Electronic Arts · Earnings release

Electronic Arts Reports Strong Q2 FY25 Results

Record Q2 net bookings driven by performance across EA SPORTS™ portfolio resulting in a

raised full-year outlook

REDWOOD CITY, CA – October 29, 2024 – (NASDAQ: EA) today announced preliminary financial results for its second quarter ended September 30, 2024.

“EA delivered another strong quarter with record Q2 net bookings, driven by our incredible teams, broad portfolio and technology leadership,” said Andrew Wilson, CEO of EA. “The momentum in our business reinforces our strategic vision to deliver innovative experiences and interactive entertainment that deepens and expands engagement across our global communities.”

“Q2 was another successful quarter for EA, exceeding the high end of our guidance range. As a result, we are also raising our FY25 outlook,” said Stuart Canfield, CFO of EA. “We remain confident in our ability to drive long-term value creation through increased scale, driving top-line growth, improved margins, and greater cash flow as shared at our Investor Day.”

Selected Operating Highlights and Metrics

•Net bookings1 for the quarter totaled $2.079 billion, setting a Q2 record and exceeding the high end of guidance range of $2.050 billion.

•American Football is on track to exceed $1 billion in net bookings for FY25, with total hours played in Q2 up over 140% year over year, and we also saw new players in the community more than double year over year.

•Through September, College Football 25 was the best-selling HD title in North America and gives EA three of the top ten HD bestsellers in North America.

•Global Football saw live service growth across all platforms in Q2, and total franchise net bookings in FY25 are on track to grow over a record FY24.

•The Sims™ 4 continues to expand, with more than 15 million players joining the game over the past year. Increased engagement led to higher-than-expected net bookings for the franchise in Q2.

Selected Financial Highlights and Metrics

•Net revenue was $2.025 billion for the quarter.

•Net cash provided by operating activities was $234 million for the quarter and $2.198 billion for the trailing twelve months.

•EA repurchased 2.6 million shares for $375 million during the quarter under the stock repurchase program, bringing the total for the trailing twelve months to 10.2 million shares for $1.400 billion.

Dividend

EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on December 18, 2024 to stockholders of record as of the close of business on November 27, 2024.

Quarterly Financial Highlights

Three Months Ended

(in $ millions, except per share amounts)

Full game

Live services and other

Total net revenue

Net income

Diluted earnings per share

Operating cash flow

Value of shares repurchased

Number of shares repurchased

Cash dividend paid

* Diluted earnings per share includes $0.34 from a one-time non-cash tax benefit in second quarter ended September 30, 2023.

Trailing Twelve Months Financial Highlights

Twelve Months Ended

(in $ millions)

Full game

Live services and other

Total net revenue

Net income

Operating cash flow

Value of shares repurchased

Number of shares repurchased

Operating Metric

The following is a calculation of our total net bookings1 for the periods presented:

Three Months Ended

Twelve Months Ended

(in $ millions)

Total net revenue

Change in deferred net revenue (online-enabled games)

Total net bookings

Financial outlook metrics:

•G1Net revenue is expected to be approximately $7.400 billion to $7.700 billion.

◦G2Change in deferred net revenue (online-enabled games) is expected to be approximately $100 million.

•G3Net income is expected to be approximately $1.019 billion to $1.156 billion.

•G4Diluted earnings per share is expected to be approximately $3.82 to $4.33.

•G5Operating cash flow is expected to be approximately $2.075 billion to $2.275 billion.

•The Company estimates a share count of 267 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

•G6Net bookings1 is expected to be approximately $7.500 billion to $7.800 billion.

Third Quarter Fiscal Year 2025 Expectations – Ending December 31, 2024

Financial outlook metrics:

•G7Net revenue is expected to be approximately $1.875 billion to $2.025 billion.

◦G8Change in deferred net revenue (online-enabled games) is expected to be approximately $525 million.

•G9Net income is expected to be approximately $226 million to $270 million.

•G10Diluted earnings per share is expected to be approximately $0.85 to $1.02.

•The Company estimates a share count of 266 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

•G11Net bookings1 is expected to be approximately $2.400 billion to $2.550 billion.

Conference Call and Supporting Documents

Electronic Arts will host a conference call on October 29, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the second fiscal quarter ended September 30, 2024 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA’s IR Website at http://ir.ea.com.

EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website.

A dial-in replay of the conference call will be available until November 5, 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 October 29, 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 and trends; 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, 2024.

These forward-looking statements are current as of October 29, 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 September 30, 2024. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2024.

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 2024, EA posted GAAP net revenue of approximately $7.6 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, EA SPORTS™ College Football, Need for Speed™, Dragon Age™, 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, Dragon Age, 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:

Andrew Uerkwitz

Justin Higgs

Vice President, Investor Relations

Vice President, Corporate Communications

auerkwitz@ea.com

jhiggs@ea.com

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.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in $ millions, except per share data)

Three Months Ended

Six Months Ended September 30,

Net revenue

Cost of revenue

Gross profit

Operating expenses:

Research and development

Marketing and sales

General and administrative

Amortization of intangibles

Restructuring

2

3

Total operating expenses

Operating income

Interest and other income (expense), net

Income before provision for (benefit from) income taxes

Provision for (benefit from) income taxes

(8)

Net income

Earnings per share

Basic

Diluted

Number of shares used in computation

Basic

Diluted

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on July 30, 2024 for the three months ended September 30, 2024 plus a comparison to the actuals for the three months ended September 30, 2023.

Three Months Ended September 30,

Variance

Net revenue

Net revenue

GAAP-based financial data

Change in deferred net revenue (online-enabled games)1

4

Cost of revenue

Cost of revenue

GAAP-based financial data

Acquisition-related expenses

—

Stock-based compensation

(5)

1

(4)

(2)

Operating expenses

Operating expenses

GAAP-based financial data

Acquisition-related expenses

3

Restructuring and related charges

—

Stock-based compensation

Income before tax

Income before tax

GAAP-based financial data

Acquisition-related expenses

(3)

Change in deferred net revenue (online-enabled games)1

4

Restructuring and related charges

—

Stock-based compensation

9

Tax rate used for management reporting

%

%

%

Earnings per share

Basic

Diluted

Number of shares used in computation

Basic

(1)

Diluted

(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.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in $ millions)

ASSETS

Current assets:

Cash and cash equivalents

Short-term investments

Receivables, net

Other current assets

Total current assets

Property and equipment, net

Goodwill

Acquisition-related intangibles, net

Deferred income taxes, net

Other assets

TOTAL ASSETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable, accrued, and other current liabilities

Deferred net revenue (online-enabled games)

Total current liabilities

Senior notes, net

Income tax obligations

Other liabilities

Total liabilities

Stockholders’ equity:

Common stock

3

3

Retained earnings

Accumulated other comprehensive loss

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

2Derived from audited consolidated financial statements.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in $ millions)

Three Months Ended September 30,

Six Months Ended September 30,

OPERATING ACTIVITIES

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization, accretion and impairment

Stock-based compensation

Change in assets and liabilities

Receivables, net

Other assets

Accounts payable, accrued, and other liabilities

Deferred income taxes, net

Deferred net revenue (online-enabled games)

Net cash provided by operating activities

INVESTING ACTIVITIES

Capital expenditures

Proceeds from maturities and sales of short-term investments

Purchase of short-term investments

Net cash used in investing activities

FINANCING ACTIVITIES

Proceeds from issuance of common stock

Cash dividends paid

Cash paid to taxing authorities for shares withheld from employees

Common stock repurchases

Net cash used in financing activities

Effect of foreign exchange on cash and cash equivalents

6

(9)

Change in cash and cash equivalents

Beginning cash and cash equivalents

Ending cash and cash equivalents

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions, except per share data)

Q2

Q3

Q4

Q1

Q2

YOY %

Change

Net revenue

Net revenue

6

%

GAAP-based financial data

Change in deferred net revenue (online-enabled games)1

Gross profit

Gross profit

8

%

Gross profit (as a % of net revenue)

%

%

%

%

%

GAAP-based financial data

Acquisition-related expenses

Change in deferred net revenue (online-enabled games)1

Stock-based compensation

2

2

2

4

4

Operating income

Operating income

2

%

Operating income (as a % of net revenue)

%

%

%

%

%

GAAP-based financial data

Acquisition-related expenses

Change in deferred net revenue (online-enabled games)1

Restructuring and related charges

—

—

6

Stock-based compensation

Net income

Net income

%)

Net income (as a % of net revenue)

%

%

%

%

%

GAAP-based financial data

Acquisition-related expenses

Change in deferred net revenue (online-enabled games)1

Restructuring and related charges

—

—

6

Stock-based compensation

Tax rate used for management reporting

%

%

%

%

%

Diluted earnings per share

%)

Number of shares used in computation

Basic

Diluted

1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions)

Q2

Q3

Q4

Q1

Q2

YOY %

Change

QUARTERLY NET REVENUE PRESENTATIONS

Net revenue by composition

Full game downloads

%

Packaged goods

%)

Full game

%

Live services and other

1

%

Total net revenue

6

%

Full game

%

%

%

%

%

Live services and other

%

%

%

%

%

Total net revenue %

%

%

%

%

%

GAAP-based financial data

Full game downloads

Packaged goods

4

Full game

Live services and other

Total change in deferred net revenue (online-enabled games) by composition1

Net revenue by platform

Console

%

PC & Other

%)

Mobile

(6

%)

Total net revenue

6

%

GAAP-based financial data

Console

PC & Other

Mobile

(9)

—

Total change in deferred net revenue (online-enabled games) by platform1

1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions)

Q2

Q3

Q4

Q1

Q2

YOY %

Change

CASH FLOW DATA

Investing cash flow

Investing cash flow - TTM

(5

%)

Financing cash flow

Financing cash flow - TTM

(8

%)

Operating cash flow

Operating cash flow - TTM

(1

%)

Capital expenditures

Capital expenditures - TTM

%

Free cash flow3

Free cash flow3 - TTM

(2

%)

Common stock repurchases

%

Cash dividends paid

—

DEPRECIATION

Depreciation expense

4

%

BALANCE SHEET DATA

Cash and cash equivalents

Short-term investments

Cash and cash equivalents, and short-term investments

%

Receivables, net

(3

%)

STOCK-BASED COMPENSATION

Cost of revenue

2

2

2

4

4

Research and development

Marketing and sales

General and administrative

Total stock-based compensation

RESTRUCTURING AND RELATED CHARGES

Restructuring

2

—

2

Office space reductions

(2)

—

2

4

1

Total restructuring and related charges

—

—

6

3Free cash flow is defined as Operating cash flow less Capital expenditures.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(in $ millions)

The following table provides a reconciliation of non-GAAP operating income and margin to their most directly comparable GAAP financial measure for the three months ended September 30, 2024 plus a comparison to the actuals for the three months ended September 30, 2023.

Three Months Ended

YOY % Change

Net revenue

6%

GAAP operating income

2%

Acquisition-related expenses

Restructuring and related charges

—

Stock-based compensation

Non-GAAP operating income

GAAP operating margin

Non-GAAP operating margin

Impact from change in deferred net revenue (online-enabled games)

ELECTRONIC ARTS INC. AND SUBSIDIARIES

GAAP Guidance to Non-GAAP Guidance

(in $ millions)

The following table provides GAAP to Non-GAAP reconciliation of the Company’s FY25 guidance.

GAAP-Based Financial Data

GAAP-Based Financial Data

A

B

C

D

GAAP Guidance Range

Acquisition-related expenses5

Restructuring and related charges5

Stock-based compensation5

Non-GAAP Guidance Range = A + B +C + D

Change in deferred net revenue (online-enabled games)5

Net revenue

to

—

—

—

to

Cost of revenue

to

—

to

—

Operating expense

to

to

—

Operating margin

to

to

Income before provision for income taxes

to

to

Net income4

to

Number of shares used in computation:

Diluted

4 The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.

5 The mid-point of the range has been used for purposes of presenting reconciling items to operating margin.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

GAAP-Based Financial Data for Guidance

(in $ millions)

The following table provides supplemental information to the Company’s Q3 FY25 guidance.

GAAP-Based Financial Data

GAAP Guidance Range

Acquisition-related expenses

Restructuring and related charges

Stock-based compensation

Change in deferred net revenue (online-enabled games)

Net revenue

to

—

—

—

Cost of revenue

to

—

(5)

—

Operating expense

to

(5)

—

Income before provision for income taxes

to

5

Net income4

to

Number of shares used in computation:

Diluted

4 The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.

Non-GAAP Financial Measures

As a supplement to the Company’s financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company presents certain non-GAAP measures of financial performance, including non-GAAP operating margin and free cash flow. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the Company’s results of operations as determined in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting and differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.

The non-GAAP financial measures exclude acquisition-related expenses, stock-based compensation, restructuring and related charges, and capital expenditures, as applicable in any given reporting period and our outlook. The Company may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures. Management believes that these non-GAAP financial measures provide investors with additional useful information to better understand and evaluate the Company’s operating results and future prospects because they exclude certain items that may not be indicative of the Company’s core business, operating results, or future outlook. These non-GAAP financial measures, with further adjustments are used by management to understand ongoing financial and business performance.

The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan, and analyze future periods. Accordingly, the Company applies the same tax rate to its management reporting financial results.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure.