Financial Data and Key Metrics Changes - The meeting confirmed that over 89% of the outstanding shares eligible to vote were present, indicating strong shareholder engagement [4][8] - The final voting results will be filed with the SEC on a form eight K within four business days, reflecting compliance with regulatory requirements [8] Business Line Data and Key Metrics Changes - No specific financial data or key metrics related to individual business lines were discussed during the meeting [10] Market Data and Key Metrics Changes - No specific market data or key metrics were provided in the meeting [10] Company Strategy and Development Direction and Industry Competition - The meeting did not cover specific strategic initiatives or competitive positioning within the industry [10] Management's Comments on Operating Environment and Future Outlook - Management did not provide comments on the operating environment or future outlook during the meeting [10] Other Important Information - The meeting included the election of eight board members and an advisory vote on executive compensation, indicating ongoing governance practices [5][6] - KPMG was ratified as the independent public registered accounting firm for fiscal year 2026, ensuring continuity in auditing services [6] Q&A Session Summary Question: Were there any questions from shareholders? - There were no questions to answer during the Q&A session, indicating either satisfaction with the information provided or a lack of engagement from shareholders [10]

Financial Data and Key Metrics Changes - The meeting confirmed that over 89% of outstanding shares were present for voting, indicating strong shareholder engagement [4][8] - The final voting results will be filed with the SEC, reflecting the company's commitment to transparency [8] Business Line Data and Key Metrics Changes - No specific business line data or key metrics were discussed during the meeting [10] Market Data and Key Metrics Changes - No specific market data or key metrics were provided during the meeting [10] Company Strategy and Development Direction and Industry Competition - The meeting included proposals for board member elections and executive compensation, indicating a focus on governance and leadership continuity [5][6] Management's Comments on Operating Environment and Future Outlook - There were no comments from management regarding the operating environment or future outlook during the meeting [10] Other Important Information - The meeting was conducted virtually, and the formal business portion was concluded before moving to the Q&A session [9][10] Q&A Session Summary - There were no questions raised during the Q&A session, leading to a prompt conclusion of the meeting [10]

Core Viewpoint - The recent CPI data has positively influenced the US stock market, leading to significant gains in major indices, with the S&P 500 and Nasdaq reaching all-time highs [1]. Market Performance - The S&P 500 index rose by 1.13% to 6445.76 points, the Nasdaq composite increased by 1.39% to 21681.9 points, and the Dow Jones Industrial Average climbed by 1.1% to 44458.61 points [1]. - The Russell 2000 index, which is seen as a beneficiary of interest rate cuts, surged nearly 3% [3]. Sector Highlights - Technology stocks rebounded, with notable performances from major companies: Apple up 1.09%, Microsoft up 1.43%, Amazon up 0.08%, Nvidia up 0.6%, Google-A up 1.16%, Tesla up 0.53%, and Meta up 3.15% [7]. - Intel experienced a significant increase of 5.62%, with a two-day gain of 11% following a shift in Trump's stance [8]. - Other companies such as Electronic Arts, BlackRock, Goldman Sachs, and Morgan Stanley also reached historical highs [9]. International Market - The Nasdaq Golden Dragon China Index rose by 1.49%, with Alibaba up 3.19%, JD.com up 3.01%, Baidu up 2.14%, and Pinduoduo up 3% [10]. - However, some Chinese companies faced declines, such as NIO down 8.96% and XPeng down 6.08% [10].

Core Insights - EA Esports and Full Sail University are continuing their collaboration with the Madden NFL 26 Championship Series (MCS 26) being hosted at Full Sail's Orlando Health Fortress for the second consecutive year, following last year's success [1][2][3] Company Collaboration - The partnership aims to leverage Full Sail's alumni network to support production and provide real-world experience for students, with over 40 graduates hired in key production roles during the first year [2][3] - EA Esports is exploring content creation opportunities on Full Sail's campus, enhancing the educational experience for students in media and entertainment programs [2][3] Event Details - The MCS 26 will feature competitions with a total prize pool of USD $150,000, and will be broadcasted globally on platforms like Twitch and YouTube [3][4] - Key competition dates include the Kickoff Challenge on September 10, 2025, Most Feared Challenge on October 15, 2025, Zero Chill Challenge on December 10, 2025, and Last Chance Qualifier on January 21, 2026 [5] Educational Impact - Full Sail University provides students with hands-on learning experiences in areas such as shoutcasting and production, enhancing their skills and industry readiness [2][3] - The collaboration has resulted in significant opportunities for students and graduates to work alongside industry professionals, fostering a dynamic learning environment [3][6] Company Background - Electronic Arts (EA) is a leading global company in digital interactive entertainment, with a reported GAAP net revenue of approximately $7.6 billion in fiscal year 2024 [4] - Full Sail University is recognized as a top institution for game design and offers various degree programs in entertainment media and emerging technologies, boasting over 100,000 graduates [6]

Anti-Cheat Measures - Electronic Arts blocked over 300,000 cheating attempts after the Battlefield 6 beta launch [1] Industry Focus - The report highlights the gaming industry's ongoing battle against cheating in online multiplayer games [1]

Core Insights - Electronic Arts launched an open beta for Battlefield 6, which quickly faced issues with cheaters [1][2] - The company reported 104,000 instances of potential cheating and stopped 330,000 attempts to cheat within the first two days [2] Anti-Cheat Measures - Electronic Arts employs a kernel-level anti-cheat system called Javelin, which has high privileges on users' computers to monitor for cheats [2] - The system is not foolproof, and the company acknowledges that it cannot guarantee the absence of cheaters [4] - Secure Boot is utilized as an additional security measure, but it is not a complete solution [5] Industry Context - Cheating remains a widespread issue in online gaming, affecting various companies including Riot Games and Activision, which have also implemented kernel-level anti-cheat systems [8][9] - Other companies, like Riot Games, have developed multi-faceted approaches to combat cheating, including hardware fingerprinting and community infiltration [10]

Industry Overview - The Chinese gaming industry achieved record highs in revenue and user scale in the first half of 2025, with actual sales revenue reaching 168 billion yuan, a year-on-year increase of 14.08%, and user scale nearing 679 million, up 0.72% [4][3] - The growth is attributed to the successful launch of several new games, the steady performance of evergreen titles, and the strong momentum in esports and mini-program games [4] Event Highlights - The 2025 ChinaJoy opened in Shanghai, featuring 743 companies and showcasing cutting-edge technologies such as 3D printing, AI gaming applications, and brain-computer interfaces [5] - The event emphasized the integration of gaming with technology and culture, with significant participation from both major and independent game developers [6][7] Company Developments - Chuangmeng Tiandi received a strategic investment of 39 million HKD from Playrix, marking a shift from a "distribution agency" model to a "equity binding" partnership, which is expected to enhance long-term cooperation [8][9] - Giant Network's new mobile game "Supernatural Action Team" surpassed 1 million concurrent users shortly after launch, indicating strong market performance and contributing to a significant increase in the company's stock price [10] - The new simulation game "Talking Tom Cat 2" achieved over 11 million downloads within two weeks of its overseas launch, ranking highly in multiple countries' app stores [11] Regulatory and Legal Issues - Tencent's "Honor of Kings" faced a lawsuit regarding its matchmaking algorithm, marking a significant legal challenge in the gaming industry [12] - Sony filed a lawsuit against Tencent, alleging that Tencent's new game "Wild Origin" plagiarized its title "Horizon Zero Dawn" [13] International Developments - EA announced a transformation of the "Battlefield" series into a "platform" model, indicating a shift towards long-term operation and continuous updates for the franchise [14][15] - The esports events for the 2026 Asian Games were confirmed, including popular titles such as "League of Legends" and "Honor of Kings" [16] Esports Events - The Delta DDC Diamond Championship concluded with Team TB winning the title, showcasing the competitive landscape of esports in China [17]

Part I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Electronic Arts reported slightly increased net revenue but decreased net income, EPS, assets, and operating cash flow Condensed Consolidated Statements of Operations (Q1 FY26 vs Q1 FY25) | (In millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net revenue** | **$1,671** | **$1,660** | | Gross profit | $1,392 | $1,397 | | Operating income | $271 | $364 | | **Net income** | **$201** | **$280** | | **Diluted EPS** | **$0.79** | **$1.04** | Condensed Consolidated Balance Sheets | (In millions) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,518 | $2,136 | | Total current assets | $2,545 | $3,276 | | **Total Assets** | **$11,699** | **$12,368** | | Deferred net revenue (current) | $1,334 | $1,700 | | Total current liabilities | $3,040 | $3,459 | | **Total Liabilities** | **$5,617** | **$5,982** | | **Total Stockholders' Equity** | **$6,082** | **$6,386** | Condensed Consolidated Statements of Cash Flows (Q1 FY26 vs Q1 FY25) | (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$17** | **$120** | | Net cash used in investing activities | ($89) | ($69) | | Net cash used in financing activities | ($568) | ($546) | | **Net decrease in cash and cash equivalents** | **($618)** | **($500)** | - The company completed one non-material acquisition during the quarter, resulting in a slight increase in goodwill to **$5.39 billion**[41](index=41&type=chunk) - In May 2024, a new **$5.0 billion stock repurchase program** was authorized, superseding the previous program. During the quarter, the company repurchased **3.0 million shares** for approximately **$375 million**[86](index=86&type=chunk)[88](index=88&type=chunk) - Revenue from live services and other was **$1,382 million**, while full game revenue was **$289 million**. Console remains the largest platform, generating **$1,007 million** in revenue[96](index=96&type=chunk)[97](index=97&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue and operating income trends, net bookings growth, and a revenue recognition policy update - Key financial results for the quarter ended June 30, 2025: - Total net revenue: **$1,671 million (+1% YoY)** - Live services and other net revenue: **$1,382 million (-2% YoY)** - Operating income: **$271 million (-26% YoY)** - Net cash from operations: **$17 million (-86% YoY)** - Returned **$423 million** to stockholders (**$375M buyback**, **$48M dividend**)[113](index=113&type=chunk) Net Bookings (Q1 FY26 vs Q1 FY25) | (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net revenue | $1,671 | $1,660 | | Change in deferred net revenue | ($373) | ($398) | | **Net bookings** | **$1,298** | **$1,262** | - Net bookings increased by **3% YoY**, driven by Split Fiction and the global football franchise, partially offset by a decrease in Apex Legends extra content sales[116](index=116&type=chunk) - The company completed its annual evaluation of the Estimated Offering Period for revenue recognition. For new sales starting Q2 FY26, revenue for mobile and PC/console free-to-play games will be recognized over a unified eleven-month period. This change is expected to shift approximately **$81 million** in net revenue from FY2026 to FY2027[133](index=133&type=chunk) - The company returned **$423 million** to stockholders during the quarter through **$375 million in share repurchases** and **$48 million in dividends**[171](index=171&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency and interest rates, impacting fair values of hedges and investments - The company hedges a portion of its foreign currency risk related to forecasted sales and expenses. A hypothetical 10% adverse foreign currency exchange rate movement would result in potential declines of **$236 million** in the fair value of cash flow hedges[178](index=178&type=chunk)[181](index=181&type=chunk) - For balance sheet hedging, a hypothetical 10% adverse currency movement would result in potential losses of **$106 million** in the Condensed Consolidated Statements of Operations[181](index=181&type=chunk) - Interest rate risk exposure is primarily in the short-term investment portfolio. A hypothetical **150 basis point** increase in interest rates would result in a **$1 million (1%)** decrease in the fair market value of these investments[184](index=184&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period[186](index=186&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[187](index=187&type=chunk) Part II - OTHER INFORMATION [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course litigation, which management does not expect to materially affect financial statements - The company is subject to claims and litigation arising in the ordinary course of business, which are not expected to have a material adverse effect on its financial statements[71](index=71&type=chunk)[191](index=191&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant strategic, operational, legal, and financial risks, including competition, cybersecurity, and regulatory issues - **Strategic Risks:** - Intense competition from established and emerging companies - Significant revenue concentration in a few popular franchises, such as **EA SPORTS FC** - Potential for product development delays to miss key selling periods - Failure to anticipate or adapt to new technologies like AI and evolving business models[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - **Operational Risks:** - Vulnerability to security breaches and sophisticated cyber-attacks, including ransomware and exploits of in-game virtual economies - Potential for outages and disruptions in IT infrastructure and cloud services - Intense competition for attracting and retaining key executive, technical, and creative talent[212](index=212&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk) - **Legal & Compliance Risks:** - Subject to complex and evolving global laws regarding consumer protection, online safety, and data privacy - Scrutiny of business models involving virtual items and currency - Risk of infringing on third-party intellectual property rights[223](index=223&type=chunk)[224](index=224&type=chunk)[228](index=228&type=chunk) - **Financial Risks:** - Exposure to foreign currency fluctuations, as international revenue comprised **59% of total net revenue in FY25** - Obligations and covenants related to outstanding senior notes and a revolving credit facility - Potential for changes in tax rates or exposure to additional tax liabilities, particularly in the U.S. and Switzerland[232](index=232&type=chunk)[233](index=233&type=chunk)[235](index=235&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company authorized a new $5.0 billion stock repurchase program and repurchased approximately 3.0 million shares during the quarter - In May 2024, a new stock repurchase program was authorized for up to **$5.0 billion stock repurchase program**, expiring May 9, 2027[243](index=243&type=chunk) Share Repurchases for the Three Months Ended June 30, 2025 | Fiscal Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Mar 30 - Apr 26, 2025 | 1,244,547 | N/A (Mix of ASR & Open Market) | | Apr 27 - May 24, 2025 | 805,982 | $150.09 | | May 25 - Jun 28, 2025 | 933,455 | $149.03 | | **Total** | **2,983,984** | | - The maximum dollar value that may still be purchased under the program as of June 28, 2025, was **$2,277 million**[244](index=244&type=chunk) [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) Three executives adopted Rule 10b5-1 trading plans to manage their personal holdings of EA common stock - Three executives adopted Rule 10b5-1 trading plans during the quarter: Jacob J. Schatz (EVP, Global Affairs), Mala Singh (Chief People Officer), and Stuart Canfield (CFO)[246](index=246&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed or incorporated by reference as part of the Form 10-Q report - The exhibits listed in the exhibit index are filed or incorporated by reference as part of the report[247](index=247&type=chunk)

Investment Rating - The report maintains a "Buy" rating for Electronic Arts (EA) with a target price of $179.80 [5][13]. Core Insights - EA reported FY26Q1 net revenue of $1.67 billion, exceeding consensus expectations by 7.4% and showing a year-over-year increase of 0.7% [1][5]. - The net bookings revenue reached $1.3 billion, surpassing consensus expectations by 4% and reflecting a year-over-year growth of 2.9%, primarily driven by stable growth in core products like the global football and rugby series [1][5]. - Despite an increase in new game release investments leading to a decline in net profit margin by 4.9 percentage points to 12%, the company achieved a net profit of $201 million, exceeding expectations by 51.6% [1][5]. Financial Performance - FY26Q1 net bookings revenue was $1.3 billion, higher than the previous guidance of $1.23 billion, with game net bookings revenue at $214 million, up 27.4% year-over-year, driven by the new title "Split Fiction" [2]. - Real-time service net bookings revenue was $1.08 billion, down 0.9% year-over-year, mainly due to stable growth in the "FC" and rugby series, partially offset by a decline in "Apex Legends" [2]. - The core game series saw a modest single-digit year-over-year growth in "FC" series net bookings, with "FC Online" achieving double-digit growth and "FC Mobile" reaching a record high with over 50 million installations [2]. Upcoming Releases - EA released the first trailer for "Battlefield 6" on July 24, with over 7 million views by July 29, and the full game is expected to launch within FY26 on platforms including PS5, Xbox X|S, and PC [3]. - The core football game "FC 26" is anticipated to be released on September 26 across all platforms, including the Switch 2, focusing on enhancing player experience with competitive and realistic gameplay modes [3]. Earnings Forecast and Valuation - The report slightly lowers the FY26-28E net revenue estimates by 1%, 0.8%, and 0.8% to $7.19 billion, $8.11 billion, and $8.36 billion respectively, primarily due to pressure on net bookings revenue from the rugby series [4][11]. - The FY26-28E net profit estimates are also reduced by 4.7%, 2.3%, and 2.6% to $910 million, $1.38 billion, and $1.43 billion respectively, attributed to increased promotional costs for "Battlefield 6" [4][11]. - The valuation is based on a PE of 33 times for FY27, aligning with the average of comparable companies, resulting in a target price of $179.80, down from a previous estimate of $184.60 [4][13].

Investment Rating - The report maintains a "Buy" rating for Electronic Arts (EA) with a target price of $179.80 [1][11]. Core Insights - EA reported FY26Q1 net revenue of $1.67 billion, exceeding consensus expectations by 7.4% and showing a year-over-year increase of 0.7%. Net bookings reached $1.3 billion, surpassing expectations by 4% and reflecting a year-over-year growth of 2.9% [1]. - The growth is primarily driven by the strong performance of core products, particularly the global football and rugby series, while the decline in "Apex Legends" was less severe than anticipated. Despite increased investment in new game releases leading to a 4.9 percentage point drop in net profit margin to 12%, the company achieved a net profit of $201 million, exceeding expectations by 51.6% [1]. - EA plans to release "Battlefield 6" within FY26 and maintains its full-year guidance unchanged [1]. Summary by Sections Financial Performance - FY26Q1 net bookings were $1.3 billion, higher than the previous guidance of $1.23 billion. Game net bookings were $214 million, up 27.4% year-over-year, driven by the new title "Split Fiction" [1]. - Real-time service net bookings were $1.08 billion, down 0.9% year-over-year, impacted by the performance of "FC" and the rugby series, partially offset by the better-than-expected decline in "Apex Legends" [1]. - Key game series performance: 1. "FC" series net bookings showed single-digit growth year-over-year, with "FC Online" achieving double-digit growth and "FC Mobile" surpassing 50 million installations. 2. Rugby series net bookings maintained positive growth year-over-year, although a decline of 8% is expected in Q2 due to high base effects, with a recovery anticipated in H2. 3. "F1 25" launched in Q1, benefiting from the concurrent F1 movie release, resulting in a 27% year-over-year increase in net bookings [1]. Earnings Forecast and Valuation - The report slightly lowers FY26-28E net revenue estimates by 1%, 0.8%, and 0.8% to $7.19 billion, $8.11 billion, and $8.36 billion, respectively, primarily due to pressure on net bookings from the rugby series [3]. - FY26-28E net profit estimates are also reduced by 4.7%, 2.3%, and 2.6% to $911 million, $1.38 billion, and $1.43 billion, respectively, due to rising promotional costs for "Battlefield 6" [3]. - The valuation is switched to FY27, assigning a PE of 33x, consistent with peer averages, leading to a target price of $179.80, down from a previous estimate of $184.60 [3][11]. Upcoming Releases - The first trailer for "Battlefield 6" was released on July 24, with over 7 million views by July 29. The game is expected to launch within FY26 on PS5, Xbox XJS, and PC, with the highest historical investment in its development [2]. - The core football game "FC 26" is set to release on September 26 across all platforms, including Switch 2, focusing on enhancing player experience with competitive and realistic gameplay modes [2].