integrate these acquisitions. Fiscal Year 2022 Expectations – Ending March 31, 2022 Financial metrics: Net revenue is expected to be approximately $6.925 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $600 million. Net income is expected to be approximately $694 million. Diluted earnings per share is expected to be approximately $2.43. Operating cash flow is expected to be approximately $1.900 billion. The Company estimates a share count of 286 million for purposes of calculating fiscal year 2022 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $7.525 billion. In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Twelve Months Ending March 31, 2022 GAAP-Based Financial Data GAAP Guidance Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation (in $ millions) Total net revenue 6,925 - 600 - Cost of revenue 1,844 (130 ) - (5 ) Operating expense 4,048 (180 ) - (525 ) Income before provision for income taxes 984 310 600 530 Net income 694 Number of shares used in computation: Diluted shares 286 Fourth Quarter Fiscal Year 2022 Expectations – Ending March 31, 2022 Financial metrics: Net revenue is expected to be approximately $1.759 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $2 million. Net income is expected to be approximately $130 million. Diluted earnings per share is expected to be approximately $0.46. The Company estimates a share count of 284 million for purposes of calculating fourth quarter fiscal 2022 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $1.761 billion. In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ending March 31, 2022 GAAP-Based Financial Data GAAP Guidance Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation (in $ millions) Total net revenue 1,759 - 2 - Cost of revenue 404 (42 ) - (1 ) Operating expense 1,086 (49 ) - (126 ) Income before provision for income taxes 259 91 2 127 Net income 130 Number of shares used in computation: Diluted shares 284 Conference Call and Supporting Documents Electronic Arts will host a conference call on February 1, 2022 at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal quarter ended December 31, 2021 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 (866) 324-3683 (domestic) or (509) 844-0959 (international), using the conference code 4063695 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 February 15, 2022 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 4063695. 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 February 1, 2022” and other information regarding EA's fiscal 2022 and other future 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: the impact of the COVID-19 pandemic, 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 among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic 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, 2021. These forward-looking statements are current as of February 1, 2022. 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 December 31, 2021. 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 December 31, 2021. 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 2021, EA posted GAAP net revenue of $5.6 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and F1®. More information about EA is available at www.ea.com/news. EA SPORTS, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall and Plants vs. Zombies are trademarks of Electronic Arts Inc. STAR WARS © & TM 2015 Lucasfilm Ltd. All rights reserved. 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. 2 For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2021. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 Net revenue 1,789 1,673 5,166 4,283 Cost of revenue 631 601 1,440 1,175 Gross profit 1,158 1,072 3,726 3,108 Operating expenses: Research and development 539 451 1,607 1,310 Marketing and sales 293 216 716 493 General and administrative 163 149 508 418 Amortization of intangibles 61 5 131 16 Total operating expenses 1,056 821 2,962 2,237 Operating income 102 251 764 871 Interest and other income (expense), net (11 ) (6 ) (39 ) (19 ) Income before provision for income taxes 91 245 725 852 Provision for income taxes 25 34 161 91 Net income 66 211 564 761 Earnings per share Basic 0.23 0.73 1.99 2.63 Diluted 0.23 0.72 1.97 2.61 Number of shares used in computation Basic 283 290 284 289 Diluted 285 292 287 292 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on November 3, 2021 for the three months ended December 31, 2021 plus a comparison to the actuals for the three months ended December 31, 2020. Three Months Ended December 31, 2021 2021 2020 Guidance Variance Actuals Actuals Net revenue Net revenue 1,750 39 1,789 1,673 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 875 (87 ) 788 727 Cost of revenue Cost of revenue 625 6 631 601 GAAP-based financial data Acquisition-related expenses (50 ) 6 (44 ) — Stock-based compensation — (1 ) (1 ) (1 ) Operating expenses Operating expenses 1,100 (44 ) 1,056 821 GAAP-based financial data Acquisition-related expenses (35 ) (26 ) (61 ) (5 ) Stock-based compensation (135 ) 7 (128 ) (110 ) Income before tax Income before tax 8 83 91 245 GAAP-based financial data Acquisition-related expenses 85 20 105 5 Change in deferred net revenue (online-enabled games)1 875 (87 ) 788 727 Stock-based compensation 135 (6 ) 129 111 Tax rate used for management reporting 18 % 18 % 18 % Earnings per share Basic 0.02 0.21 0.23 0.73 Diluted 0.02 0.21 0.23 0.72 Number of shares Basic 284 (1 ) 283 290 Diluted 287 (2 ) 285 292 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) December 31, 2021 March 31, 20212 ASSETS Current assets: Cash and cash equivalents 2,670 5,260 Short-term investments 346 1,106 Receivables, net 965 521 Other current assets 377 326 Total current assets 4,358 7,213 Property and equipment, net 522 491 Goodwill 5,389 2,868 Acquisition-related intangibles, net 1,052 309 Deferred income taxes, net 2,130 2,045 Other assets 479 362 TOTAL ASSETS 13,930 13,288 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 86 96 Accrued and other current liabilities 1,443 1,341 Deferred net revenue (online-enabled games) 2,101 1,527 Total current liabilities 3,630 2,964 Senior notes, net 1,878 1,876 Income tax obligations 326 315 Deferred income taxes, net 75 43 Other liabilities 404 250 Total liabilities 6,313 5,448 Stockholders’ equity: Common stock 3 3 Retained earnings 7,608 7,887 Accumulated other comprehensive income (loss) 6 (50 ) Total stockholders’ equity 7,617 7,840 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,930 13,288 2 Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 OPERATING ACTIVITIES Net income 66 211 564 761 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and accretion 146 46 345 123 Stock-based compensation 129 111 403 326 Change in assets and liabilities Receivables, net 56 (348 ) (390 ) (309 ) Other assets (24 ) 85 (75 ) (28 ) Accounts payable (51 ) (77 ) (9 ) 29 Accrued and other liabilities 433 341 183 245 Deferred income taxes, net — 14 (140 ) (18 ) Deferred net revenue (online-enabled games) 779 741 574 434 Net cash provided by operating activities 1,534 1,124 1,455 1,563 INVESTING ACTIVITIES Capital expenditures (48 ) (30 ) (135 ) (93 ) Proceeds from maturities and sales of short-term investments 65 670 1,193 2,088 Purchase of short-term investments (69 ) (640 ) (438 ) (2,056 ) Acquisitions, net of cash acquired 3 — (3,391 ) — Net cash used in investing activities (49 ) — (2,771 ) (61 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 3 13 44 56 Cash dividends paid (48 ) (49 ) (145 ) (49 ) Cash paid to taxing authorities for shares withheld from employees (72 ) (67 ) (193 ) (144 ) Repurchase and retirement of common stock (325 ) (326 ) (975 ) (404 ) Net cash used in financing activities (442 ) (429 ) (1,269 ) (541 ) Effect of foreign exchange on cash and cash equivalents (3 ) 18 (5 ) 43 Change in cash and cash equivalents 1,040 713 (2,590 ) 1,004 Beginning cash and cash equivalents 1,630 4,059 5,260 3,768 Ending cash and cash equivalents 2,670 4,772 2,670 4,772 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change Net revenue Net revenue 1,673 1,346 1,551 1,826 1,789 7 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Gross profit Gross profit 1,072 1,027 1,236 1,332 1,158 8 % Gross profit (as a % of net revenue) 64 % 76 % 80 % 73 % 65 % GAAP-based financial data Acquisition-related expenses — 4 22 22 44 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 1 1 1 2 1 Operating income Operating income 251 175 322 340 102 (59 %) Operating income (as a % of net revenue) 15 % 13 % 21 % 19 % 6 % GAAP-based financial data Acquisition-related expenses 5 18 62 52 105 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 111 109 125 149 129 Net income Net income 211 76 204 294 66 (69 %) Net income (as a % of net revenue) 13 % 6 % 13 % 16 % 4 % GAAP-based financial data Acquisition-related expenses 5 18 62 52 105 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 111 109 125 149 129 Tax rate used for management reporting 18 % 18 % 18 % 18 % 18 % Diluted earnings per share 0.72 0.26 0.71 1.02 0.23 (68 %) Number of diluted shares used in computation Basic 290 288 286 285 283 Diluted 292 290 289 287 285 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) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 347 185 233 337 400 15 % Packaged goods 375 65 89 280 216 (42 %) Full game 722 250 322 617 616 (15 %) Live services and other 951 1,096 1,229 1,209 1,173 23 % Total net revenue 1,673 1,346 1,551 1,826 1,789 7 % Full game 43 % 19 % 21 % 34 % 34 % Live services and other 57 % 81 % 79 % 66 % 66 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 53 (19 ) (5 ) 35 179 Packaged goods 83 (44 ) (35 ) 44 105 Full game 136 (63 ) (40 ) 79 284 Live services and other 591 207 (175 ) (54 ) 504 Total change in deferred net revenue (online-enabled games) by composition1 727 144 (215 ) 25 788 Net revenue by platform Console 1,191 879 972 1,198 1,138 (4 %) PC & Other 326 295 361 377 374 15 % Mobile 156 172 218 251 277 78 % Total net revenue 1,673 1,346 1,551 1,826 1,789 7 % GAAP-based financial data Console 619 71 (278 ) (29 ) 608 PC & Other 73 51 9 26 137 Mobile 35 22 54 28 43 Total change in deferred net revenue (online-enabled games) by platform1 727 144 (215 ) 25 788 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) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change CASH FLOW DATA Operating cash flow 1,124 371 (143 ) 64 1,534 36 % Operating cash flow - TTM 2,061 1,934 1,413 1,416 1,826 (11 %) Capital expenditures 30 31 44 43 48 60 % Capital expenditures - TTM 133 124 130 148 166 25 % Repurchase and retirement of common stock 326 325 325 325 325 — % Cash dividends paid 49 49 49 48 48 (2 %) DEPRECIATION Depreciation expense 37 38 40 39 41 11 % BALANCE SHEET DATA Cash and cash equivalents 4,772 5,260 2,838 1,630 2,670 Short-term investments 1,938 1,106 881 342 346 Cash and cash equivalents, and short-term investments 6,710 6,366 3,719 1,972 3,016 (55 %) Receivables, net 778 521 557 1,031 965 24 % STOCK-BASED COMPENSATION Cost of revenue 1 1 1 2 1 Research and development 74 71 85 101 86 Marketing and sales 11 12 12 15 14 General and administrative 25 25 27 31 28 Total stock-based compensation 111 109 125 149 129 Category: Company News View source version on businesswire.com: https://www.businesswire.com/news/home/20220131005975/en/Contacts Chris Evenden Vice President, Investor Relations 650-628-0255 cevenden@ea.com John Reseburg Vice President, Global Communications 650-628-3601 jreseburg@ea.com
Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third fiscal quarter ended December 31, 2021. “FY22 has been a year of outstanding growth for Electronic Arts, and we’re proud that our franchises were among the most-downloaded, most-played, and most popular titles over the last year and the holiday quarter,” said Andrew Wilson, CEO of Electronic Arts. “Our network of more than 540 million unique active accounts continues to expand, players are spending more time in our games, and with our amazing IP we are well-positioned for continued growth.” “Q3 was the largest quarter in the company’s history for net bookings, underlying profitability and cash generation,” said CFO Blake Jorgensen. “Our portfolio approach will enable us to deliver organic growth in the double digits this year, continue to deliver strong cash flow, and provides a strong foundation for growth as we look to the future.” Selected Operating Highlights and Metrics Net bookings1 for the trailing twelve months was $7.254 billion, up 22% year-over-year. Over the last year, the EA player network has grown to more than 540 million unique active accounts. During FY22 to date, more than 180 million monthly active accounts on average engaged in our games across all platforms. At quarter end, Apex Legends™ monthly active players were up more than 30% year-over-year. Players are spending nearly 20% more time in our games in FY22 compared to the previous year. Selected Financial Highlights and Metrics Net cash provided by operating activities was a record $1.534 billion for the quarter and $1.826 billion for the trailing twelve months. EA repurchased 2.4 million shares for $325 million during the quarter, bringing the total for the last twelve months to 9.4 million shares for $1.300 billion. EA paid a cash dividend of $0.17 per share during the quarter. Dividend EA has declared a quarterly cash dividend of $0.17 per share of the Company’s common stock. The dividend is payable on March 23, 2022 to shareholders of record as of the close of business on March 9, 2022. Quarterly Financial Highlights Three Months Ended December 31, 2021 2020 (in $ millions, except per share amounts) Full game 616 722 Live services and other 1,173 951 Total net revenue 1,789 1,673 Net income 66 211 Diluted earnings per share 0.23 0.72 Operating cash flow 1,534 1,124 Value of shares repurchased 325 326 Number of shares repurchased 2.4 2.5 The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Three Months Ended December 31, 2021 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation Total net revenue 1,789 - 788 - Cost of revenue 631 (44 ) - (1 ) Gross profit 1,158 44 788 1 Total operating expenses 1,056 (61 ) - (128 ) Operating income 102 105 788 129 Interest and other income (expense), net (11 ) - - - Income before provision for income taxes 91 105 788 129 Number of shares used in computation: Diluted 285 Trailing Twelve Months Financial Highlights Twelve Months Ended December 31, 2021 2020 (in $ millions) Full game 1,805 1,719 Live services and other 4,707 3,951 Total net revenue 6,512 5,670 Net income 640 1,179 Operating cash flow 1,826 2,061 Value of shares repurchased 1,300 695 Number of shares repurchased 9.4 5.9 The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Twelve Months Ended December 31, 2021 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation Total net revenue 6,512 - 742 - Cost of revenue 1,759 (92 ) - (5 ) Gross profit 4,753 92 742 5 Total operating expenses 3,814 (145 ) - (507 ) Operating income 939 237 742 512 Interest and other income (expense), net (49 ) - - - Income before provision for income taxes 890 237 742 512 Operating Metric The following is a calculation of our total net bookings1 for the periods presented: Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 (in $ millions) Total net revenue 1,789 1,673 6,512 5,670 Change in deferred net revenue (online-enabled games) 788 727 742 286 Net bookings 2,577 2,400 7,254 5,956 Business Outlook as of February 1, 2022 Our financial expectations for the quarter and fiscal year ending March 31, 2022 include estimates of the impact of our completed acquisitions on consolidated results and could be materially impacted as we integrate these acquisitions. Fiscal Year 2022 Expectations – Ending March 31, 2022 Financial metrics: Net revenue is expected to be approximately $6.925 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $600 million. Net income is expected to be approximately $694 million. Diluted earnings per share is expected to be approximately $2.43. Operating cash flow is expected to be approximately $1.900 billion. The Company estimates a share count of 286 million for purposes of calculating fiscal year 2022 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $7.525 billion. In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Twelve Months Ending March 31, 2022 GAAP-Based Financial Data GAAP Guidance Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation (in $ millions) Total net revenue 6,925 - 600 - Cost of revenue 1,844 (130 ) - (5 ) Operating expense 4,048 (180 ) - (525 ) Income before provision for income taxes 984 310 600 530 Net income 694 Number of shares used in computation: Diluted shares 286 Fourth Quarter Fiscal Year 2022 Expectations – Ending March 31, 2022 Financial metrics: Net revenue is expected to be approximately $1.759 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $2 million. Net income is expected to be approximately $130 million. Diluted earnings per share is expected to be approximately $0.46. The Company estimates a share count of 284 million for purposes of calculating fourth quarter fiscal 2022 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $1.761 billion. In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ending March 31, 2022 GAAP-Based Financial Data GAAP Guidance Acquisition- related expenses Change in deferred net revenue (online-enabled games) Stock-based compensation (in $ millions) Total net revenue 1,759 - 2 - Cost of revenue 404 (42 ) - (1 ) Operating expense 1,086 (49 ) - (126 ) Income before provision for income taxes 259 91 2 127 Net income 130 Number of shares used in computation: Diluted shares 284 Conference Call and Supporting Documents Electronic Arts will host a conference call on February 1, 2022 at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal quarter ended December 31, 2021 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 (866) 324-3683 (domestic) or (509) 844-0959 (international), using the conference code 4063695 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 February 15, 2022 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 4063695. 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 February 1, 2022” and other information regarding EA's fiscal 2022 and other future 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: the impact of the COVID-19 pandemic, 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 among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic 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, 2021. These forward-looking statements are current as of February 1, 2022. 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 December 31, 2021. 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 December 31, 2021. 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 2021, EA posted GAAP net revenue of $5.6 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and F1®. More information about EA is available at www.ea.com/news. EA SPORTS, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall and Plants vs. Zombies are trademarks of Electronic Arts Inc. STAR WARS © & TM 2015 Lucasfilm Ltd. All rights reserved. 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. 2 For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2021. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 Net revenue 1,789 1,673 5,166 4,283 Cost of revenue 631 601 1,440 1,175 Gross profit 1,158 1,072 3,726 3,108 Operating expenses: Research and development 539 451 1,607 1,310 Marketing and sales 293 216 716 493 General and administrative 163 149 508 418 Amortization of intangibles 61 5 131 16 Total operating expenses 1,056 821 2,962 2,237 Operating income 102 251 764 871 Interest and other income (expense), net (11 ) (6 ) (39 ) (19 ) Income before provision for income taxes 91 245 725 852 Provision for income taxes 25 34 161 91 Net income 66 211 564 761 Earnings per share Basic 0.23 0.73 1.99 2.63 Diluted 0.23 0.72 1.97 2.61 Number of shares used in computation Basic 283 290 284 289 Diluted 285 292 287 292 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on November 3, 2021 for the three months ended December 31, 2021 plus a comparison to the actuals for the three months ended December 31, 2020. Three Months Ended December 31, 2021 2021 2020 Guidance Variance Actuals Actuals Net revenue Net revenue 1,750 39 1,789 1,673 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 875 (87 ) 788 727 Cost of revenue Cost of revenue 625 6 631 601 GAAP-based financial data Acquisition-related expenses (50 ) 6 (44 ) — Stock-based compensation — (1 ) (1 ) (1 ) Operating expenses Operating expenses 1,100 (44 ) 1,056 821 GAAP-based financial data Acquisition-related expenses (35 ) (26 ) (61 ) (5 ) Stock-based compensation (135 ) 7 (128 ) (110 ) Income before tax Income before tax 8 83 91 245 GAAP-based financial data Acquisition-related expenses 85 20 105 5 Change in deferred net revenue (online-enabled games)1 875 (87 ) 788 727 Stock-based compensation 135 (6 ) 129 111 Tax rate used for management reporting 18 % 18 % 18 % Earnings per share Basic 0.02 0.21 0.23 0.73 Diluted 0.02 0.21 0.23 0.72 Number of shares Basic 284 (1 ) 283 290 Diluted 287 (2 ) 285 292 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) December 31, 2021 March 31, 20212 ASSETS Current assets: Cash and cash equivalents 2,670 5,260 Short-term investments 346 1,106 Receivables, net 965 521 Other current assets 377 326 Total current assets 4,358 7,213 Property and equipment, net 522 491 Goodwill 5,389 2,868 Acquisition-related intangibles, net 1,052 309 Deferred income taxes, net 2,130 2,045 Other assets 479 362 TOTAL ASSETS 13,930 13,288 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 86 96 Accrued and other current liabilities 1,443 1,341 Deferred net revenue (online-enabled games) 2,101 1,527 Total current liabilities 3,630 2,964 Senior notes, net 1,878 1,876 Income tax obligations 326 315 Deferred income taxes, net 75 43 Other liabilities 404 250 Total liabilities 6,313 5,448 Stockholders’ equity: Common stock 3 3 Retained earnings 7,608 7,887 Accumulated other comprehensive income (loss) 6 (50 ) Total stockholders’ equity 7,617 7,840 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,930 13,288 2 Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 OPERATING ACTIVITIES Net income 66 211 564 761 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and accretion 146 46 345 123 Stock-based compensation 129 111 403 326 Change in assets and liabilities Receivables, net 56 (348 ) (390 ) (309 ) Other assets (24 ) 85 (75 ) (28 ) Accounts payable (51 ) (77 ) (9 ) 29 Accrued and other liabilities 433 341 183 245 Deferred income taxes, net — 14 (140 ) (18 ) Deferred net revenue (online-enabled games) 779 741 574 434 Net cash provided by operating activities 1,534 1,124 1,455 1,563 INVESTING ACTIVITIES Capital expenditures (48 ) (30 ) (135 ) (93 ) Proceeds from maturities and sales of short-term investments 65 670 1,193 2,088 Purchase of short-term investments (69 ) (640 ) (438 ) (2,056 ) Acquisitions, net of cash acquired 3 — (3,391 ) — Net cash used in investing activities (49 ) — (2,771 ) (61 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 3 13 44 56 Cash dividends paid (48 ) (49 ) (145 ) (49 ) Cash paid to taxing authorities for shares withheld from employees (72 ) (67 ) (193 ) (144 ) Repurchase and retirement of common stock (325 ) (326 ) (975 ) (404 ) Net cash used in financing activities (442 ) (429 ) (1,269 ) (541 ) Effect of foreign exchange on cash and cash equivalents (3 ) 18 (5 ) 43 Change in cash and cash equivalents 1,040 713 (2,590 ) 1,004 Beginning cash and cash equivalents 1,630 4,059 5,260 3,768 Ending cash and cash equivalents 2,670 4,772 2,670 4,772 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change Net revenue Net revenue 1,673 1,346 1,551 1,826 1,789 7 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Gross profit Gross profit 1,072 1,027 1,236 1,332 1,158 8 % Gross profit (as a % of net revenue) 64 % 76 % 80 % 73 % 65 % GAAP-based financial data Acquisition-related expenses — 4 22 22 44 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 1 1 1 2 1 Operating income Operating income 251 175 322 340 102 (59 %) Operating income (as a % of net revenue) 15 % 13 % 21 % 19 % 6 % GAAP-based financial data Acquisition-related expenses 5 18 62 52 105 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 111 109 125 149 129 Net income Net income 211 76 204 294 66 (69 %) Net income (as a % of net revenue) 13 % 6 % 13 % 16 % 4 % GAAP-based financial data Acquisition-related expenses 5 18 62 52 105 Change in deferred net revenue (online-enabled games)1 727 144 (215 ) 25 788 Stock-based compensation 111 109 125 149 129 Tax rate used for management reporting 18 % 18 % 18 % 18 % 18 % Diluted earnings per share 0.72 0.26 0.71 1.02 0.23 (68 %) Number of diluted shares used in computation Basic 290 288 286 285 283 Diluted 292 290 289 287 285 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) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 347 185 233 337 400 15 % Packaged goods 375 65 89 280 216 (42 %) Full game 722 250 322 617 616 (15 %) Live services and other 951 1,096 1,229 1,209 1,173 23 % Total net revenue 1,673 1,346 1,551 1,826 1,789 7 % Full game 43 % 19 % 21 % 34 % 34 % Live services and other 57 % 81 % 79 % 66 % 66 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 53 (19 ) (5 ) 35 179 Packaged goods 83 (44 ) (35 ) 44 105 Full game 136 (63 ) (40 ) 79 284 Live services and other 591 207 (175 ) (54 ) 504 Total change in deferred net revenue (online-enabled games) by composition1 727 144 (215 ) 25 788 Net revenue by platform Console 1,191 879 972 1,198 1,138 (4 %) PC & Other 326 295 361 377 374 15 % Mobile 156 172 218 251 277 78 % Total net revenue 1,673 1,346 1,551 1,826 1,789 7 % GAAP-based financial data Console 619 71 (278 ) (29 ) 608 PC & Other 73 51 9 26 137 Mobile 35 22 54 28 43 Total change in deferred net revenue (online-enabled games) by platform1 727 144 (215 ) 25 788 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) Q3 Q4 Q1 Q2 Q3 YOY % FY21 FY21 FY22 FY22 FY22 Change CASH FLOW DATA Operating cash flow 1,124 371 (143 ) 64 1,534 36 % Operating cash flow - TTM 2,061 1,934 1,413 1,416 1,826 (11 %) Capital expenditures 30 31 44 43 48 60 % Capital expenditures - TTM 133 124 130 148 166 25 % Repurchase and retirement of common stock 326 325 325 325 325 — % Cash dividends paid 49 49 49 48 48 (2 %) DEPRECIATION Depreciation expense 37 38 40 39 41 11 % BALANCE SHEET DATA Cash and cash equivalents 4,772 5,260 2,838 1,630 2,670 Short-term investments 1,938 1,106 881 342 346 Cash and cash equivalents, and short-term investments 6,710 6,366 3,719 1,972 3,016 (55 %) Receivables, net 778 521 557 1,031 965 24 % STOCK-BASED COMPENSATION Cost of revenue 1 1 1 2 1 Research and development 74 71 85 101 86 Marketing and sales 11 12 12 15 14 General and administrative 25 25 27 31 28 Total stock-based compensation 111 109 125 149 129 Category: Company News View source version on businesswire.com: https://www.businesswire.com/news/home/20220131005975/en/
Chris Evenden Vice President, Investor Relations 650-628-0255 cevenden@ea.com John Reseburg Vice President, Global Communications 650-628-3601 jreseburg@ea.com