Electronic Arts(EA) - 2025 Q1 - Quarterly Results

Q1 FY25 Performance Highlights Executive Summary Electronic Arts reported a strong start to fiscal year 2025, with Q1 results exceeding expectations, driven by strong live services performance and successful game launches - EA delivered a strong start to FY25, beating net bookings guidance, driven by live services and continued player engagement[1] - The successful launch of EA SPORTS College Football 25 and upcoming titles are expected to build momentum for FY25 and beyond[1] Operating Highlights Q1 operating performance was robust, with net bookings reaching $1.262 billion, exceeding guidance, fueled by strong Madden NFL 24, FC Online, and FC Mobile results Q1 FY25 Key Operating Metrics | Metric | Value | Driver | | :--- | :--- | :--- | | Net Bookings | $1.262 billion | Stronger performance from Madden NFL 24, FC Online, and FC Mobile | - EA SPORTS Madden NFL showed sustained momentum, with weekly average users in Ultimate Team and total net bookings up double digits year-over-year[2] - Post-quarter, EA SPORTS College Football 25 attracted 5 million unique players in its first week, with an additional 500,000 playing via the EA Play trial[2] Financial Highlights For Q1, EA reported net revenue of $1.660 billion and $120 million in operating cash flow, while repurchasing 2.8 million shares for $375 million Q1 FY25 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Revenue | $1.660 billion | | Net Cash from Operating Activities | $120 million | | Trailing Twelve Months OCF | $2.076 billion | Shareholder Returns Dividend and Share Repurchases EA declared a quarterly cash dividend of $0.19 per share and actively repurchased 2.8 million shares for $375 million during the quarter - A quarterly cash dividend of $0.19 per share was declared, payable on September 18, 2024[4] Share Repurchase Activity | Period | Shares Repurchased (millions) | Value ($ millions) | | :--- | :--- | :--- | | Q1 FY25 | 2.8 | 375 | | TTM Ended June 30, 2024 | 10.2 | 1,350 | Financial Results Selected Financial Highlights This section provides a comparative overview of key financial metrics for the three and twelve months ending June 30, 2024, versus the same periods in 2023 Q1 Financial Highlights (Three Months Ended June 30) | Metric (in $ millions, except per share) | 2024 | 2023 | | :--- | :--- | :--- | | Total net revenue | 1,660 | 1,924 | | Net income | 280 | 402 | | Diluted earnings per share | 1.04 | 1.47 | | Operating cash flow | 120 | 359 | Trailing Twelve Months Financial Highlights (Ended June 30) | Metric (in $ millions) | 2024 | 2023 | | :--- | :--- | :--- | | Total net revenue | 7,298 | 7,583 | | Net income | 1,151 | 893 | | Operating cash flow | 2,076 | 1,987 | Net Bookings Calculation (in $ millions) | Period | Total Net Revenue | Change in Deferred Net Revenue | Total Net Bookings | | :--- | :--- | :--- | :--- | | Q1 FY25 | 1,660 | (398) | 1,262 | | Q1 FY24 | 1,924 | (346) | 1,578 | Consolidated Statements of Operations For Q1 FY25, net revenue decreased to $1.660 billion, resulting in a net income of $280 million or $1.04 per diluted share, down from the prior year Q1 FY25 Statement of Operations (in $ millions, except per share) | Line Item | Q1 FY25 | Q1 FY24 | | :--- | :--- | :--- | | Net Revenue | 1,660 | 1,924 | | Gross Profit | 1,397 | 1,556 | | Operating Income | 364 | 542 | | Net Income | 280 | 402 | | Diluted EPS | $1.04 | $1.47 | Consolidated Balance Sheets As of June 30, 2024, EA's balance sheet shows total assets of $12.708 billion, with cash and cash equivalents at $2.400 billion, and total stockholders' equity at $7.400 billion Balance Sheet Highlights (in $ millions) | Account | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 2,400 | 2,900 | | Total current assets | 3,587 | 4,247 | | TOTAL ASSETS | 12,708 | 13,420 | | Total current liabilities | 2,468 | 3,090 | | TOTAL LIABILITIES | 5,308 | 5,907 | | Total stockholders' equity | 7,400 | 7,513 | Consolidated Statements of Cash Flows For Q1 FY25, operating cash flow was $120 million, with significant cash usage in financing activities, leading to a $500 million decrease in cash and cash equivalents Q1 FY25 Cash Flow Summary (in $ millions) | Activity | Q1 FY25 | Q1 FY24 | | :--- | :--- | :--- | | Net cash provided by operating activities | 120 | 359 | | Net cash used in investing activities | (69) | (44) | | Net cash used in financing activities | (546) | (482) | | Change in cash and cash equivalents | (500) | (165) | Supplemental Financial Information Q1 FY25 net revenue composition shows 85% from live services and 15% from full game sales, with console remaining the largest platform Q1 FY25 Net Revenue by Composition (in $ millions) | Composition | Q1 FY25 | Q1 FY24 | YoY % Change | | :--- | :--- | :--- | :--- | | Full game | 250 | 443 | (44%) | | Live services and other | 1,410 | 1,481 | (5%) | | Total net revenue | 1,660 | 1,924 | (14%) | - The composition of net revenue in Q1 FY25 was 85% from Live services and other, and 15% from Full game sales[29] Q1 FY25 Net Revenue by Platform (in $ millions) | Platform | Q1 FY25 | Q1 FY24 | YoY % Change | | :--- | :--- | :--- | :--- | | Console | 1,005 | 1,167 | (14%) | | PC & Other | 365 | 451 | (19%) | | Mobile | 290 | 306 | (5%) | Business Outlook Fiscal Year 2025 Guidance Electronic Arts provided its financial outlook for the full fiscal year 2025, projecting net bookings between $7.300 billion and $7.700 billion FY2025 Full Year Guidance | Metric | Expected Range (in billions, except per share) | | :--- | :--- | | Net Bookings | $7.300 to $7.700 | | Net Revenue | $7.100 to $7.500 | | Net Income | $0.904 to $1.085 | | Diluted EPS | $3.34 to $4.00 | | Operating Cash Flow | $2.050 to $2.250 | Second Quarter FY25 Guidance For Q2 FY25, EA anticipates net bookings between $1.950 billion and $2.050 billion, with net revenue expected in the range of $1.900 billion to $2.000 billion Q2 FY2025 Guidance | Metric | Expected Range (in billions, except per share) | | :--- | :--- | | Net Bookings | $1.950 to $2.050 | | Net Revenue | $1.900 to $2.000 | | Net Income | $0.204 to $0.248 | | Diluted EPS | $0.76 to $0.93 | GAAP to Non-GAAP Reconciliation Reconciliation of Financial Measures This section details the reconciliation from GAAP to non-GAAP financial measures for historical results and future guidance, adjusting for specific non-core items Q1 GAAP to Non-GAAP Operating Income Reconciliation (in $ millions) | Line Item | Q1 FY25 | Q1 FY24 | | :--- | :--- | :--- | | GAAP operating income | 364 | 542 | | Acquisition-related expenses | 27 | 41 | | Restructuring and related charges | 6 | 3 | | Stock-based compensation | 143 | 130 | | Non-GAAP operating income | 540 | 716 | FY25 Guidance - GAAP vs. Non-GAAP Operating Margin | Metric | GAAP Range | Non-GAAP Range | | :--- | :--- | :--- | | Operating Margin | 18.0% to 20.6% | 29.6% to 31.7% | - The company uses an internal tax rate of 19% to evaluate operating performance and for forecasting purposes[35][37][39] Supporting Information Conference Call and Forward-Looking Statements This section provides investor conference call details and a standard disclaimer regarding forward-looking statements, which are subject to risks and uncertainties - An investor conference call was held on July 30, 2024, to discuss the financial results, with replays available[11][12] - The report includes forward-looking statements regarding future performance, which are not guarantees and are subject to risks and uncertainties[13][14] About Electronic Arts and Non-GAAP Measures This section provides a corporate overview of Electronic Arts as a global leader in digital interactive entertainment and explains the rationale for using non-GAAP financial measures - Electronic Arts is a global leader in digital interactive entertainment, with key brands like EA SPORTS FC™, Apex Legends™, and The Sims™[16] - The company uses non-GAAP financial measures to supplement GAAP results, excluding items like acquisition-related expenses, stock-based compensation, and restructuring charges to better evaluate core operating performance[38]