Electronic Arts Reports Strong Q1 FY25 Results

Rhea-AI Summary

Electronic Arts (EA) reported strong Q1 FY25 results, beating net bookings guidance with $1.262 billion. Key highlights include:

- EA SPORTS College Football 25 welcomed 5 million unique players in its first week

- Madden NFL 24 saw double-digit growth in Ultimate Team weekly average users and total net bookings

- Dragon Age: The Veilguard gameplay reveal trended #1 on YouTube Gaming

EA declared a quarterly cash dividend of $0.19 per share. For FY25, EA expects net revenue of $7.100-$7.500 billion and net bookings of $7.300-$7.700 billion. The company repurchased 2.8 million shares for $375 million during Q1.

Positive

• Net bookings of $1.262 billion exceeded the high end of guidance
• EA SPORTS College Football 25 attracted 5 million unique players in its first week
• Madden NFL 24 saw double-digit growth in Ultimate Team weekly average users and total net bookings
• Dragon Age: The Veilguard gameplay reveal trended #1 on YouTube Gaming
• Quarterly cash dividend of $0.19 per share declared
• 2.8 million shares repurchased for $375 million during Q1

Negative

• Net revenue decreased from $1.924 billion in Q1 FY24 to $1.660 billion in Q1 FY25
• Net income decreased from $402 million in Q1 FY24 to $280 million in Q1 FY25
• Diluted earnings per share decreased from $1.47 in Q1 FY24 to $1.04 in Q1 FY25
• Operating cash flow decreased from $359 million in Q1 FY24 to $120 million in Q1 FY25

Financial Analyst

Electronic Arts' Q1 FY25 results demonstrate robust performance, with net bookings of $1.262 billion exceeding the high end of guidance. This outperformance was primarily driven by strong showings from Madden NFL 24, FC Online and FC Mobile. The company's focus on live services and player engagement is clearly paying dividends.

Key financial highlights include:

• Net revenue of $1.660 billion
• Net income of $280 million
• Diluted EPS of $1.04
• Operating cash flow of $120 million

While these figures represent year-over-year declines, it's important to note that Q1 is typically EA's weakest quarter due to the timing of major sports title releases. The company's outlook for Q2 and full-year FY25 suggests confidence in its pipeline, with projected net bookings of $7.300 billion to $7.700 billion for the full year.

EA's continued focus on share repurchases ($375 million in Q1) and dividends ($0.19 per share) demonstrates a commitment to returning value to shareholders. The strong launch of EA SPORTS College Football 25, attracting 5 million unique players in its first week, bodes well for the company's sports portfolio.

However, investors should monitor the performance of live services, which showed a slight year-over-year decline. As this segment is important for EA's long-term growth strategy, any sustained weakness could be a concern.

Market Research Analyst

EA's Q1 results and future outlook provide valuable insights into the gaming industry's current trends and consumer behavior. The success of live services and sports titles underscores the ongoing shift towards games-as-a-service models and the enduring popularity of sports franchises.

The record-breaking launch of EA SPORTS College Football 25 is particularly noteworthy. With 5 million unique players in its first week, it demonstrates the pent-up demand for college sports games and EA's ability to capitalize on untapped markets. This success could potentially open up new revenue streams and partnership opportunities in the collegiate sports arena.

The sustained momentum of Madden NFL, with weekly average users in Ultimate Team and total net bookings up double digits year-over-year, reinforces the strength of EA's sports portfolio. This is important as sports games often provide stable, recurring revenue through annual releases and in-game purchases.

The reveal of Dragon Age: The Veilguard gameplay trending #1 on YouTube Gaming indicates strong interest in EA's RPG offerings. This diversification across genres is important for mitigating risk and appealing to a broad range of gamers.

However, the slight year-over-year decline in live services revenue ($1.410 billion vs $1.481 billion) warrants attention. As the industry continues to shift towards this model, EA will need to innovate and engage players to maintain growth in this important segment.

Tech Expert

EA's Q1 results highlight the company's successful execution of its digital-first strategy. The strong performance of live services, particularly in sports titles, demonstrates EA's ability to leverage technology to create engaging, long-lasting player experiences.

The success of EA SPORTS FC's celebration of real-world tournaments, attracting tens of millions of new fans, showcases the power of integrating live events with digital experiences. This synergy between real-world sports and virtual gaming environments is a key differentiator for EA in the competitive gaming market.

The company's ability to drive engagement through Ultimate Team in Madden NFL, with double-digit growth in weekly average users, indicates effective use of data analytics and personalized content delivery. These engagement metrics are important for long-term player retention and monetization.

Looking ahead, the upcoming launch of Dragon Age: The Veilguard presents an opportunity for EA to showcase its technological capabilities in creating immersive RPG experiences. The strong initial reception, trending #1 on YouTube Gaming, suggests high expectations for the game's visual and technical aspects.

However, the slight decline in live services revenue year-over-year (-4.8%) may indicate a need for technological innovation to maintain player engagement and spending. EA should focus on leveraging emerging technologies like AI and machine learning to enhance personalization and create more dynamic live service experiences.

Overall, EA's tech strategy appears sound, but continued investment in cutting-edge technologies will be important to maintain its competitive edge in the rapidly evolving gaming industry.

Live services drive Q1 expectation beat and builds momentum for FY25

REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Electronic Arts (NASDAQ: EA) today announced preliminary financial results for its first quarter ended June 30, 2024.

“EA delivered a strong start to FY25, beating net bookings guidance as we continue to execute across our business,” said Andrew Wilson, CEO of EA. "Our focus on delivering bigger, bolder, and more connected experiences for our players has never been sharper and is illustrated by the record-breaking launch of EA SPORTS College Football 25 as we head into another historic Q2 sports season at EA."

“Strong execution, live events and continued player engagement across our experiences, delivered Q1 results above expectations,” said Stuart Canfield, CFO of EA. “Looking ahead, the remarkable success of our launch week for College Football, combined with the upcoming launches for EA SPORTS Madden NFL, EA SPORTS FC and Dragon Age: The Veilguard, is building momentum for FY25 and beyond. We are well positioned to deliver our multi-year financial objectives.”

Selected Operating Highlights and Metrics

• Net bookings¹ for the quarter totaled $1.262 billion, exceeding the high end of the guidance range of $1.250 billion. This was driven by stronger performance across Madden NFL 24, FC Online and FC Mobile.
• EA SPORTS FC^TM celebrated real-world tournaments and events during Q1, attracting tens of millions of new fans and driving engagement across the franchise during the quarter.

• EA SPORTS^TM Madden NFL delivered sustained momentum through the quarter, with weekly average users in Ultimate Team and total net bookings up double digits year-over-year.
• During the quarter, EA revealed Dragon Age: The Veilguard gameplay, which trended #1 on YouTube Gaming and received millions of views.
• After the quarter ended, EA SPORTS^TM College Football 25 welcomed 5 million unique players into the game through its first week, with over 500,000 more playing via the EA Play trial.

Selected Financial Highlights and Metrics

• Net revenue was $1.660 billion for the quarter.
• Net cash provided by operating activities was $120 million for the quarter and $2.076 billion for the trailing twelve months.
• EA repurchased 2.8 million shares for $375 million during the quarter under the new stock repurchase program, bringing the total for the trailing twelve months to 10.2 million shares for $1.350 billion.

Dividend

EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on September 18, 2024 to stockholders of record as of the close of business on August 28, 2024.

Quarterly Financial Highlights

		Three Months Ended
		June 30,
		2024		2023
(in $ millions, except per share amounts)
Full game		250		443
Live services and other		1,410		1,481
Total net revenue		1,660		1,924
Net income		280		402
Diluted earnings per share		1.04		1.47
Operating cash flow		120		359
Value of shares repurchased		375		325
Number of shares repurchased		2.8		2.6
Cash dividend paid		50		52

Trailing Twelve Months Financial Highlights

		Twelve Months Ended
		June 30,
		2024		2023
(in $ millions)
Full game		1,822		2,039
Live services and other		5,476		5,544
Total net revenue		7,298		7,583
Net income		1,151		893
Operating cash flow		2,076		1,987
Value of shares repurchased		1,350		1,300
Number of shares repurchased		10.2		10.5

Operating Metric

The following is a calculation of our total net bookings¹ for the periods presented:

		Three Months Ended						Twelve Months Ended
		June 30,						June 30,
		2024			2023			2024			2023
(in $ millions)
Total net revenue		1,660			1,924			7,298			7,583
Change in deferred net revenue (online-enabled games)		(398	)		(346	)		(184	)		37
Total net bookings		1,262			1,578			7,114			7,620

Business Outlook as of July 30, 2024

Fiscal Year 2025 Expectations – Ending March 31, 2025

Financial outlook metrics:

• Net revenue is expected to be approximately $7.100 billion to $7.500 billion.
  • Change in deferred net revenue (online-enabled games) is expected to be approximately $200 million.
• Net income is expected to be approximately $904 million to $1.085 billion.
• Diluted earnings per share is expected to be approximately $3.34 to $4.00.
• Operating cash flow is expected to be approximately $2.050 billion to $2.250 billion.
• The Company estimates a share count of 271 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

• Net bookings¹ is expected to be approximately $7.300 billion to $7.700 billion.

Second Quarter Fiscal Year 2025 Expectations – Ending September 30, 2024

Financial outlook metrics:

• Net revenue is expected to be approximately $1.900 billion to $2.000 billion.
  • Change in deferred net revenue (online-enabled games) is expected to be approximately $50 million.

• Net income is expected to be approximately $204 million to $248 million.
• Diluted earnings per share is expected to be approximately $0.76 to $0.93.
• The Company estimates a share count of 267 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

• Net bookings¹ is expected to be approximately $1.950 billion to $2.050 billion.

Conference Call and Supporting Documents

Electronic Arts will host a conference call on July 30, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the first fiscal quarter ended June 30, 2024 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA’s IR Website at http://ir.ea.com.

EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website.

A dial-in replay of the conference call will be available until August 14, 2024 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using conference code 5939891. An audio webcast replay of the conference call will be available for one year on EA’s IR Website.

Forward-Looking Statements

Some statements set forth in this release, including the information relating to EA’s expectations under the heading “Business Outlook as of July 30, 2024” and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements.

Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences and trends; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; economic and geopolitical conditions; changes in our tax rates or tax laws; and other factors described in Part I, Item 1A of Electronic Arts’ latest Annual Report on Form 10-K under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission.

These forward-looking statements are current as of July 30, 2024. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts.

While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended June 30, 2024.

About Electronic Arts

Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.

In fiscal year 2024, EA posted GAAP net revenue of approximately $7.6 billion. Headquartered in Redwood City, California, 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^®. More information about EA is available at www.ea.com/news.

EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Dragon Age, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission.

¹ Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in $ millions, except per share data)
		Three Months Ended June 30,
		2024		2023
Net revenue		1,660		1,924
Cost of revenue		263		368
Gross profit		1,397		1,556
Operating expenses:
Research and development		629		596
Marketing and sales		205		229
General and administrative		180		163
Amortization of intangibles		17		25
Restructuring		2		1
Total operating expenses		1,033		1,014
Operating income		364		542
Interest and other income (expense), net		30		14
Income before provision for income taxes		394		556
Provision for income taxes		114		154
Net income		280		402
Earnings per share
Basic		1.05		1.48
Diluted		1.04		1.47
Number of shares used in computation
Basic		266		272
Diluted		268		274

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on May 7, 2024 for the three months ended June 30, 2024 plus a comparison to the actuals for the three months ended June 30, 2023.

		Three Months Ended June 30,
		2024 Guidance (Mid-Point)						2024 Actuals			2023 Actuals
					Variance
Net revenue
Net revenue		1,625			35			1,660			1,924
GAAP-based financial data
Change in deferred net revenue (online-enabled games)1		(425	)		27			(398	)		(346	)
Cost of revenue
Cost of revenue		245			18			263			368
GAAP-based financial data
Acquisition-related expenses		(10	)		—			(10	)		(16	)
Stock-based compensation		(5	)		1			(4	)		(2	)
Operating expenses
Operating expenses		1,075			(42	)		1,033			1,014
GAAP-based financial data
Acquisition-related expenses		(20	)		3			(17	)		(25	)
Restructuring and related charges		(65	)		59			(6	)		(3	)
Stock-based compensation		(135	)		(4	)		(139	)		(128	)
Income before tax
Income before tax		324			70			394			556
GAAP-based financial data
Acquisition-related expenses		30			(3	)		27			41
Change in deferred net revenue (online-enabled games)1		(425	)		27			(398	)		(346	)
Restructuring and related charges		65			(59	)		6			3
Stock-based compensation		140			3			143			130
Tax rate used for management reporting		19	%					19	%		19	%
Earnings per share
Basic		0.83			0.22			1.05			1.48
Diluted		0.82			0.22			1.04			1.47
Number of shares used in computation
Basic		268			(2	)		266			272
Diluted		270			(2	)		268			274

¹The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in $ millions)
		June 30, 2024			March 31, 20242
ASSETS
Current assets:
Cash and cash equivalents		2,400			2,900
Short-term investments		366			362
Receivables, net		433			565
Other current assets		388			420
Total current assets		3,587			4,247
Property and equipment, net		558			578
Goodwill		5,379			5,379
Acquisition-related intangibles, net		373			400
Deferred income taxes, net		2,393			2,380
Other assets		418			436
TOTAL ASSETS		12,708			13,420
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		80			110
Accrued and other current liabilities		976			1,166
Deferred net revenue (online-enabled games)		1,412			1,814
Total current liabilities		2,468			3,090
Senior notes, net		1,882			1,882
Income tax obligations		525			497
Deferred income taxes, net		1			1
Other liabilities		432			437
Total liabilities		5,308			5,907
Stockholders’ equity:
Common stock		3			3
Retained earnings		7,457			7,582
Accumulated other comprehensive loss		(60	)		(72	)
Total stockholders’ equity		7,400			7,513
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		12,708			13,420

²Derived from audited consolidated financial statements.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in $ millions)
		Three Months Ended June 30,
		2024			2023
OPERATING ACTIVITIES
Net income		280			402
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, accretion and impairment		80			88
Stock-based compensation		143			130
Change in assets and liabilities
Receivables, net		132			167
Other assets		58			96
Accounts payable		(11	)		(18	)
Accrued and other liabilities		(147	)		(92	)
Deferred income taxes, net		(13	)		(93	)
Deferred net revenue (online-enabled games)		(402	)		(321	)
Net cash provided by operating activities		120			359
INVESTING ACTIVITIES
Capital expenditures		(67	)		(45	)
Proceeds from maturities and sales of short-term investments		128			151
Purchase of short-term investments		(130	)		(150	)
Net cash used in investing activities		(69	)		(44	)
FINANCING ACTIVITIES
Cash dividends paid		(50	)		(52	)
Cash paid to taxing authorities for shares withheld from employees		(121	)		(105	)
Common stock repurchases		(375	)		(325	)
Net cash used in financing activities		(546	)		(482	)
Effect of foreign exchange on cash and cash equivalents		(5	)		2
Change in cash and cash equivalents		(500	)		(165	)
Beginning cash and cash equivalents		2,900			2,424
Ending cash and cash equivalents		2,400			2,259

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
		Q1			Q2			Q3			Q4			Q1			YOY %
		FY24			FY24			FY24			FY24			FY25			Change
Net revenue
Net revenue		1,924			1,914			1,945			1,779			1,660			(14	%)
GAAP-based financial data
Change in deferred net revenue (online-enabled games)1		(346	)		(94	)		421			(113	)		(398	)
Gross profit
Gross profit		1,556			1,458			1,416			1,422			1,397			(10	%)
Gross profit (as a % of net revenue)		81	%		76	%		73	%		80	%		84	%
GAAP-based financial data
Acquisition-related expenses		16			15			16			29			10
Change in deferred net revenue (online-enabled games)1		(346	)		(94	)		421			(113	)		(398	)
Stock-based compensation		2			2			2			2			4
Operating income
Operating income		542			377			365			234			364			(33	%)
Operating income (as a % of net revenue)		28	%		20	%		19	%		13	%		22	%
GAAP-based financial data
Acquisition-related expenses		41			39			37			101			27
Change in deferred net revenue (online-enabled games)1		(346	)		(94	)		421			(113	)		(398	)
Restructuring and related charges		3			—			—			61			6
Stock-based compensation		130			155			151			148			143
Net income
Net income		402			399			290			182			280			(30	%)
Net income (as a % of net revenue)		21	%		21	%		15	%		10	%		17	%
GAAP-based financial data
Acquisition-related expenses		41			39			37			101			27
Change in deferred net revenue (online-enabled games)1		(346	)		(94	)		421			(113	)		(398	)
Restructuring and related charges		3			—			—			61			6
Stock-based compensation		130			155			151			148			143
Tax rate used for management reporting		19	%		19	%		19	%		19	%		19	%
Diluted earnings per share		1.47			1.47			1.07			0.67			1.04			(29	%)
Number of shares used in computation
Basic		272			271			269			267			266
Diluted		274			272			271			270			268

¹The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
		Q1			Q2			Q3			Q4			Q1			YOY %
		FY24			FY24			FY24			FY24			FY25			Change
QUARTERLY NET REVENUE PRESENTATIONS
Net revenue by composition
Full game downloads		301			346			431			265			190			(37	%)
Packaged goods		142			275			187			68			60			(58	%)
Full game		443			621			618			333			250			(44	%)
Live services and other		1,481			1,293			1,327			1,446			1,410			(5	%)
Total net revenue		1,924			1,914			1,945			1,779			1,660			(14	%)
Full game		23	%		32	%		32	%		19	%		15	%
Live services and other		77	%		68	%		68	%		81	%		85	%
Total net revenue %		100	%		100	%		100	%		100	%		100	%
GAAP-based financial data
Full game downloads		(21	)		24			32			(37	)		(47	)
Packaged goods		(21	)		46			4			(37	)		(35	)
Full game		(42	)		70			36			(74	)		(82	)
Live services and other		(304	)		(164	)		385			(39	)		(316	)
Total change in deferred net revenue (online-enabled games) by composition1		(346	)		(94	)		421			(113	)		(398	)
Net revenue by platform
Console		1,167			1,187			1,229			1,049			1,005			(14	%)
PC & Other		451			423			420			423			365			(19	%)
Mobile		306			304			296			307			290			(5	%)
Total net revenue		1,924			1,914			1,945			1,779			1,660			(14	%)
GAAP-based financial data
Console		(266	)		(35	)		377			(94	)		(328	)
PC & Other		(77	)		(34	)		33			(10	)		(70	)
Mobile		(3	)		(25	)		11			(9	)		—
Total change in deferred net revenue (online-enabled games) by platform1		(346	)		(94	)		421			(113	)		(398	)

¹The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
		Q1			Q2			Q3			Q4			Q1			YOY %
		FY24			FY24			FY24			FY24			FY25			Change
CASH FLOW DATA
Investing cash flow		(44	)		(63	)		(51	)		(49	)		(69	)
Investing cash flow - TTM		(196	)		(205	)		(195	)		(207	)		(232	)		(18	%)
Financing cash flow		(482	)		(351	)		(431	)		(360	)		(546	)
Financing cash flow - TTM		(1,606	)		(1,609	)		(1,622	)		(1,624	)		(1,688	)		(5	%)
Operating cash flow		359			112			1,264			580			120
Operating cash flow - TTM		1,987			2,211			2,352			2,315			2,076			4	%
Capital expenditures		45			51			52			51			67
Capital expenditures - TTM		193			191			195			199			221			15	%
Free cash flow3		314			61			1,212			529			53
Free cash flow3 - TTM		1,794			2,020			2,157			2,116			1,855			3	%
Common stock repurchases		325			325			325			325			375			15	%
Cash dividends paid		52			51			51			51			50			(4	%)
DEPRECIATION
Depreciation expense		49			49			48			50			51			4	%
BALANCE SHEET DATA
Cash and cash equivalents		2,259			1,946			2,742			2,900			2,400
Short-term investments		343			359			362			362			366
Cash and cash equivalents, and short-term investments		2,602			2,305			3,104			3,262			2,766			6	%
Receivables, net		517			1,047			867			565			433			(16	%)
STOCK-BASED COMPENSATION
Cost of revenue		2			2			2			2			4
Research and development		93			113			108			104			101
Marketing and sales		11			13			14			14			12
General and administrative		24			27			27			28			26
Total stock-based compensation		130			155			151			148			143
RESTRUCTURING AND RELATED CHARGES
Restructuring		1			2			—			59			2
Office space reductions		2			(2	)		—			2			4
Total restructuring and related charges		3			—			—			61			6

³Free cash flow is defined as Operating cash flow less Capital expenditures.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(in $ millions)
The following table provides a reconciliation of non-GAAP operating income and margin to their most directly comparable GAAP financial measure for the three months ended June 30, 2024 plus a comparison to the actuals for the three months ended June 30, 2023.
		Three Months Ended
		June 30,
		2024			2023			YOY % Change
Net revenue		1,660			1,924			(14	%)
GAAP operating income		364			542			(33	%)
Acquisition-related expenses		27			41
Restructuring and related charges		6			3
Stock-based compensation		143			130
Non-GAAP operating income		540			716			(25	%)
GAAP operating margin		21.9	%		28.2	%
Non-GAAP operating margin		32.5	%		37.2	%
Impact from change in deferred net revenue (online-enabled games)		(2,120) bps			(1,380) bps

ELECTRONIC ARTS INC. AND SUBSIDIARIES
GAAP Guidance to Non-GAAP Guidance
(in $ millions)
The following table provides GAAP to Non-GAAP reconciliation of the Company’s FY25 guidance.
		Twelve Months Ending March 31, 2025
		GAAP-Based Financial Data																					GAAP-Based Financial Data
				A				B			C			D
		GAAP Guidance Range						Acquisition related expenses2			Restructuring and related charges2			Stock-based compensation2			Non-GAAP Guidance Range = A + B +C + D						Change in deferred net revenue (online- enabled games)2
Net revenue		7,100		to	7,500			—			—			—			7,100		to	7,500			200
Cost of revenue		1,480		to	1,520			(40	)		—			(10	)		1,430		to	1,470			—
Operating expense		4,345		to	4,435			(70	)		(95	)		(615	)		3,565		to	3,655			—
Operating margin		18.0	%	to	20.6	%		150 bps			130 bps			860 bps			29.6	%	to	31.7	%		200 bps to 170 bps
Income before provision for income taxes		1,329		to	1,596			110			95			625			2,159		to	2,426			200
Net income1		904		to	1,085
Number of shares used in computation:
Diluted		271

¹ The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.

² The mid-point of the range has been used for purposes of presenting reconciling items to operating margin.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
GAAP-Based Financial Data for Guidance
(in $ millions)
The following table provides supplemental information to the Company’s Q2 FY25 guidance.
		Three Months Ending September 30, 2024
		GAAP-Based Financial Data
		GAAP Guidance Range				Acquisition -related expenses			Restructuring and related charges			Stock-based compensation			Change in deferred net revenue (online -enabled games)
Net revenue		1,900	to	2,000		—			—			—			50
Cost of revenue		420	to	450		(10	)		—			(5	)		—
Operating expense		1,190	to	1,200		(20	)		(65	)		(160	)		—
Income before provision for income taxes		300	to	365		30			65			165			50
Net income1		204	to	248
Number of shares used in computation:
Diluted		267

¹ The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.

Non-GAAP Financial Measures

As a supplement to the Company’s financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company presents certain non-GAAP measures of financial performance, including non-GAAP operating margin and free cash flow. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the Company’s results of operations as determined in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting and differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.

The non-GAAP financial measures exclude acquisition-related expenses, stock-based compensation, restructuring and related charges, and capital expenditures, as applicable in any given reporting period and our outlook. The Company may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures. Management believes that these non-GAAP financial measures provide investors with additional useful information to better understand and evaluate the Company’s operating results and future prospects because they exclude certain items that may not be indicative of the Company’s core business, operating results, or future outlook. These non-GAAP financial measures, with further adjustments are used by management to understand ongoing financial and business performance.

The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan, and analyze future periods. Accordingly, the Company applies the same tax rate to its management reporting financial results.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730845001/en/

Andrew Uerkwitz

Vice President, Investor Relations

650-674-7191

auerkwitz@ea.com

Erin Rheaume

Director, Financial Communications

650-628-7978

erheaume@ea.com

Source: Electronic Arts

FAQ

What was EA's net bookings for Q1 FY25?

EA's net bookings for Q1 FY25 were $1.262 billion, exceeding the high end of the guidance range of $1.250 billion.

How many players did EA SPORTS College Football 25 attract in its first week?

EA SPORTS College Football 25 welcomed 5 million unique players into the game through its first week, with over 500,000 more playing via the EA Play trial.

What is EA's financial outlook for FY25?

For FY25, EA expects net revenue of $7.100-$7.500 billion and net bookings of $7.300-$7.700 billion.

How much did EA (NASDAQ: EA) spend on share repurchases in Q1 FY25?

EA repurchased 2.8 million shares for $375 million during Q1 FY25 under the new stock repurchase program.

What is the quarterly cash dividend declared by EA for Q1 FY25?

EA declared a quarterly cash dividend of $0.19 per share of the Company's common stock, payable on September 18, 2024.