Core Viewpoint - Electronic Arts (EA) reported a decline in earnings and revenues for Q3 fiscal 2025, with a notable decrease in live services and full-game revenues, raising concerns about future performance leading up to the next earnings release [2][4][10]. Financial Performance - EA's Q3 fiscal 2025 earnings were $2.83 per share, down 4.4% year over year, while revenues decreased 6.38% to $2.22 billion [2][3]. - Net bookings for the quarter were $2.22 billion, reflecting a 6.4% year-over-year decline, with full-game net bookings at $633 million, down 3% [3][4]. - Full-game revenues accounted for 31.8% of total revenues, decreasing 3.1% to $599 million, while live services revenues, making up 68.2% of total revenues, fell 3.2% to $1.28 billion [4][6]. Revenue Breakdown - Revenues from consoles decreased 1% to $1.23 billion, while revenues from PC & Other and mobile platforms declined 7% to $420 million and $296 million, respectively [5][6]. - Full-game download revenues increased 3% year over year to $431 million, contrasting with a significant 18% drop in packaged goods revenues to $187 million [4][5]. Operating Metrics - EA's GAAP gross profit rose 0.8% to $1.43 billion, with a gross margin expansion of 300 basis points to 75.8% [6][7]. - Operating income increased 3.3% year over year to $377 million, although the operating margin contracted 130 basis points to 20% [7]. Cash Flow and Shareholder Returns - As of December 31, 2024, EA had $3.16 billion in cash and short-term investments, up from $2.56 billion as of September 30, 2024 [8]. - The company repurchased 2.4 million shares for $375 million during the quarter, totaling 10.1 million shares for $1.45 billion over the trailing 12 months [8]. Future Guidance - For Q4 fiscal 2025, EA expects revenues between $1.682 billion and $1.832 billion, with earnings per share projected between 65 cents and $1.00 [10]. - For the full fiscal year 2025, EA anticipates revenues in the range of $7.25 billion to $7.40 billion and earnings per share between $3.9 and $4.25 [10][11]. Market Sentiment - There has been a downward trend in estimates, with the consensus estimate shifting down by 15.96% [12]. - EA currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [14].

Core Insights - Winning a football videogame competition offers higher monetary rewards compared to traditional football aspirations, highlighting the growing financial potential in esports [1] Group 1: Prize Money - The upcoming competition features a prize of $250,000 for the winner and $150,000 for the runner-up, indicating significant financial incentives in the esports industry [1]

Group 1: Market Overview - The S&P 500 experienced a 2.7% rise in January, marking a strong start to 2025 despite some stocks underperforming [1] Group 2: Electronic Arts - Electronic Arts' stock fell by 16% in January following the announcement of preliminary quarterly results, with management now expecting a decline in live bookings instead of a previously predicted mid-single-digit percentage increase [2] Group 3: ON Semiconductor - ON Semiconductor's stock dropped by 17% in January after a 25% decline in 2024, with revenue falling 14.2% to $7.1 billion due to challenging market conditions [3] Group 4: Constellation Brands - Constellation Brands' stock price decreased by 18.2% in January, with fiscal third-quarter sales dipping 0.3% to $2.46 billion and adjusted earnings per share remaining virtually unchanged at $3.25 [4] Group 5: PG&E - PG&E shares declined by 22.5% in January amid concerns over potential liabilities related to California wildfires, following a history of bankruptcy protection filed in 2019 due to similar issues [5] Group 6: Edison International - Edison International's stock price fell by 32.4% in January, facing lawsuits related to wildfire damage, creating significant investor risk until litigation is resolved [6]

Core Viewpoint - Electronic Arts reported mixed Q3 fiscal 2025 results, with revenues missing expectations but earnings exceeding estimates, leading to a lowered full-year outlook and an accelerated share repurchase plan [1][3]. Financial Performance - Q3 revenues were $1.9 billion, down 3% year-over-year, attributed to lower contributions from EA Sports FC Ultimate Team and Apex Legends, alongside softer demand for Dragon Age [3]. - Net bookings for the quarter were $2.22 billion, below the consensus estimate of $2.32 billion, while earnings per share were $1.11, slightly above the expected $1.08 [1][3]. - The operating margin expanded by 120 basis points to 20% in Q3, and profit per share increased by 4% from $1.07 in the prior-year quarter [3]. Future Outlook - The company lowered its full-year outlook, expecting bookings between $7.0 billion and $7.15 billion and adjusted earnings per share between $6.25 and $6.65 for fiscal 2025, compared to $7.4 billion in bookings and $6.92 adjusted earnings per share in fiscal 2024 [3]. - The stock surged 8% post-announcement, driven by investor optimism regarding the $1 billion share buyback plan [4]. Stock Performance - EA stock has underperformed the S&P 500 index, with a -4% return since the beginning of 2024, while the S&P 500 is up 27% [2]. - Over the last four years, EA stock returns were -8% in 2021, -7% in 2022, 13% in 2023, and 7% in 2024, indicating a lackluster performance compared to the index [4]. Valuation - The estimated valuation for Electronic Arts is $142 per share, approximately 9% above its current market price, based on a forward expected earnings multiple of 21x for 2025 [6].

Financial Performance - Total net revenue for the fiscal quarter ended December 31, 2024, was $1,883 million, down 3% year-over-year[118] - Live services and other net revenue was $1,284 million, also down 3% year-over-year[118] - Net income was $293 million with diluted earnings per share of $1.11[118] - Net bookings for the three months ended December 31, 2024, were $2,215 million, a decrease of $151 million, or 6% year-over-year[124] - Digital full game downloads generated net revenue of $1,343 million, up from $1,262 million in 2023[116] - The gross margin increased to 75.8%, up 3 percentage points year-over-year[118] - Net revenue for the three months ended December 31, 2024 was $1,883 million, a decrease of $62 million compared to the same period in 2023[149] - Full game net revenue for the nine months ended December 31, 2024 was $1,565 million, down $117 million or 7% year-over-year[158] - Live services and other net revenue for the nine months ended December 31, 2024 was $4,003 million, a decrease of $98 million or 2% compared to the same period in 2023[159] Revenue Breakdown - Live services net revenue attributable to extra content was $4,379 million for the trailing twelve months ended December 31, 2024[114] - Full game downloads generated $446 million in revenue, an increase of 3% from $431 million in the prior year[150] - Packaged goods revenue decreased by 18%, from $187 million in 2023 to $153 million in 2024[150] - Live services and other revenue decreased by 3%, from $1,327 million in 2023 to $1,284 million in 2024[150] - The decrease in net revenue was primarily driven by a $232 million decline in extra content sales for Apex Legends and other titles[149] - A $170 million increase in revenue was noted from American football franchises, particularly from EA SPORTS College Football 25 and Dragon Age: The Veilguard[149] Expenses and Costs - Cost of revenue for the three months ended December 31, 2024 was $456 million, a decrease of $73 million compared to $529 million in the same period in 2023[161] - Research and development expenses for the three months ended December 31, 2024 were $606 million, an increase of $22 million or 4% year-over-year[168] - Marketing and sales expenses for the three months ended December 31, 2024 decreased by $25 million or 9% compared to the same period in 2023[170] - General and administrative expenses for the three months ended December 31, 2024 were $176 million, an increase of $6 million or 4% year-over-year[173] Cash Flow and Liquidity - As of December 31, 2024, cash and cash equivalents decreased by $124 million to $2,776 million, while total liquidity decreased to $3,155 million, representing 23% of total assets[178] - Net cash provided by operating activities decreased by $205 million to $1,530 million for the nine months ended December 31, 2024, primarily due to lower cash collections and higher tax payments[179] - Net cash used in investing activities increased by $19 million to $177 million, driven by an $84 million decrease in proceeds from short-term investments and a $19 million increase in capital expenditures[180] - Net cash used in financing activities increased by $188 million to $1,452 million, primarily due to a $158 million increase in common stock repurchases and excise tax payments[181] - During the nine months ended December 31, 2024, the company returned $1,276 million to stockholders, repurchasing 7.9 million shares for approximately $1,125 million[187] Strategic Initiatives - The restructuring plan approved in February 2024 aims to align the portfolio and resources with strategic priorities, expected to be completed by March 31, 2025[122] - The transition to the EA SPORTS FC brand is expected to expand global football experiences and engage more fans[119] Market Risks - The company is exposed to significant market risks, including foreign currency exchange rates, interest rates, and market prices, which have experienced notable volatility[194] - As of December 31, 2024, a hypothetical adverse foreign currency exchange rate movement of 10% could result in potential declines of $194 million in cash flow hedging and $155 million in balance sheet hedging[199] - A hypothetical 150 basis point increase in interest rates would lead to a $4 million, or 1%, decrease in the fair market value of the company's short-term investments as of December 31, 2024[203] - The company employs foreign currency forward contracts to hedge against foreign currency risks, with maturities generally of 18 months or less for sales and 3 months or less for balance sheet hedging[196][197] - The strengthening of the U.S. dollar negatively impacts reported international net revenue while positively affecting international operating expenses due to lower translation rates[195] Internal Controls and Compliance - There have been no changes in internal controls over financial reporting that materially affect the company's reporting as of the end of the fiscal quarter[206] - The company acknowledges inherent limitations in its disclosure controls and procedures, including the possibility of human error and resource constraints[207]

Core Insights - Electronic Arts (EA) reported a decline in earnings and revenues for the third quarter of fiscal 2025, with earnings per share at $2.83, down 4.4% year over year, and revenues at $2.22 billion, down 6.38% year over year due to decreased Live services and full-game revenues [1][2]. Financial Performance - The Zacks Consensus Estimate for earnings was $2.99 per share, while the revenue consensus was $2.29 billion [2]. - Net bookings for the fiscal third quarter were $2.22 billion, reflecting a 6.4% year-over-year decline, with minimal impact from foreign exchange [2]. - Full-game net bookings were $633 million, down 3% year over year, while Live services net bookings were $1.58 billion, down 8% year over year [3]. - Full-game revenues accounted for 31.8% of total revenues, decreasing 3.1% year over year to $599 million, with full-game download revenues increasing 3% to $431 million, and revenues from packaged goods plunging 18% to $187 million [4]. - Live services and other revenues, making up 68.2% of total revenues, decreased 3.2% year over year to $1.28 billion [4]. - Revenues from consoles decreased 1% year over year to $1.23 billion, while revenues from PC & Other and mobile platforms declined 7% year over year to $420 million and $296 million, respectively [5]. Operating Metrics - EA's GAAP gross profit increased 0.8% year over year to $1.43 billion, with a gross margin expansion of 300 basis points to 75.8% [6]. - Operating expenses decreased 0.1% year over year to $1.05 billion, but as a percentage of revenues, they expanded 170 basis points to 55.8% [6]. - Operating income on a GAAP basis increased 3.3% year over year to $377 million, although the operating margin contracted 130 basis points to 20% [7]. Balance Sheet and Cash Flow - As of December 31, 2024, EA had $3.16 billion in cash and short-term investments, up from $2.56 billion as of September 30, 2024 [8]. - Net cash provided by operating activities was $1.176 billion for the quarter and $2.110 billion for the trailing 12 months [8]. - EA repurchased 2.4 million shares for $375 million during the quarter, totaling 10.1 million shares for $1.45 billion over the trailing 12 months [8]. Dividend and Guidance - The company declared a quarterly cash dividend of 19 cents per share, payable on March 19, 2025, to stockholders of record as of February 26, 2025 [9]. - For the fourth quarter of fiscal 2025, EA expects GAAP revenues between $1.682 billion and $1.832 billion, with earnings per share in the range of 65 cents to $1.00 [11]. - For fiscal 2025, EA anticipates revenues between $7.25 billion and $7.40 billion, with earnings per share between $3.9 and $4.25 [11].

分组1 - Electronic Arts (EA) reported quarterly earnings of $2.83 per share, missing the Zacks Consensus Estimate of $2.99 per share, and down from $2.96 per share a year ago, representing an earnings surprise of -5.35% [1] - The company posted revenues of $2.22 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.68%, and down from $2.37 billion year-over-year [2] - Electronic Arts shares have lost about 16% since the beginning of the year, while the S&P 500 has gained 1.9% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $1.31 on revenues of $1.61 billion, and for the current fiscal year, it is $6.99 on revenues of $7.24 billion [7] - The Zacks Industry Rank indicates that the Gaming industry is currently in the top 19% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Reporting and Filing - Electronic Arts Inc. provided preliminary results for its third fiscal quarter ended December 31, 2024 [5] - The company updated its business outlook for the fiscal year ending March 31, 2025 [5] - A press release detailing the preliminary results and outlook was issued on January 22, 2025 [5] - The press release is attached as Exhibit 99.1 in the Form 8-K filing [7] - The information in Item 2.02 is not deemed "filed" under the Exchange Act unless specified otherwise [6] - The filing includes an Interactive Data File (Inline XBRL) as Exhibit 104 [7] - Stuart Canfield, Chief Financial Officer, signed the report on behalf of Electronic Arts Inc. [11] - The report was filed pursuant to the Securities Exchange Act of 1934 [9] Company Information - Electronic Arts Inc. is incorporated in Delaware with the IRS Employer Identification No. 94-2838567 [2] - The company's common stock is traded on the NASDAQ Global Select Market under the symbol "EA" [3]

Group 1 - The investigation by Pomerantz LLP focuses on potential securities fraud or unlawful business practices by Electronic Arts and its officers or directors [1] - On January 22, 2025, Electronic Arts revised its net bookings forecast for fiscal year 2025, lowering it to a range of $7 billion to $7.15 billion from a previous range of $7.5 billion to $7.8 billion [2] - Following the announcement of the revised outlook, Electronic Arts' stock price dropped by $23.77 per share, or 16.7%, closing at $118.58 per share on January 23, 2025 [3] Group 2 - Pomerantz LLP is recognized as a leading firm in corporate, securities, and antitrust class litigation, with a history of recovering multimillion-dollar damages for victims of securities fraud and corporate misconduct [4]

Core Insights - The upcoming earnings report from Electronic Arts (EA) is projected to show quarterly earnings of $2.99 per share, reflecting a 1% increase year-over-year, while revenues are expected to decline by 4.8% to $2.25 billion [1] - Analysts have revised the consensus EPS estimate down by 36.6% over the last 30 days, indicating a significant reevaluation of expectations [1][2] - The stock has underperformed, with a -16% return over the past month compared to the S&P 500's +2.7% [5] Revenue Composition - Analysts estimate that 'Net revenue by composition- Live services and other- Non-GAAP (Net Bookings)' will be $1.54 billion, a decrease of 10.3% from the previous year [4] - The 'Net revenue by composition- Full game- Full game downloads- Non-GAAP (Net Bookings)' is expected to reach $487.20 million, indicating a 5.2% increase year-over-year [4] - For 'Net revenue by composition- Full game- Packaged goods- Non-GAAP (Net Bookings)', the estimate is $189.88 million, reflecting a slight decline of 0.6% from the prior year [5] Overall Market Position - The estimated 'Net Bookings' for EA stands at $2.25 billion, down from $2.37 billion in the previous year [5] - EA currently holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [5]