About this content About Josh Lamb After graduating from the University of Kent in the summer of 2022 with a degree in History, Josh joined Proactive later that year as a journalist in the UK editorial team. Josh has reported on a range of areas whilst at Proactive, including energy companies during a time of global crisis, aviation and airlines as the sector recovers from the pandemic, as well as covering economic, social and governance issues. Read more About the publisher Proactive financial news and ...

Key TakeawaysElectronic Arts shares are tumbling 15% in premarket trading Thursday, a day after slumping demand for its EA SPORTS FC 25 video game prompted the company to cut its outlook.The company projected net bookings to be $2.22 billion for the fiscal third quarter, down from $2.4 billion to $2.55 billion previously.EA also cut its fiscal 2025 net bookings forecast to a range of $7 billion to $7.15 billion, down from $7.5 billion to $7.8 billion. Electronic Arts (EA) shares are tumbling in premarket tr ...

Core Viewpoint - Electronic Arts (EA) has reduced its full-year bookings guidance due to underperformance in its soccer franchise, EA Sports FC, leading to a 7% drop in shares during extended trading [1][3]. Financial Performance - For the fiscal third quarter ending December 31, EA expects net bookings of approximately $2.215 billion, down from previous guidance of $2.4 billion to $2.55 billion [2]. - Revenue for the December quarter is projected to be around $1.88 billion, with diluted earnings per share of $1.11 [2]. - EA anticipates full fiscal year net bookings between $7 billion and $7.15 billion, a decrease from earlier guidance of $7.5 billion to $7.8 billion [3]. Game Performance - The soccer franchise, previously branded under FIFA, has shown weakness, with a noted slowdown in growth after two years of double-digit increases in net bookings [4]. - EA's role-playing game "Dragon Age" had 1.5 million players during the quarter, falling short of expectations by nearly 50% [4]. - The company expects Global Football sales to decline year-over-year and anticipates a decrease in bookings from online sales in fiscal 2025, primarily due to the soccer franchise's underperformance [4]. Recent Developments - EA recently updated FC 25 with new content and gameplay improvements, which received positive feedback from players [5].

Company Performance and Challenges - EA's subpar performance is attributed to fierce competition in the gaming industry, challenges in player engagement and retention, and weak monetization in freemium models [1][2] - EA faces lower-than-expected monetization in freemium models, particularly in Apex Legends Season 22 [2] - EA's shares have lost 8.5% in the past month, underperforming the Zacks Consumer Discretionary sector's decline of 0.4% and the Zacks Gaming industry's loss of 3.1% [8] - EA's stock has underperformed peers like Roblox (RBLX), Nintendo (NTDOY), and TakeTwo Interactive Software (TTWO) in the same time frame [8] Financial Estimates and Trends - For Q3 fiscal 2025, EA expects net revenues of $1.875-$2.025 billion and diluted earnings of 85 cents to $1.02 per share [3] - For full-year fiscal 2025, EA expects net revenues of $7.4-$7.7 billion and diluted earnings of $3.82-$4.33 per share [3] - The Zacks Consensus Estimate for Q3 fiscal 2025 revenues is $2.51 billion, indicating year-over-year growth of 6.02% [10] - The Zacks Consensus Estimate for Q3 fiscal 2025 earnings is $3.41 per share, indicating year-over-year growth of 15.2% [10] - The Zacks Consensus Estimate for full-year fiscal 2025 revenues is $7.69 billion, indicating year-over-year growth of 3.51% [11] - The Zacks Consensus Estimate for full-year fiscal 2025 earnings is $7.82 per share, indicating year-over-year growth of 12.52% [11] - EA's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average surprise of 4.29% [11] Gaming Portfolio and Innovations - EA benefits from an expanding portfolio with immersive offerings in sports, adventure, and life simulation games [6] - EA leverages GenAI and advanced technologies like ICE Q for enhanced gameplay and creative experiences [6] - In Q2 fiscal 2025, total hours played increased by 140% year over year [6] - EA's latest releases include Dragon Age: The Veil Guard, The Sims 4 Creator Kit, and My Sims Cozy bundle [9] - EA and Hazelight Studios announced Split Fiction, a co-op action-adventure game blending sci-fi and fantasy, set to release on March 6 [9] Industry and Competitive Landscape - EA faces fierce competition in the gaming industry, especially in the free-to-play (FPS) segment [2] - Challenges persist in maintaining consistent player engagement and retention across some franchises [2]

Core Viewpoint - Electronic Arts (EA) has shown strong performance in its recent earnings report, with significant year-over-year growth in earnings and revenues, driven by recovery in live services and full game revenues [2][3]. Financial Performance - EA reported Q2 fiscal 2025 earnings of $2.15 per share, a 47.3% increase year over year, with revenues rising 5.8% to $2.02 billion [2]. - Net bookings for the fiscal second quarter reached $2.07 billion, up 14.2% year over year, largely due to the positive reception of EA SPORTS College Football 25 [3]. - Full-game net bookings were $832 million, reflecting a 20% increase year over year, while live services net bookings rose 10% to $1.25 billion [4]. Revenue Breakdown - Full-game revenues accounted for 35.4% of total revenues, increasing 15.3% year over year to $716 million, with full-game download revenues up 37% to $475 million [5]. - Live services and other revenues, making up 64.6% of total revenues, increased 1.2% year over year to $1.3 billion [6]. - Console revenues grew 16% year over year to $1.37 billion, while revenues from PC & Other and mobile platforms declined by 14% and 5%, respectively [6]. Operating Metrics - GAAP gross profit increased 7.6% year over year to $156 billion, with a gross margin of 77.5% [7]. - Operating income on a GAAP basis rose 1.9% year over year to $384 million, with an operating margin of 19% [8]. Balance Sheet and Cash Flow - As of October 30, 2024, EA had $2.5 billion in cash and short-term investments, down from $2.76 billion as of June 30, 2024 [9]. - The company repurchased 2.6 million shares for $375 million during the quarter, totaling 10.2 million shares for $1.4 billion over the trailing 12 months [9]. Dividend and Guidance - EA declared a quarterly cash dividend of 19 cents per share, payable on December 18, 2024 [10]. - For Q3 fiscal 2025, EA expects revenues between $1.875 billion and $2.025 billion and earnings per share in the range of 85 cents to $1.02 [11]. - For fiscal 2025, EA anticipates revenues of $7.4 billion to $7.7 billion and net bookings between $7.5 billion and $7.8 billion [12]. Market Sentiment - Estimates for EA have trended downward over the past month, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [14][16].

Core Viewpoint - Electronic Arts (EA) has shown strong performance in the stock market, with a year-to-date gain of 21.7%, outperforming both the broader Zacks Consumer Discretionary sector and the Zacks Gaming industry [1] Financial Performance - EA's revenue from live services and other sources increased by 1.2% year-over-year to $1.3 billion, while full-game download revenues surged by 37% year-over-year to $475 million during Q2 of fiscal 2025 [2] - For Q3 fiscal 2025, EA anticipates GAAP revenues between $1.875 billion and $2.025 billion, with earnings per share expected to range from 85 cents to $1.02 [6] - The company projects fiscal 2025 revenues between $7.4 billion and $7.7 billion, with earnings per share expected between $3.34 and $4 [6][10] - The consensus estimate for Q3 fiscal 2025 earnings is $3.43 per share, reflecting a 15.88% year-over-year growth [9] - The consensus for fiscal 2025 earnings is $7.82 per share, indicating a 12.52% year-over-year growth [10] Product Development and Innovations - EA has introduced Strand Hair Technology in Dragon Age: The Veilguard, enhancing character realism with 50,000 individual strands for over 100 hairstyles [3] - The company launched Cranium Technology in EA SPORTS FC 25, improving character customization and animation [4] - EA's ongoing research and development in titles like Battlefield and skate aims to boost customer engagement and satisfaction [5] Market Position and Valuation - EA shares are currently considered overvalued, with a forward 12-month Price/Earnings (P/E) ratio of 20.18, higher than the Zacks Consumer Discretionary sector's 19.14 [12] - The company has a Zacks Rank 3 (Hold), suggesting that investors should wait for a more favorable entry point [13]

Core Viewpoint - Electronic Arts (EA) has experienced a significant stock price increase of over 25% since early 2022, attributed to revenue growth and share repurchases, despite a general decline in gaming demand [1][2][3]. Financial Performance - EA's revenue rose by 30% from $5.6 billion in fiscal 2021 to $7.3 billion currently, although revenue growth was only 2% in fiscal 2024 due to declining gaming demand [1][3]. - The company's operating margin improved to 20.9% in fiscal 2024 from 18.6% in 2021, indicating enhanced profitability [2]. - EA reported total bookings of $2.1 billion in Q2'25, reflecting a 14% year-over-year increase, with earnings per share rising to $2.15 from $1.46 in the prior-year quarter [3]. Market Position and Valuation - EA's stock is currently priced fairly at an estimated valuation of $165 per share, based on a forward P/E ratio of 21x expected earnings of $7.79 for 2025 [5]. - The company has a solid financial position, with a debt to equity ratio of 4.5% and cash constituting 24.3% of its assets, indicating low financial risk [2]. Industry Trends - The U.S. total video game sales in 2023 reached $57.2 billion, showing only a modest 1% year-over-year growth, reflecting broader industry challenges [1]. - The average quarterly playtime for gamers has decreased by 26% from 2021 to 2023, contributing to the overall decline in gaming demand [3]. Stock Performance - EA stock has risen 20% this year, slightly underperforming the S&P 500 index, which rose by 25% [4]. - Historical returns for EA stock have been less volatile compared to the S&P 500, with annual returns of -8% in 2021, -7% in 2022, and 13% in 2023 [4].

Core Viewpoint - Electronic Arts (EA) is a prominent company in the gaming industry, known for its development and distribution of games across various platforms including consoles, PCs, and mobile devices [1]. Group 1: Company Overview - EA's portfolio includes well-known franchises such as Battlefield, Mass Effect, Dragon Age, The Sims, Need for Speed, EA Sports FC (formerly FIFA), and Madden NFL Series [1]. Group 2: Investment Philosophy - The investment philosophy is based on fundamental bottom-up analysis and quantitative modeling, focusing on identifying perception gaps to exploit over-pessimism and excessive exuberance in the market [1].

[Part I - FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Electronic Arts Inc.'s unaudited condensed consolidated financial statements for the periods ended September 30, 2024, detailing financial position, operating results, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2024, shows a decrease in total assets, liabilities, and stockholders' equity compared to March 31, 2024, primarily due to reduced cash and deferred net revenue Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2,197 | $2,900 | | Total current assets | $3,972 | $4,247 | | Goodwill | $5,381 | $5,379 | | **Total Assets** | **$13,136** | **$13,420** | | **Liabilities & Equity** | | | | Deferred net revenue (current) | $1,475 | $1,814 | | Total current liabilities | $2,787 | $3,090 | | Senior notes, net | $1,883 | $1,882 | | **Total Liabilities** | **$5,728** | **$5,907** | | **Total Stockholders' Equity** | **$7,408** | **$7,513** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended September 30, 2024, net revenue increased while net income decreased due to higher operating expenses and taxes, with a similar trend for the six-month period Statement of Operations Highlights (in millions, except per share data) | Metric | Q2 2024 (Three Months) | Q2 2023 (Three Months) | H1 2024 (Six Months) | H1 2023 (Six Months) | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $2,025 | $1,914 | $3,685 | $3,838 | | Gross Profit | $1,569 | $1,458 | $2,966 | $3,014 | | Operating Income | $384 | $377 | $748 | $919 | | Net Income | $294 | $399 | $574 | $801 | | Diluted EPS | $1.11 | $1.47 | $2.15 | $2.93 | - Restructuring charges for the three and six months ended September 30, 2024 were **$51 million** and **$53 million**, respectively, compared to minimal charges in the prior year periods[8](index=8&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income for the three and six months ended September 30, 2024, decreased year-over-year, primarily due to lower net income and losses on derivative instruments Comprehensive Income Summary (in millions) | Metric | Q2 2024 (Three Months) | Q2 2023 (Three Months) | H1 2024 (Six Months) | H1 2023 (Six Months) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $294 | $399 | $574 | $801 | | Other Comprehensive Income (Loss) | ($55) | $41 | ($43) | $33 | | **Total Comprehensive Income** | **$239** | **$440** | **$531** | **$834** | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from March 31 to September 30, 2024, primarily due to common stock repurchases and cash dividends, partially offset by net income and stock-based compensation - For the six months ended September 30, 2024, the company repurchased **5.4 million shares** for a total of **$750 million**[14](index=14&type=chunk)[113](index=113&type=chunk) - Cash dividends declared were **$0.19 per common share** in each of the first two quarters of fiscal 2025, totaling **$101 million** for the six-month period[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended September 30, 2024, net cash provided by operating activities decreased, while significant cash was used in financing activities, primarily for stock repurchases, leading to a net decrease in cash and cash equivalents Cash Flow Summary (Six Months Ended Sep 30, in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $354 | $471 | | Net cash used in investing activities | ($115) | ($107) | | Net cash used in financing activities | ($948) | ($833) | | **Net decrease in cash and cash equivalents** | **($703)** | **($478)** | - The decrease in operating cash flow was mainly due to changes in working capital, including a **$447 million** increase in receivables and a **$339 million** decrease in deferred net revenue[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, financial instruments, restructuring charges, and commitments, confirming the company operates as a single reportable segment - The company operates as a **single reportable segment**, as the Chief Operating Decision Maker reviews operating results on a total company basis to assess performance and allocate resources[116](index=116&type=chunk) - The 2024 Restructuring Plan is estimated to incur total charges of **$125 million to $165 million**, with actions expected to be substantially completed by March 31, 2025, and **$119 million** in net charges incurred to date[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - As of September 30, 2024, the company had unrecognized commitments of approximately **$1,760 million** for developer/licensor agreements and **$1,265 million** for marketing[89](index=89&type=chunk) - In May 2024, a new stock repurchase program was authorized for up to **$5.0 billion**, expiring in May 2027, replacing the previous program[112](index=112&type=chunk) [Report of Independent Registered Public Accounting Firm](index=28&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP reviewed the interim financial information and found no material modifications needed for conformity with U.S. GAAP, noting the review's scope is less than an audit - The accounting firm **KPMG LLP** conducted a review, not an audit, of the interim financial statements[128](index=128&type=chunk) - **KPMG LLP** stated they are not aware of any material modifications needed for the financial information to conform with U.S. GAAP[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial results, business trends, critical accounting policies, and liquidity, highlighting increased net revenue and bookings for Q2 2025 [Overview](index=29&type=section&id=Overview) This section summarizes EA's business, recent financial performance, and key trends, including a 6% year-over-year increase in net revenue and a 14% increase in net bookings for the quarter Q2 2025 Financial Highlights | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Total net revenue | $2,025 million | +6% | | Live services and other net revenue | $1,309 million | +1% | | Operating income | $384 million | +2% | | Diluted earnings per share | $1.11 | - | | Net cash provided by operating activities | $234 million | +109% | - Key business trends include focusing on **live services**, the shift to **digital game delivery**, intense competition, reliance on major franchises (**EA SPORTS FC**, **Madden NFL**, **Apex Legends**), and building re-occurring revenue streams[135](index=135&type=chunk)[136](index=136&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) Net Bookings (in millions) | Period | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended Sep 30** | $2,079 | $1,820 | $259 | 14% | | **Six Months Ended Sep 30** | $3,341 | $3,398 | ($57) | -2% | [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section details critical accounting policies and estimates, primarily focusing on revenue recognition judgments for 'Games with Services' and significant estimates required for income taxes, including deferred tax assets - For 'Games with Services', the sales price is generally allocated **75%** to the software license (recognized at a point in time) and **25%** to future update rights and online hosting (recognized ratably over the Estimated Offering Period)[150](index=150&type=chunk) - The Estimated Offering Period for recognizing service-related revenue is a key judgment, estimated to be **8 months** for digital sales, **10 months** for retail sales, and **12 months** for free-to-play games[159](index=159&type=chunk) - The realizability analysis for the **Swiss deferred tax asset** is a critical estimate, relying on judgments about future Swiss taxable income and interest rates[164](index=164&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For the three months ended September 30, 2024, net revenue increased 6% year-over-year, driven by full game sales, while operating expenses rose due to higher R&D and G&A costs Net Revenue by Composition - Q2 (Three Months Ended Sep 30, in millions) | Composition | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Full game | $716 | $621 | $95 | 15% | | Live services and other | $1,309 | $1,293 | $16 | 1% | | **Total net revenue** | **$2,025** | **$1,914** | **$111** | **6%** | - The increase in Q2 full game revenue was primarily due to the **American football franchises**, driven by the release of **EA SPORTS College Football 25**[173](index=173&type=chunk) Operating Expenses - Q2 (Three Months Ended Sep 30, in millions) | Expense Category | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Cost of Revenue | $456 | $456 | $0 | 0% | | Research and development | $648 | $602 | $46 | 8% | | Marketing and sales | $272 | $280 | ($8) | (3)% | | General and administrative | $197 | $173 | $24 | 14% | [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2024, cash and equivalents decreased due to significant cash used in financing activities, primarily stock repurchases, though the company believes its liquidity remains sufficient Cash Flow Summary (Six Months Ended Sep 30, in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $354 | $471 | | Net cash used in investing activities | ($115) | ($107) | | Net cash used in financing activities | ($948) | ($833) | - During the six months ended September 30, 2024, the company returned **$851 million** to stockholders, consisting of **$750 million** in share repurchases and **$101 million** in dividends[210](index=210&type=chunk) - The company has a **$500 million unsecured revolving credit facility**, which was undrawn as of September 30, 2024[208](index=208&type=chunk) - As of September 30, 2024, approximately **$857 million** of cash and cash equivalents were held in foreign jurisdictions, all of which is available for repatriation without material tax cost[211](index=211&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates and interest rates, using hedging strategies for currency risk and managing its short-term investment portfolio for interest rate risk - The company is exposed to **foreign currency risk** from international sales, where a strengthening U.S. dollar negatively impacts reported international net revenue[217](index=217&type=chunk) - EA uses **foreign currency forward contracts** to hedge a portion of forecasted foreign-currency-denominated sales and expenses and to mitigate risk from foreign-currency-denominated monetary assets and liabilities[218](index=218&type=chunk)[219](index=219&type=chunk) - A hypothetical adverse **10% foreign currency exchange rate movement** would result in a potential decline of **$229 million** in the fair value of cash flow hedges[221](index=221&type=chunk) - Interest rate risk primarily affects the short-term investment portfolio, where a hypothetical **150 basis point increase** in interest rates would decrease the fair market value by approximately **$3 million**[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of September 30, 2024[227](index=227&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that materially affected or are reasonably likely to materially affect such controls[228](index=228&type=chunk) [Part II - OTHER INFORMATION](index=46&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various claims and litigation in the ordinary course of business, which management does not expect to have a material adverse effect on its financial statements - The company is subject to claims and litigation arising in the ordinary course of business but does not expect any reasonably foreseeable disposition to have a **material adverse effect** on its financial statements[92](index=92&type=chunk)[231](index=231&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section outlines the company's strategic, operational, legal, financial, and general risks, including intense competition, cybersecurity threats, regulatory compliance, and economic volatility [Strategic Risks](index=46&type=section&id=STRATEGIC%20RISKS) The company faces strategic risks from intense competition, reliance on a few popular franchises, potential failure to meet development schedules, and dependence on third-party intellectual property and partners - The business is intensely competitive, and a significant portion of revenue is derived from a few popular franchises, such as **EA SPORTS FC**, making the company vulnerable to the underperformance of a single major title[233](index=233&type=chunk)[235](index=235&type=chunk) - Failure to meet product development schedules can lead to **delayed revenue**, **increased expenses**, and harm to profitability, especially if key selling periods are missed[236](index=236&type=chunk)[237](index=237&type=chunk) - The business depends on the success of **third-party consoles and platforms**, and the ability to acquire and maintain licenses for key intellectual property (e.g., sports leagues, Star Wars) is critical[245](index=245&type=chunk)[252](index=252&type=chunk) [Operational Risks](index=49&type=section&id=OPERATIONAL%20RISKS) Operational risks include disruption from catastrophic events, security breaches, service outages, and challenges in retaining key talent, alongside significant reliance on major platform partners - The company has experienced and may continue to experience **security breaches and cyber threats**, which could lead to loss of data, business interruptions, and damage to brand reputation[256](index=256&type=chunk)[258](index=258&type=chunk) - The business depends on the ability to attract, train, and retain **key executive, technical, and creative talent** in a highly competitive market[262](index=262&type=chunk) - A significant percentage of digital net revenue comes from partners like **Sony, Microsoft, Apple, and Google**, who have significant control over distribution, promotion, and fees, exposing EA to risks associated with their businesses and policies[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) [Legal and Compliance Risks](index=51&type=section&id=LEGAL%20AND%20COMPLIANCE%20RISKS) Legal and compliance risks include complex and evolving global regulations on data privacy and consumer protection, increased scrutiny on virtual items and AI, and challenges related to intellectual property infringement and protection - The business is subject to **complex and evolving global data privacy, security, and consumer-protection laws**, and non-compliance could result in significant penalties and brand damage[268](index=268&type=chunk)[269](index=269&type=chunk) - Business models involving **virtual items** and the use of **artificial intelligence** are subject to evolving laws and regulations that could limit offerings or increase compliance costs[273](index=273&type=chunk) - The company may be subject to costly claims of infringing **third-party intellectual property rights** and faces challenges in protecting its own IP from unauthorized copying, particularly in certain foreign countries[275](index=275&type=chunk)[279](index=279&type=chunk) [Financial Risks](index=53&type=section&id=FINANCIAL%20RISKS) Financial risks include exposure to foreign currency fluctuations, the impact of outstanding debt on cash flow, and potential adverse effects from changes in tax laws or audit outcomes - With **60% of total net revenue from international sales** in FY24, the company is significantly exposed to foreign currency exchange rate fluctuations[280](index=280&type=chunk) - The company has outstanding **senior notes and a credit facility**, and this indebtedness could impact financial condition by requiring dedication of cash flow to repayment and increasing vulnerability to downturns[281](index=281&type=chunk) - Changes in tax laws or interpretations, particularly in the **U.S. and Switzerland**, could adversely affect the company's effective tax rate and financial condition[283](index=283&type=chunk)[284](index=284&type=chunk) [General Risks](index=54&type=section&id=GENERAL%20RISKS) General risks include exposure to macroeconomic conditions like inflation and recession impacting consumer spending, and the inherent volatility of the company's stock price - The business is subject to **macroeconomic conditions** like inflation and recession that can negatively impact discretionary consumer spending[288](index=288&type=chunk) - The company's **stock price is historically volatile** and subject to significant fluctuations due to operating results, analyst estimates, and general market conditions[290](index=290&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) A new **$5.0 billion** stock repurchase program was authorized in May 2024, under which the company repurchased approximately **2.6 million shares** for **$375 million** during the quarter - In May 2024, the company authorized a new stock repurchase program for up to **$5.0 billion**, expiring May 9, 2027[291](index=291&type=chunk) Share Repurchases (Three Months Ended Sep 30, 2024) | Period | Total Shares Purchased | Average Price Paid | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | **Total for Quarter** | **2,587,975** | **$144.83** | **$375 million** | [Item 3. Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[292](index=292&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[298](index=298&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) This section discloses that several company executives adopted Rule 10b5-1 trading plans during the quarter to manage their personal equity holdings - CEO **Andrew Wilson**, CFO **Stuart Canfield**, and President of EA Entertainment & Technology **Laura Miele** each adopted a Rule 10b5-1 trading plan during the quarter[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q report, including corporate governance documents, CEO and CFO certifications, and financial data in Inline XBRL format - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the **Sarbanes-Oxley Act**[302](index=302&type=chunk) - Financial statements and notes are provided in **Inline XBRL format** as part of the exhibits[302](index=302&type=chunk)

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [1][2] - The news team covers a wide range of sectors including biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] - Proactive has a presence in key finance and investing hubs with bureaus and studios located in major cities such as London, New York, and Sydney [2] Group 2 - The company utilizes technology to enhance workflows and has adopted automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [4]