Electronic Arts(EA) - 2026 Q1 - Quarterly Results

Q1 FY26 Earnings Release Overview Management Commentary Management reported a strong Q1 FY26, exceeding expectations with resilient live services and player engagement, while reaffirming full-year guidance - CEO Andrew Wilson noted a strong start to FY26, exceeding expectations, with deepening player engagement in EA SPORTS and anticipation for Battlefield 6 and skate. launches[3] - CFO Stuart Canfield confirmed Q1 performance surpassed the high end of guidance, attributing success to resilient live services and a broad portfolio, maintaining confidence in full-year guidance and long-term margin framework[3] Selected Operating and Financial Highlights EA achieved strong Q1 FY26 performance with $1.298 billion in net bookings, driven by EA SPORTS and Apex Legends, alongside a declared dividend and share repurchases Q1 FY26 Selected Financial Highlights | Metric | Value | | :----- | :---- | | Net bookings | $1.298 billion | | Net revenue | $1.671 billion | | Net cash provided by operating activities (Q1) | $17 million | | Net cash provided by operating activities (TTM) | $1.976 billion | | Shares repurchased (Q1) | 3.0 million | | Value of shares repurchased (Q1) | $375 million | | Shares repurchased (TTM) | 17.8 million | | Value of shares repurchased (TTM) | $2.500 billion | - Q1 performance saw better-than-expected contributions from many areas in our portfolio, including EA SPORTS, Apex Legends, and catalog[6] - Global Football delivered year-over-year growth in net bookings, highlighted by a record quarter in FC Mobile net bookings[6] - EA declared a quarterly cash dividend of $0.19 per share, payable on September 17, 2025, to stockholders of record as of August 27, 2025[5] Business Outlook Fiscal Year 2026 Expectations EA's FY26 outlook remains unchanged, projecting $7.6 billion to $8.0 billion in net bookings and a commitment to return at least 80% of free cash flow to shareholders - The outlook for fiscal year 2026 provided on May 6, 2025, remains unchanged[7] FY26 Financial Expectations | Metric | Range (in $ millions, except EPS) | | :----- | :-------------------------------- | | Net bookings | $7,600 - $8,000 | | Net revenue | $7,100 - $7,500 | | GAAP operating expenses | $4,470 - $4,570 | | Net income | $795 - $974 | | Diluted earnings per share | $3.09 - $3.79 | | Operating cash flow | $2,200 - $2,400 | - The Company intends to return at least 80% of free cash flow with stock repurchases and dividends through fiscal year 2027[9] Q2 Fiscal Year 2026 Expectations Q2 FY26 guidance projects net bookings of $1.8 billion to $1.9 billion, factoring in Madden NFL 26 launch, Apex Legends momentum, and a content phasing headwind Q2 FY26 Financial Expectations | Metric | Range (in $ millions, except EPS) | | :----- | :-------------------------------- | | Net bookings | $1,800 - $1,900 | | Net revenue | $1,750 - $1,850 | | GAAP operating expenses | $1,215 - $1,235 | | Net income | $73 - $117 | | Diluted earnings per share | $0.29 - $0.46 | - The Company expects a more normalized curve for College Football full game sales, partially offset by the launch of Madden NFL 26, with early momentum in Apex Legends and catalog continuing[9] - This guidance includes a four-point year-over-year headwind related to phasing of the EA SPORTS FC 26 Ultimate Edition content, which will largely be recognized in Q3[9] - Year-over-year growth in expenses is largely driven by marketing related to upcoming launches, notably Battlefield 6[9] Financial Performance Highlights Quarterly Financial Highlights (Q1 FY26 vs Q1 FY25) Q1 FY26 saw a slight 0.7% increase in total net revenue to $1.671 billion, but net income decreased by 28.2% to $201 million, with diluted EPS falling by 24.0% Q1 FY26 vs Q1 FY25 Financial Highlights | Metric (in $ millions, except per share) | Q1 FY26 (June 30, 2025) | Q1 FY25 (June 30, 2024) | YoY Change | | :--------------------------------------- | :---------------------- | :---------------------- | :--------- | | Full game net revenue | $289 | $250 | +15.6% | | Live services and other net revenue | $1,382 | $1,410 | -2.0% | | Total net revenue | $1,671 | $1,660 | +0.7% | | Net income | $201 | $280 | -28.2% | | Diluted earnings per share | $0.79 | $1.04 | -24.0% | | Operating cash flow | $17 | $120 | -85.8% | | Value of shares repurchased | $375 | $375 | 0.0% | | Number of shares repurchased | 3.0 | 2.8 | +7.1% | | Cash dividend paid | $48 | $50 | -4.0% | Trailing Twelve Months Financial Highlights (TTM FY26 vs TTM FY25) TTM FY26 total net revenue increased by 2.4% to $7.474 billion, while net income decreased by 9.5% to $1.042 billion, and share repurchases significantly increased TTM FY26 vs TTM FY25 Financial Highlights | Metric (in $ millions) | TTM FY26 (June 30, 2025) | TTM FY25 (June 30, 2024) | YoY Change | | :--------------------- | :----------------------- | :----------------------- | :--------- | | Full game net revenue | $2,041 | $1,822 | +12.0% | | Live services and other net revenue | $5,433 | $5,476 | -0.8% | | Total net revenue | $7,474 | $7,298 | +2.4% | | Net income | $1,042 | $1,151 | -9.5% | | Operating cash flow | $1,976 | $2,076 | -4.8% | | Value of shares repurchased | $2,500 | $1,350 | +85.2% | | Number of shares repurchased | 17.8 | 10.2 | +74.5% | Operating Metric: Total Net Bookings Total net bookings for Q1 FY26 increased by 2.9% to $1.298 billion, with TTM net bookings growing by 3.9% to $7.391 billion, reflecting adjustments for deferred net revenue Total Net Bookings (in $ millions) (Q1 & TTM) | Metric (in $ millions) | Q1 FY26 | Q1 FY25 | TTM FY26 | TTM FY25 | | :--------------------- | :------ | :------ | :------- | :------- | | Total net revenue | $1,671 | $1,660 | $7,474 | $7,298 | | Change in deferred net revenue (online-enabled games) | ($373) | ($398) | ($83) | ($184) | | Total net bookings | $1,298 | $1,262 | $7,391 | $7,114 | - Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period, calculated by adding total net revenue to the change in deferred net revenue for online-enabled games[21] Corporate Information Conference Call and Supporting Documents Electronic Arts will host a conference call on July 29, 2025, to discuss Q1 FY26 results and future outlook, with supporting documents available on its Investor Relations website - Electronic Arts will host a conference call on July 29, 2025, at 2:00 pm PT (5:00 pm ET) to review its results for the first fiscal quarter ended June 30, 2025, and its outlook for the future[13] - EA has posted a slide presentation with a financial model of EA's historical results and guidance on EA's IR Website, and will also post the prepared remarks and a transcript from the conference call[14] Forward-Looking Statements This section clarifies that certain statements are forward-looking and subject to material changes due to various factors, with EA assuming no obligation to update these preliminary estimates - Some statements in this release, including the information relating to EA's expectations under the heading 'Business Outlook as of July 29, 2025' and other information regarding EA's expectations, contain forward-looking statements that are subject to change[15] - Factors which could cause the Company's results to differ materially from its expectations include sales of products/services, ability to develop digital products, managing expenses, competition, governmental regulations, timely product releases, and economic conditions[16] - The preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts and could differ from the actual amounts that Electronic Arts ultimately reports in its Form 10-Q[18] About Electronic Arts Electronic Arts is a global leader in digital interactive entertainment, developing games and online services, reporting approximately $7.5 billion in GAAP net revenue in FY25, and known for critically acclaimed brands - Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment, developing and delivering games, content and online services for Internet-connected consoles, mobile devices and personal computers[19] - In fiscal year 2025, EA posted GAAP net revenue of approximately $7.5 billion[20] - 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®[20] Detailed GAAP Financial Statements Unaudited Condensed Consolidated Statements of Operations Q1 FY26 net revenue slightly increased to $1,671 million, but rising operating expenses led to a 25.6% decrease in operating income and a 28.2% decrease in net income Condensed Consolidated Statements of Operations (in $ millions, except per share) (Q1 FY26 vs Q1 FY25) | Metric (in $ millions, except per share) | Q1 FY26 (June 30, 2025) | Q1 FY25 (June 30, 2024) | YoY Change | | :--------------------------------------- | :---------------------- | :---------------------- | :--------- | | Net revenue | $1,671 | $1,660 | +0.7% | | Cost of revenue | $279 | $263 | +6.1% | | Gross profit | $1,392 | $1,397 | -0.4% | | Total operating expenses | $1,121 | $1,033 | +8.5% | | Operating income | $271 | $364 | -25.6% | | Income before provision for income taxes | $273 | $394 | -30.7% | | Net income | $201 | $280 | -28.2% | | Diluted earnings per share | $0.79 | $1.04 | -24.0% | Q1 FY26 Performance vs. Guidance and Prior Year EA's Q1 FY26 net revenue of $1,671 million exceeded guidance by $71 million, with income before tax outperforming by $62 million and diluted EPS by $0.21 Q1 FY26 Actuals vs. Guidance (Mid-Point) and Q1 FY25 Actuals | Metric (in $ millions, except per share) | Q1 FY26 Guidance (Mid-Point) | Variance to Guidance | Q1 FY26 Actuals | Q1 FY25 Actuals | | :--------------------------------------- | :--------------------------- | :------------------- | :-------------- | :-------------- | | Net revenue | $1,600 | $71 | $1,671 | $1,660 | | Cost of revenue | $275 | $4 | $279 | $263 | | Operating expenses | $1,115 | $6 | $1,121 | $1,033 | | Income before tax | $211 | $62 | $273 | $394 | | Diluted earnings per share | $0.58 | $0.21 | $0.79 | $1.04 | Unaudited Condensed Consolidated Balance Sheets Total assets decreased to $11,699 million as of June 30, 2025, primarily due to lower cash and deferred net revenue, leading to a reduced total stockholders' equity Condensed Consolidated Balance Sheets (in $ millions) (June 30, 2025 vs March 31, 2025) | Metric (in $ millions) | June 30, 2025 | March 31, 2025 | QoQ Change | | :--------------------- | :------------ | :------------- | :--------- | | Cash and cash equivalents | $1,518 | $2,136 | -$618 | | Total current assets | $2,545 | $3,276 | -$731 | | Total assets | $11,699 | $12,368 | -$669 | | Deferred net revenue (online-enabled games) | $1,334 | $1,700 | -$366 | | Total current liabilities | $3,040 | $3,459 | -$419 | | Total liabilities | $5,617 | $5,982 | -$365 | | Total stockholders' equity | $6,082 | $6,386 | -$304 | Unaudited Condensed Consolidated Statements of Cash Flows Q1 FY26 net cash from operating activities significantly decreased to $17 million, driven by deferred net revenue changes, while cash used in investing and financing activities also rose Condensed Consolidated Statements of Cash Flows (in $ millions) (Q1 FY26 vs Q1 FY25) | Metric (in $ millions) | Q1 FY26 (June 30, 2025) | Q1 FY25 (June 30, 2024) | YoY Change | | :--------------------- | :---------------------- | :---------------------- | :--------- | | Net cash provided by operating activities | $17 | $120 | -$103 | | Net cash used in investing activities | ($89) | ($69) | -$20 | | Net cash used in financing activities | ($568) | ($546) | -$22 | | Change in cash and cash equivalents | ($618) | ($500) | -$118 | | Ending cash and cash equivalents | $1,518 | $2,400 | -$882 | Supplemental Financial Information and Business Metrics This section details quarterly and TTM trends for financial metrics, showing a slight Q1 FY26 total net revenue increase driven by full game downloads, despite a minor live services revenue decline Quarterly Performance Trends Q1 FY26 net revenue increased by 1% to $1,671 million, but operating income decreased by 26% and net income by 28%, with diluted EPS down by 24% Quarterly Financial Performance Trends (in $ millions, except per share) (Q1 FY25 - Q1 FY26) | Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | YoY % Change (Q1) | | :----- | :------ | :------ | :------ | :------ | :------ | :---------------- | | Net revenue | $1,660 | $2,025 | $1,883 | $1,895 | $1,671 | 1 % | | Gross profit | $1,397 | $1,569 | $1,427 | $1,527 | $1,392 | — | | Gross profit (as a % of net revenue) | 84 % | 78 % | 76 % | 81 % | 83 % | | | Operating income | $364 | $384 | $377 | $395 | $271 | (26 %) | | Operating income (as a % of net revenue) | 22 % | 19 % | 20 % | 21 % | 16 % | | | Net income | $280 | $294 | $293 | $254 | $201 | (28 %) | | Net income (as a % of net revenue) | 17 % | 15 % | 16 % | 13 % | 12 % | | | Diluted earnings per share | 1.04 | 1.11 | 1.11 | 0.98 | 0.79 | (24 %) | Quarterly Net Revenue by Composition and Platform Q1 FY26 full game net revenue rose 16% to $289 million due to downloads, while live services slightly declined, and console remained the largest platform with stable revenue Quarterly Net Revenue by Composition (in $ millions) (Q1 FY25 - Q1 FY26) | Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | YoY % Change (Q1) | | :----- | :------ | :------ | :------ | :------ | :------ | :---------------- | | Full game downloads | $190 | $475 | $446 | $367 | $233 | 23 % | | Packaged goods | $60 | $241 | $153 | $70 | $56 | (7 %) | | Full game | $250 | $716 | $599 | $437 | $289 | 16 % | | Live services and other | $1,410 | $1,309 | $1,284 | $1,458 | $1,382 | (2 %) | | Total net revenue | $1,660 | $2,025 | $1,883 | $1,895 | $1,671 | 1 % | Quarterly Net Revenue by Platform (in $ millions) (Q1 FY25 - Q1 FY26) | Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | YoY % Change (Q1) | | :----- | :------ | :------ | :------ | :------ | :------ | :---------------- | | Console | $1,005 | $1,374 | $1,215 | $1,182 | $1,007 | — | | PC & Other | $365 | $364 | $392 | $426 | $374 | 2 % | | Mobile | $290 | $287 | $276 | $287 | $290 | — | | Total net revenue | $1,660 | $2,025 | $1,883 | $1,895 | $1,671 | 1 % | Cash Flow and Balance Sheet Data Q1 FY26 operating cash flow significantly decreased to $17 million, with TTM operating cash flow down 5% to $1,976 million, and total cash and short-term investments declining 41% Cash Flow Data (in $ millions) (Q1 FY25 - Q1 FY26) | Metric (in $ millions) | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | YoY % Change (Q1) | | :--------------------- | :------ | :------ | :------ | :------ | :------ | :---------------- | | Operating cash flow | $120 | $234 | $1,176 | $549 | $17 | | | Operating cash flow - TTM | $2,076 | $2,198 | $2,110 | $2,079 | $1,976 | (5 %) | | Capital expenditures | $67 | $50 | $50 | $54 | $72 | | | Free cash flow | $53 | $184 | $1,126 | $495 | ($55) | | | Free cash flow - TTM | $1,855 | $1,978 | $1,892 | $1,858 | $1,750 | (6 %) | | Common stock repurchases and excise taxes paid | $375 | $375 | $383 | $1,375 | $375 | — | | Cash dividends paid | $50 | $51 | $50 | $48 | $48 | (4 %) | Balance Sheet Data (in $ millions) (Q1 FY25 - Q1 FY26) | Metric (in $ millions) | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | YoY % Change (Q1) | | :--------------------- | :------ | :------ | :------ | :------ | :------ | :---------------- | | Cash and cash equivalents | $2,400 | $2,197 | $2,776 | $2,136 | $1,518 | | | Short-term investments | $366 | $366 | $379 | $112 | $112 | | | Cash and cash equivalents, and short-term investments | $2,766 | $2,563 | $3,155 | $2,248 | $1,630 | (41 %) | | Receivables, net | $433 | $1,012 | $742 | $679 | $533 | 23 % | Non-GAAP Financial Measures and Reconciliations Reconciliation of GAAP to Non-GAAP Operating Income (Q1 FY26 vs Q1 FY25) Q1 FY26 non-GAAP operating income decreased by 17% to $450 million, with the non-GAAP operating margin falling to 26.9%, after adjusting for acquisition-related expenses and stock-based compensation GAAP to Non-GAAP Operating Income Reconciliation (in $ millions, except percentages) (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 (June 30, 2025) | Q1 FY25 (June 30, 2024) | YoY % Change | | :----- | :---------------------- | :---------------------- | :----------- | | Net revenue | $1,671 | $1,660 | 1% | | GAAP operating income | $271 | $364 | (26%) | | Acquisition-related expenses | $27 | $27 | | | Restructuring and related charges | — | $6 | | | Stock-based compensation | $152 | $143 | | | Non-GAAP operating income | $450 | $540 | (17%) | | GAAP operating margin | 16.2% | 21.9% | | | Non-GAAP operating margin | 26.9% | 32.5% | | GAAP to Non-GAAP Guidance Reconciliation (FY26) FY26 non-GAAP net revenue is projected between $7.1 billion and $7.5 billion, with an operating margin of 27.2% to 29.2%, after adjusting for acquisition-related expenses and deferred net revenue FY26 GAAP to Non-GAAP Guidance Reconciliation | Metric (in $ millions) | GAAP Guidance Range | Non-GAAP Guidance Range | | :--------------------- | :------------------ | :---------------------- | | Net revenue | $7,100 to $7,500 | $7,100 to $7,500 | | Cost of revenue | $1,475 to $1,515 | $1,420 to $1,460 | | Operating expense | $4,470 to $4,570 | $3,750 to $3,850 | | Operating margin | 16.3% to 18.9% | 27.2% to 29.2% | | Income before provision for income taxes | $1,136 to $1,391 | $1,911 to $2,166 | - Non-GAAP adjustments for FY26 guidance include acquisition-related expenses, stock-based compensation, and the change in deferred net revenue (online-enabled games)[38] GAAP-Based Financial Data for Q2 FY26 Guidance Q2 FY26 GAAP net revenue is projected between $1.75 billion and $1.85 billion, with net income of $73 million to $117 million, including adjustments for acquisition-related expenses and deferred net revenue Q2 FY26 GAAP Guidance with Adjustments | Metric (in $ millions) | GAAP Guidance Range | Acquisition-related expenses | Stock-based compensation | Change in deferred net revenue (online enabled games) | | :--------------------- | :------------------ | :--------------------------- | :----------------------- | :---------------------------------------------------- | | Net revenue | $1,750 to $1,850 | — | — | $50 | | Cost of revenue | $430 to $450 | ($10) | ($5) | — | | Operating expense | $1,215 to $1,235 | ($20) | ($170) | — | | Income before provision for income taxes | $104 to $167 | $30 | $175 | $50 | | Net income | $73 to $117 | | | | Explanation of Non-GAAP Financial Measures EA utilizes non-GAAP financial measures, including non-GAAP operating margin and free cash flow, to supplement GAAP, offering investors additional insights into core business performance by excluding non-recurring or non-operational items - Non-GAAP financial measures are presented as a supplement to GAAP to provide investors with additional useful information to better understand and evaluate the Company's operating results and future prospects[42] - These non-GAAP financial measures exclude acquisition-related expenses, stock-based compensation, restructuring and related charges, and capital expenditures, as applicable, which management believes may not be indicative of the Company's core business[43] - The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan, and analyze future periods[44]