Record Q1 Net Bookings, up 21% year-over-year,
driven by EA SPORTS FIFA Momentum and Star Wars Jedi: Survivor
Electronic Arts Inc. (NASDAQ: EA) today announced preliminary
financial results for its first quarter ended June 30, 2023.
“EA delivered a record Q1, driven by strong momentum in EA
SPORTS global football and Star Wars Jedi: Survivor,” said Andrew
Wilson, CEO of EA. “Our exceptional teams are creating innovative
entertainment experiences across our multi-year pipeline, starting
with the highly anticipated, culture defining titles Madden NFL 24
and EA SPORTS FC 24.”
"We had a strong start to the fiscal year, with net bookings
growth of 21% year over year, highlighted by new releases,
continued live services growth, healthy engagement, and new player
acquisition,” said Stuart Canfield, CFO of EA. “Looking ahead, our
teams remain focused on delivering long-term growth and
profitability.”
Selected Operating Highlights and
Metrics1
- Net bookings2 for Q1 was $1.578 billion, up 21%
year-over-year (up 25% in constant currency).
- Live services and other net bookings for Q1 was
$1.177 billion, up 4% year-over-year (up 7% in constant currency)
and represented 75% of total net bookings.
- Our teams continue to execute across the business — launching
five new high-quality releases, while providing over 145 content
updates across 37 titles during the quarter.
- EA SPORTS FIFA net bookings growth accelerated year over
year, delivering a record Q1 for the franchise, and further
demonstrating the power and potential of a connected massive online
community.
- Star Wars Jedi: Survivor launched to critical acclaim
and commercial success. The game is entertaining millions of
players around the world, and with multiple “best of 2023” list
accolades, and a blockbuster story, we’re seeing players spend more
time in-game than its predecessor.
Selected Financial Highlights and
Metrics
- Net revenue was $1.924 billion for the quarter.
- Net cash provided by operating activities was $359 million for
the quarter and $1.987 billion for the trailing twelve months.
- EA repurchased 2.6 million shares for $325 million during the
quarter, bringing the total for the trailing twelve months to 10.5
million shares for $1.300 billion.
Dividend
EA has declared a quarterly cash dividend of $0.19 per share of
the Company’s common stock. The dividend is payable on September
20, 2023 to shareholders of record as of the close of business on
August 30, 2023.
Quarterly Financial
Highlights
Three Months Ended
June 30,
2023
2022
(in $ millions, except per share
amounts)
Full game
443
341
Live services and other
1,481
1,426
Total net revenue
1,924
1,767
Net income
402
311
Diluted earnings per share
1.47
1.11
Operating cash flow
359
(78
)
Value of shares repurchased
325
320
Number of shares repurchased
2.6
2.5
Cash dividend paid
52
53
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 June 30,
2023
GAAP-Based Financial
Data
(in $ millions)
Statement of
Operations
Acquisition-related
expenses
Change in deferred net revenue
(online-enabled games)
Restructuring and related
charges
Stock-based
compensation
Total net revenue
1,924
—
(346
)
—
—
Cost of revenue
368
(16
)
—
—
(2
)
Gross profit
1,556
16
(346
)
—
2
Total operating expenses
1,014
(25
)
—
(3
)
(128
)
Operating income
542
41
(346
)
3
130
Interest and other income (expense),
net
14
—
—
—
—
Income before provision for income
taxes
556
41
(346
)
3
130
Number of shares used in computation:
Diluted
274
Trailing Twelve Months Financial
Highlights
Twelve Months Ended
June 30,
2023
2022
(in $ millions)
Full game
2,039
2,012
Live services and other
5,544
5,195
Total net revenue
7,583
7,207
Net income
893
896
Operating cash flow
1,987
1,964
Value of shares repurchased
1,300
1,295
Number of shares repurchased
10.5
9.7
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 June 30,
2023
GAAP-Based Financial
Data
(in $ millions)
Statement of
Operations
Acquisition-related
expenses
Change in deferred net revenue
(online-enabled games)
Restructuring and related
charges
Stock-based
compensation
Total net revenue
7,583
—
37
—
—
Cost of revenue
1,846
(106
)
—
—
(7
)
Gross profit
5,737
106
37
—
7
Total operating expenses
4,304
(144
)
—
(158
)
(546
)
Operating income
1,433
250
37
158
553
Interest and other income (expense),
net
13
—
—
—
—
Income before provision for income
taxes
1,446
250
37
158
553
Operating Metric
The following is a calculation of our total net bookings2 for
the periods presented:
Three Months Ended
June 30,
Twelve Months Ended
June 30,
2023
2022
2023
2022
(in $ millions)
Total net revenue
1,924
1,767
7,583
7,207
Change in deferred net revenue
(online-enabled games)
(346
)
(468
)
37
271
Total Net bookings
1,578
1,299
7,620
7,478
Business Outlook as of August 1,
2023
Fiscal Year 2024 Expectations – Ending March 31, 2024
Financial metrics:
- Net revenue is expected to be approximately $7.300 billion to
$7.700 billion.
- No change in deferred net revenue (online-enabled games) is
expected.
- Net income is expected to be approximately $947 million to
$1.087 billion.
- Diluted earnings per share is expected to be approximately
$3.42 to $3.92.
- Operating cash flow is expected to be approximately $1.700
billion to $1.850 billion.
- The Company estimates a share count of 277 million for purposes
of calculating fiscal year 2024 diluted earnings per share.
Operational metric:
- Net bookings2 is expected to be approximately $7.300 billion to
$7.700 billion.
In addition, the following outlook for GAAP-based financial
data3 and long-term tax rate of 19% are used internally by EA to
adjust GAAP expectations to assess EA’s operating results and plan
for future periods:
Twelve Months Ending March 31,
2024
GAAP-Based Financial
Data*
GAAP Guidance Range
Acquisition-related
expenses
Change in deferred net revenue
(online-enabled games)
Restructuring and related
charges
Stock-based
compensation
(in $ millions)
Total net revenue
7,300 to 7,700
—
—
—
—
Cost of revenue
1,670 to 1,750
(65
)
—
—
(5
)
Operating expense
4,248 to 4,368
(95
)
—
(13
)
(600
)
Income before provision for income
taxes
1,393 to 1,598
160
—
13
605
Net income
947 to 1,087
Number of shares used in computation:
Diluted shares
277
*The mid-point of the range has been used
for purposes of presenting the reconciling items.
Second Quarter Fiscal Year 2024 Expectations – Ending
September 30, 2023
Financial metrics:
- Net revenue is expected to be approximately $1.825 billion to
$1.925 billion.
- Change in deferred net revenue (online-enabled games) is
expected to be approximately ($125) million.
- Net income is expected to be approximately $197 million to $243
million.
- Diluted earnings per share is expected to be approximately
$0.72 to $0.89.
- The Company estimates a share count of 273 million for purposes
of calculating second quarter fiscal 2024 diluted earnings per
share.
Operational metric:
- Net bookings2 is expected to be approximately $1.700 billion to
$1.800 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 Ending September
30, 2023
GAAP-Based Financial
Data*
GAAP Guidance Range
Acquisition-related
expenses
Change in deferred net revenue
(online-enabled games)
Restructuring and related
charges
Stock-based
compensation
(in $ millions)
Total net revenue
1,825 to 1,925
—
(125
)
—
—
Cost of revenue
430 to 450
(15
)
—
—
—
Operating expense
1,110 to 1,120
(25
)
—
(10
)
(155
)
Income before provision for income
taxes
290 to 358
40
(125
)
10
155
Net income
197 to 243
Number of shares used in computation:
Diluted shares
273
*The mid-point of the range has been used
for purposes of presenting the reconciling items.
Conference Call and Supporting
Documents
Electronic Arts will host a conference call on August 1, 2023 at
2:00 pm PT (5:00 pm ET) to review its results for the first quarter
ended June 30, 2023 and its outlook for the future. During the
course of the call, Electronic Arts may disclose material
developments affecting its business and/or financial performance.
Listeners may access the conference call live through the following
dial-in number (888) 330-2446 (domestic) or (240) 789-2732
(international), using the conference code 5939891 or via webcast
at EA’s IR Website at http://ir.ea.com.
EA has posted a slide presentation with a financial model of
EA’s historical results and guidance on EA’s IR Website. EA will
also post the prepared remarks and a transcript from the conference
call on EA’s IR Website.
A dial-in replay of the conference call will be available until
August 15, 2023 at (800) 770-2030 (domestic) or (647) 362-9199
(international) using pin code 5939891. An audio webcast replay of
the conference call will be available for one year on EA’s IR
Website.
Forward-Looking Statements
Some statements set forth in this release, including the
information relating to EA’s expectations under the heading
“Business Outlook as of August 1, 2023” and other information
regarding EA's expectations contain forward-looking statements that
are subject to change. Statements including words such as
“anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,”
“predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,”
“could” (and the negative of any of these terms), “future” and
similar expressions also identify forward-looking statements. These
forward-looking statements are not guarantees of future performance
and reflect management’s current expectations. Our actual results
could differ materially from those discussed in the forward-looking
statements.
Some of the factors which could cause the Company’s results to
differ materially from its expectations include the following:
sales of the Company’s products and services; the Company’s ability
to develop and support digital products and services, including
managing online security and privacy; outages of our products,
services and technological infrastructure; the Company’s ability to
manage expenses; the competition in the interactive entertainment
industry; governmental regulations; the effectiveness of the
Company’s sales and marketing programs; timely development and
release of the Company’s products and services; the Company’s
ability to realize the anticipated benefits of, and integrate,
acquisitions; the consumer demand for, and the availability of an
adequate supply of console hardware units; the Company’s ability to
predict consumer preferences among competing platforms; the
Company’s ability to develop and implement new technology; foreign
currency exchange rate fluctuations; economic and geopolitical
conditions; changes in our tax rates or tax laws; and other factors
described in Part 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 1,
2023. Electronic Arts assumes no obligation to revise or update any
forward-looking statement for any reason, except as required by
law. In addition, the preliminary financial results set forth in
this release are estimates based on information currently available
to Electronic Arts.
While Electronic Arts believes these estimates are meaningful,
they could differ from the actual amounts that Electronic Arts
ultimately reports in its Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2023. Electronic Arts assumes no
obligation and does not intend to update these estimates prior to
filing its Form 10-Q for the fiscal quarter ended June 30,
2023.
About Electronic Arts
Electronic Arts (NASDAQ: EA) is a global leader in digital
interactive entertainment. The Company develops and delivers games,
content and online services for Internet-connected consoles, mobile
devices and personal computers.
In fiscal year 2023, EA posted GAAP net revenue of approximately
$7.4 billion. Headquartered in Redwood City, California, EA is
recognized for a portfolio of critically acclaimed, high-quality
brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The
Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™
and F1®. More information about EA is available at
www.ea.com/news.
EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex
Legends, The Sims, Titanfall, and Plants vs. Zombies are trademarks
of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the
property of their respective owners and used with permission.
1 For more information on constant
currency, please refer to the earnings slides available on EA’s IR
Website.
2 Net bookings is defined as the net
amount of products and services sold digitally or sold-in
physically in the period. Net bookings is calculated by adding
total net revenue to the change in deferred net revenue for
online-enabled games.
3 For more information about the nature of
the GAAP-based financial data, please refer to EA’s Form 10-K for
the fiscal year ended March 31, 2023.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Statements of Operations
(in $ millions, except per
share data)
Three Months Ended June
30,
2023
2022
Net revenue
1,924
1,767
Cost of revenue
368
314
Gross profit
1,556
1,453
Operating expenses:
Research and development
596
572
Marketing and sales
229
234
General and administrative
163
167
Amortization and impairment of
intangibles
25
39
Restructuring
1
—
Total operating expenses
1,014
1,012
Operating income
542
441
Interest and other income (expense),
net
14
(5
)
Income before provision for income
taxes
556
436
Provision for income taxes
154
125
Net income
402
311
Earnings per share
Basic
1.48
1.11
Diluted
1.47
1.11
Number of shares used in
computation
Basic
272
279
Diluted
274
281
Results (in $ millions, except per
share data) The following table reports the variance of the
actuals versus our guidance provided on May 9, 2023 for the three
months ended June 30, 2023 plus a comparison to the actuals for the
three months ended June 30, 2022.
Three Months Ended June
30,
2023 Guidance
(Mid-Point)
2023 Actuals
2022 Actuals
Variance
Net revenue
Net revenue
1,875
49
1,924
1,767
GAAP-based financial data
Change in deferred net revenue
(online-enabled games)1
(325
)
(21
)
(346
)
(468
)
Cost of revenue
Cost of revenue
360
8
368
314
GAAP-based financial data
Acquisition-related expenses
(20
)
4
(16
)
(30
)
Stock-based compensation
—
(2
)
(2
)
(2
)
Operating expenses
Operating expenses
1,075
(61
)
1,014
1,012
GAAP-based financial data
Acquisition-related expenses
(25
)
—
(25
)
(39
)
Restructuring and related charges
(20
)
17
(3
)
—
Stock-based compensation
(140
)
12
(128
)
(123
)
Income before tax
Income before tax
445
111
556
436
GAAP-based financial data
Acquisition-related expenses
45
(4
)
41
69
Change in deferred net revenue
(online-enabled games)1
(325
)
(21
)
(346
)
(468
)
Restructuring and related charges
20
(17
)
3
—
Stock-based compensation
140
(10
)
130
125
Tax rate used for management reporting
19
%
19
%
19
%
Earnings per share
Basic
1.07
0.41
1.48
1.11
Diluted
1.06
0.41
1.47
1.11
Number of shares used in
computation
Basic
275
(3
)
272
279
Diluted
277
(3
)
274
281
1 The change in deferred net revenue
(online-enabled games) in the unaudited condensed consolidated
statements of cash flows does not necessarily equal the change in
deferred net revenue (online-enabled games) in the unaudited
condensed consolidated statements of operations primarily due to
the impact of unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Balance Sheets
(in $ millions)
June 30, 2023
March 31, 20232
ASSETS
Current assets:
Cash and cash equivalents
2,259
2,424
Short-term investments
343
343
Receivables, net
517
684
Other current assets
455
518
Total current assets
3,574
3,969
Property and equipment, net
545
549
Goodwill
5,381
5,380
Acquisition-related intangibles, net
577
618
Deferred income taxes, net
2,555
2,462
Other assets
451
481
TOTAL ASSETS
13,083
13,459
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
75
99
Accrued and other current liabilities
1,145
1,285
Deferred net revenue (online-enabled
games)
1,580
1,901
Total current liabilities
2,800
3,285
Senior notes, net
1,880
1,880
Income tax obligations
681
607
Deferred income taxes, net
1
1
Other liabilities
387
393
Total liabilities
5,749
6,166
Stockholders’ equity:
Common stock
3
3
Retained earnings
7,406
7,357
Accumulated other comprehensive loss
(75
)
(67
)
Total stockholders’ equity
7,334
7,293
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
13,083
13,459
2 Derived from audited consolidated
financial statements.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Statements of Cash Flows
(in $ millions)
Three Months Ended June
30,
2023
2022
OPERATING ACTIVITIES
Net income
402
311
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation, amortization and
accretion
88
114
Stock-based compensation
130
125
Change in assets and liabilities
Receivables, net
167
70
Other assets
96
(15
)
Accounts payable
(18
)
(16
)
Accrued and other liabilities
(92
)
(105
)
Deferred income taxes, net
(93
)
(86
)
Deferred net revenue (online-enabled
games)
(321
)
(476
)
Net cash provided by (used in)
operating activities
359
(78
)
INVESTING ACTIVITIES
Capital expenditures
(45
)
(59
)
Proceeds from maturities and sales of
short-term investments
151
87
Purchase of short-term investments
(150
)
(93
)
Net cash used in investing
activities
(44
)
(65
)
FINANCING ACTIVITIES
Proceeds from issuance of common stock
—
1
Cash dividends paid
(52
)
(53
)
Cash paid to taxing authorities for shares
withheld from employees
(105
)
(104
)
Repurchase and retirement of common
stock
(325
)
(320
)
Net cash used in financing
activities
(482
)
(476
)
Effect of foreign exchange on cash and
cash equivalents
2
(31
)
Change in cash and cash
equivalents
(165
)
(650
)
Beginning cash and cash equivalents
2,424
2,732
Ending cash and cash
equivalents
2,259
2,082
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Supplemental
Financial Information and Business Metrics
(in $ millions, except per
share data)
Q1
Q2
Q3
Q4
Q1
YOY %
FY23
FY23
FY23
FY23
FY24
Change
Net revenue
Net revenue
1,767
1,904
1,881
1,874
1,924
9
%
GAAP-based financial data
Change in deferred net revenue
(online-enabled games)1
(468
)
(150
)
461
72
(346
)
Gross profit
Gross profit
1,453
1,442
1,313
1,426
1,556
7
%
Gross profit (as a % of net revenue)
82
%
76
%
70
%
76
%
81
%
GAAP-based financial data
Acquisition-related expenses
30
39
26
25
16
Change in deferred net revenue
(online-enabled games)1
(468
)
(150
)
461
72
(346
)
Stock-based compensation
2
1
2
2
2
Operating income
Operating income
441
427
289
175
542
23
%
Operating income (as a % of net
revenue)
25
%
22
%
15
%
9
%
28
%
GAAP-based financial data
Acquisition-related expenses
69
82
76
51
41
Change in deferred net revenue
(online-enabled games)1
(468
)
(150
)
461
72
(346
)
Restructuring and related charges
—
—
—
155
3
Stock-based compensation
125
140
141
142
130
Net income (loss)
Net income (loss)
311
299
204
(12
)
402
29
%
Net income (loss) (as a % of net
revenue)
18
%
16
%
11
%
(1
%)
21
%
GAAP-based financial data
Acquisition-related expenses
69
82
76
51
41
Change in deferred net revenue
(online-enabled games)1
(468
)
(150
)
461
72
(346
)
Restructuring and related charges
—
—
—
155
3
Stock-based compensation
125
140
141
142
130
Tax rate used for management reporting
19
%
19
%
19
%
19
%
19
%
Diluted earnings (loss) per
share
1.11
1.07
0.73
(0.04
)
1.47
32
%
Number of shares used in
computation
Basic
279
278
276
274
272
Diluted
281
279
278
274
274
Anti-dilutive shares excluded for loss
position3
—
—
—
1
—
1 The change in deferred net revenue
(online-enabled games) in the unaudited condensed consolidated
statements of cash flows does not necessarily equal the change in
deferred net revenue (online-enabled games) in the unaudited
condensed consolidated statements of operations primarily due to
the impact of unrecognized gains/losses on cash flow hedges.
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)
Q1
Q2
Q3
Q4
Q1
YOY %
FY23
FY23
FY23
FY23
FY24
Change
QUARTERLY NET REVENUE
PRESENTATIONS
Net revenue by composition
Full game downloads
237
328
423
274
301
27
%
Packaged goods
104
274
199
98
142
37
%
Full game
341
602
622
372
443
30
%
Live services and other
1,426
1,302
1,259
1,502
1,481
4
%
Total net revenue
1,767
1,904
1,881
1,874
1,924
9
%
Full game
19
%
32
%
33
%
20
%
23
%
Live services and other
81
%
68
%
67
%
80
%
77
%
Total net revenue %
100
%
100
%
100
%
100
%
100
%
GAAP-based financial data
Full game downloads
(111
)
17
45
(24
)
(21
)
Packaged goods
(65
)
16
20
(24
)
(21
)
Full game
(176
)
33
65
(48
)
(42
)
Live services and other
(292
)
(183
)
396
120
(304
)
Total change in deferred net revenue
(online-enabled games) by composition1
(468
)
(150
)
461
72
(346
)
Net revenue by platform
Console
1,042
1,161
1,152
1,088
1,167
12
%
PC & Other
402
423
435
469
451
12
%
Mobile
323
320
294
317
306
(5
%)
Total net revenue
1,767
1,904
1,881
1,874
1,924
9
%
GAAP-based financial data
Console
(405
)
(134
)
423
11
(266
)
PC & Other
(54
)
8
29
47
(77
)
Mobile
(9
)
(24
)
9
14
(3
)
Total change in deferred net revenue
(online-enabled games) by platform1
(468
)
(150
)
461
72
(346
)
1 The change in deferred net revenue
(online-enabled games) in the unaudited condensed consolidated
statements of cash flows does not necessarily equal the change in
deferred net revenue (online-enabled games) in the unaudited
condensed consolidated statements of operations primarily due to
the impact of unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND
SUBSIDIARIES
Unaudited Supplemental
Financial Information and Business Metrics
(in $ millions)
Q1
Q2
Q3
Q4
Q1
YOY %
FY23
FY23
FY23
FY23
FY24
Change
CASH FLOW DATA
Operating cash flow
(78
)
(112
)
1,123
617
359
560
%
Operating cash flow - TTM
1,964
1,788
1,377
1,550
1,987
1
%
Capital expenditures
59
53
48
47
45
(24
%)
Capital expenditures - TTM
203
213
213
207
193
(5
%)
Repurchase and retirement of common
stock
320
325
325
325
325
2
%
Cash dividends paid
53
53
52
52
52
(2
%)
DEPRECIATION
Depreciation expense
44
45
46
58
49
11
%
BALANCE SHEET DATA
Cash and cash equivalents
2,082
1,539
2,202
2,424
2,259
Short-term investments
334
335
351
343
343
Cash and cash equivalents, and short-term
investments
2,416
1,874
2,553
2,767
2,602
8
%
Receivables, net
579
919
836
684
517
(11
%)
STOCK-BASED COMPENSATION
Cost of revenue
2
1
2
2
2
Research and development
81
95
95
96
93
Marketing and sales
13
16
15
15
11
General and administrative
29
28
29
29
24
Total stock-based compensation
125
140
141
142
130
RESTRUCTURING AND RELATED
CHARGES
Restructuring
—
—
—
111
1
Office space reductions
—
—
—
44
2
Total restructuring and related
charges
—
—
—
155
3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801614416/en/
Katie Burke Director, Investor Relations 650-628-7605
katieburke@ea.com
Erin Rheaume Director, Financial Communications 650-628-7978
erheaume@ea.com
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