Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Electronic Arts Reports Strong Q3 FY24 Results By: Electronic Arts Inc. via Business Wire January 30, 2024 at 16:05 PM EST EA SPORTS FCTM Momentum Continues, Driving Record Live Services Net Bookings Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third quarter ended December 31, 2023. “Our incredible teams delivered a strong Q3, entertaining hundreds of millions of people across our portfolio, driving deep engagement and record live services,” said Andrew Wilson, CEO of EA. “We remain focused on growing our biggest franchises and delivering new, innovative games and experiences for our global communities.” “EA SPORTS FC outperformed expectations again this quarter, delivering 7% year-over-year net bookings growth, as momentum continued through the FC brand transition,” said Stuart Canfield, CFO of EA. “We will continue to build upon the strength within our portfolio, while prioritizing investments in our largest opportunities for multi-year growth.” Selected Operating Highlights and Metrics1 Net bookings2 for Q3 was $2.366 billion, up 1% year-over-year (up 2% in constant currency). Live services and other net bookings for Q3 achieved a record $1.712 billion, up 3% year-over-year (up 5% in constant currency). On a trailing twelve-month basis, live services were 73% of our business. The EA SPORTS FCTM franchise outperformed Q3 expectations, delivering 7% net bookings growth against a prior year that included the World Cup. EA SPORTSTM Madden NFL delivered net bookings growth of 5% year-over-year. Selected Financial Highlights and Metrics Net revenue was $1.945 billion for the quarter. Net cash provided by operating activities for the quarter was $1.264 billion, up 13% year-over-year. For the trailing twelve months, net cash provided by operating activities was a record $2.352 billion. EA repurchased 2.5 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.4 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 March 20, 2024 to shareholders of record as of the close of business on February 28, 2024. Quarterly Financial Highlights Three Months Ended December 31, (in $ millions, except per share amounts) 2023 2022 Full game 618 622 Live services and other 1,327 1,259 Total net revenue 1,945 1,881 Net income 290 204 Diluted earnings per share 1.07 0.73 Operating cash flow 1,264 1,123 Value of shares repurchased 325 325 Number of shares repurchased 2.5 2.6 Cash dividend paid 51 52 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 December 31, 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 1,945 — 421 — — Cost of revenue 529 (16 ) — — (2 ) Gross profit 1,416 16 421 — 2 Total operating expenses 1,051 (21 ) — — (149 ) Operating income 365 37 421 — 151 Interest and other income (expense), net 17 — — — — Income before provision for income taxes 382 37 421 — 151 Number of shares used in computation: Diluted 271 Trailing Twelve Months Financial Highlights Twelve Months Ended December 31, (in $ millions) 2023 2022 Full game 2,054 2,003 Live services and other 5,603 5,374 Total net revenue 7,657 7,377 Net income 1,079 1,039 Operating cash flow 2,352 1,377 Value of shares repurchased 1,300 1,295 Number of shares repurchased 10.4 10.2 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 December 31, 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 7,657 — 53 — — Cost of revenue 1,801 (72 ) — — (8 ) Gross profit 5,856 72 53 — 8 Total operating expenses 4,397 (96 ) — (158 ) (570 ) Operating income 1,459 168 53 158 578 Interest and other income (expense), net 51 — — — — Income before provision for income taxes 1,510 168 53 158 578 Operating Metric The following is a calculation of our total net bookings2 for the periods presented: Three Months Ended December 31, Twelve Months Ended December 31, (in $ millions) 2023 2022 2023 2022 Total net revenue 1,945 1,881 7,657 7,377 Change in deferred net revenue (online-enabled games) 421 461 53 (231) Total net bookings 2,366 2,342 7,710 7,146 Business Outlook as of January 30, 2024 Fourth Quarter Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $1.625 billion to $1.925 billion. No change in deferred net revenue (online-enabled games) is expected. Net income is expected to be approximately $54 million to $183 million. Diluted earnings per share is expected to be approximately $0.20 to $0.68. The Company estimates a share count of 271 million for purposes of calculating diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $1.625 billion to $1.925 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 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 1,625 to 1,925 — — — — Cost of revenue 360 to 410 (30 ) — — (5 ) Operating expense 1,125 to 1,205 (75 ) — — (150 ) Income before provision for income taxes 158 to 325 105 — — 155 Net income 54 to 183 Number of shares used in computation: Diluted shares 271 *The mid-point of the range has been used for purposes of presenting the reconciling items. ** Subsequent to December 31, 2023, we impaired certain acquisition-related intangible assets totaling approximately $70 million that will be recorded in the fourth quarter of fiscal year 2024. Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $7.408 billion to $7.708 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately ($19) million. Net income is expected to be approximately $1.145 billion to $1.274 billion. Diluted earnings per share is expected to be approximately $4.21 to $4.68. Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion. The Company estimates a share count of 272 million for purposes of calculating diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $7.389 billion to $7.689 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 7,408 to 7,708 — (19 ) — — Cost of revenue 1,713 to 1,763 (77 ) — — (11 ) Operating expense 4,271 to 4,351 (145 ) — (3 ) (580 ) Income before provision for income taxes 1,487 to 1,654 222 (19 ) 3 591 Net income 1,145 to 1,274 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. ** Includes Q4 impairment of acquisition-related intangible assets as per previous table. Conference Call and Supporting Documents Electronic Arts will host a conference call on January 30, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the third quarter ended December 31, 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 February 14, 2024 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using conference code 5939891. An audio webcast replay of the conference call will be available for one year on EA’s IR Website. Forward-Looking Statements Some statements set forth in this release, including the information relating to EA’s expectations under the heading “Business Outlook as of January 30, 2024” and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences 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 January 30, 2024. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 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 December 31, 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. For additional information, please contact: 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 December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Net revenue 1,945 1,881 5,783 5,552 Cost of revenue 529 568 1,353 1,344 Gross profit 1,416 1,313 4,430 4,208 Operating expenses: Research and development 584 556 1,782 1,693 Marketing and sales 276 256 785 723 General and administrative 170 162 506 503 Amortization and impairment of intangibles 21 50 70 132 Restructuring — — 3 — Total operating expenses 1,051 1,024 3,146 3,051 Operating income 365 289 1,284 1,157 Interest and other income (expense), net 17 (7 ) 45 (12 ) Income before provision for income taxes 382 282 1,329 1,145 Provision for income taxes 92 78 238 331 Net income 290 204 1,091 814 Earnings per share Basic 1.08 0.74 4.03 2.93 Diluted 1.07 0.73 4.01 2.92 Number of shares used in computation Basic 269 276 271 278 Diluted 271 278 272 279 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on November 1, 2023 for the three months ended December 31, 2023 plus a comparison to the actuals for the three months ended December 31, 2022. Three Months Ended December 31, 2023 Guidance (Mid-Point) 2023 Actuals 2022 Actuals Variance Net revenue Net revenue 1,925 20 1,945 1,881 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 425 (4 ) 421 461 Cost of revenue Cost of revenue 515 14 529 568 GAAP-based financial data Acquisition-related expenses (15 ) (1 ) (16 ) (26 ) Stock-based compensation — (2 ) (2 ) (2 ) Operating expenses Operating expenses 1,080 (29 ) 1,051 1,024 GAAP-based financial data Acquisition-related expenses (25 ) 4 (21 ) (50 ) Stock-based compensation (155 ) 6 (149 ) (139 ) Income before tax Income before tax 337 45 382 282 GAAP-based financial data Acquisition-related expenses 40 (3 ) 37 76 Change in deferred net revenue (online-enabled games)1 425 (4 ) 421 461 Stock-based compensation 155 (4 ) 151 141 Tax rate used for management reporting 19 % 19 % 19 % Earnings per share Basic 0.89 0.19 1.08 0.74 Diluted 0.88 0.19 1.07 0.73 Number of shares used in computation Basic 270 (1 ) 269 276 Diluted 272 (1 ) 271 278 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) December 31, 2023 March 31, 20232 ASSETS Current assets: Cash and cash equivalents 2,742 2,424 Short-term investments 362 343 Receivables, net 867 684 Other current assets 378 518 Total current assets 4,349 3,969 Property and equipment, net 561 549 Goodwill 5,382 5,380 Acquisition-related intangibles, net 501 618 Deferred income taxes, net 2,375 2,462 Other assets 449 481 TOTAL ASSETS 13,617 13,459 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 62 99 Accrued and other current liabilities 1,299 1,285 Deferred net revenue (online-enabled games) 1,919 1,901 Total current liabilities 3,280 3,285 Senior notes, net 1,881 1,880 Income tax obligations 482 607 Deferred income taxes, net 2 1 Other liabilities 439 393 Total liabilities 6,084 6,166 Stockholders’ equity: Common stock 3 3 Retained earnings 7,614 7,357 Accumulated other comprehensive loss (84 ) (67 ) Total stockholders’ equity 7,533 7,293 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,617 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 December 31, Nine Months Ended December 31, 2023 2022 2023 2022 OPERATING ACTIVITIES Net income 290 204 1,091 814 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, accretion and impairment 82 122 255 363 Stock-based compensation 151 141 436 406 Change in assets and liabilities Receivables, net 183 90 (184 ) (186 ) Other assets 112 (28 ) 186 (53 ) Accounts payable (93 ) (74 ) (36 ) (21 ) Accrued and other liabilities 138 297 (119 ) 28 Deferred income taxes, net (20 ) (47 ) 88 (203 ) Deferred net revenue (online-enabled games) 421 418 18 (215 ) Net cash provided by operating activities 1,264 1,123 1,735 933 INVESTING ACTIVITIES Capital expenditures (52 ) (48 ) (148 ) (160 ) Proceeds from maturities and sales of short-term investments 148 77 450 243 Purchase of short-term investments (147 ) (90 ) (460 ) (263 ) Net cash used in investing activities (51 ) (61 ) (158 ) (180 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 3 3 43 47 Cash dividends paid (51 ) (52 ) (154 ) (158 ) Cash paid to taxing authorities for shares withheld from employees (58 ) (44 ) (178 ) (161 ) Repurchase and retirement of common stock (325 ) (325 ) (975 ) (970 ) Net cash used in financing activities (431 ) (418 ) (1,264 ) (1,242 ) Effect of foreign exchange on cash and cash equivalents 14 19 5 (41 ) Change in cash and cash equivalents 796 663 318 (530 ) Beginning cash and cash equivalents 1,946 1,539 2,424 2,732 Ending cash and cash equivalents 2,742 2,202 2,742 2,202 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change Net revenue Net revenue 1,881 1,874 1,924 1,914 1,945 3 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Gross profit Gross profit 1,313 1,426 1,556 1,458 1,416 8 % Gross profit (as a % of net revenue) 70 % 76 % 81 % 76 % 73 % GAAP-based financial data Acquisition-related expenses 26 25 16 15 16 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Stock-based compensation 2 2 2 2 2 Operating income Operating income 289 175 542 377 365 26 % Operating income (as a % of net revenue) 15 % 9 % 28 % 20 % 19 % GAAP-based financial data Acquisition-related expenses 76 51 41 39 37 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Restructuring and related charges — 155 3 — — Stock-based compensation 141 142 130 155 151 Net income (loss) Net income (loss) 204 (12 ) 402 399 290 42 % Net income (loss) (as a % of net revenue) 11 % (1 %) 21 % 21 % 15 % GAAP-based financial data Acquisition-related expenses 76 51 41 39 37 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Restructuring and related charges — 155 3 — — Stock-based compensation 141 142 130 155 151 Tax rate used for management reporting 19 % 19 % 19 % 19 % 19 % Diluted earnings (loss) per share 0.73 (0.04 ) 1.47 1.47 1.07 47 % Number of shares used in computation Basic 276 274 272 271 269 Diluted 278 274 274 272 271 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) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 423 274 301 346 431 2 % Packaged goods 199 98 142 275 187 (6 %) Full game 622 372 443 621 618 (1 %) Live services and other 1,259 1,502 1,481 1,293 1,327 5 % Total net revenue 1,881 1,874 1,924 1,914 1,945 3 % Full game 33 % 20 % 23 % 32 % 32 % Live services and other 67 % 80 % 77 % 68 % 68 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 45 (24 ) (21 ) 24 32 Packaged goods 20 (24 ) (21 ) 46 4 Full game 65 (48 ) (42 ) 70 36 Live services and other 396 120 (304 ) (164 ) 385 Total change in deferred net revenue (online-enabled games) by composition1 461 72 (346 ) (94 ) 421 Net revenue by platform Console 1,152 1,088 1,167 1,187 1,229 7 % PC & Other 435 469 451 423 420 (3 %) Mobile 294 317 306 304 296 1 % Total net revenue 1,881 1,874 1,924 1,914 1,945 3 % GAAP-based financial data Console 423 11 (266 ) (35 ) 377 PC & Other 29 47 (77 ) (34 ) 33 Mobile 9 14 (3 ) (25 ) 11 Total change in deferred net revenue (online-enabled games) by platform1 461 72 (346 ) (94 ) 421 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) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change CASH FLOW DATA Operating cash flow 1,123 617 359 112 1,264 13 % Operating cash flow - TTM 1,377 1,550 1,987 2,211 2,352 71 % Capital expenditures 48 47 45 51 52 8 % Capital expenditures - TTM 213 207 193 191 195 (8 %) Repurchase and retirement of common stock 325 325 325 325 325 — Cash dividends paid 52 52 52 51 51 (2 %) DEPRECIATION Depreciation expense 46 58 49 49 48 4 % BALANCE SHEET DATA Cash and cash equivalents 2,202 2,424 2,259 1,946 2,742 Short-term investments 351 343 343 359 362 Cash and cash equivalents, and short-term investments 2,553 2,767 2,602 2,305 3,104 22 % Receivables, net 836 684 517 1,047 867 4 % STOCK-BASED COMPENSATION Cost of revenue 2 2 2 2 2 Research and development 95 96 93 113 108 Marketing and sales 15 15 11 13 14 General and administrative 29 29 24 27 27 Total stock-based compensation 141 142 130 155 151 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/20240130758283/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 Q3 FY24 Results By: Electronic Arts Inc. via Business Wire January 30, 2024 at 16:05 PM EST EA SPORTS FCTM Momentum Continues, Driving Record Live Services Net Bookings Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third quarter ended December 31, 2023. “Our incredible teams delivered a strong Q3, entertaining hundreds of millions of people across our portfolio, driving deep engagement and record live services,” said Andrew Wilson, CEO of EA. “We remain focused on growing our biggest franchises and delivering new, innovative games and experiences for our global communities.” “EA SPORTS FC outperformed expectations again this quarter, delivering 7% year-over-year net bookings growth, as momentum continued through the FC brand transition,” said Stuart Canfield, CFO of EA. “We will continue to build upon the strength within our portfolio, while prioritizing investments in our largest opportunities for multi-year growth.” Selected Operating Highlights and Metrics1 Net bookings2 for Q3 was $2.366 billion, up 1% year-over-year (up 2% in constant currency). Live services and other net bookings for Q3 achieved a record $1.712 billion, up 3% year-over-year (up 5% in constant currency). On a trailing twelve-month basis, live services were 73% of our business. The EA SPORTS FCTM franchise outperformed Q3 expectations, delivering 7% net bookings growth against a prior year that included the World Cup. EA SPORTSTM Madden NFL delivered net bookings growth of 5% year-over-year. Selected Financial Highlights and Metrics Net revenue was $1.945 billion for the quarter. Net cash provided by operating activities for the quarter was $1.264 billion, up 13% year-over-year. For the trailing twelve months, net cash provided by operating activities was a record $2.352 billion. EA repurchased 2.5 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.4 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 March 20, 2024 to shareholders of record as of the close of business on February 28, 2024. Quarterly Financial Highlights Three Months Ended December 31, (in $ millions, except per share amounts) 2023 2022 Full game 618 622 Live services and other 1,327 1,259 Total net revenue 1,945 1,881 Net income 290 204 Diluted earnings per share 1.07 0.73 Operating cash flow 1,264 1,123 Value of shares repurchased 325 325 Number of shares repurchased 2.5 2.6 Cash dividend paid 51 52 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 December 31, 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 1,945 — 421 — — Cost of revenue 529 (16 ) — — (2 ) Gross profit 1,416 16 421 — 2 Total operating expenses 1,051 (21 ) — — (149 ) Operating income 365 37 421 — 151 Interest and other income (expense), net 17 — — — — Income before provision for income taxes 382 37 421 — 151 Number of shares used in computation: Diluted 271 Trailing Twelve Months Financial Highlights Twelve Months Ended December 31, (in $ millions) 2023 2022 Full game 2,054 2,003 Live services and other 5,603 5,374 Total net revenue 7,657 7,377 Net income 1,079 1,039 Operating cash flow 2,352 1,377 Value of shares repurchased 1,300 1,295 Number of shares repurchased 10.4 10.2 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 December 31, 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 7,657 — 53 — — Cost of revenue 1,801 (72 ) — — (8 ) Gross profit 5,856 72 53 — 8 Total operating expenses 4,397 (96 ) — (158 ) (570 ) Operating income 1,459 168 53 158 578 Interest and other income (expense), net 51 — — — — Income before provision for income taxes 1,510 168 53 158 578 Operating Metric The following is a calculation of our total net bookings2 for the periods presented: Three Months Ended December 31, Twelve Months Ended December 31, (in $ millions) 2023 2022 2023 2022 Total net revenue 1,945 1,881 7,657 7,377 Change in deferred net revenue (online-enabled games) 421 461 53 (231) Total net bookings 2,366 2,342 7,710 7,146 Business Outlook as of January 30, 2024 Fourth Quarter Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $1.625 billion to $1.925 billion. No change in deferred net revenue (online-enabled games) is expected. Net income is expected to be approximately $54 million to $183 million. Diluted earnings per share is expected to be approximately $0.20 to $0.68. The Company estimates a share count of 271 million for purposes of calculating diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $1.625 billion to $1.925 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 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 1,625 to 1,925 — — — — Cost of revenue 360 to 410 (30 ) — — (5 ) Operating expense 1,125 to 1,205 (75 ) — — (150 ) Income before provision for income taxes 158 to 325 105 — — 155 Net income 54 to 183 Number of shares used in computation: Diluted shares 271 *The mid-point of the range has been used for purposes of presenting the reconciling items. ** Subsequent to December 31, 2023, we impaired certain acquisition-related intangible assets totaling approximately $70 million that will be recorded in the fourth quarter of fiscal year 2024. Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $7.408 billion to $7.708 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately ($19) million. Net income is expected to be approximately $1.145 billion to $1.274 billion. Diluted earnings per share is expected to be approximately $4.21 to $4.68. Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion. The Company estimates a share count of 272 million for purposes of calculating diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $7.389 billion to $7.689 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 7,408 to 7,708 — (19 ) — — Cost of revenue 1,713 to 1,763 (77 ) — — (11 ) Operating expense 4,271 to 4,351 (145 ) — (3 ) (580 ) Income before provision for income taxes 1,487 to 1,654 222 (19 ) 3 591 Net income 1,145 to 1,274 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. ** Includes Q4 impairment of acquisition-related intangible assets as per previous table. Conference Call and Supporting Documents Electronic Arts will host a conference call on January 30, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the third quarter ended December 31, 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 February 14, 2024 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using conference code 5939891. An audio webcast replay of the conference call will be available for one year on EA’s IR Website. Forward-Looking Statements Some statements set forth in this release, including the information relating to EA’s expectations under the heading “Business Outlook as of January 30, 2024” and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences 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 January 30, 2024. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 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 December 31, 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. For additional information, please contact: 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 December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Net revenue 1,945 1,881 5,783 5,552 Cost of revenue 529 568 1,353 1,344 Gross profit 1,416 1,313 4,430 4,208 Operating expenses: Research and development 584 556 1,782 1,693 Marketing and sales 276 256 785 723 General and administrative 170 162 506 503 Amortization and impairment of intangibles 21 50 70 132 Restructuring — — 3 — Total operating expenses 1,051 1,024 3,146 3,051 Operating income 365 289 1,284 1,157 Interest and other income (expense), net 17 (7 ) 45 (12 ) Income before provision for income taxes 382 282 1,329 1,145 Provision for income taxes 92 78 238 331 Net income 290 204 1,091 814 Earnings per share Basic 1.08 0.74 4.03 2.93 Diluted 1.07 0.73 4.01 2.92 Number of shares used in computation Basic 269 276 271 278 Diluted 271 278 272 279 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on November 1, 2023 for the three months ended December 31, 2023 plus a comparison to the actuals for the three months ended December 31, 2022. Three Months Ended December 31, 2023 Guidance (Mid-Point) 2023 Actuals 2022 Actuals Variance Net revenue Net revenue 1,925 20 1,945 1,881 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 425 (4 ) 421 461 Cost of revenue Cost of revenue 515 14 529 568 GAAP-based financial data Acquisition-related expenses (15 ) (1 ) (16 ) (26 ) Stock-based compensation — (2 ) (2 ) (2 ) Operating expenses Operating expenses 1,080 (29 ) 1,051 1,024 GAAP-based financial data Acquisition-related expenses (25 ) 4 (21 ) (50 ) Stock-based compensation (155 ) 6 (149 ) (139 ) Income before tax Income before tax 337 45 382 282 GAAP-based financial data Acquisition-related expenses 40 (3 ) 37 76 Change in deferred net revenue (online-enabled games)1 425 (4 ) 421 461 Stock-based compensation 155 (4 ) 151 141 Tax rate used for management reporting 19 % 19 % 19 % Earnings per share Basic 0.89 0.19 1.08 0.74 Diluted 0.88 0.19 1.07 0.73 Number of shares used in computation Basic 270 (1 ) 269 276 Diluted 272 (1 ) 271 278 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) December 31, 2023 March 31, 20232 ASSETS Current assets: Cash and cash equivalents 2,742 2,424 Short-term investments 362 343 Receivables, net 867 684 Other current assets 378 518 Total current assets 4,349 3,969 Property and equipment, net 561 549 Goodwill 5,382 5,380 Acquisition-related intangibles, net 501 618 Deferred income taxes, net 2,375 2,462 Other assets 449 481 TOTAL ASSETS 13,617 13,459 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 62 99 Accrued and other current liabilities 1,299 1,285 Deferred net revenue (online-enabled games) 1,919 1,901 Total current liabilities 3,280 3,285 Senior notes, net 1,881 1,880 Income tax obligations 482 607 Deferred income taxes, net 2 1 Other liabilities 439 393 Total liabilities 6,084 6,166 Stockholders’ equity: Common stock 3 3 Retained earnings 7,614 7,357 Accumulated other comprehensive loss (84 ) (67 ) Total stockholders’ equity 7,533 7,293 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,617 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 December 31, Nine Months Ended December 31, 2023 2022 2023 2022 OPERATING ACTIVITIES Net income 290 204 1,091 814 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, accretion and impairment 82 122 255 363 Stock-based compensation 151 141 436 406 Change in assets and liabilities Receivables, net 183 90 (184 ) (186 ) Other assets 112 (28 ) 186 (53 ) Accounts payable (93 ) (74 ) (36 ) (21 ) Accrued and other liabilities 138 297 (119 ) 28 Deferred income taxes, net (20 ) (47 ) 88 (203 ) Deferred net revenue (online-enabled games) 421 418 18 (215 ) Net cash provided by operating activities 1,264 1,123 1,735 933 INVESTING ACTIVITIES Capital expenditures (52 ) (48 ) (148 ) (160 ) Proceeds from maturities and sales of short-term investments 148 77 450 243 Purchase of short-term investments (147 ) (90 ) (460 ) (263 ) Net cash used in investing activities (51 ) (61 ) (158 ) (180 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 3 3 43 47 Cash dividends paid (51 ) (52 ) (154 ) (158 ) Cash paid to taxing authorities for shares withheld from employees (58 ) (44 ) (178 ) (161 ) Repurchase and retirement of common stock (325 ) (325 ) (975 ) (970 ) Net cash used in financing activities (431 ) (418 ) (1,264 ) (1,242 ) Effect of foreign exchange on cash and cash equivalents 14 19 5 (41 ) Change in cash and cash equivalents 796 663 318 (530 ) Beginning cash and cash equivalents 1,946 1,539 2,424 2,732 Ending cash and cash equivalents 2,742 2,202 2,742 2,202 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change Net revenue Net revenue 1,881 1,874 1,924 1,914 1,945 3 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Gross profit Gross profit 1,313 1,426 1,556 1,458 1,416 8 % Gross profit (as a % of net revenue) 70 % 76 % 81 % 76 % 73 % GAAP-based financial data Acquisition-related expenses 26 25 16 15 16 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Stock-based compensation 2 2 2 2 2 Operating income Operating income 289 175 542 377 365 26 % Operating income (as a % of net revenue) 15 % 9 % 28 % 20 % 19 % GAAP-based financial data Acquisition-related expenses 76 51 41 39 37 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Restructuring and related charges — 155 3 — — Stock-based compensation 141 142 130 155 151 Net income (loss) Net income (loss) 204 (12 ) 402 399 290 42 % Net income (loss) (as a % of net revenue) 11 % (1 %) 21 % 21 % 15 % GAAP-based financial data Acquisition-related expenses 76 51 41 39 37 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Restructuring and related charges — 155 3 — — Stock-based compensation 141 142 130 155 151 Tax rate used for management reporting 19 % 19 % 19 % 19 % 19 % Diluted earnings (loss) per share 0.73 (0.04 ) 1.47 1.47 1.07 47 % Number of shares used in computation Basic 276 274 272 271 269 Diluted 278 274 274 272 271 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) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 423 274 301 346 431 2 % Packaged goods 199 98 142 275 187 (6 %) Full game 622 372 443 621 618 (1 %) Live services and other 1,259 1,502 1,481 1,293 1,327 5 % Total net revenue 1,881 1,874 1,924 1,914 1,945 3 % Full game 33 % 20 % 23 % 32 % 32 % Live services and other 67 % 80 % 77 % 68 % 68 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 45 (24 ) (21 ) 24 32 Packaged goods 20 (24 ) (21 ) 46 4 Full game 65 (48 ) (42 ) 70 36 Live services and other 396 120 (304 ) (164 ) 385 Total change in deferred net revenue (online-enabled games) by composition1 461 72 (346 ) (94 ) 421 Net revenue by platform Console 1,152 1,088 1,167 1,187 1,229 7 % PC & Other 435 469 451 423 420 (3 %) Mobile 294 317 306 304 296 1 % Total net revenue 1,881 1,874 1,924 1,914 1,945 3 % GAAP-based financial data Console 423 11 (266 ) (35 ) 377 PC & Other 29 47 (77 ) (34 ) 33 Mobile 9 14 (3 ) (25 ) 11 Total change in deferred net revenue (online-enabled games) by platform1 461 72 (346 ) (94 ) 421 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) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change CASH FLOW DATA Operating cash flow 1,123 617 359 112 1,264 13 % Operating cash flow - TTM 1,377 1,550 1,987 2,211 2,352 71 % Capital expenditures 48 47 45 51 52 8 % Capital expenditures - TTM 213 207 193 191 195 (8 %) Repurchase and retirement of common stock 325 325 325 325 325 — Cash dividends paid 52 52 52 51 51 (2 %) DEPRECIATION Depreciation expense 46 58 49 49 48 4 % BALANCE SHEET DATA Cash and cash equivalents 2,202 2,424 2,259 1,946 2,742 Short-term investments 351 343 343 359 362 Cash and cash equivalents, and short-term investments 2,553 2,767 2,602 2,305 3,104 22 % Receivables, net 836 684 517 1,047 867 4 % STOCK-BASED COMPENSATION Cost of revenue 2 2 2 2 2 Research and development 95 96 93 113 108 Marketing and sales 15 15 11 13 14 General and administrative 29 29 24 27 27 Total stock-based compensation 141 142 130 155 151 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/20240130758283/en/Contacts Katie Burke Director, Investor Relations 650-628-7605 katieburke@ea.com Erin Rheaume Director, Financial Communications 650-628-7978 erheaume@ea.com
Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third quarter ended December 31, 2023. “Our incredible teams delivered a strong Q3, entertaining hundreds of millions of people across our portfolio, driving deep engagement and record live services,” said Andrew Wilson, CEO of EA. “We remain focused on growing our biggest franchises and delivering new, innovative games and experiences for our global communities.” “EA SPORTS FC outperformed expectations again this quarter, delivering 7% year-over-year net bookings growth, as momentum continued through the FC brand transition,” said Stuart Canfield, CFO of EA. “We will continue to build upon the strength within our portfolio, while prioritizing investments in our largest opportunities for multi-year growth.” Selected Operating Highlights and Metrics1 Net bookings2 for Q3 was $2.366 billion, up 1% year-over-year (up 2% in constant currency). Live services and other net bookings for Q3 achieved a record $1.712 billion, up 3% year-over-year (up 5% in constant currency). On a trailing twelve-month basis, live services were 73% of our business. The EA SPORTS FCTM franchise outperformed Q3 expectations, delivering 7% net bookings growth against a prior year that included the World Cup. EA SPORTSTM Madden NFL delivered net bookings growth of 5% year-over-year. Selected Financial Highlights and Metrics Net revenue was $1.945 billion for the quarter. Net cash provided by operating activities for the quarter was $1.264 billion, up 13% year-over-year. For the trailing twelve months, net cash provided by operating activities was a record $2.352 billion. EA repurchased 2.5 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.4 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 March 20, 2024 to shareholders of record as of the close of business on February 28, 2024. Quarterly Financial Highlights Three Months Ended December 31, (in $ millions, except per share amounts) 2023 2022 Full game 618 622 Live services and other 1,327 1,259 Total net revenue 1,945 1,881 Net income 290 204 Diluted earnings per share 1.07 0.73 Operating cash flow 1,264 1,123 Value of shares repurchased 325 325 Number of shares repurchased 2.5 2.6 Cash dividend paid 51 52 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 December 31, 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 1,945 — 421 — — Cost of revenue 529 (16 ) — — (2 ) Gross profit 1,416 16 421 — 2 Total operating expenses 1,051 (21 ) — — (149 ) Operating income 365 37 421 — 151 Interest and other income (expense), net 17 — — — — Income before provision for income taxes 382 37 421 — 151 Number of shares used in computation: Diluted 271 Trailing Twelve Months Financial Highlights Twelve Months Ended December 31, (in $ millions) 2023 2022 Full game 2,054 2,003 Live services and other 5,603 5,374 Total net revenue 7,657 7,377 Net income 1,079 1,039 Operating cash flow 2,352 1,377 Value of shares repurchased 1,300 1,295 Number of shares repurchased 10.4 10.2 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 December 31, 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 7,657 — 53 — — Cost of revenue 1,801 (72 ) — — (8 ) Gross profit 5,856 72 53 — 8 Total operating expenses 4,397 (96 ) — (158 ) (570 ) Operating income 1,459 168 53 158 578 Interest and other income (expense), net 51 — — — — Income before provision for income taxes 1,510 168 53 158 578 Operating Metric The following is a calculation of our total net bookings2 for the periods presented: Three Months Ended December 31, Twelve Months Ended December 31, (in $ millions) 2023 2022 2023 2022 Total net revenue 1,945 1,881 7,657 7,377 Change in deferred net revenue (online-enabled games) 421 461 53 (231) Total net bookings 2,366 2,342 7,710 7,146 Business Outlook as of January 30, 2024 Fourth Quarter Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $1.625 billion to $1.925 billion. No change in deferred net revenue (online-enabled games) is expected. Net income is expected to be approximately $54 million to $183 million. Diluted earnings per share is expected to be approximately $0.20 to $0.68. The Company estimates a share count of 271 million for purposes of calculating diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $1.625 billion to $1.925 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 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 1,625 to 1,925 — — — — Cost of revenue 360 to 410 (30 ) — — (5 ) Operating expense 1,125 to 1,205 (75 ) — — (150 ) Income before provision for income taxes 158 to 325 105 — — 155 Net income 54 to 183 Number of shares used in computation: Diluted shares 271 *The mid-point of the range has been used for purposes of presenting the reconciling items. ** Subsequent to December 31, 2023, we impaired certain acquisition-related intangible assets totaling approximately $70 million that will be recorded in the fourth quarter of fiscal year 2024. Fiscal Year 2024 Expectations – Ending March 31, 2024 Financial outlook metrics: Net revenue is expected to be approximately $7.408 billion to $7.708 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately ($19) million. Net income is expected to be approximately $1.145 billion to $1.274 billion. Diluted earnings per share is expected to be approximately $4.21 to $4.68. Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion. The Company estimates a share count of 272 million for purposes of calculating diluted earnings per share. Operational outlook metric: Net bookings2 is expected to be approximately $7.389 billion to $7.689 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 7,408 to 7,708 — (19 ) — — Cost of revenue 1,713 to 1,763 (77 ) — — (11 ) Operating expense 4,271 to 4,351 (145 ) — (3 ) (580 ) Income before provision for income taxes 1,487 to 1,654 222 (19 ) 3 591 Net income 1,145 to 1,274 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. ** Includes Q4 impairment of acquisition-related intangible assets as per previous table. Conference Call and Supporting Documents Electronic Arts will host a conference call on January 30, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the third quarter ended December 31, 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 February 14, 2024 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using conference code 5939891. An audio webcast replay of the conference call will be available for one year on EA’s IR Website. Forward-Looking Statements Some statements set forth in this release, including the information relating to EA’s expectations under the heading “Business Outlook as of January 30, 2024” and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences 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 January 30, 2024. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 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 December 31, 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. For additional information, please contact: 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 December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Net revenue 1,945 1,881 5,783 5,552 Cost of revenue 529 568 1,353 1,344 Gross profit 1,416 1,313 4,430 4,208 Operating expenses: Research and development 584 556 1,782 1,693 Marketing and sales 276 256 785 723 General and administrative 170 162 506 503 Amortization and impairment of intangibles 21 50 70 132 Restructuring — — 3 — Total operating expenses 1,051 1,024 3,146 3,051 Operating income 365 289 1,284 1,157 Interest and other income (expense), net 17 (7 ) 45 (12 ) Income before provision for income taxes 382 282 1,329 1,145 Provision for income taxes 92 78 238 331 Net income 290 204 1,091 814 Earnings per share Basic 1.08 0.74 4.03 2.93 Diluted 1.07 0.73 4.01 2.92 Number of shares used in computation Basic 269 276 271 278 Diluted 271 278 272 279 Results (in $ millions, except per share data) The following table reports the variance of the actuals versus our guidance provided on November 1, 2023 for the three months ended December 31, 2023 plus a comparison to the actuals for the three months ended December 31, 2022. Three Months Ended December 31, 2023 Guidance (Mid-Point) 2023 Actuals 2022 Actuals Variance Net revenue Net revenue 1,925 20 1,945 1,881 GAAP-based financial data Change in deferred net revenue (online-enabled games)1 425 (4 ) 421 461 Cost of revenue Cost of revenue 515 14 529 568 GAAP-based financial data Acquisition-related expenses (15 ) (1 ) (16 ) (26 ) Stock-based compensation — (2 ) (2 ) (2 ) Operating expenses Operating expenses 1,080 (29 ) 1,051 1,024 GAAP-based financial data Acquisition-related expenses (25 ) 4 (21 ) (50 ) Stock-based compensation (155 ) 6 (149 ) (139 ) Income before tax Income before tax 337 45 382 282 GAAP-based financial data Acquisition-related expenses 40 (3 ) 37 76 Change in deferred net revenue (online-enabled games)1 425 (4 ) 421 461 Stock-based compensation 155 (4 ) 151 141 Tax rate used for management reporting 19 % 19 % 19 % Earnings per share Basic 0.89 0.19 1.08 0.74 Diluted 0.88 0.19 1.07 0.73 Number of shares used in computation Basic 270 (1 ) 269 276 Diluted 272 (1 ) 271 278 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) December 31, 2023 March 31, 20232 ASSETS Current assets: Cash and cash equivalents 2,742 2,424 Short-term investments 362 343 Receivables, net 867 684 Other current assets 378 518 Total current assets 4,349 3,969 Property and equipment, net 561 549 Goodwill 5,382 5,380 Acquisition-related intangibles, net 501 618 Deferred income taxes, net 2,375 2,462 Other assets 449 481 TOTAL ASSETS 13,617 13,459 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 62 99 Accrued and other current liabilities 1,299 1,285 Deferred net revenue (online-enabled games) 1,919 1,901 Total current liabilities 3,280 3,285 Senior notes, net 1,881 1,880 Income tax obligations 482 607 Deferred income taxes, net 2 1 Other liabilities 439 393 Total liabilities 6,084 6,166 Stockholders’ equity: Common stock 3 3 Retained earnings 7,614 7,357 Accumulated other comprehensive loss (84 ) (67 ) Total stockholders’ equity 7,533 7,293 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,617 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 December 31, Nine Months Ended December 31, 2023 2022 2023 2022 OPERATING ACTIVITIES Net income 290 204 1,091 814 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, accretion and impairment 82 122 255 363 Stock-based compensation 151 141 436 406 Change in assets and liabilities Receivables, net 183 90 (184 ) (186 ) Other assets 112 (28 ) 186 (53 ) Accounts payable (93 ) (74 ) (36 ) (21 ) Accrued and other liabilities 138 297 (119 ) 28 Deferred income taxes, net (20 ) (47 ) 88 (203 ) Deferred net revenue (online-enabled games) 421 418 18 (215 ) Net cash provided by operating activities 1,264 1,123 1,735 933 INVESTING ACTIVITIES Capital expenditures (52 ) (48 ) (148 ) (160 ) Proceeds from maturities and sales of short-term investments 148 77 450 243 Purchase of short-term investments (147 ) (90 ) (460 ) (263 ) Net cash used in investing activities (51 ) (61 ) (158 ) (180 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 3 3 43 47 Cash dividends paid (51 ) (52 ) (154 ) (158 ) Cash paid to taxing authorities for shares withheld from employees (58 ) (44 ) (178 ) (161 ) Repurchase and retirement of common stock (325 ) (325 ) (975 ) (970 ) Net cash used in financing activities (431 ) (418 ) (1,264 ) (1,242 ) Effect of foreign exchange on cash and cash equivalents 14 19 5 (41 ) Change in cash and cash equivalents 796 663 318 (530 ) Beginning cash and cash equivalents 1,946 1,539 2,424 2,732 Ending cash and cash equivalents 2,742 2,202 2,742 2,202 ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change Net revenue Net revenue 1,881 1,874 1,924 1,914 1,945 3 % GAAP-based financial data Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Gross profit Gross profit 1,313 1,426 1,556 1,458 1,416 8 % Gross profit (as a % of net revenue) 70 % 76 % 81 % 76 % 73 % GAAP-based financial data Acquisition-related expenses 26 25 16 15 16 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Stock-based compensation 2 2 2 2 2 Operating income Operating income 289 175 542 377 365 26 % Operating income (as a % of net revenue) 15 % 9 % 28 % 20 % 19 % GAAP-based financial data Acquisition-related expenses 76 51 41 39 37 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Restructuring and related charges — 155 3 — — Stock-based compensation 141 142 130 155 151 Net income (loss) Net income (loss) 204 (12 ) 402 399 290 42 % Net income (loss) (as a % of net revenue) 11 % (1 %) 21 % 21 % 15 % GAAP-based financial data Acquisition-related expenses 76 51 41 39 37 Change in deferred net revenue (online-enabled games)1 461 72 (346 ) (94 ) 421 Restructuring and related charges — 155 3 — — Stock-based compensation 141 142 130 155 151 Tax rate used for management reporting 19 % 19 % 19 % 19 % 19 % Diluted earnings (loss) per share 0.73 (0.04 ) 1.47 1.47 1.07 47 % Number of shares used in computation Basic 276 274 272 271 269 Diluted 278 274 274 272 271 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) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change QUARTERLY NET REVENUE PRESENTATIONS Net revenue by composition Full game downloads 423 274 301 346 431 2 % Packaged goods 199 98 142 275 187 (6 %) Full game 622 372 443 621 618 (1 %) Live services and other 1,259 1,502 1,481 1,293 1,327 5 % Total net revenue 1,881 1,874 1,924 1,914 1,945 3 % Full game 33 % 20 % 23 % 32 % 32 % Live services and other 67 % 80 % 77 % 68 % 68 % Total net revenue % 100 % 100 % 100 % 100 % 100 % GAAP-based financial data Full game downloads 45 (24 ) (21 ) 24 32 Packaged goods 20 (24 ) (21 ) 46 4 Full game 65 (48 ) (42 ) 70 36 Live services and other 396 120 (304 ) (164 ) 385 Total change in deferred net revenue (online-enabled games) by composition1 461 72 (346 ) (94 ) 421 Net revenue by platform Console 1,152 1,088 1,167 1,187 1,229 7 % PC & Other 435 469 451 423 420 (3 %) Mobile 294 317 306 304 296 1 % Total net revenue 1,881 1,874 1,924 1,914 1,945 3 % GAAP-based financial data Console 423 11 (266 ) (35 ) 377 PC & Other 29 47 (77 ) (34 ) 33 Mobile 9 14 (3 ) (25 ) 11 Total change in deferred net revenue (online-enabled games) by platform1 461 72 (346 ) (94 ) 421 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) Q3 Q4 Q1 Q2 Q3 YOY % FY23 FY23 FY24 FY24 FY24 Change CASH FLOW DATA Operating cash flow 1,123 617 359 112 1,264 13 % Operating cash flow - TTM 1,377 1,550 1,987 2,211 2,352 71 % Capital expenditures 48 47 45 51 52 8 % Capital expenditures - TTM 213 207 193 191 195 (8 %) Repurchase and retirement of common stock 325 325 325 325 325 — Cash dividends paid 52 52 52 51 51 (2 %) DEPRECIATION Depreciation expense 46 58 49 49 48 4 % BALANCE SHEET DATA Cash and cash equivalents 2,202 2,424 2,259 1,946 2,742 Short-term investments 351 343 343 359 362 Cash and cash equivalents, and short-term investments 2,553 2,767 2,602 2,305 3,104 22 % Receivables, net 836 684 517 1,047 867 4 % STOCK-BASED COMPENSATION Cost of revenue 2 2 2 2 2 Research and development 95 96 93 113 108 Marketing and sales 15 15 11 13 14 General and administrative 29 29 24 27 27 Total stock-based compensation 141 142 130 155 151 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/20240130758283/en/
Katie Burke Director, Investor Relations 650-628-7605 katieburke@ea.com Erin Rheaume Director, Financial Communications 650-628-7978 erheaume@ea.com