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 Q1 FY23 Financial Results By: Electronic Arts Inc. via Business Wire August 02, 2022 at 16:01 PM EDT Electronic Arts Inc. (NASDAQ:EA) today announced preliminary financial results for its first fiscal quarter ended June 30, 2022. “EA delivered strong results in Q1 with our growing player network deeply engaged in new games and live services,” said CEO Andrew Wilson. “Our expanding EA SPORTS portfolio and owned IP franchises continue to power resilience and longevity in our business. Our teams remain focused on what they do best – making amazing experiences that inspire new generations to play, watch, create, compete and connect.” “Our FIFA franchise and the successful launch of F1 drove our net bookings outperformance, delivering another quarter ahead of expectations,” said CFO Chris Suh. “Looking ahead, our focus on execution and disciplined investment across our broad portfolio of games and live services will fuel our long-term growth.” Selected Operating Highlights and Metrics Net bookings1 for the trailing twelve months was $7.478 billion, up 22% year-over-year. Live services and other net bookings for the trailing twelve months were up 20% year-over-year and represent 73% of total net bookings. The EA player network grew to nearly 600 million active accounts at quarter end. FIFA Ultimate Team™ engagement during the quarter was up nearly 40% year-over-year in weekly and daily average players. In Q1, FIFA Mobile delivered the highest net bookings quarter in history, with record high DAUs, up 10% from last quarter. Selected Financial Highlights and Metrics Net cash (used in)/provided by operating activities was $(78) million for the quarter and $1.964 billion for the trailing twelve months. EA repurchased 2.5 million shares for $320 million during the quarter, bringing the total for the trailing twelve months to 9.7 million shares for $1.295 billion. EA paid a cash dividend of $0.19 per share during the quarter, for a total of $53 million. Dividend EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on September 21, 2022 to shareholders of record as of the close of business on August 31, 2022. Quarterly Financial Highlights Three Months Ended June 30, 2022 2021 (in $ millions, except per share amounts) Full game 341 322 Live services and other 1,426 1,229 Total net revenue 1,767 1,551 Net income 311 204 Diluted earnings per share 1.11 0.71 Operating cash flow (78 ) (143 ) Value of shares repurchased 320 325 Number of shares repurchased 2.5 2.3 The following GAAP-based financial data2 and tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Three Months Ended June 30, 2022 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 1,767 - (468 ) - Cost of revenue 314 (30 ) - (2 ) Gross profit 1,453 30 (468 ) 2 Total operating expenses 1,012 (39 ) - (123 ) Operating income 441 69 (468 ) 125 Interest and other income (expense), net (5 ) - - - Income before provision for income taxes 436 69 (468 ) 125 Number of shares used in computation: Diluted 281 Trailing Twelve Months Financial Highlights Twelve Months Ended June 30, 2022 2021 (in $ millions) Full game 2,012 1,576 Live services and other 5,195 4,145 Total net revenue 7,207 5,721 Net income 896 676 Operating cash flow 1,964 1,413 Value of shares repurchased 1,295 976 Number of shares repurchased 9.7 7.2 The following GAAP-based financial data2 was used internally by company management to adjust its GAAP results in order to assess EA’s operating results. During fiscal 2022, management used a tax rate of 18% and in fiscal 2023 a tax rate of 19%. Twelve Months Ended June 30, 2022 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 7,207 - 271 - Cost of revenue 1,858 (141 ) - (7 ) Gross profit 5,349 141 271 7 Total operating expenses 4,101 (182 ) - (521 ) Operating income 1,248 323 271 528 Interest and other income (expense), net (39 ) - - - Income before provision for income taxes 1,209 323 271 528 Operating Metric The following is a calculation of our total net bookings1 for the periods presented: Three Months Ended Twelve Months Ended June 30, June 30, 2022 2021 2022 2021 (in $ millions) Total net revenue 1,767 1,551 7,207 5,721 Change in deferred net revenue (online-enabled games) (468 ) (215 ) 271 415 Net bookings 1,299 1,336 7,478 6,136 Business Outlook as of August 2, 2022 Fiscal Year 2023 Expectations – Ending March 31, 2023 Financial metrics: Net revenue is expected to be approximately $7.600 to $7.800 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $300 million. Net income is expected to be approximately $793 to $815 million. Diluted earnings per share is expected to be approximately $2.79 to $2.87. Operating cash flow is expected to be approximately $1.600 to $1.650 billion. The Company estimates a share count of 284 million for purposes of calculating fiscal year 2023 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $7.900 to $8.100 billion. In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% 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, 2023 GAAP-Based Financial Data GAAP Guidance Range Acquisition- related expenses Change in deferred net revenue (online- enabled games) Stock-based compensation (in $ millions) Total net revenue 7,600 to 7,800 - 300 - Cost of revenue 2,020 to 2,065 (110 ) - (5 ) Operating expense 4,200 to 4,315 (140 ) - (595 ) Income before provision for income taxes 1,321 to 1,358 250 300 600 Net income 793 to 815 Number of shares used in computation: Diluted shares 284 * The mid-point of the range has been used for purposes of presenting the reconciling items. Second Quarter Fiscal Year 2023 Expectations – Ending September 30, 2022 Financial metrics: Net revenue is expected to be approximately $1.850 to $1.900 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $(125) million. Net income is expected to be approximately $220 to $242 million. Diluted earnings per share is expected to be approximately $0.78 to $0.86. The Company estimates a share count of 281 million for purposes of calculating second quarter fiscal 2023 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $1.725 to $1.775 billion. In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ending September 30, 2022 GAAP-Based Financial Data* GAAP Guidance Range Acquisition- related expenses Change in deferred net revenue (online- enabled games) Stock-based compensation (in $ millions) Total net revenue 1,850 to 1,900 - (125 ) - Cost of revenue 467 to 480 (30 ) - (2 ) Operating expense 1,036 to 1,041 (40 ) - (148 ) Income before provision for income taxes 338 to 373 70 (125 ) 150 Net income 220 to 242 Number of shares used in computation: Diluted shares 281 * The mid-point of the range has been used for purposes of presenting the reconciling items. Conference Call and Supporting Documents Electronic Arts will host a conference call on August 2, 2022 at 2:00 pm PT (5:00 pm ET) to review its results for the first quarter ended June 30, 2022 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 August 16, 2022 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using pin 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 August 2, 2022” and other information regarding EA's fiscal 2023 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 among competing platforms; 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 I, Item 1A of Electronic Arts’ latest Annual Report on Form 10-K under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission. These forward-looking statements are current as of August 2, 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 June 30, 2022. 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 June 30, 2022. 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 2022, EA posted GAAP net revenue of approximately $7 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, 2022. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended June 30, 2022 2021 Net revenue 1,767 1,551 Cost of revenue 314 315 Gross profit 1,453 1,236 Operating expenses: Research and development 572 515 Marketing and sales 234 190 General and administrative 167 169 Amortization and impairment of intangibles 39 40 Total operating expenses 1,012 914 Operating income 441 322 Interest and other income (expense), net (5 ) (14 ) Income before provision for income taxes 436 308 Provision for income taxes 125 104 Net income 311 204 Earnings per share Basic 1.11 0.71 Diluted 1.11 0.71 Number of shares used in computation Basic 279 286 Diluted 281 289 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on May 10, 2022 for the three months ended June 30, 2022 plus a comparison to the actuals for the three months ended June 30, 2021. Three Months Ended June 30, 2022 Guidance (Mid-Point) 2022 Actuals 2021 Actuals Variance Net revenue Net revenue 1,700 67 1,767 1,551 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (475 ) 7 (468 ) (215 ) Cost of revenue Cost of revenue 315 (1 ) 314 315 GAAP-based financial data Acquisition-related expenses (30 ) — (30 ) (22 ) Stock-based compensation (2 ) — (2 ) (1 ) Operating expenses Operating expenses 1,013 (1 ) 1,012 914 GAAP-based financial data Acquisition-related expenses (40 ) 1 (39 ) (40 ) Stock-based compensation (123 ) — (123 ) (124 ) Income before tax Income before tax 356 80 436 308 GAAP-based financial data Acquisition-related expenses 70 (1 ) 69 62 Change in deferred net revenue (online-enabled games)1 (475 ) 7 (468 ) (215 ) Stock-based compensation 125 — 125 125 Tax rate used for management reporting 19 % 19 % 18 % Earnings per share Basic 0.81 0.30 1.11 0.71 Diluted 0.81 0.30 1.11 0.71 Number of shares used in computation Basic 281 (2 ) 279 286 Diluted 283 (2 ) 281 289 1The 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) June 30, 2022 March 31, 20222 ASSETS Current assets: Cash and cash equivalents 2,082 2,732 Short-term investments 334 330 Receivables, net 579 650 Other current assets 522 439 Total current assets 3,517 4,151 Property and equipment, net 545 550 Goodwill 5,382 5,387 Acquisition-related intangibles, net 893 962 Deferred income taxes, net 2,327 2,243 Other assets 528 507 TOTAL ASSETS 13,192 13,800 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 70 101 Accrued and other current liabilities 1,215 1,388 Deferred net revenue (online-enabled games) 1,548 2,024 Total current liabilities 2,833 3,513 Senior notes, net 1,878 1,878 Income tax obligations 438 386 Deferred income taxes, net 1 1 Other liabilities 401 397 Total liabilities 5,551 6,175 Stockholders’ equity: Common stock 3 3 Retained earnings 7,567 7,607 Accumulated other comprehensive income 71 15 Total stockholders’ equity 7,641 7,625 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,192 13,800 2Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended June 30, 2022 2021 OPERATING ACTIVITIES Net income 311 204 Adjustments to reconcile net income to net cash used in operating activities: Depreciation, amortization, accretion and impairment 114 105 Stock-based compensation 125 125 Change in assets and liabilities Receivables, net 70 12 Other assets (15 ) (74 ) Accounts payable (16 ) (19 ) Accrued and other liabilities (105 ) (302 ) Deferred income taxes, net (86 ) 28 Deferred net revenue (online-enabled games) (476 ) (222 ) Net cash used in operating activities (78 ) (143 ) INVESTING ACTIVITIES Capital expenditures (59 ) (44 ) Proceeds from maturities and sales of short-term investments 87 507 Purchase of short-term investments (93 ) (285 ) Acquisitions, net of cash acquired — (1,989 ) Net cash used in investing activities (65 ) (1,811 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 1 — Cash dividends paid (53 ) (49 ) Cash paid to taxing authorities for shares withheld from employees (104 ) (105 ) Repurchase and retirement of common stock (320 ) (325 ) Net cash used in financing activities (476 ) (479 ) Effect of foreign exchange on cash and cash equivalents (31 ) 11 Change in cash and cash equivalents (650 ) (2,422 ) Beginning cash and cash equivalents 2,732 5,260 Ending cash and cash equivalents 2,082 2,838 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change Net revenue Net revenue 1,551 1,826 1,789 1,825 1,767 14 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Gross profit Gross profit 1,236 1,332 1,158 1,406 1,453 18 % Gross profit (as a % of net revenue) 80 % 73 % 65 % 77 % 82 % GAAP-based financial data Acquisition-related expenses 22 22 44 45 30 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 1 2 1 2 2 Operating income Operating income 322 340 102 365 441 37 % Operating income (as a % of net revenue) 21 % 19 % 6 % 20 % 25 % GAAP-based financial data Acquisition-related expenses 62 52 105 97 69 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 125 149 129 125 125 Net income Net income 204 294 66 225 311 52 % Net income (as a % of net revenue) 13 % 16 % 4 % 12 % 18 % GAAP-based financial data Acquisition-related expenses 62 52 105 97 69 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 125 149 129 125 125 Tax rate used for management reporting 18 % 18 % 18 % 18 % 19 % Diluted earnings per share 0.71 1.02 0.23 0.80 1.11 56 % Number of shares used in computation Basic 286 285 283 281 279 Diluted 289 287 285 283 281 1The 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) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 233 337 400 312 237 2 % Packaged goods 89 280 216 126 104 17 % Full game 322 617 616 438 341 6 % Live services and other 1,229 1,209 1,173 1,387 1,426 16 % Total net revenue 1,551 1,826 1,789 1,825 1,767 14 % Full game 21 % 34 % 34 % 24 % 19 % Live services and other 79 % 66 % 66 % 76 % 81 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads (5 ) 35 179 (103 ) (111 ) Packaged goods (35 ) 44 105 (68 ) (65 ) Full game (40 ) 79 284 (171 ) (176 ) Live services and other (175 ) (54 ) 504 97 (292 ) Total change in deferred net revenue (online-enabled games) by composition1 (215 ) 25 788 (74 ) (468 ) Net revenue by platform Console 972 1,198 1,138 1,092 1,042 7 % PC & Other 361 377 374 420 402 11 % Mobile 218 251 277 313 323 48 % Total net revenue 1,551 1,826 1,789 1,825 1,767 14 % GAAP-based financial data Console (278 ) (29 ) 608 (86 ) (405 ) PC & Other 9 26 137 3 (54 ) Mobile 54 28 43 9 (9 ) Total change in deferred net revenue (online-enabled games) by platform1 (215 ) 25 788 (74 ) (468 ) 1The 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) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change CASH FLOW DATA Operating cash flow (143 ) 64 1,534 444 (78 ) 45 % Operating cash flow - TTM 1,413 1,416 1,826 1,899 1,964 39 % Capital expenditures 44 43 48 53 59 34 % Capital expenditures - TTM 130 148 166 188 203 56 % Repurchase and retirement of common stock 325 325 325 325 320 (2 %) Cash dividends paid 49 48 48 48 53 8 % DEPRECIATION Depreciation expense 40 39 41 42 44 10 % BALANCE SHEET DATA Cash and cash equivalents 2,838 1,630 2,670 2,732 2,082 Short-term investments 881 342 346 330 334 Cash and cash equivalents, and short-term investments 3,719 1,972 3,016 3,062 2,416 (35 %) Receivables, net 557 1,031 965 650 579 4 % STOCK-BASED COMPENSATION Cost of revenue 1 2 1 2 2 Research and development 85 101 86 84 81 Marketing and sales 12 15 14 13 13 General and administrative 27 31 28 26 29 Total stock-based compensation 125 149 129 125 125 View source version on businesswire.com: https://www.businesswire.com/news/home/20220801005849/en/Contacts For additional information, please contact: Chris Evenden Vice President, Investor Relations 650-628-0255 cevenden@ea.com Cat Channon Vice President, Global Communications + 41 22 316 1258 cchannon@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 Q1 FY23 Financial Results By: Electronic Arts Inc. via Business Wire August 02, 2022 at 16:01 PM EDT Electronic Arts Inc. (NASDAQ:EA) today announced preliminary financial results for its first fiscal quarter ended June 30, 2022. “EA delivered strong results in Q1 with our growing player network deeply engaged in new games and live services,” said CEO Andrew Wilson. “Our expanding EA SPORTS portfolio and owned IP franchises continue to power resilience and longevity in our business. Our teams remain focused on what they do best – making amazing experiences that inspire new generations to play, watch, create, compete and connect.” “Our FIFA franchise and the successful launch of F1 drove our net bookings outperformance, delivering another quarter ahead of expectations,” said CFO Chris Suh. “Looking ahead, our focus on execution and disciplined investment across our broad portfolio of games and live services will fuel our long-term growth.” Selected Operating Highlights and Metrics Net bookings1 for the trailing twelve months was $7.478 billion, up 22% year-over-year. Live services and other net bookings for the trailing twelve months were up 20% year-over-year and represent 73% of total net bookings. The EA player network grew to nearly 600 million active accounts at quarter end. FIFA Ultimate Team™ engagement during the quarter was up nearly 40% year-over-year in weekly and daily average players. In Q1, FIFA Mobile delivered the highest net bookings quarter in history, with record high DAUs, up 10% from last quarter. Selected Financial Highlights and Metrics Net cash (used in)/provided by operating activities was $(78) million for the quarter and $1.964 billion for the trailing twelve months. EA repurchased 2.5 million shares for $320 million during the quarter, bringing the total for the trailing twelve months to 9.7 million shares for $1.295 billion. EA paid a cash dividend of $0.19 per share during the quarter, for a total of $53 million. Dividend EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on September 21, 2022 to shareholders of record as of the close of business on August 31, 2022. Quarterly Financial Highlights Three Months Ended June 30, 2022 2021 (in $ millions, except per share amounts) Full game 341 322 Live services and other 1,426 1,229 Total net revenue 1,767 1,551 Net income 311 204 Diluted earnings per share 1.11 0.71 Operating cash flow (78 ) (143 ) Value of shares repurchased 320 325 Number of shares repurchased 2.5 2.3 The following GAAP-based financial data2 and tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Three Months Ended June 30, 2022 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 1,767 - (468 ) - Cost of revenue 314 (30 ) - (2 ) Gross profit 1,453 30 (468 ) 2 Total operating expenses 1,012 (39 ) - (123 ) Operating income 441 69 (468 ) 125 Interest and other income (expense), net (5 ) - - - Income before provision for income taxes 436 69 (468 ) 125 Number of shares used in computation: Diluted 281 Trailing Twelve Months Financial Highlights Twelve Months Ended June 30, 2022 2021 (in $ millions) Full game 2,012 1,576 Live services and other 5,195 4,145 Total net revenue 7,207 5,721 Net income 896 676 Operating cash flow 1,964 1,413 Value of shares repurchased 1,295 976 Number of shares repurchased 9.7 7.2 The following GAAP-based financial data2 was used internally by company management to adjust its GAAP results in order to assess EA’s operating results. During fiscal 2022, management used a tax rate of 18% and in fiscal 2023 a tax rate of 19%. Twelve Months Ended June 30, 2022 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 7,207 - 271 - Cost of revenue 1,858 (141 ) - (7 ) Gross profit 5,349 141 271 7 Total operating expenses 4,101 (182 ) - (521 ) Operating income 1,248 323 271 528 Interest and other income (expense), net (39 ) - - - Income before provision for income taxes 1,209 323 271 528 Operating Metric The following is a calculation of our total net bookings1 for the periods presented: Three Months Ended Twelve Months Ended June 30, June 30, 2022 2021 2022 2021 (in $ millions) Total net revenue 1,767 1,551 7,207 5,721 Change in deferred net revenue (online-enabled games) (468 ) (215 ) 271 415 Net bookings 1,299 1,336 7,478 6,136 Business Outlook as of August 2, 2022 Fiscal Year 2023 Expectations – Ending March 31, 2023 Financial metrics: Net revenue is expected to be approximately $7.600 to $7.800 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $300 million. Net income is expected to be approximately $793 to $815 million. Diluted earnings per share is expected to be approximately $2.79 to $2.87. Operating cash flow is expected to be approximately $1.600 to $1.650 billion. The Company estimates a share count of 284 million for purposes of calculating fiscal year 2023 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $7.900 to $8.100 billion. In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% 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, 2023 GAAP-Based Financial Data GAAP Guidance Range Acquisition- related expenses Change in deferred net revenue (online- enabled games) Stock-based compensation (in $ millions) Total net revenue 7,600 to 7,800 - 300 - Cost of revenue 2,020 to 2,065 (110 ) - (5 ) Operating expense 4,200 to 4,315 (140 ) - (595 ) Income before provision for income taxes 1,321 to 1,358 250 300 600 Net income 793 to 815 Number of shares used in computation: Diluted shares 284 * The mid-point of the range has been used for purposes of presenting the reconciling items. Second Quarter Fiscal Year 2023 Expectations – Ending September 30, 2022 Financial metrics: Net revenue is expected to be approximately $1.850 to $1.900 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $(125) million. Net income is expected to be approximately $220 to $242 million. Diluted earnings per share is expected to be approximately $0.78 to $0.86. The Company estimates a share count of 281 million for purposes of calculating second quarter fiscal 2023 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $1.725 to $1.775 billion. In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ending September 30, 2022 GAAP-Based Financial Data* GAAP Guidance Range Acquisition- related expenses Change in deferred net revenue (online- enabled games) Stock-based compensation (in $ millions) Total net revenue 1,850 to 1,900 - (125 ) - Cost of revenue 467 to 480 (30 ) - (2 ) Operating expense 1,036 to 1,041 (40 ) - (148 ) Income before provision for income taxes 338 to 373 70 (125 ) 150 Net income 220 to 242 Number of shares used in computation: Diluted shares 281 * The mid-point of the range has been used for purposes of presenting the reconciling items. Conference Call and Supporting Documents Electronic Arts will host a conference call on August 2, 2022 at 2:00 pm PT (5:00 pm ET) to review its results for the first quarter ended June 30, 2022 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 August 16, 2022 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using pin 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 August 2, 2022” and other information regarding EA's fiscal 2023 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 among competing platforms; 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 I, Item 1A of Electronic Arts’ latest Annual Report on Form 10-K under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission. These forward-looking statements are current as of August 2, 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 June 30, 2022. 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 June 30, 2022. 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 2022, EA posted GAAP net revenue of approximately $7 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, 2022. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended June 30, 2022 2021 Net revenue 1,767 1,551 Cost of revenue 314 315 Gross profit 1,453 1,236 Operating expenses: Research and development 572 515 Marketing and sales 234 190 General and administrative 167 169 Amortization and impairment of intangibles 39 40 Total operating expenses 1,012 914 Operating income 441 322 Interest and other income (expense), net (5 ) (14 ) Income before provision for income taxes 436 308 Provision for income taxes 125 104 Net income 311 204 Earnings per share Basic 1.11 0.71 Diluted 1.11 0.71 Number of shares used in computation Basic 279 286 Diluted 281 289 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on May 10, 2022 for the three months ended June 30, 2022 plus a comparison to the actuals for the three months ended June 30, 2021. Three Months Ended June 30, 2022 Guidance (Mid-Point) 2022 Actuals 2021 Actuals Variance Net revenue Net revenue 1,700 67 1,767 1,551 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (475 ) 7 (468 ) (215 ) Cost of revenue Cost of revenue 315 (1 ) 314 315 GAAP-based financial data Acquisition-related expenses (30 ) — (30 ) (22 ) Stock-based compensation (2 ) — (2 ) (1 ) Operating expenses Operating expenses 1,013 (1 ) 1,012 914 GAAP-based financial data Acquisition-related expenses (40 ) 1 (39 ) (40 ) Stock-based compensation (123 ) — (123 ) (124 ) Income before tax Income before tax 356 80 436 308 GAAP-based financial data Acquisition-related expenses 70 (1 ) 69 62 Change in deferred net revenue (online-enabled games)1 (475 ) 7 (468 ) (215 ) Stock-based compensation 125 — 125 125 Tax rate used for management reporting 19 % 19 % 18 % Earnings per share Basic 0.81 0.30 1.11 0.71 Diluted 0.81 0.30 1.11 0.71 Number of shares used in computation Basic 281 (2 ) 279 286 Diluted 283 (2 ) 281 289 1The 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) June 30, 2022 March 31, 20222 ASSETS Current assets: Cash and cash equivalents 2,082 2,732 Short-term investments 334 330 Receivables, net 579 650 Other current assets 522 439 Total current assets 3,517 4,151 Property and equipment, net 545 550 Goodwill 5,382 5,387 Acquisition-related intangibles, net 893 962 Deferred income taxes, net 2,327 2,243 Other assets 528 507 TOTAL ASSETS 13,192 13,800 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 70 101 Accrued and other current liabilities 1,215 1,388 Deferred net revenue (online-enabled games) 1,548 2,024 Total current liabilities 2,833 3,513 Senior notes, net 1,878 1,878 Income tax obligations 438 386 Deferred income taxes, net 1 1 Other liabilities 401 397 Total liabilities 5,551 6,175 Stockholders’ equity: Common stock 3 3 Retained earnings 7,567 7,607 Accumulated other comprehensive income 71 15 Total stockholders’ equity 7,641 7,625 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,192 13,800 2Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended June 30, 2022 2021 OPERATING ACTIVITIES Net income 311 204 Adjustments to reconcile net income to net cash used in operating activities: Depreciation, amortization, accretion and impairment 114 105 Stock-based compensation 125 125 Change in assets and liabilities Receivables, net 70 12 Other assets (15 ) (74 ) Accounts payable (16 ) (19 ) Accrued and other liabilities (105 ) (302 ) Deferred income taxes, net (86 ) 28 Deferred net revenue (online-enabled games) (476 ) (222 ) Net cash used in operating activities (78 ) (143 ) INVESTING ACTIVITIES Capital expenditures (59 ) (44 ) Proceeds from maturities and sales of short-term investments 87 507 Purchase of short-term investments (93 ) (285 ) Acquisitions, net of cash acquired — (1,989 ) Net cash used in investing activities (65 ) (1,811 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 1 — Cash dividends paid (53 ) (49 ) Cash paid to taxing authorities for shares withheld from employees (104 ) (105 ) Repurchase and retirement of common stock (320 ) (325 ) Net cash used in financing activities (476 ) (479 ) Effect of foreign exchange on cash and cash equivalents (31 ) 11 Change in cash and cash equivalents (650 ) (2,422 ) Beginning cash and cash equivalents 2,732 5,260 Ending cash and cash equivalents 2,082 2,838 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change Net revenue Net revenue 1,551 1,826 1,789 1,825 1,767 14 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Gross profit Gross profit 1,236 1,332 1,158 1,406 1,453 18 % Gross profit (as a % of net revenue) 80 % 73 % 65 % 77 % 82 % GAAP-based financial data Acquisition-related expenses 22 22 44 45 30 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 1 2 1 2 2 Operating income Operating income 322 340 102 365 441 37 % Operating income (as a % of net revenue) 21 % 19 % 6 % 20 % 25 % GAAP-based financial data Acquisition-related expenses 62 52 105 97 69 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 125 149 129 125 125 Net income Net income 204 294 66 225 311 52 % Net income (as a % of net revenue) 13 % 16 % 4 % 12 % 18 % GAAP-based financial data Acquisition-related expenses 62 52 105 97 69 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 125 149 129 125 125 Tax rate used for management reporting 18 % 18 % 18 % 18 % 19 % Diluted earnings per share 0.71 1.02 0.23 0.80 1.11 56 % Number of shares used in computation Basic 286 285 283 281 279 Diluted 289 287 285 283 281 1The 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) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 233 337 400 312 237 2 % Packaged goods 89 280 216 126 104 17 % Full game 322 617 616 438 341 6 % Live services and other 1,229 1,209 1,173 1,387 1,426 16 % Total net revenue 1,551 1,826 1,789 1,825 1,767 14 % Full game 21 % 34 % 34 % 24 % 19 % Live services and other 79 % 66 % 66 % 76 % 81 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads (5 ) 35 179 (103 ) (111 ) Packaged goods (35 ) 44 105 (68 ) (65 ) Full game (40 ) 79 284 (171 ) (176 ) Live services and other (175 ) (54 ) 504 97 (292 ) Total change in deferred net revenue (online-enabled games) by composition1 (215 ) 25 788 (74 ) (468 ) Net revenue by platform Console 972 1,198 1,138 1,092 1,042 7 % PC & Other 361 377 374 420 402 11 % Mobile 218 251 277 313 323 48 % Total net revenue 1,551 1,826 1,789 1,825 1,767 14 % GAAP-based financial data Console (278 ) (29 ) 608 (86 ) (405 ) PC & Other 9 26 137 3 (54 ) Mobile 54 28 43 9 (9 ) Total change in deferred net revenue (online-enabled games) by platform1 (215 ) 25 788 (74 ) (468 ) 1The 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) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change CASH FLOW DATA Operating cash flow (143 ) 64 1,534 444 (78 ) 45 % Operating cash flow - TTM 1,413 1,416 1,826 1,899 1,964 39 % Capital expenditures 44 43 48 53 59 34 % Capital expenditures - TTM 130 148 166 188 203 56 % Repurchase and retirement of common stock 325 325 325 325 320 (2 %) Cash dividends paid 49 48 48 48 53 8 % DEPRECIATION Depreciation expense 40 39 41 42 44 10 % BALANCE SHEET DATA Cash and cash equivalents 2,838 1,630 2,670 2,732 2,082 Short-term investments 881 342 346 330 334 Cash and cash equivalents, and short-term investments 3,719 1,972 3,016 3,062 2,416 (35 %) Receivables, net 557 1,031 965 650 579 4 % STOCK-BASED COMPENSATION Cost of revenue 1 2 1 2 2 Research and development 85 101 86 84 81 Marketing and sales 12 15 14 13 13 General and administrative 27 31 28 26 29 Total stock-based compensation 125 149 129 125 125 View source version on businesswire.com: https://www.businesswire.com/news/home/20220801005849/en/Contacts For additional information, please contact: Chris Evenden Vice President, Investor Relations 650-628-0255 cevenden@ea.com Cat Channon Vice President, Global Communications + 41 22 316 1258 cchannon@ea.com
Electronic Arts Inc. (NASDAQ:EA) today announced preliminary financial results for its first fiscal quarter ended June 30, 2022. “EA delivered strong results in Q1 with our growing player network deeply engaged in new games and live services,” said CEO Andrew Wilson. “Our expanding EA SPORTS portfolio and owned IP franchises continue to power resilience and longevity in our business. Our teams remain focused on what they do best – making amazing experiences that inspire new generations to play, watch, create, compete and connect.” “Our FIFA franchise and the successful launch of F1 drove our net bookings outperformance, delivering another quarter ahead of expectations,” said CFO Chris Suh. “Looking ahead, our focus on execution and disciplined investment across our broad portfolio of games and live services will fuel our long-term growth.” Selected Operating Highlights and Metrics Net bookings1 for the trailing twelve months was $7.478 billion, up 22% year-over-year. Live services and other net bookings for the trailing twelve months were up 20% year-over-year and represent 73% of total net bookings. The EA player network grew to nearly 600 million active accounts at quarter end. FIFA Ultimate Team™ engagement during the quarter was up nearly 40% year-over-year in weekly and daily average players. In Q1, FIFA Mobile delivered the highest net bookings quarter in history, with record high DAUs, up 10% from last quarter. Selected Financial Highlights and Metrics Net cash (used in)/provided by operating activities was $(78) million for the quarter and $1.964 billion for the trailing twelve months. EA repurchased 2.5 million shares for $320 million during the quarter, bringing the total for the trailing twelve months to 9.7 million shares for $1.295 billion. EA paid a cash dividend of $0.19 per share during the quarter, for a total of $53 million. Dividend EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on September 21, 2022 to shareholders of record as of the close of business on August 31, 2022. Quarterly Financial Highlights Three Months Ended June 30, 2022 2021 (in $ millions, except per share amounts) Full game 341 322 Live services and other 1,426 1,229 Total net revenue 1,767 1,551 Net income 311 204 Diluted earnings per share 1.11 0.71 Operating cash flow (78 ) (143 ) Value of shares repurchased 320 325 Number of shares repurchased 2.5 2.3 The following GAAP-based financial data2 and tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results: Three Months Ended June 30, 2022 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 1,767 - (468 ) - Cost of revenue 314 (30 ) - (2 ) Gross profit 1,453 30 (468 ) 2 Total operating expenses 1,012 (39 ) - (123 ) Operating income 441 69 (468 ) 125 Interest and other income (expense), net (5 ) - - - Income before provision for income taxes 436 69 (468 ) 125 Number of shares used in computation: Diluted 281 Trailing Twelve Months Financial Highlights Twelve Months Ended June 30, 2022 2021 (in $ millions) Full game 2,012 1,576 Live services and other 5,195 4,145 Total net revenue 7,207 5,721 Net income 896 676 Operating cash flow 1,964 1,413 Value of shares repurchased 1,295 976 Number of shares repurchased 9.7 7.2 The following GAAP-based financial data2 was used internally by company management to adjust its GAAP results in order to assess EA’s operating results. During fiscal 2022, management used a tax rate of 18% and in fiscal 2023 a tax rate of 19%. Twelve Months Ended June 30, 2022 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 7,207 - 271 - Cost of revenue 1,858 (141 ) - (7 ) Gross profit 5,349 141 271 7 Total operating expenses 4,101 (182 ) - (521 ) Operating income 1,248 323 271 528 Interest and other income (expense), net (39 ) - - - Income before provision for income taxes 1,209 323 271 528 Operating Metric The following is a calculation of our total net bookings1 for the periods presented: Three Months Ended Twelve Months Ended June 30, June 30, 2022 2021 2022 2021 (in $ millions) Total net revenue 1,767 1,551 7,207 5,721 Change in deferred net revenue (online-enabled games) (468 ) (215 ) 271 415 Net bookings 1,299 1,336 7,478 6,136 Business Outlook as of August 2, 2022 Fiscal Year 2023 Expectations – Ending March 31, 2023 Financial metrics: Net revenue is expected to be approximately $7.600 to $7.800 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $300 million. Net income is expected to be approximately $793 to $815 million. Diluted earnings per share is expected to be approximately $2.79 to $2.87. Operating cash flow is expected to be approximately $1.600 to $1.650 billion. The Company estimates a share count of 284 million for purposes of calculating fiscal year 2023 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $7.900 to $8.100 billion. In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% 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, 2023 GAAP-Based Financial Data GAAP Guidance Range Acquisition- related expenses Change in deferred net revenue (online- enabled games) Stock-based compensation (in $ millions) Total net revenue 7,600 to 7,800 - 300 - Cost of revenue 2,020 to 2,065 (110 ) - (5 ) Operating expense 4,200 to 4,315 (140 ) - (595 ) Income before provision for income taxes 1,321 to 1,358 250 300 600 Net income 793 to 815 Number of shares used in computation: Diluted shares 284 * The mid-point of the range has been used for purposes of presenting the reconciling items. Second Quarter Fiscal Year 2023 Expectations – Ending September 30, 2022 Financial metrics: Net revenue is expected to be approximately $1.850 to $1.900 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $(125) million. Net income is expected to be approximately $220 to $242 million. Diluted earnings per share is expected to be approximately $0.78 to $0.86. The Company estimates a share count of 281 million for purposes of calculating second quarter fiscal 2023 diluted earnings per share. Operational metric: Net bookings1 is expected to be approximately $1.725 to $1.775 billion. In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ending September 30, 2022 GAAP-Based Financial Data* GAAP Guidance Range Acquisition- related expenses Change in deferred net revenue (online- enabled games) Stock-based compensation (in $ millions) Total net revenue 1,850 to 1,900 - (125 ) - Cost of revenue 467 to 480 (30 ) - (2 ) Operating expense 1,036 to 1,041 (40 ) - (148 ) Income before provision for income taxes 338 to 373 70 (125 ) 150 Net income 220 to 242 Number of shares used in computation: Diluted shares 281 * The mid-point of the range has been used for purposes of presenting the reconciling items. Conference Call and Supporting Documents Electronic Arts will host a conference call on August 2, 2022 at 2:00 pm PT (5:00 pm ET) to review its results for the first quarter ended June 30, 2022 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 August 16, 2022 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using pin 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 August 2, 2022” and other information regarding EA's fiscal 2023 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 among competing platforms; 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 I, Item 1A of Electronic Arts’ latest Annual Report on Form 10-K under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission. These forward-looking statements are current as of August 2, 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 June 30, 2022. 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 June 30, 2022. 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 2022, EA posted GAAP net revenue of approximately $7 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, 2022. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended June 30, 2022 2021 Net revenue 1,767 1,551 Cost of revenue 314 315 Gross profit 1,453 1,236 Operating expenses: Research and development 572 515 Marketing and sales 234 190 General and administrative 167 169 Amortization and impairment of intangibles 39 40 Total operating expenses 1,012 914 Operating income 441 322 Interest and other income (expense), net (5 ) (14 ) Income before provision for income taxes 436 308 Provision for income taxes 125 104 Net income 311 204 Earnings per share Basic 1.11 0.71 Diluted 1.11 0.71 Number of shares used in computation Basic 279 286 Diluted 281 289 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on May 10, 2022 for the three months ended June 30, 2022 plus a comparison to the actuals for the three months ended June 30, 2021. Three Months Ended June 30, 2022 Guidance (Mid-Point) 2022 Actuals 2021 Actuals Variance Net revenue Net revenue 1,700 67 1,767 1,551 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (475 ) 7 (468 ) (215 ) Cost of revenue Cost of revenue 315 (1 ) 314 315 GAAP-based financial data Acquisition-related expenses (30 ) — (30 ) (22 ) Stock-based compensation (2 ) — (2 ) (1 ) Operating expenses Operating expenses 1,013 (1 ) 1,012 914 GAAP-based financial data Acquisition-related expenses (40 ) 1 (39 ) (40 ) Stock-based compensation (123 ) — (123 ) (124 ) Income before tax Income before tax 356 80 436 308 GAAP-based financial data Acquisition-related expenses 70 (1 ) 69 62 Change in deferred net revenue (online-enabled games)1 (475 ) 7 (468 ) (215 ) Stock-based compensation 125 — 125 125 Tax rate used for management reporting 19 % 19 % 18 % Earnings per share Basic 0.81 0.30 1.11 0.71 Diluted 0.81 0.30 1.11 0.71 Number of shares used in computation Basic 281 (2 ) 279 286 Diluted 283 (2 ) 281 289 1The 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) June 30, 2022 March 31, 20222 ASSETS Current assets: Cash and cash equivalents 2,082 2,732 Short-term investments 334 330 Receivables, net 579 650 Other current assets 522 439 Total current assets 3,517 4,151 Property and equipment, net 545 550 Goodwill 5,382 5,387 Acquisition-related intangibles, net 893 962 Deferred income taxes, net 2,327 2,243 Other assets 528 507 TOTAL ASSETS 13,192 13,800 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 70 101 Accrued and other current liabilities 1,215 1,388 Deferred net revenue (online-enabled games) 1,548 2,024 Total current liabilities 2,833 3,513 Senior notes, net 1,878 1,878 Income tax obligations 438 386 Deferred income taxes, net 1 1 Other liabilities 401 397 Total liabilities 5,551 6,175 Stockholders’ equity: Common stock 3 3 Retained earnings 7,567 7,607 Accumulated other comprehensive income 71 15 Total stockholders’ equity 7,641 7,625 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,192 13,800 2Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended June 30, 2022 2021 OPERATING ACTIVITIES Net income 311 204 Adjustments to reconcile net income to net cash used in operating activities: Depreciation, amortization, accretion and impairment 114 105 Stock-based compensation 125 125 Change in assets and liabilities Receivables, net 70 12 Other assets (15 ) (74 ) Accounts payable (16 ) (19 ) Accrued and other liabilities (105 ) (302 ) Deferred income taxes, net (86 ) 28 Deferred net revenue (online-enabled games) (476 ) (222 ) Net cash used in operating activities (78 ) (143 ) INVESTING ACTIVITIES Capital expenditures (59 ) (44 ) Proceeds from maturities and sales of short-term investments 87 507 Purchase of short-term investments (93 ) (285 ) Acquisitions, net of cash acquired — (1,989 ) Net cash used in investing activities (65 ) (1,811 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 1 — Cash dividends paid (53 ) (49 ) Cash paid to taxing authorities for shares withheld from employees (104 ) (105 ) Repurchase and retirement of common stock (320 ) (325 ) Net cash used in financing activities (476 ) (479 ) Effect of foreign exchange on cash and cash equivalents (31 ) 11 Change in cash and cash equivalents (650 ) (2,422 ) Beginning cash and cash equivalents 2,732 5,260 Ending cash and cash equivalents 2,082 2,838 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change Net revenue Net revenue 1,551 1,826 1,789 1,825 1,767 14 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Gross profit Gross profit 1,236 1,332 1,158 1,406 1,453 18 % Gross profit (as a % of net revenue) 80 % 73 % 65 % 77 % 82 % GAAP-based financial data Acquisition-related expenses 22 22 44 45 30 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 1 2 1 2 2 Operating income Operating income 322 340 102 365 441 37 % Operating income (as a % of net revenue) 21 % 19 % 6 % 20 % 25 % GAAP-based financial data Acquisition-related expenses 62 52 105 97 69 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 125 149 129 125 125 Net income Net income 204 294 66 225 311 52 % Net income (as a % of net revenue) 13 % 16 % 4 % 12 % 18 % GAAP-based financial data Acquisition-related expenses 62 52 105 97 69 Change in deferred net revenue (online-enabled games)1 (215 ) 25 788 (74 ) (468 ) Stock-based compensation 125 149 129 125 125 Tax rate used for management reporting 18 % 18 % 18 % 18 % 19 % Diluted earnings per share 0.71 1.02 0.23 0.80 1.11 56 % Number of shares used in computation Basic 286 285 283 281 279 Diluted 289 287 285 283 281 1The 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) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 233 337 400 312 237 2 % Packaged goods 89 280 216 126 104 17 % Full game 322 617 616 438 341 6 % Live services and other 1,229 1,209 1,173 1,387 1,426 16 % Total net revenue 1,551 1,826 1,789 1,825 1,767 14 % Full game 21 % 34 % 34 % 24 % 19 % Live services and other 79 % 66 % 66 % 76 % 81 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads (5 ) 35 179 (103 ) (111 ) Packaged goods (35 ) 44 105 (68 ) (65 ) Full game (40 ) 79 284 (171 ) (176 ) Live services and other (175 ) (54 ) 504 97 (292 ) Total change in deferred net revenue (online-enabled games) by composition1 (215 ) 25 788 (74 ) (468 ) Net revenue by platform Console 972 1,198 1,138 1,092 1,042 7 % PC & Other 361 377 374 420 402 11 % Mobile 218 251 277 313 323 48 % Total net revenue 1,551 1,826 1,789 1,825 1,767 14 % GAAP-based financial data Console (278 ) (29 ) 608 (86 ) (405 ) PC & Other 9 26 137 3 (54 ) Mobile 54 28 43 9 (9 ) Total change in deferred net revenue (online-enabled games) by platform1 (215 ) 25 788 (74 ) (468 ) 1The 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) Q1 Q2 Q3 Q4 Q1 YOY % FY22 FY22 FY22 FY22 FY23 Change CASH FLOW DATA Operating cash flow (143 ) 64 1,534 444 (78 ) 45 % Operating cash flow - TTM 1,413 1,416 1,826 1,899 1,964 39 % Capital expenditures 44 43 48 53 59 34 % Capital expenditures - TTM 130 148 166 188 203 56 % Repurchase and retirement of common stock 325 325 325 325 320 (2 %) Cash dividends paid 49 48 48 48 53 8 % DEPRECIATION Depreciation expense 40 39 41 42 44 10 % BALANCE SHEET DATA Cash and cash equivalents 2,838 1,630 2,670 2,732 2,082 Short-term investments 881 342 346 330 334 Cash and cash equivalents, and short-term investments 3,719 1,972 3,016 3,062 2,416 (35 %) Receivables, net 557 1,031 965 650 579 4 % STOCK-BASED COMPENSATION Cost of revenue 1 2 1 2 2 Research and development 85 101 86 84 81 Marketing and sales 12 15 14 13 13 General and administrative 27 31 28 26 29 Total stock-based compensation 125 149 129 125 125 View source version on businesswire.com: https://www.businesswire.com/news/home/20220801005849/en/
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