Electronic Arts FY2024 Q4 Earnings Release
Download PDFMay, 2024 May 7, 2024
Electronic Arts Inc. Q4 and FY24 Results
Table of
Contents
Safe Harbor Statement
Select FY24 Highlights
Net Bookings Results
Core Business and FY25 Title Slate
FY24 Actuals & Guidance
GAAP to Non -GAAP Reconciliation
Appendix
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Safe Harbor Statement
Some statements set forth inthis document, including the information relating to EA’s fiscal 2025 guidance information and title slate 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 inour tax rates or tax laws ;and other factors described inPart II,Item 1Aof Electronic Arts’ latest
Quarterly Report on Form 10-Qunder the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission,
including our Annual Report on Form 10-Kfor the fiscal year ended March 31,2023 .
These forward -looking statements are current as of May 7,2024 .Electronic Arts assumes no obligation to revise or update any forward -looking statement
for any reason, except as required by law .Inaddition, the preliminary financial results set forth herein 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 Annual
Report on Form 10-Kfor the fiscal year ended March 31,2024 .Electronic Arts assumes no obligation and does not intend to update these estimates prior to
filing its Form 10-Kfor the fiscal year ended March 31,2024 .
Refer to Appendix for additional disclosures.
Please review our risk factors on Form 10 -Q filed with the SEC
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Select FY24 Highlights
Refer to Appendix for additional disclosures.
$7.4B
Total net bookings
+1% year over year in FY24
$5.4B
Live Services
Net Bookings in FY24
73% of total net bookings
$2.3B
Record Fiscal Year Operating
Cash Flow
New stock repurchase
program of $5B over 3 years
Apex Legends $3.4B in
lifetime net bookings
Our global football franchise
grew net bookings by
high -teens percent in FY24
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Refer to Appendix for additional disclosures, including constant currency (“CC”).
Net Bookings by Composition
(in $ millions)
1,484 1,622 1,407
267
324
259
Q4 FY22 Q4 FY23 Q4 FY24
1,751
1,946
1,666
(13%)
Quarterly
(14%)
(20%)
YoY YoY CC
(14%)
(21%)
(12%) 5,370 5,530 5,425
2,145 1,811 2,005
FY22 FY23 FY24
7,515
Fiscal Year
+11%
(2%)
+1%
YoY
7,341 7,430
Live services and other Full game
YoY CC
+3%
+12%
(1%)
5
322 331 298
423 516 413
1,006
1,099
955
Q4 FY22 Q4 FY23 Q4 FY24
1,751
1,946
1,666
Net Bookings by Platform
(in $ millions)
(13%)
Quarterly
(14%)
(20%)
YoY YoY CC
(14%)
(19%)
(13%)
Fiscal Year
+6%
(7%)
+1%
YoY
(10%) (9%) 1,193 1,244 1,187
1,707 1,759 1,629
4,615 4,338 4,614
FY22 FY23 FY24
7,515 7,341 7,430
(5%)
Refer to Appendix for additional disclosures, including constant currency (“CC”).
Console Mobile PC & Other
YoY CC
+3%
+8%
(6%)
(4%)
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Refer to Appendix for additional disclosures.
Ecosystems
New Releases in FY25 *
Tales of Kenzera : ZAU (Apr 23)
EA SPORTS F1 24 ©(May 31)
EA SPORTS College Football 25
EA SPORTS Madden NFL 25
EA SPORTS FC 25
EA SPORTS NHL 25 Partner title
* We have two unannounced titles in FY25: one partner title expected in Q4, and one owned IP title, which is not
included in the above table. We expect to provide more details on timing at a later date.
Core Business and FY25 Title Slate
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FY24 Actuals, Q1 & FY25 Guidance
(in $ millions, except EPS)
Refer to Appendix for additional disclosures. For additional information please refer to our Non -GAAP Operating Margin FAQ.
FY24A FY25E Q1 FY25E
Net Revenue 7,562 7,100 to 7,500 1,575 to 1,675
Cost of Revenue 1,710 1,480 to 1,520 240 to 250
GAAP EPS $4.68 $3.34 to $4.00 $0.73 to $0.90
Operating Cash Flow 2,315 2,050 to 2,250 —
GAAP Operating Margin 20.1% 18.0% to 20.6% 17.1% to 20.3%
Non -GAAP Operating Margin 31.5% 29.6% to 31.7% —
Impact of GAAP Deferrals (120) bps 200 bps to 170 bps —
Note: Our EPS guidance calculation does not factor in future share repurchases.Non -GAAP Operating Margin calculated as a % of GAAP Net Revenue.
Net Bookings 7,430 7,300 to 7,700 1,150 to 1,250
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GAAP to Non – GAAP Reconciliation: FY24 Actuals
Twelve Months Ended March 31, 2024
(in $ millions)
A
GAAP 1
B
Acquisition – related expenses 1
C
Restructuring and related charges 1
D
Stock -based compensation 1
=A+B+C+D
Non -GAAP Change in deferred net revenue (online -enabled games) 1
Net revenue 7,562 – – – 7,562 (132)
Cost of revenue 1,710 (76) – (8) 1,626 –
Operating expense 4,334 (142) (64) (576) 3,552 –
Operating margin 20.1% 290 bps 80 bps 770 bps 31.5% (120) bps
Income before provision for income taxes 1,589 218 64 584 2,455 (132)
Net income 2 1,273
Number of shares used in computation:
Diluted shares 272
1GAAP -Based Actual Financial Data. 2The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future per iods.
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GAAP to Non – GAAP Reconciliation: FY25 Guidance
Twelve Months Ending March 31, 2025
(in $ millions)
A
GAAP Guidance Range 1
B
Acquisition – related expenses 1
C
Restructuring and related charges 1
D
Stock -based compensation 1
=A+B+C+D
Non -GAAP GuidanceRange
Change in deferred net revenue (online -enabled games) 1
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 income 2 904 to 1,085
Number of shares used in computation:
Diluted shares 271
1GAAP -Based Financial Data -the mid -point of the range has been used for purposes of presenting the reconciling items. 2The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future per iods.
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Refer to Appendix for additional disclosures.
Q1 FY25 Guidance
Three Months Ending June 30, 2024
(in $ millions)
GAAP Guidance Range 1 Acquisition – related expenses 1
Change in deferred net revenue (online -enabled games) 1
Restructuring and related charges 1 Stock -based compensation 1
Net revenue 1,575 to 1,675 – (425) – –
Cost of revenue 240 to 250 (10) – – (5)
Operating expense 1,065 to 1,085 (20) – (65) (135)
Income before provision for income taxes 290 to 357 30 (425) 65 140
Net income 2 197 to 243
Number of shares used in computation:
Diluted shares 270
1GAAP -Based Financial Data -the mid -point of the range has been used for purposes of presenting the reconciling items. 2The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future per iods.
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Refer to Appendix for additional disclosures.
Appendix
Cash Flow Selected Data
Currency Assumptions
Constant Currency Reconciliation
Additional Disclosures
Non -GAAP Financial Measures
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Cash Flow Selected Data
(in $ millions)
Actuals
Q4 2024 Q4 2023 TTM Q4 2024 TTM Q4 2023
Operating Cash Flow 580 617 2,315 1,550
Capital Expenditures 51 47 199 207
Free Cash Flow 529 570 2,116 1,343
Investing Cash Flow (49) (37) (207) (217)
Financing Cash Flow (360) (358) (1,624) (1,600)
Free cash flow is defined as operating cash flow minus capital expenditures. Management believes free cash flow is a useful mea sure of the company’s ability to generate cash.
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Currency Assumptions
If the U.S. dollar strengthens 10% against the Euro and British pound sterling:
• With hedging, total net bookings decrease ~2.0%
• Total cost of revenue and operating expenses decrease ~2.0%
Note: Our financial guidance includes the forecasted impact of the FX cash flow hedging program.1 For FY23 Q4A and FY24 Q4A, FX rates are a simple average of EA’s actual monthly P&L rates. For FY25E, the same FX rates are used for all forecast periods.2 For all periods, FX rates are quoted using market convention.
Rule of thumb
If the U.S. dollar strengthens 10% against the Canadian dollar and Swedish
krona:
• Total net bookings decrease ~0.5%
• With hedging, total cost of revenue and operating expenses decrease
~0.5%
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Current FX assumptions 1,2 USD/ Q4 2023 Q4 2024 FY 2025E
Net Bookings
EUR 1.07 1.09 1.08
GBP 1.22 1.27 1.26
Operating Expenses
CAD 1.35 1.34 1.36
SEK 10.33 10.26 10.61
Constant Currency Reconciliation – Net Bookings Guidance
(in $ millions)
Q1 2025
As Guidance
Q1 2024
As Reported
Percentage
Change YoY Currency Impact
Percentage
Change YoY
Constant Currency
Low 1,150 1,578 (27%) 1 (27%)
High 1,250 1,578 (21%) 1 (21%)
2025
As Guidance
2024
As Reported
Percentage
Change YoY Currency Impact
Percentage
Change YoY
Constant Currency
Low 7,300 7,430 (2%) (8) (2%)
High 7,700 7,430 +4% (8) +4%
Numbers above may not foot due to rounding and calculation methodologies.
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Constant Currency Reconciliation – Net Bookings (FY)
(in $ millions)
2024
As Reported
2023
As Reported
Percentage
Change YoY
2024
Currency Impact
Percentage
Change YoY
Constant Currency
Console 4,614 4,338 +6% 48 +8%
PC & other 1,629 1,759 (7%) 35 (6%)
Mobile 1,187 1,244 (5%) 11 (4%)
Net Bookings 7,430 7,341 +1% 94 +3%
2024
As Reported
2023
As Reported
Percentage
Change YoY
2024
Currency Impact
Percentage
Change YoY
Constant Currency
Full game 2,005 1,811 +11% 16 +12%
Live services & other 5,425 5,530 (2%) 78 (1%)
Net Bookings 7,430 7,341 +1% 94 +3%
Numbers above may not foot due to rounding and calculation methodologies.
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Constant Currency Reconciliation – Net Bookings (Q4)
(in $ millions)
Q4 2024
As Reported
Q4 2023
As Reported
Percentage
Change YoY
Q4 2024
Currency Impact
Percentage
Change YoY
Constant Currency
Console 955 1,099 (13%) 4 (13%)
PC & other 413 516 (20%) 7 (19%)
Mobile 298 331 (10%) 3 (9%)
Net Bookings 1,666 1,946 (14%) 14 (14%)
Q4 2024
As Reported
Q4 2023
As Reported
Percentage
Change YoY
Q4 2024
Currency Impact
Percentage
Change YoY
Constant Currency
Full game 259 324 (20%) (1) (21%)
Live services & other 1,407 1,622 (13%) 15 (12%)
Net Bookings 1,666 1,946 (14%) 14 (14%)
Numbers above may not foot due to rounding and calculation methodologies.
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Additional Disclosures
Net revenue, gross profit and operating cash flow are presented on aGAAP basis .
Net bookings isan operating metric that EA defines as the net amount of products and services sold digitally or sold -inphysically inthe period .Net bookings
iscalculated by adding total net revenue to the change indeferred net revenue for online -enabled games .Acalculation of net bookings can be found inthe
“Net Bookings” tab of the Financial Model provided on our IRwebsite .
We define EA’s player network as the number of active accounts used to play EA games and services on any platform over the preceding 12 months .We
determine these operating metrics by using internal company data .We also use information provided by third parties, including third party network logins
provided by platform providers .While we believe that the operating metrics we report are reasonable estimates for the applicable period of measurement,
there are inherent challenges in measuring how our games and services are played across large global populations .For example, while we seek to remove
duplicate accounts inthese metrics, we do not require players to use acommon identifier or to link their accounts to play an EA game on console/PC and an
EA game on their mobile device, or to play two or more EA games on asingle mobile device .Therefore, aplayer that plays two of our games on asingle mobile
device or plays two of our games (or the same game) across different devices may be counted as two accounts .In addition, we evaluate our systems for
false accounts, which represent user profiles that we believe are intended to be used for purposes that violate our terms of service, and remove them from
our player network .From time to time, our actions may impact the period -by -period comparability of these metrics .For example, we may change our
methodology or we may implement strategic decisions with respect to certain games and services, including sunsetting titles .
From time to time, we make comparisons of current periods to prior periods with reference to constant currency .We evaluate our performance on aconstant
currency basis in order to facilitate period -to-period comparisons without regard to the impact of changing foreign currency exchange rates .To present
constant currency information (both historical and forward -looking), the current period results are converted into United States dollars using the weighted
average exchange rates from the comparative period rather than the rates in effect .Constant currency information is presented net of the impact of our
foreign exchange hedging programs .
EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall, and Plants vs.Zombies are trademarks of Electronic Arts Inc .
John Madden, NFL, FIFA and F1are the property of their respective owners and used with permission .
Forward -looking statements are valid as of May 7,2024 only .Electronic Arts assumes no obligation to update these forward -looking statements, except
required by law .
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Non – GAAP Financial Measures
As asupplement 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 income, non -GAAP operating margin, and free cash flow .These
non -GAAP financial measures should not be considered as asubstitute for, or superior to, measures of financial performance prepared in accordance with
GAAP .Inaddition, these non -GAAP measures have limitations inthat 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 acomprehensive 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 inany 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 atax 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 .
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