Electronic Arts(US:EA)2026-02-03 22:05Financial Performance - Total net revenue for the fiscal quarter ended December 31, 2025, was $1,901 million, representing a 1% year-over-year increase[127]. - Net revenue for the three months ended December 31, 2025 was $1,901 million, an increase of $18 million or 1% compared to the same period in 2024[158]. - Net revenue for the nine months ended December 31, 2025 was $5,411 million, a decrease of $157 million compared to the same period in 2024, driven by a $523 million decrease in net revenue from extra content sales for Apex Legends[165]. - Total net revenue for the nine months ended December 31, 2025, was $5,411 million, a decrease of $157 million or 3% compared to $5,568 million in 2024[166]. Revenue Breakdown - Live services and other net revenue was $1,269 million, down 1% year-over-year, while gross margin decreased by 2 percentage points to 73.8%[127]. - Net revenue attributable to live services and other was $5,330 million for the trailing twelve months ended December 31, 2025, with extra content contributing $4,116 million[122]. - Full game net revenue for the three months ended December 31, 2025 was $632 million, a 6% increase of $33 million compared to the same period in 2024, driven by the release of Battlefield 6[161]. - Live services and other net revenue for the three months ended December 31, 2025 was $1,269 million, a decrease of $15 million or 1% compared to the same period in 2024, primarily due to decreased sales of extra content for Apex Legends[164]. - Full game downloads for the three months ended December 31, 2025 increased by $100 million or 22% to $546 million compared to the same period in 2024[159]. - Packaged goods revenue for the three months ended December 31, 2025 decreased by $67 million or 44% to $86 million compared to the same period in 2024[159]. - Full game net revenue decreased by $26 million or 2% to $1,539 million for the nine months ended December 31, 2025, primarily due to declines in EA SPORTS College Football and EA SPORTS FC[167]. - Live services and other net revenue decreased by $131 million or 3% to $3,872 million for the nine months ended December 31, 2025, driven by lower sales of extra content for Apex Legends and Ultimate Team[168]. Operating Income and Expenses - Operating income for the quarter was $127 million, down 66% year-over-year, with operating expenses increasing by 22% to $1,276 million[127]. - Research and development expenses increased by $213 million or 11% to $2,096 million for the nine months ended December 31, 2025, primarily due to higher personnel-related costs[177]. - Marketing and sales expenses increased by $146 million or 20% to $356 million for the nine months ended December 31, 2025, mainly due to higher spending related to Battlefield 6[180]. - General and administrative expenses increased by $19 million or 3% to $572 million for the nine months ended December 31, 2025, primarily due to merger-related expenses[183]. Cash Flow and Financial Position - Net cash provided by operating activities was $1,826 million, reflecting a 55% increase year-over-year[127]. - Net cash provided by operating activities increased by $443 million to $1,973 million for the nine months ended December 31, 2025, driven by higher cash collections from sales[188]. - Cash and cash equivalents as of December 31, 2025, were $2,784 million, an increase of $648 million from $2,136 million as of March 31, 2025[187]. - The company believes its cash, cash equivalents, and available financing facilities will be sufficient to meet material cash requirements for the next 12 months and beyond[196]. - The company may choose to raise additional capital to strengthen its financial position and pursue strategic acquisitions, although there is no assurance that such capital will be available on favorable terms[196]. Mergers and Acquisitions - The proposed merger with the Consortium was announced on September 28, 2025, which may impact future financial performance[120]. - The company has a shelf registration statement on file with the SEC, allowing it to offer securities for general corporate purposes, including funding for working capital and potential acquisitions[199]. Tax and Regulatory Matters - The effective tax rate for the nine months ended December 31, 2025, was 29%, with a provision for income taxes of $175 million, down from $331 million in 2024[186]. Risk Management - A hypothetical adverse foreign currency exchange rate movement of 10% could result in potential declines of $221 million in the fair value of foreign currency forward contracts used in cash flow hedging[207]. - A hypothetical 150 basis point increase in interest rates would result in a $1 million, or 1%, decrease in the fair market value of the company's short-term investments as of December 31, 2025[210]. - The company employs foreign currency forward contracts to hedge anticipated exposures, but these activities may not fully protect against currency fluctuations[204]. - The company does not have any off-balance sheet arrangements as of December 31, 2025[201].