Electronic Arts (EA) Q1 Earnings and Revenues Decline Y/Y

Core Insights - Electronic Arts (EA) reported a significant decline in first-quarter fiscal 2025 earnings, with earnings per share at 52 cents, down 54.4% year over year, and revenues decreased by 13.7% to $1.26 billion due to weaknesses in Live services and full-game revenues [1][2] Financial Performance - Net bookings for the fiscal first quarter were $1.262 billion, reflecting a 20% year-over-year decline in both actual and constant currency [1] - Full-game revenues, accounting for 15.1% of total revenues, fell 43.6% year over year to $250 million, with full-game download revenues down 37% to $190 million and packaged goods revenues plunging 58% to $60 million [2] - Live services and other revenues, which represent 84.9% of total revenues, decreased 4.8% year over year to $1.41 billion [2] - Operating income on a GAAP basis decreased 32.8% year over year to $364 million, with an operating margin contraction of 620 basis points to 21.9% [5] Gaming Metrics - EA SPORTS Madden NFL showed strong performance, driven by new in-game innovations that enhanced player acquisition and engagement [3] - EA SPORTS FC franchise results were better than expected but down compared to the previous year, which had benefited from World Cup-related growth [3] - EA SPORTS College Football achieved record engagement in its first week, contributing to the expansion of the EA SPORTS community [3] Operating Details - EA's GAAP gross profit declined 10.2% year over year to $1.39 billion, while gross margin expanded by 330 basis points to 84.2% [5] - Operating expenses increased by 1.9% year over year to $1.03 billion, with operating expenses as a percentage of revenues rising by 950 basis points to 62.2% [5] Balance Sheet and Cash Flow - As of June 30, 2024, EA had $2.76 billion in cash and short-term investments, down from $3.2 billion as of March 31, 2024 [6] - The company repurchased 2.8 million shares for $375 million during the quarter, totaling 10.2 million shares for $1.350 billion over the trailing 12 months [6] - EA declared a quarterly cash dividend of 19 cents per share, payable on September 18, 2024 [6] Guidance - For the second quarter of fiscal 2025, EA expects GAAP revenues between $1.9 billion and $2 billion, with earnings per share projected in the range of 76-93 cents [7] - For fiscal 2025, EA anticipates revenues between $7.1 billion and $7.5 billion and net bookings between $7.3 billion and $7.7 billion [7]