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 Strong Q2 FY24 Results By: Electronic Arts Inc. via Business Wire November 01, 2023 at 16:05 PM EDT Company exceeds expectations on the strength of EA SPORTS portfolio; Successfully launches EA SPORTS FC 24 Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second quarter ended September 30, 2023. “We delivered a strong Q2 and successfully launched EA SPORTS FC, transforming one of the largest franchises in the world into a powerful, interactive platform for the future of football fandom,” said Andrew Wilson, CEO of EA. “Looking ahead, our incredible teams will continue to innovate and expand across our world-class IP, building experiences that entertain our massive online communities, celebrate fandom, and increase connection for our growing global player base.” “EA SPORTS strength, driven by new releases and ongoing live services, delivered Q2 results ahead of expectations,” said Stuart Canfield, CFO of EA. “We remain focused on delivering for our growing player communities and building upon the momentum across our portfolio, while prioritizing investments that execute against our largest opportunities to drive long term growth.” Selected Operating Highlights and Metrics1 Net bookings2 for Q2 was $1.820 billion, up 4% year-over-year (up 5% in constant currency). Live services and other net bookings for Q2 was $1.129 billion, up 1% year-over-year (up 2% in constant currency). On a trailing twelve-month basis, live services were 73% of our business. EA SPORTS Madden NFL franchise outperformed Q2 expectations, delivering net bookings growth of 6% year-over-year. EA SPORTS global football franchise outperformed Q2 expectations driven by the continued strength of EA SPORTS FIFA 23 and demand for the release of EA SPORTS FC 24. EA SPORTS FC 24, within the first four weeks of global launch, had over 14.5 million active accounts. Selected Financial Highlights and Metrics Net revenue was $1.914 billion for the quarter. Net cash provided by operating activities was $112 million for the quarter and $2.211 billion for the trailing twelve months. EA repurchased 2.6 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.5 million shares for $1.300 billion. Dividend EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on December 20, 2023 to shareholders of record as of the close of business on November 29, 2023. Quarterly Financial Highlights Three Months Ended September 30, 2023 2022 (in $ millions, except per share amounts) Full game 621 602 Live services and other 1,293 1,302 Total net revenue 1,914 1,904 Net income 399 299 Diluted earnings per share* 1.47 1.07 Operating cash flow 112 (112) Value of shares repurchased 325 325 Number of shares repurchased 2.6 2.6 Cash dividend paid 51 53 * Diluted earnings per share includes $0.34 from a one-time non-cash tax benefit. The following GAAP-based financial data3 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 September 30, 2023 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 1,914 - (94 ) - - Cost of revenue 456 (15 ) - - (2 ) Gross profit 1,458 15 (94 ) - 2 Total operating expenses 1,081 (24 ) - - (153 ) Operating income 377 39 (94 ) - 155 Interest and other income (expense), net 14 - - - - Income before provision for income taxes 391 39 (94 ) - 155 Number of shares used in computation: Diluted 272 Trailing Twelve Months Financial Highlights Twelve Months Ended September 30, 2023 2022 (in $ millions) Full game 2,058 1,997 Live services and other 5,535 5,288 Total net revenue 7,593 7,285 Net income 993 901 Operating cash flow 2,211 1,788 Value of shares repurchased 1,300 1,295 Number of shares repurchased 10.5 10.0 The following GAAP-based financial data3 and a tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results. Twelve Months Ended September 30, 2023 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 7,593 - 93 - - Cost of revenue 1,840 (82 ) - - (8 ) Gross profit 5,753 82 93 - 8 Total operating expenses 4,370 (125 ) - (158 ) (560 ) Operating income 1,383 207 93 158 568 Interest and other income (expense), net 27 - - - - Income before provision for income taxes 1,410 207 93 158 568 Operating Metric The following is a calculation of our total net bookings2 for the periods presented: Three Months Ended September 30, Twelve Months Ended September 30, 2023 2022 2023 2022 (in $ millions) Total net revenue 1,914 1,904 7,593 7,285 Change in deferred net revenue (online-enabled games) (94 ) (150 ) 93 96 Total net bookings 1,820 1,754 7,686 7,381 Business Outlook as of November 1, 2023 Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $7.300 billion to $7.700 billion. No change in deferred net revenue (online-enabled games) is expected. Net income is expected to be approximately $1.118 billion to $1.273 billion. Diluted earnings per share is expected to be approximately $4.10 to $4.66. Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion. The Company estimates a share count of 273 million for purposes of calculating fiscal year 2024 diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $7.300 billion to $7.700 billion. In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA’s operating results and plan for future periods: Twelve Months Ended March 31, 2024 GAAP-Based Financial Data* (in $ millions) GAAP Guidance Range Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 7,300 to 7,700 - - - - Cost of revenue 1,670 to 1,750 (65 ) - - (5 ) Operating expense 4,213 to 4,333 (95 ) - (3 ) (595 ) Income before provision for income taxes 1,462 to 1,664 160 - 3 600 Net income 1,118 to 1,273 Number of shares used in computation: Diluted shares 273 *The mid-point of the range has been used for purposes of presenting the reconciling items. Third Quarter Fiscal Year 2024 Expectations – Ending December 31, 2023 Financial outlook metrics: Net revenue is expected to be approximately $1.825 billion to $2.025 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $425 million. Net income is expected to be approximately $203 million to $275 million. Diluted earnings per share is expected to be approximately $0.75 to $1.01. The Company estimates a share count of 272 million for purposes of calculating third quarter fiscal 2024 diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $2.250 billion to $2.450 billion. In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ended December 31, 2023 GAAP-Based Financial Data* (in $ millions) GAAP Guidance Range Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 1,825 to 2,025 - 425 - - Cost of revenue 495 to 535 (15 ) - - - Operating expense 1,050 to 1,110 (25 ) - - (155 ) Income before provision for income taxes 286 to 387 40 425 - 155 Net income 203 to 275 Number of shares used in computation: Diluted shares 272 *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 November 1, 2023 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2023 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA’s IR Website at http://ir.ea.com. EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website. A dial-in replay of the conference call will be available until November 15, 2023 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 November 1, 2023” and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences 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 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, 2023. These forward-looking statements are current as of November 1, 2023. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2023. 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 2023, EA posted GAAP net revenue of approximately $7.4 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The Sims™, EA SPORTS Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and EA SPORTS F1®. More information about EA is available at www.ea.com/news. EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission. 1 For more information on constant currency, please refer to the earnings slides available on EA’s IR Website. 2 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. 3 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, 2023. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 Net revenue 1,914 1,904 3,838 3,671 Cost of revenue 456 462 824 776 Gross profit 1,458 1,442 3,014 2,895 Operating expenses: Research and development 602 565 1,198 1,137 Marketing and sales 280 233 509 467 General and administrative 173 174 336 341 Amortization and impairment of intangibles 24 43 49 82 Restructuring 2 — 3 — Total operating expenses 1,081 1,015 2,095 2,027 Operating income 377 427 919 868 Interest and other income (expense), net 14 — 28 (5 ) Income before provision for (benefit from) income taxes 391 427 947 863 Provision for income taxes (8) 128 146 253 Net income 399 299 801 610 Earnings per share Basic 1.47 1.08 2.94 2.19 Diluted 1.47 1.07 2.93 2.18 Number of shares used in computation Basic 271 278 272 279 Diluted 272 279 273 280 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on August 1, 2023 for the three months ended September 30, 2023 plus a comparison to the actuals for the three months ended September 30, 2022. Three Months Ended September 30, 2023 Guidance (Mid-Point) 2023 Actuals 2022 Actuals Variance Net revenue Net revenue 1,875 39 1,914 1,904 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (125 ) 31 (94 ) (150 ) Cost of revenue Cost of revenue 440 16 456 462 GAAP-based financial data Acquisition-related expenses (15 ) — (15 ) (39 ) Stock-based compensation — (2 ) (2 ) (1 ) Operating expenses Operating expenses 1,115 (34 ) 1,081 1,015 GAAP-based financial data Acquisition-related expenses (25 ) 1 (24 ) (43 ) Restructuring and related charges (10 ) 10 — — Stock-based compensation (155 ) 2 (153 ) (139 ) Income before tax Income before tax 324 67 391 427 GAAP-based financial data Acquisition-related expenses 40 (1 ) 39 82 Change in deferred net revenue (online-enabled games)1 (125 ) 31 (94 ) (150 ) Restructuring and related charges 10 (10 ) — — Stock-based compensation 155 — 155 140 Tax rate used for management reporting 19 % 19 % 19 % Earnings per share Basic 0.81 0.66 1.47 1.08 Diluted 0.81 0.66 1.47 1.07 Number of shares used in computation Basic 272 (1 ) 271 278 Diluted 273 (1 ) 272 279 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) September 30, 2023 March 31, 20232 ASSETS Current assets: Cash and cash equivalents 1,946 2,424 Short-term investments 359 343 Receivables, net 1,047 684 Other current assets 492 518 Total current assets 3,844 3,969 Property and equipment, net 542 549 Goodwill 5,378 5,380 Acquisition-related intangibles, net 538 618 Deferred income taxes, net 2,353 2,462 Other assets 484 481 TOTAL ASSETS 13,139 13,459 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 152 99 Accrued and other current liabilities 1,138 1,285 Deferred net revenue (online-enabled games) 1,498 1,901 Total current liabilities 2,788 3,285 Senior notes, net 1,881 1,880 Income tax obligations 458 607 Deferred income taxes, net 1 1 Other liabilities 436 393 Total liabilities 5,564 6,166 Stockholders’ equity: Common stock 3 3 Retained earnings 7,606 7,357 Accumulated other comprehensive loss (34 ) (67 ) Total stockholders’ equity 7,575 7,293 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,139 13,459 2Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 OPERATING ACTIVITIES Net income 399 299 801 610 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, amortization, accretion and impairment 85 127 173 241 Stock-based compensation 155 140 285 265 Change in assets and liabilities Receivables, net (534 ) (346 ) (367 ) (276 ) Other assets (22 ) (10 ) 74 (25 ) Accounts payable 75 69 57 53 Accrued and other liabilities (165 ) (164 ) (257 ) (269 ) Deferred income taxes, net 201 (70 ) 108 (156 ) Deferred net revenue (online-enabled games) (82 ) (157 ) (403 ) (633 ) Net cash provided by (used in) operating activities 112 (112 ) 471 (190 ) INVESTING ACTIVITIES Capital expenditures (51 ) (53 ) (96 ) (112 ) Proceeds from maturities and sales of short-term investments 151 79 302 166 Purchase of short-term investments (163 ) (80 ) (313 ) (173 ) Net cash used in investing activities (63 ) (54 ) (107 ) (119 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 40 43 40 44 Cash dividends paid (51 ) (53 ) (103 ) (106 ) Cash paid to taxing authorities for shares withheld from employees (15 ) (13 ) (120 ) (117 ) Repurchase and retirement of common stock (325 ) (325 ) (650 ) (645 ) Net cash used in financing activities (351 ) (348 ) (833 ) (824 ) Effect of foreign exchange on cash and cash equivalents (11 ) (29 ) (9 ) (60 ) Change in cash and cash equivalents (313 ) (543 ) (478 ) (1,193 ) Beginning cash and cash equivalents 2,259 2,082 2,424 2,732 Ending cash and cash equivalents 1,946 1,539 1,946 1,539 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change Net revenue Net revenue 1,904 1,881 1,874 1,924 1,914 1 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Gross profit Gross profit 1,442 1,313 1,426 1,556 1,458 1 % Gross profit (as a % of net revenue) 76 % 70 % 76 % 81 % 76 % GAAP-based financial data Acquisition-related expenses 39 26 25 16 15 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Stock-based compensation 1 2 2 2 2 Operating income Operating income 427 289 175 542 377 (12 %) Operating income (as a % of net revenue) 22 % 15 % 9 % 28 % 20 % GAAP-based financial data Acquisition-related expenses 82 76 51 41 39 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Restructuring and related charges — — 155 3 — Stock-based compensation 140 141 142 130 155 Net income (loss) Net income (loss) 299 204 (12 ) 402 399 33 % Net income (loss) (as a % of net revenue) 16 % 11 % (1 %) 21 % 21 % GAAP-based financial data Acquisition-related expenses 82 76 51 41 39 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Restructuring and related charges — — 155 3 — Stock-based compensation 140 141 142 130 155 Tax rate used for management reporting 19 % 19 % 19 % 19 % 19 % Diluted earnings (loss) per share 1.07 0.73 (0.04 ) 1.47 1.47 37 % Number of shares used in computation Basic 278 276 274 272 271 Diluted 279 278 274 274 272 Anti-dilutive shares excluded for loss position3 — — 1 — — 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. 3 Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable though stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 328 423 274 301 346 5 % Packaged goods 274 199 98 142 275 — Full game 602 622 372 443 621 3 % Live services and other 1,302 1,259 1,502 1,481 1,293 (1 %) Total net revenue 1,904 1,881 1,874 1,924 1,914 1 % Full game 32 % 33 % 20 % 23 % 32 % Live services and other 68 % 67 % 80 % 77 % 68 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 17 45 (24 ) (21 ) 24 Packaged goods 16 20 (24 ) (21 ) 46 Full game 33 65 (48 ) (42 ) 70 Live services and other (183 ) 396 120 (304 ) (164 ) Total change in deferred net revenue (online-enabled games) by composition1 (150 ) 461 72 (346 ) (94 ) Net revenue by platform Console 1,161 1,152 1,088 1,167 1,187 2 % PC & Other 423 435 469 451 423 — Mobile 320 294 317 306 304 (5 %) Total net revenue 1,904 1,881 1,874 1,924 1,914 1 % GAAP-based financial data Console (134 ) 423 11 (266 ) (35 ) PC & Other 8 29 47 (77 ) (34 ) Mobile (24 ) 9 14 (3 ) (25 ) Total change in deferred net revenue (online-enabled games) by platform1 (150 ) 461 72 (346 ) (94 ) 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) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change CASH FLOW DATA Operating cash flow (112 ) 1,123 617 359 112 200 % Operating cash flow - TTM 1,788 1,377 1,550 1,987 2,211 24 % Capital expenditures 53 48 47 45 51 (4 %) Capital expenditures - TTM 213 213 207 193 191 (10 %) Repurchase and retirement of common stock 325 325 325 325 325 — Cash dividends paid 53 52 52 52 51 (4 %) DEPRECIATION Depreciation expense 45 46 58 49 49 9 % BALANCE SHEET DATA Cash and cash equivalents 1,539 2,202 2,424 2,259 1,946 Short-term investments 335 351 343 343 359 Cash and cash equivalents, and short-term investments 1,874 2,553 2,767 2,602 2,305 23 % Receivables, net 919 836 684 517 1,047 14 % STOCK-BASED COMPENSATION Cost of revenue 1 2 2 2 2 Research and development 95 95 96 93 113 Marketing and sales 16 15 15 11 13 General and administrative 28 29 29 24 27 Total stock-based compensation 140 141 142 130 155 RESTRUCTURING AND RELATED CHARGES Restructuring — — 111 1 2 Office space reductions — — 44 2 (2 ) Total restructuring and related charges — — 155 3 — View source version on businesswire.com: https://www.businesswire.com/news/home/20231101877865/en/Contacts Katie Burke Director, Investor Relations 650-628-7605 katieburke@ea.com Erin Rheaume Director, Financial Communications 650-628-7978 erheaume@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 Strong Q2 FY24 Results By: Electronic Arts Inc. via Business Wire November 01, 2023 at 16:05 PM EDT Company exceeds expectations on the strength of EA SPORTS portfolio; Successfully launches EA SPORTS FC 24 Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second quarter ended September 30, 2023. “We delivered a strong Q2 and successfully launched EA SPORTS FC, transforming one of the largest franchises in the world into a powerful, interactive platform for the future of football fandom,” said Andrew Wilson, CEO of EA. “Looking ahead, our incredible teams will continue to innovate and expand across our world-class IP, building experiences that entertain our massive online communities, celebrate fandom, and increase connection for our growing global player base.” “EA SPORTS strength, driven by new releases and ongoing live services, delivered Q2 results ahead of expectations,” said Stuart Canfield, CFO of EA. “We remain focused on delivering for our growing player communities and building upon the momentum across our portfolio, while prioritizing investments that execute against our largest opportunities to drive long term growth.” Selected Operating Highlights and Metrics1 Net bookings2 for Q2 was $1.820 billion, up 4% year-over-year (up 5% in constant currency). Live services and other net bookings for Q2 was $1.129 billion, up 1% year-over-year (up 2% in constant currency). On a trailing twelve-month basis, live services were 73% of our business. EA SPORTS Madden NFL franchise outperformed Q2 expectations, delivering net bookings growth of 6% year-over-year. EA SPORTS global football franchise outperformed Q2 expectations driven by the continued strength of EA SPORTS FIFA 23 and demand for the release of EA SPORTS FC 24. EA SPORTS FC 24, within the first four weeks of global launch, had over 14.5 million active accounts. Selected Financial Highlights and Metrics Net revenue was $1.914 billion for the quarter. Net cash provided by operating activities was $112 million for the quarter and $2.211 billion for the trailing twelve months. EA repurchased 2.6 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.5 million shares for $1.300 billion. Dividend EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on December 20, 2023 to shareholders of record as of the close of business on November 29, 2023. Quarterly Financial Highlights Three Months Ended September 30, 2023 2022 (in $ millions, except per share amounts) Full game 621 602 Live services and other 1,293 1,302 Total net revenue 1,914 1,904 Net income 399 299 Diluted earnings per share* 1.47 1.07 Operating cash flow 112 (112) Value of shares repurchased 325 325 Number of shares repurchased 2.6 2.6 Cash dividend paid 51 53 * Diluted earnings per share includes $0.34 from a one-time non-cash tax benefit. The following GAAP-based financial data3 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 September 30, 2023 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 1,914 - (94 ) - - Cost of revenue 456 (15 ) - - (2 ) Gross profit 1,458 15 (94 ) - 2 Total operating expenses 1,081 (24 ) - - (153 ) Operating income 377 39 (94 ) - 155 Interest and other income (expense), net 14 - - - - Income before provision for income taxes 391 39 (94 ) - 155 Number of shares used in computation: Diluted 272 Trailing Twelve Months Financial Highlights Twelve Months Ended September 30, 2023 2022 (in $ millions) Full game 2,058 1,997 Live services and other 5,535 5,288 Total net revenue 7,593 7,285 Net income 993 901 Operating cash flow 2,211 1,788 Value of shares repurchased 1,300 1,295 Number of shares repurchased 10.5 10.0 The following GAAP-based financial data3 and a tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results. Twelve Months Ended September 30, 2023 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 7,593 - 93 - - Cost of revenue 1,840 (82 ) - - (8 ) Gross profit 5,753 82 93 - 8 Total operating expenses 4,370 (125 ) - (158 ) (560 ) Operating income 1,383 207 93 158 568 Interest and other income (expense), net 27 - - - - Income before provision for income taxes 1,410 207 93 158 568 Operating Metric The following is a calculation of our total net bookings2 for the periods presented: Three Months Ended September 30, Twelve Months Ended September 30, 2023 2022 2023 2022 (in $ millions) Total net revenue 1,914 1,904 7,593 7,285 Change in deferred net revenue (online-enabled games) (94 ) (150 ) 93 96 Total net bookings 1,820 1,754 7,686 7,381 Business Outlook as of November 1, 2023 Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $7.300 billion to $7.700 billion. No change in deferred net revenue (online-enabled games) is expected. Net income is expected to be approximately $1.118 billion to $1.273 billion. Diluted earnings per share is expected to be approximately $4.10 to $4.66. Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion. The Company estimates a share count of 273 million for purposes of calculating fiscal year 2024 diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $7.300 billion to $7.700 billion. In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA’s operating results and plan for future periods: Twelve Months Ended March 31, 2024 GAAP-Based Financial Data* (in $ millions) GAAP Guidance Range Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 7,300 to 7,700 - - - - Cost of revenue 1,670 to 1,750 (65 ) - - (5 ) Operating expense 4,213 to 4,333 (95 ) - (3 ) (595 ) Income before provision for income taxes 1,462 to 1,664 160 - 3 600 Net income 1,118 to 1,273 Number of shares used in computation: Diluted shares 273 *The mid-point of the range has been used for purposes of presenting the reconciling items. Third Quarter Fiscal Year 2024 Expectations – Ending December 31, 2023 Financial outlook metrics: Net revenue is expected to be approximately $1.825 billion to $2.025 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $425 million. Net income is expected to be approximately $203 million to $275 million. Diluted earnings per share is expected to be approximately $0.75 to $1.01. The Company estimates a share count of 272 million for purposes of calculating third quarter fiscal 2024 diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $2.250 billion to $2.450 billion. In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ended December 31, 2023 GAAP-Based Financial Data* (in $ millions) GAAP Guidance Range Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 1,825 to 2,025 - 425 - - Cost of revenue 495 to 535 (15 ) - - - Operating expense 1,050 to 1,110 (25 ) - - (155 ) Income before provision for income taxes 286 to 387 40 425 - 155 Net income 203 to 275 Number of shares used in computation: Diluted shares 272 *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 November 1, 2023 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2023 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA’s IR Website at http://ir.ea.com. EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website. A dial-in replay of the conference call will be available until November 15, 2023 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 November 1, 2023” and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences 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 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, 2023. These forward-looking statements are current as of November 1, 2023. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2023. 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 2023, EA posted GAAP net revenue of approximately $7.4 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The Sims™, EA SPORTS Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and EA SPORTS F1®. More information about EA is available at www.ea.com/news. EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission. 1 For more information on constant currency, please refer to the earnings slides available on EA’s IR Website. 2 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. 3 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, 2023. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 Net revenue 1,914 1,904 3,838 3,671 Cost of revenue 456 462 824 776 Gross profit 1,458 1,442 3,014 2,895 Operating expenses: Research and development 602 565 1,198 1,137 Marketing and sales 280 233 509 467 General and administrative 173 174 336 341 Amortization and impairment of intangibles 24 43 49 82 Restructuring 2 — 3 — Total operating expenses 1,081 1,015 2,095 2,027 Operating income 377 427 919 868 Interest and other income (expense), net 14 — 28 (5 ) Income before provision for (benefit from) income taxes 391 427 947 863 Provision for income taxes (8) 128 146 253 Net income 399 299 801 610 Earnings per share Basic 1.47 1.08 2.94 2.19 Diluted 1.47 1.07 2.93 2.18 Number of shares used in computation Basic 271 278 272 279 Diluted 272 279 273 280 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on August 1, 2023 for the three months ended September 30, 2023 plus a comparison to the actuals for the three months ended September 30, 2022. Three Months Ended September 30, 2023 Guidance (Mid-Point) 2023 Actuals 2022 Actuals Variance Net revenue Net revenue 1,875 39 1,914 1,904 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (125 ) 31 (94 ) (150 ) Cost of revenue Cost of revenue 440 16 456 462 GAAP-based financial data Acquisition-related expenses (15 ) — (15 ) (39 ) Stock-based compensation — (2 ) (2 ) (1 ) Operating expenses Operating expenses 1,115 (34 ) 1,081 1,015 GAAP-based financial data Acquisition-related expenses (25 ) 1 (24 ) (43 ) Restructuring and related charges (10 ) 10 — — Stock-based compensation (155 ) 2 (153 ) (139 ) Income before tax Income before tax 324 67 391 427 GAAP-based financial data Acquisition-related expenses 40 (1 ) 39 82 Change in deferred net revenue (online-enabled games)1 (125 ) 31 (94 ) (150 ) Restructuring and related charges 10 (10 ) — — Stock-based compensation 155 — 155 140 Tax rate used for management reporting 19 % 19 % 19 % Earnings per share Basic 0.81 0.66 1.47 1.08 Diluted 0.81 0.66 1.47 1.07 Number of shares used in computation Basic 272 (1 ) 271 278 Diluted 273 (1 ) 272 279 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) September 30, 2023 March 31, 20232 ASSETS Current assets: Cash and cash equivalents 1,946 2,424 Short-term investments 359 343 Receivables, net 1,047 684 Other current assets 492 518 Total current assets 3,844 3,969 Property and equipment, net 542 549 Goodwill 5,378 5,380 Acquisition-related intangibles, net 538 618 Deferred income taxes, net 2,353 2,462 Other assets 484 481 TOTAL ASSETS 13,139 13,459 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 152 99 Accrued and other current liabilities 1,138 1,285 Deferred net revenue (online-enabled games) 1,498 1,901 Total current liabilities 2,788 3,285 Senior notes, net 1,881 1,880 Income tax obligations 458 607 Deferred income taxes, net 1 1 Other liabilities 436 393 Total liabilities 5,564 6,166 Stockholders’ equity: Common stock 3 3 Retained earnings 7,606 7,357 Accumulated other comprehensive loss (34 ) (67 ) Total stockholders’ equity 7,575 7,293 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,139 13,459 2Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 OPERATING ACTIVITIES Net income 399 299 801 610 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, amortization, accretion and impairment 85 127 173 241 Stock-based compensation 155 140 285 265 Change in assets and liabilities Receivables, net (534 ) (346 ) (367 ) (276 ) Other assets (22 ) (10 ) 74 (25 ) Accounts payable 75 69 57 53 Accrued and other liabilities (165 ) (164 ) (257 ) (269 ) Deferred income taxes, net 201 (70 ) 108 (156 ) Deferred net revenue (online-enabled games) (82 ) (157 ) (403 ) (633 ) Net cash provided by (used in) operating activities 112 (112 ) 471 (190 ) INVESTING ACTIVITIES Capital expenditures (51 ) (53 ) (96 ) (112 ) Proceeds from maturities and sales of short-term investments 151 79 302 166 Purchase of short-term investments (163 ) (80 ) (313 ) (173 ) Net cash used in investing activities (63 ) (54 ) (107 ) (119 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 40 43 40 44 Cash dividends paid (51 ) (53 ) (103 ) (106 ) Cash paid to taxing authorities for shares withheld from employees (15 ) (13 ) (120 ) (117 ) Repurchase and retirement of common stock (325 ) (325 ) (650 ) (645 ) Net cash used in financing activities (351 ) (348 ) (833 ) (824 ) Effect of foreign exchange on cash and cash equivalents (11 ) (29 ) (9 ) (60 ) Change in cash and cash equivalents (313 ) (543 ) (478 ) (1,193 ) Beginning cash and cash equivalents 2,259 2,082 2,424 2,732 Ending cash and cash equivalents 1,946 1,539 1,946 1,539 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change Net revenue Net revenue 1,904 1,881 1,874 1,924 1,914 1 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Gross profit Gross profit 1,442 1,313 1,426 1,556 1,458 1 % Gross profit (as a % of net revenue) 76 % 70 % 76 % 81 % 76 % GAAP-based financial data Acquisition-related expenses 39 26 25 16 15 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Stock-based compensation 1 2 2 2 2 Operating income Operating income 427 289 175 542 377 (12 %) Operating income (as a % of net revenue) 22 % 15 % 9 % 28 % 20 % GAAP-based financial data Acquisition-related expenses 82 76 51 41 39 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Restructuring and related charges — — 155 3 — Stock-based compensation 140 141 142 130 155 Net income (loss) Net income (loss) 299 204 (12 ) 402 399 33 % Net income (loss) (as a % of net revenue) 16 % 11 % (1 %) 21 % 21 % GAAP-based financial data Acquisition-related expenses 82 76 51 41 39 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Restructuring and related charges — — 155 3 — Stock-based compensation 140 141 142 130 155 Tax rate used for management reporting 19 % 19 % 19 % 19 % 19 % Diluted earnings (loss) per share 1.07 0.73 (0.04 ) 1.47 1.47 37 % Number of shares used in computation Basic 278 276 274 272 271 Diluted 279 278 274 274 272 Anti-dilutive shares excluded for loss position3 — — 1 — — 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. 3 Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable though stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 328 423 274 301 346 5 % Packaged goods 274 199 98 142 275 — Full game 602 622 372 443 621 3 % Live services and other 1,302 1,259 1,502 1,481 1,293 (1 %) Total net revenue 1,904 1,881 1,874 1,924 1,914 1 % Full game 32 % 33 % 20 % 23 % 32 % Live services and other 68 % 67 % 80 % 77 % 68 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 17 45 (24 ) (21 ) 24 Packaged goods 16 20 (24 ) (21 ) 46 Full game 33 65 (48 ) (42 ) 70 Live services and other (183 ) 396 120 (304 ) (164 ) Total change in deferred net revenue (online-enabled games) by composition1 (150 ) 461 72 (346 ) (94 ) Net revenue by platform Console 1,161 1,152 1,088 1,167 1,187 2 % PC & Other 423 435 469 451 423 — Mobile 320 294 317 306 304 (5 %) Total net revenue 1,904 1,881 1,874 1,924 1,914 1 % GAAP-based financial data Console (134 ) 423 11 (266 ) (35 ) PC & Other 8 29 47 (77 ) (34 ) Mobile (24 ) 9 14 (3 ) (25 ) Total change in deferred net revenue (online-enabled games) by platform1 (150 ) 461 72 (346 ) (94 ) 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) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change CASH FLOW DATA Operating cash flow (112 ) 1,123 617 359 112 200 % Operating cash flow - TTM 1,788 1,377 1,550 1,987 2,211 24 % Capital expenditures 53 48 47 45 51 (4 %) Capital expenditures - TTM 213 213 207 193 191 (10 %) Repurchase and retirement of common stock 325 325 325 325 325 — Cash dividends paid 53 52 52 52 51 (4 %) DEPRECIATION Depreciation expense 45 46 58 49 49 9 % BALANCE SHEET DATA Cash and cash equivalents 1,539 2,202 2,424 2,259 1,946 Short-term investments 335 351 343 343 359 Cash and cash equivalents, and short-term investments 1,874 2,553 2,767 2,602 2,305 23 % Receivables, net 919 836 684 517 1,047 14 % STOCK-BASED COMPENSATION Cost of revenue 1 2 2 2 2 Research and development 95 95 96 93 113 Marketing and sales 16 15 15 11 13 General and administrative 28 29 29 24 27 Total stock-based compensation 140 141 142 130 155 RESTRUCTURING AND RELATED CHARGES Restructuring — — 111 1 2 Office space reductions — — 44 2 (2 ) Total restructuring and related charges — — 155 3 — View source version on businesswire.com: https://www.businesswire.com/news/home/20231101877865/en/Contacts Katie Burke Director, Investor Relations 650-628-7605 katieburke@ea.com Erin Rheaume Director, Financial Communications 650-628-7978 erheaume@ea.com
Company exceeds expectations on the strength of EA SPORTS portfolio; Successfully launches EA SPORTS FC 24
Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second quarter ended September 30, 2023. “We delivered a strong Q2 and successfully launched EA SPORTS FC, transforming one of the largest franchises in the world into a powerful, interactive platform for the future of football fandom,” said Andrew Wilson, CEO of EA. “Looking ahead, our incredible teams will continue to innovate and expand across our world-class IP, building experiences that entertain our massive online communities, celebrate fandom, and increase connection for our growing global player base.” “EA SPORTS strength, driven by new releases and ongoing live services, delivered Q2 results ahead of expectations,” said Stuart Canfield, CFO of EA. “We remain focused on delivering for our growing player communities and building upon the momentum across our portfolio, while prioritizing investments that execute against our largest opportunities to drive long term growth.” Selected Operating Highlights and Metrics1 Net bookings2 for Q2 was $1.820 billion, up 4% year-over-year (up 5% in constant currency). Live services and other net bookings for Q2 was $1.129 billion, up 1% year-over-year (up 2% in constant currency). On a trailing twelve-month basis, live services were 73% of our business. EA SPORTS Madden NFL franchise outperformed Q2 expectations, delivering net bookings growth of 6% year-over-year. EA SPORTS global football franchise outperformed Q2 expectations driven by the continued strength of EA SPORTS FIFA 23 and demand for the release of EA SPORTS FC 24. EA SPORTS FC 24, within the first four weeks of global launch, had over 14.5 million active accounts. Selected Financial Highlights and Metrics Net revenue was $1.914 billion for the quarter. Net cash provided by operating activities was $112 million for the quarter and $2.211 billion for the trailing twelve months. EA repurchased 2.6 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.5 million shares for $1.300 billion. Dividend EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on December 20, 2023 to shareholders of record as of the close of business on November 29, 2023. Quarterly Financial Highlights Three Months Ended September 30, 2023 2022 (in $ millions, except per share amounts) Full game 621 602 Live services and other 1,293 1,302 Total net revenue 1,914 1,904 Net income 399 299 Diluted earnings per share* 1.47 1.07 Operating cash flow 112 (112) Value of shares repurchased 325 325 Number of shares repurchased 2.6 2.6 Cash dividend paid 51 53 * Diluted earnings per share includes $0.34 from a one-time non-cash tax benefit. The following GAAP-based financial data3 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 September 30, 2023 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 1,914 - (94 ) - - Cost of revenue 456 (15 ) - - (2 ) Gross profit 1,458 15 (94 ) - 2 Total operating expenses 1,081 (24 ) - - (153 ) Operating income 377 39 (94 ) - 155 Interest and other income (expense), net 14 - - - - Income before provision for income taxes 391 39 (94 ) - 155 Number of shares used in computation: Diluted 272 Trailing Twelve Months Financial Highlights Twelve Months Ended September 30, 2023 2022 (in $ millions) Full game 2,058 1,997 Live services and other 5,535 5,288 Total net revenue 7,593 7,285 Net income 993 901 Operating cash flow 2,211 1,788 Value of shares repurchased 1,300 1,295 Number of shares repurchased 10.5 10.0 The following GAAP-based financial data3 and a tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results. Twelve Months Ended September 30, 2023 GAAP-Based Financial Data (in $ millions) Statement of Operations Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 7,593 - 93 - - Cost of revenue 1,840 (82 ) - - (8 ) Gross profit 5,753 82 93 - 8 Total operating expenses 4,370 (125 ) - (158 ) (560 ) Operating income 1,383 207 93 158 568 Interest and other income (expense), net 27 - - - - Income before provision for income taxes 1,410 207 93 158 568 Operating Metric The following is a calculation of our total net bookings2 for the periods presented: Three Months Ended September 30, Twelve Months Ended September 30, 2023 2022 2023 2022 (in $ millions) Total net revenue 1,914 1,904 7,593 7,285 Change in deferred net revenue (online-enabled games) (94 ) (150 ) 93 96 Total net bookings 1,820 1,754 7,686 7,381 Business Outlook as of November 1, 2023 Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $7.300 billion to $7.700 billion. No change in deferred net revenue (online-enabled games) is expected. Net income is expected to be approximately $1.118 billion to $1.273 billion. Diluted earnings per share is expected to be approximately $4.10 to $4.66. Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion. The Company estimates a share count of 273 million for purposes of calculating fiscal year 2024 diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $7.300 billion to $7.700 billion. In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA’s operating results and plan for future periods: Twelve Months Ended March 31, 2024 GAAP-Based Financial Data* (in $ millions) GAAP Guidance Range Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 7,300 to 7,700 - - - - Cost of revenue 1,670 to 1,750 (65 ) - - (5 ) Operating expense 4,213 to 4,333 (95 ) - (3 ) (595 ) Income before provision for income taxes 1,462 to 1,664 160 - 3 600 Net income 1,118 to 1,273 Number of shares used in computation: Diluted shares 273 *The mid-point of the range has been used for purposes of presenting the reconciling items. Third Quarter Fiscal Year 2024 Expectations – Ending December 31, 2023 Financial outlook metrics: Net revenue is expected to be approximately $1.825 billion to $2.025 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $425 million. Net income is expected to be approximately $203 million to $275 million. Diluted earnings per share is expected to be approximately $0.75 to $1.01. The Company estimates a share count of 272 million for purposes of calculating third quarter fiscal 2024 diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $2.250 billion to $2.450 billion. In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA’s operating results and plan for future periods: Three Months Ended December 31, 2023 GAAP-Based Financial Data* (in $ millions) GAAP Guidance Range Acquisition-related expenses Change in deferred net revenue (online-enabled games) Restructuring and related charges Stock-based compensation Total net revenue 1,825 to 2,025 - 425 - - Cost of revenue 495 to 535 (15 ) - - - Operating expense 1,050 to 1,110 (25 ) - - (155 ) Income before provision for income taxes 286 to 387 40 425 - 155 Net income 203 to 275 Number of shares used in computation: Diluted shares 272 *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 November 1, 2023 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2023 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA’s IR Website at http://ir.ea.com. EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website. A dial-in replay of the conference call will be available until November 15, 2023 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 November 1, 2023” and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences 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 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, 2023. These forward-looking statements are current as of November 1, 2023. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2023. 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 2023, EA posted GAAP net revenue of approximately $7.4 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The Sims™, EA SPORTS Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and EA SPORTS F1®. More information about EA is available at www.ea.com/news. EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission. 1 For more information on constant currency, please refer to the earnings slides available on EA’s IR Website. 2 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. 3 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, 2023. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in $ millions, except per share data) Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 Net revenue 1,914 1,904 3,838 3,671 Cost of revenue 456 462 824 776 Gross profit 1,458 1,442 3,014 2,895 Operating expenses: Research and development 602 565 1,198 1,137 Marketing and sales 280 233 509 467 General and administrative 173 174 336 341 Amortization and impairment of intangibles 24 43 49 82 Restructuring 2 — 3 — Total operating expenses 1,081 1,015 2,095 2,027 Operating income 377 427 919 868 Interest and other income (expense), net 14 — 28 (5 ) Income before provision for (benefit from) income taxes 391 427 947 863 Provision for income taxes (8) 128 146 253 Net income 399 299 801 610 Earnings per share Basic 1.47 1.08 2.94 2.19 Diluted 1.47 1.07 2.93 2.18 Number of shares used in computation Basic 271 278 272 279 Diluted 272 279 273 280 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on August 1, 2023 for the three months ended September 30, 2023 plus a comparison to the actuals for the three months ended September 30, 2022. Three Months Ended September 30, 2023 Guidance (Mid-Point) 2023 Actuals 2022 Actuals Variance Net revenue Net revenue 1,875 39 1,914 1,904 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (125 ) 31 (94 ) (150 ) Cost of revenue Cost of revenue 440 16 456 462 GAAP-based financial data Acquisition-related expenses (15 ) — (15 ) (39 ) Stock-based compensation — (2 ) (2 ) (1 ) Operating expenses Operating expenses 1,115 (34 ) 1,081 1,015 GAAP-based financial data Acquisition-related expenses (25 ) 1 (24 ) (43 ) Restructuring and related charges (10 ) 10 — — Stock-based compensation (155 ) 2 (153 ) (139 ) Income before tax Income before tax 324 67 391 427 GAAP-based financial data Acquisition-related expenses 40 (1 ) 39 82 Change in deferred net revenue (online-enabled games)1 (125 ) 31 (94 ) (150 ) Restructuring and related charges 10 (10 ) — — Stock-based compensation 155 — 155 140 Tax rate used for management reporting 19 % 19 % 19 % Earnings per share Basic 0.81 0.66 1.47 1.08 Diluted 0.81 0.66 1.47 1.07 Number of shares used in computation Basic 272 (1 ) 271 278 Diluted 273 (1 ) 272 279 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) September 30, 2023 March 31, 20232 ASSETS Current assets: Cash and cash equivalents 1,946 2,424 Short-term investments 359 343 Receivables, net 1,047 684 Other current assets 492 518 Total current assets 3,844 3,969 Property and equipment, net 542 549 Goodwill 5,378 5,380 Acquisition-related intangibles, net 538 618 Deferred income taxes, net 2,353 2,462 Other assets 484 481 TOTAL ASSETS 13,139 13,459 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 152 99 Accrued and other current liabilities 1,138 1,285 Deferred net revenue (online-enabled games) 1,498 1,901 Total current liabilities 2,788 3,285 Senior notes, net 1,881 1,880 Income tax obligations 458 607 Deferred income taxes, net 1 1 Other liabilities 436 393 Total liabilities 5,564 6,166 Stockholders’ equity: Common stock 3 3 Retained earnings 7,606 7,357 Accumulated other comprehensive loss (34 ) (67 ) Total stockholders’ equity 7,575 7,293 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,139 13,459 2Derived from audited consolidated financial statements. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) Three Months Ended September 30, Six Months Ended September 30, 2023 2022 2023 2022 OPERATING ACTIVITIES Net income 399 299 801 610 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, amortization, accretion and impairment 85 127 173 241 Stock-based compensation 155 140 285 265 Change in assets and liabilities Receivables, net (534 ) (346 ) (367 ) (276 ) Other assets (22 ) (10 ) 74 (25 ) Accounts payable 75 69 57 53 Accrued and other liabilities (165 ) (164 ) (257 ) (269 ) Deferred income taxes, net 201 (70 ) 108 (156 ) Deferred net revenue (online-enabled games) (82 ) (157 ) (403 ) (633 ) Net cash provided by (used in) operating activities 112 (112 ) 471 (190 ) INVESTING ACTIVITIES Capital expenditures (51 ) (53 ) (96 ) (112 ) Proceeds from maturities and sales of short-term investments 151 79 302 166 Purchase of short-term investments (163 ) (80 ) (313 ) (173 ) Net cash used in investing activities (63 ) (54 ) (107 ) (119 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 40 43 40 44 Cash dividends paid (51 ) (53 ) (103 ) (106 ) Cash paid to taxing authorities for shares withheld from employees (15 ) (13 ) (120 ) (117 ) Repurchase and retirement of common stock (325 ) (325 ) (650 ) (645 ) Net cash used in financing activities (351 ) (348 ) (833 ) (824 ) Effect of foreign exchange on cash and cash equivalents (11 ) (29 ) (9 ) (60 ) Change in cash and cash equivalents (313 ) (543 ) (478 ) (1,193 ) Beginning cash and cash equivalents 2,259 2,082 2,424 2,732 Ending cash and cash equivalents 1,946 1,539 1,946 1,539 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change Net revenue Net revenue 1,904 1,881 1,874 1,924 1,914 1 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Gross profit Gross profit 1,442 1,313 1,426 1,556 1,458 1 % Gross profit (as a % of net revenue) 76 % 70 % 76 % 81 % 76 % GAAP-based financial data Acquisition-related expenses 39 26 25 16 15 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Stock-based compensation 1 2 2 2 2 Operating income Operating income 427 289 175 542 377 (12 %) Operating income (as a % of net revenue) 22 % 15 % 9 % 28 % 20 % GAAP-based financial data Acquisition-related expenses 82 76 51 41 39 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Restructuring and related charges — — 155 3 — Stock-based compensation 140 141 142 130 155 Net income (loss) Net income (loss) 299 204 (12 ) 402 399 33 % Net income (loss) (as a % of net revenue) 16 % 11 % (1 %) 21 % 21 % GAAP-based financial data Acquisition-related expenses 82 76 51 41 39 Change in deferred net revenue (online-enabled games)1 (150 ) 461 72 (346 ) (94 ) Restructuring and related charges — — 155 3 — Stock-based compensation 140 141 142 130 155 Tax rate used for management reporting 19 % 19 % 19 % 19 % 19 % Diluted earnings (loss) per share 1.07 0.73 (0.04 ) 1.47 1.47 37 % Number of shares used in computation Basic 278 276 274 272 271 Diluted 279 278 274 274 272 Anti-dilutive shares excluded for loss position3 — — 1 — — 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. 3 Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable though stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive. ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 328 423 274 301 346 5 % Packaged goods 274 199 98 142 275 — Full game 602 622 372 443 621 3 % Live services and other 1,302 1,259 1,502 1,481 1,293 (1 %) Total net revenue 1,904 1,881 1,874 1,924 1,914 1 % Full game 32 % 33 % 20 % 23 % 32 % Live services and other 68 % 67 % 80 % 77 % 68 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 17 45 (24 ) (21 ) 24 Packaged goods 16 20 (24 ) (21 ) 46 Full game 33 65 (48 ) (42 ) 70 Live services and other (183 ) 396 120 (304 ) (164 ) Total change in deferred net revenue (online-enabled games) by composition1 (150 ) 461 72 (346 ) (94 ) Net revenue by platform Console 1,161 1,152 1,088 1,167 1,187 2 % PC & Other 423 435 469 451 423 — Mobile 320 294 317 306 304 (5 %) Total net revenue 1,904 1,881 1,874 1,924 1,914 1 % GAAP-based financial data Console (134 ) 423 11 (266 ) (35 ) PC & Other 8 29 47 (77 ) (34 ) Mobile (24 ) 9 14 (3 ) (25 ) Total change in deferred net revenue (online-enabled games) by platform1 (150 ) 461 72 (346 ) (94 ) 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) Q2 Q3 Q4 Q1 Q2 YOY % FY23 FY23 FY23 FY24 FY24 Change CASH FLOW DATA Operating cash flow (112 ) 1,123 617 359 112 200 % Operating cash flow - TTM 1,788 1,377 1,550 1,987 2,211 24 % Capital expenditures 53 48 47 45 51 (4 %) Capital expenditures - TTM 213 213 207 193 191 (10 %) Repurchase and retirement of common stock 325 325 325 325 325 — Cash dividends paid 53 52 52 52 51 (4 %) DEPRECIATION Depreciation expense 45 46 58 49 49 9 % BALANCE SHEET DATA Cash and cash equivalents 1,539 2,202 2,424 2,259 1,946 Short-term investments 335 351 343 343 359 Cash and cash equivalents, and short-term investments 1,874 2,553 2,767 2,602 2,305 23 % Receivables, net 919 836 684 517 1,047 14 % STOCK-BASED COMPENSATION Cost of revenue 1 2 2 2 2 Research and development 95 95 96 93 113 Marketing and sales 16 15 15 11 13 General and administrative 28 29 29 24 27 Total stock-based compensation 140 141 142 130 155 RESTRUCTURING AND RELATED CHARGES Restructuring — — 111 1 2 Office space reductions — — 44 2 (2 ) Total restructuring and related charges — — 155 3 — View source version on businesswire.com: https://www.businesswire.com/news/home/20231101877865/en/
Katie Burke Director, Investor Relations 650-628-7605 katieburke@ea.com Erin Rheaume Director, Financial Communications 650-628-7978 erheaume@ea.com