Electronic Arts Inc. (NASDAQ:EA) today announced preliminary
financial results for its first fiscal quarter ended June 30,
2022.
“EA delivered strong results in Q1 with our growing player
network deeply engaged in new games and live services,” said CEO
Andrew Wilson. “Our expanding EA SPORTS portfolio and owned IP
franchises continue to power resilience and longevity in our
business. Our teams remain focused on what they do best – making
amazing experiences that inspire new generations to play, watch,
create, compete and connect.”
“Our FIFA franchise and the successful launch of F1 drove our
net bookings outperformance, delivering another quarter ahead of
expectations,” said CFO Chris Suh. “Looking ahead, our focus on
execution and disciplined investment across our broad portfolio of
games and live services will fuel our long-term growth.”
Selected Operating Highlights and
Metrics
- Net bookings1 for the trailing twelve months was $7.478
billion, up 22% year-over-year.
- Live services and other net bookings for the trailing twelve
months were up 20% year-over-year and represent 73% of total net
bookings.
- The EA player network grew to nearly 600 million active
accounts at quarter end.
- FIFA Ultimate Team™ engagement during the quarter was up nearly
40% year-over-year in weekly and daily average players.
- In Q1, FIFA Mobile delivered the highest net bookings quarter
in history, with record high DAUs, up 10% from last quarter.
Selected Financial Highlights and
Metrics
- Net cash (used in)/provided by operating activities was $(78)
million for the quarter and $1.964 billion for the trailing twelve
months.
- EA repurchased 2.5 million shares for $320 million during the
quarter, bringing the total for the trailing twelve months to 9.7
million shares for $1.295 billion.
- EA paid a cash dividend of $0.19 per share during the quarter,
for a total of $53 million.
Dividend
EA has declared a quarterly cash dividend of $0.19 per share of
the Company’s common stock. The dividend is payable on September
21, 2022 to shareholders of record as of the close of business on
August 31, 2022.
Quarterly Financial
Highlights
Three Months Ended June 30,
2022
2021
(in $ millions, except per share amounts) Full game
341
322
Live services and other
1,426
1,229
Total net revenue
1,767
1,551
Net income
311
204
Diluted earnings per share
1.11
0.71
Operating cash flow
(78
)
(143
)
Value of shares repurchased
320
325
Number of shares repurchased
2.5
2.3
The following GAAP-based financial data2 and tax rate of 19% was
used internally by company management to adjust its GAAP results in
order to assess EA’s operating results:
Three Months Ended June 30, 2022 GAAP-Based Financial
Data (in $ millions)
Statement of
Operations
Acquisition-
related
expenses
Change in
deferred net
revenue
(online-
enabled
games)
Stock-based
compensation
Total net revenue
1,767
-
(468
)
-
Cost of revenue
314
(30
)
-
(2
)
Gross profit
1,453
30
(468
)
2
Total operating expenses
1,012
(39
)
-
(123
)
Operating income
441
69
(468
)
125
Interest and other income (expense), net
(5
)
-
-
-
Income before provision for income taxes
436
69
(468
)
125
Number of shares used in computation: Diluted
281
Trailing Twelve Months Financial
Highlights
Twelve Months Ended June 30,
2022
2021
(in $ millions) Full game
2,012
1,576
Live services and other
5,195
4,145
Total net revenue
7,207
5,721
Net income
896
676
Operating cash flow
1,964
1,413
Value of shares repurchased
1,295
976
Number of shares repurchased
9.7
7.2
The following GAAP-based financial data2 was used internally by
company management to adjust its GAAP results in order to assess
EA’s operating results. During fiscal 2022, management used a tax
rate of 18% and in fiscal 2023 a tax rate of 19%.
Twelve Months Ended June 30, 2022 GAAP-Based Financial
Data (in $ millions)
Statement of
Operations
Acquisition-
related
expenses
Change in
deferred net
revenue
(online-
enabled
games)
Stock-based
compensation
Total net revenue
7,207
-
271
-
Cost of revenue
1,858
(141
)
-
(7
)
Gross profit
5,349
141
271
7
Total operating expenses
4,101
(182
)
-
(521
)
Operating income
1,248
323
271
528
Interest and other income (expense), net
(39
)
-
-
-
Income before provision for income taxes
1,209
323
271
528
Operating Metric
The following is a calculation of our total net bookings1 for
the periods presented:
Three Months Ended Twelve Months Ended June
30, June 30,
2022
2021
2022
2021
(in $ millions) Total net revenue
1,767
1,551
7,207
5,721
Change in deferred net revenue (online-enabled games)
(468
)
(215
)
271
415
Net bookings
1,299
1,336
7,478
6,136
Business Outlook as of August 2,
2022
Fiscal Year 2023 Expectations – Ending March 31, 2023
Financial metrics:
- Net revenue is expected to be approximately $7.600 to $7.800
billion.
- Change in deferred net revenue (online-enabled games) is
expected to be approximately $300 million.
- Net income is expected to be approximately $793 to $815
million.
- Diluted earnings per share is expected to be approximately
$2.79 to $2.87.
- Operating cash flow is expected to be approximately $1.600 to
$1.650 billion.
- The Company estimates a share count of 284 million for purposes
of calculating fiscal year 2023 diluted earnings per share.
Operational metric:
- Net bookings1 is expected to be approximately $7.900 to $8.100
billion.
In addition, the following outlook for GAAP-based financial
data2 and updated long-term tax rate of 19% are used internally by
EA to adjust our GAAP expectations to assess EA’s operating results
and plan for future periods:
Twelve Months Ending March 31,
2023
GAAP-Based Financial
Data
GAAP
Guidance
Range
Acquisition-
related
expenses
Change in
deferred net
revenue (online-
enabled games)
Stock-based
compensation
(in $ millions) Total net revenue
7,600 to 7,800
-
300
-
Cost of revenue
2,020 to 2,065
(110
)
-
(5
)
Operating expense
4,200 to 4,315
(140
)
-
(595
)
Income before provision for income taxes
1,321 to 1,358
250
300
600
Net income
793 to 815
Number of shares used in computation: Diluted shares
284
* The mid-point of the range has been used for purposes of
presenting the reconciling items.
Second Quarter Fiscal Year 2023 Expectations – Ending
September 30, 2022
Financial metrics:
- Net revenue is expected to be approximately $1.850 to $1.900
billion.
- Change in deferred net revenue (online-enabled games) is
expected to be approximately $(125) million.
- Net income is expected to be approximately $220 to $242
million.
- Diluted earnings per share is expected to be approximately
$0.78 to $0.86.
- The Company estimates a share count of 281 million for purposes
of calculating second quarter fiscal 2023 diluted earnings per
share.
Operational metric:
- Net bookings1 is expected to be approximately $1.725 to $1.775
billion.
In addition, the following outlook for GAAP-based financial
data2 and updated long-term tax rate of 19% are used internally by
EA to adjust our GAAP expectations to assess EA’s operating results
and plan for future periods:
Three Months Ending September 30, 2022 GAAP-Based
Financial Data*
GAAP
Guidance
Range
Acquisition-
related
expenses
Change in
deferred net
revenue (online-
enabled games)
Stock-based
compensation
(in $ millions) Total net revenue
1,850 to 1,900
-
(125
)
-
Cost of revenue
467 to 480
(30
)
-
(2
)
Operating expense
1,036 to 1,041
(40
)
-
(148
)
Income before provision for income taxes
338 to 373
70
(125
)
150
Net income
220 to 242
Number of shares used in computation: Diluted shares
281
* The mid-point of the range has been used for purposes of
presenting the reconciling items.
Conference Call and Supporting
Documents
Electronic Arts will host a conference call on August 2, 2022 at
2:00 pm PT (5:00 pm ET) to review its results for the first quarter
ended June 30, 2022 and its outlook for the future. During the
course of the call, Electronic Arts may disclose material
developments affecting its business and/or financial performance.
Listeners may access the conference call live through the following
dial-in number (888) 330-2446 (domestic) or (240) 789-2732
(international), using the conference code 5939891 or via webcast
at EA’s IR Website at http://ir.ea.com.
EA has posted a slide presentation with a financial model of
EA’s historical results and guidance on EA’s IR Website. EA will
also post the prepared remarks and a transcript from the conference
call on EA’s IR Website.
A dial-in replay of the conference call will be available until
August 16, 2022 at (800) 770-2030 (domestic) or (647) 362-9199
(international) using pin code 5939891. An audio webcast replay of
the conference call will be available for one year on EA’s IR
Website.
Forward-Looking Statements
Some statements set forth in this release, including the
information relating to EA’s expectations under the heading
“Business Outlook as of August 2, 2022” and other information
regarding EA's fiscal 2023 expectations contain forward-looking
statements that are subject to change. Statements including words
such as “anticipate,” “believe,” “expect,” “intend,” “estimate,”
“plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,”
“should,” “could” (and the negative of any of these terms),
“future” and similar expressions also identify forward-looking
statements. These forward-looking statements are not guarantees of
future performance and reflect management’s current expectations.
Our actual results could differ materially from those discussed in
the forward-looking statements.
Some of the factors which could cause the Company’s results to
differ materially from its expectations include the following:
sales of the Company’s products and services; the Company’s ability
to develop and support digital products and services, including
managing online security and privacy; outages of our products,
services and technological infrastructure; the Company’s ability to
manage expenses; the competition in the interactive entertainment
industry; governmental regulations; the effectiveness of the
Company’s sales and marketing programs; timely development and
release of the Company’s products and services; the Company’s
ability to realize the anticipated benefits of, and integrate,
acquisitions; the consumer demand for, and the availability of an
adequate supply of console hardware units; the Company’s ability to
predict consumer preferences among competing platforms; the
Company’s ability to develop and implement new technology; foreign
currency exchange rate fluctuations; economic and geopolitical
conditions; changes in our tax rates or tax laws; and other factors
described in Part I, Item 1A of Electronic Arts’ latest Annual
Report on Form 10-K under the heading “Risk Factors”, as well as in
other documents we have filed with the Securities and Exchange
Commission.
These forward-looking statements are current as of August 2,
2022. Electronic Arts assumes no obligation to revise or update any
forward-looking statement for any reason, except as required by
law. In addition, the preliminary financial results set forth in
this release are estimates based on information currently available
to Electronic Arts.
While Electronic Arts believes these estimates are meaningful,
they could differ from the actual amounts that Electronic Arts
ultimately reports in its Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2022. Electronic Arts assumes no
obligation and does not intend to update these estimates prior to
filing its Form 10-Q for the fiscal quarter ended June 30,
2022.
About Electronic Arts
Electronic Arts (NASDAQ:EA) is a global leader in digital
interactive entertainment. The Company develops and delivers games,
content and online services for Internet-connected consoles, mobile
devices and personal computers.
In fiscal year 2022, EA posted GAAP net revenue of approximately
$7 billion. Headquartered in Redwood City, California, EA is
recognized for a portfolio of critically acclaimed, high-quality
brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The
Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™
and F1®. More information about EA is available at
www.ea.com/news.
EA SPORTS, Battlefield, Need for Speed, Apex Legends, The Sims,
Titanfall and Plants vs. Zombies are trademarks of Electronic Arts
Inc. STAR WARS © & TM 2015 Lucasfilm Ltd. All rights reserved.
John Madden, NFL, FIFA and F1 are the property of their respective
owners and used with permission.
1 Net bookings is defined as the net amount of products and
services sold digitally or sold-in physically in the period. Net
bookings is calculated by adding total net revenue to the change in
deferred net revenue for online-enabled games. 2 For more
information about the nature of the GAAP-based financial data,
please refer to EA’s Form 10-K for the fiscal year ended March 31,
2022.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Statements of Operations
(in $ millions, except per
share data)
Three Months Ended
June 30,
2022
2021
Net revenue
1,767
1,551
Cost of revenue
314
315
Gross profit
1,453
1,236
Operating expenses:
Research and development
572
515
Marketing and sales
234
190
General and administrative
167
169
Amortization and impairment of
intangibles
39
40
Total operating expenses
1,012
914
Operating income
441
322
Interest and other income (expense),
net
(5
)
(14
)
Income before provision for income
taxes
436
308
Provision for income taxes
125
104
Net income
311
204
Earnings per share
Basic
1.11
0.71
Diluted
1.11
0.71
Number of shares used in
computation
Basic
279
286
Diluted
281
289
Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus
our guidance provided on May 10, 2022 for the three months ended
June 30, 2022 plus a comparison to the actuals for the three months
ended June 30, 2021.
Three Months Ended June
30,
2022 Guidance
(Mid-Point)
2022
Actuals
2021
Actuals
Variance
Net revenue
Net revenue
1,700
67
1,767
1,551
GAAP-based financial data
Change in deferred net revenue
(online-enabled games)1
(475
)
7
(468
)
(215
)
Cost of revenue
Cost of revenue
315
(1
)
314
315
GAAP-based financial data
Acquisition-related expenses
(30
)
—
(30
)
(22
)
Stock-based compensation
(2
)
—
(2
)
(1
)
Operating expenses
Operating expenses
1,013
(1
)
1,012
914
GAAP-based financial data
Acquisition-related expenses
(40
)
1
(39
)
(40
)
Stock-based compensation
(123
)
—
(123
)
(124
)
Income before tax
Income before tax
356
80
436
308
GAAP-based financial data
Acquisition-related expenses
70
(1
)
69
62
Change in deferred net revenue
(online-enabled games)1
(475
)
7
(468
)
(215
)
Stock-based compensation
125
—
125
125
Tax rate used for management reporting
19
%
19
%
18
%
Earnings per share
Basic
0.81
0.30
1.11
0.71
Diluted
0.81
0.30
1.11
0.71
Number of shares used in
computation
Basic
281
(2
)
279
286
Diluted
283
(2
)
281
289
1The change in deferred net revenue (online-enabled games) in
the unaudited condensed consolidated statements of cash flows does
not necessarily equal the change in deferred net revenue
(online-enabled games) in the unaudited condensed consolidated
statements of operations primarily due to the impact of
unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Balance Sheets
(in $ millions)
June 30, 2022
March 31, 20222
ASSETS
Current assets:
Cash and cash equivalents
2,082
2,732
Short-term investments
334
330
Receivables, net
579
650
Other current assets
522
439
Total current assets
3,517
4,151
Property and equipment, net
545
550
Goodwill
5,382
5,387
Acquisition-related intangibles, net
893
962
Deferred income taxes, net
2,327
2,243
Other assets
528
507
TOTAL ASSETS
13,192
13,800
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
70
101
Accrued and other current liabilities
1,215
1,388
Deferred net revenue (online-enabled
games)
1,548
2,024
Total current liabilities
2,833
3,513
Senior notes, net
1,878
1,878
Income tax obligations
438
386
Deferred income taxes, net
1
1
Other liabilities
401
397
Total liabilities
5,551
6,175
Stockholders’ equity:
Common stock
3
3
Retained earnings
7,567
7,607
Accumulated other comprehensive income
71
15
Total stockholders’ equity
7,641
7,625
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
13,192
13,800
2Derived from audited consolidated financial statements.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Statements of Cash Flows
(in $ millions)
Three Months Ended June
30,
2022
2021
OPERATING ACTIVITIES
Net income
311
204
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation, amortization, accretion and
impairment
114
105
Stock-based compensation
125
125
Change in assets and liabilities
Receivables, net
70
12
Other assets
(15
)
(74
)
Accounts payable
(16
)
(19
)
Accrued and other liabilities
(105
)
(302
)
Deferred income taxes, net
(86
)
28
Deferred net revenue (online-enabled
games)
(476
)
(222
)
Net cash used in operating
activities
(78
)
(143
)
INVESTING ACTIVITIES
Capital expenditures
(59
)
(44
)
Proceeds from maturities and sales of
short-term investments
87
507
Purchase of short-term investments
(93
)
(285
)
Acquisitions, net of cash acquired
—
(1,989
)
Net cash used in investing
activities
(65
)
(1,811
)
FINANCING ACTIVITIES
Proceeds from issuance of common stock
1
—
Cash dividends paid
(53
)
(49
)
Cash paid to taxing authorities for shares
withheld from employees
(104
)
(105
)
Repurchase and retirement of common
stock
(320
)
(325
)
Net cash used in financing
activities
(476
)
(479
)
Effect of foreign exchange on cash and
cash equivalents
(31
)
11
Change in cash and cash
equivalents
(650
)
(2,422
)
Beginning cash and cash equivalents
2,732
5,260
Ending cash and cash
equivalents
2,082
2,838
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Supplemental
Financial Information and Business Metrics
(in $ millions, except per
share data)
Q1
Q2
Q3
Q4
Q1
YOY %
FY22
FY22
FY22
FY22
FY23
Change
Net revenue
Net revenue
1,551
1,826
1,789
1,825
1,767
14
%
GAAP-based financial data
Change in deferred net revenue
(online-enabled games)1
(215
)
25
788
(74
)
(468
)
Gross profit
Gross profit
1,236
1,332
1,158
1,406
1,453
18
%
Gross profit (as a % of net revenue)
80
%
73
%
65
%
77
%
82
%
GAAP-based financial data
Acquisition-related expenses
22
22
44
45
30
Change in deferred net revenue
(online-enabled games)1
(215
)
25
788
(74
)
(468
)
Stock-based compensation
1
2
1
2
2
Operating income
Operating income
322
340
102
365
441
37
%
Operating income (as a % of net
revenue)
21
%
19
%
6
%
20
%
25
%
GAAP-based financial data
Acquisition-related expenses
62
52
105
97
69
Change in deferred net revenue
(online-enabled games)1
(215
)
25
788
(74
)
(468
)
Stock-based compensation
125
149
129
125
125
Net income
Net income
204
294
66
225
311
52
%
Net income (as a % of net revenue)
13
%
16
%
4
%
12
%
18
%
GAAP-based financial data
Acquisition-related expenses
62
52
105
97
69
Change in deferred net revenue
(online-enabled games)1
(215
)
25
788
(74
)
(468
)
Stock-based compensation
125
149
129
125
125
Tax rate used for management reporting
18
%
18
%
18
%
18
%
19
%
Diluted earnings per share
0.71
1.02
0.23
0.80
1.11
56
%
Number of shares used in
computation
Basic
286
285
283
281
279
Diluted
289
287
285
283
281
1The change in deferred net revenue (online-enabled games) in
the unaudited condensed consolidated statements of cash flows does
not necessarily equal the change in deferred net revenue
(online-enabled games) in the unaudited condensed consolidated
statements of operations primarily due to the impact of
unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Supplemental
Financial Information and Business Metrics
(in $ millions)
Q1
Q2
Q3
Q4
Q1
YOY %
FY22
FY22
FY22
FY22
FY23
Change
QUARTERLY NET REVENUE
PRESENTATIONS
Net revenue by composition
Full game downloads
233
337
400
312
237
2
%
Packaged goods
89
280
216
126
104
17
%
Full game
322
617
616
438
341
6
%
Live services and other
1,229
1,209
1,173
1,387
1,426
16
%
Total net revenue
1,551
1,826
1,789
1,825
1,767
14
%
Full game
21
%
34
%
34
%
24
%
19
%
Live services and other
79
%
66
%
66
%
76
%
81
%
Total net revenue %
100
%
100
%
100
%
100
%
100
%
GAAP-based financial data
Full game downloads
(5
)
35
179
(103
)
(111
)
Packaged goods
(35
)
44
105
(68
)
(65
)
Full game
(40
)
79
284
(171
)
(176
)
Live services and other
(175
)
(54
)
504
97
(292
)
Total change in deferred net revenue
(online-enabled games) by composition1
(215
)
25
788
(74
)
(468
)
Net revenue by platform
Console
972
1,198
1,138
1,092
1,042
7
%
PC & Other
361
377
374
420
402
11
%
Mobile
218
251
277
313
323
48
%
Total net revenue
1,551
1,826
1,789
1,825
1,767
14
%
GAAP-based financial data
Console
(278
)
(29
)
608
(86
)
(405
)
PC & Other
9
26
137
3
(54
)
Mobile
54
28
43
9
(9
)
Total change in deferred net revenue
(online-enabled games) by platform1
(215
)
25
788
(74
)
(468
)
1The change in deferred net revenue (online-enabled games) in
the unaudited condensed consolidated statements of cash flows does
not necessarily equal the change in deferred net revenue
(online-enabled games) in the unaudited condensed consolidated
statements of operations primarily due to the impact of
unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Supplemental
Financial Information and Business Metrics
(in $ millions)
Q1
Q2
Q3
Q4
Q1
YOY %
FY22
FY22
FY22
FY22
FY23
Change
CASH FLOW DATA
Operating cash flow
(143
)
64
1,534
444
(78
)
45
%
Operating cash flow - TTM
1,413
1,416
1,826
1,899
1,964
39
%
Capital expenditures
44
43
48
53
59
34
%
Capital expenditures - TTM
130
148
166
188
203
56
%
Repurchase and retirement of common
stock
325
325
325
325
320
(2
%)
Cash dividends paid
49
48
48
48
53
8
%
DEPRECIATION
Depreciation expense
40
39
41
42
44
10
%
BALANCE SHEET DATA
Cash and cash equivalents
2,838
1,630
2,670
2,732
2,082
Short-term investments
881
342
346
330
334
Cash and cash equivalents, and short-term
investments
3,719
1,972
3,016
3,062
2,416
(35
%)
Receivables, net
557
1,031
965
650
579
4
%
STOCK-BASED COMPENSATION
Cost of revenue
1
2
1
2
2
Research and development
85
101
86
84
81
Marketing and sales
12
15
14
13
13
General and administrative
27
31
28
26
29
Total stock-based compensation
125
149
129
125
125
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220801005849/en/
For additional information, please contact: Chris Evenden Vice
President, Investor Relations 650-628-0255 cevenden@ea.com
Cat Channon Vice President, Global Communications + 41 22 316
1258 cchannon@ea.com
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