REDWOOD CITY, Calif.--(BUSINESS WIRE)--Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third fiscal quarter ended December 31, 2017.
“Players enjoyed hundreds of millions of hours in our games across console, mobile and PC during the holiday quarter, and we’re thrilled to see our titles driving excitement for more fans around the world,” said Chief Executive Officer Andrew Wilson. “We’re expanding the reach of our top franchises across more geographies, our competitions are growing in participation and viewership, and we’re continuing to grow our network with more amazing games and content coming this quarter and beyond.”
“Our diversity in portfolio, platforms, geographies, and business models is the foundation of a robust business that enables us to deliver dependable cash flow,” said Chief Financial Officer Blake Jorgensen. “Through the fourth quarter and fiscal 2019, we’ll be launching games across five different genres, on three different platforms, and to players around the world. We expect growth in full-game downloads, subscriptions, extra content, and in our mobile business.”
News and ongoing updates regarding EA and its games are available on EA’s blog at www.ea.com/news.
Selected Operating Highlights and Metrics
- Digital net bookings* for the trailing twelve months was a record $3.375 billion, up 18% year-over-year, and represents 67% of total net bookings for the same period.
- The FIFA community grew to nearly 42 million players, on console alone, during the calendar year.
- FIFA Mobile added 26 million players to its total player base in the quarter.
- FIFA Ultimate Team™ player base grew 12% year-over-year, from launch to the end of the quarter.
- In Star Wars™ Battlefront™ II, nearly 70% of players engaged in the single-player campaign.
- Battlefield™ 1 now has more than 25 million unique players life to date.
- The Sims™ 4 player base grew more than 35% year-over-year and delivered the highest-performing expansion pack to date during the quarter.
- The Madden Challenge entertainment special on The CW Network was the #1 esports television broadcast in the U.S. for 2017.
* 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.
Selected Financial Highlights and Metrics
All financial measures are presented on a GAAP basis.
- Net cash provided by operating activities was $849 million.
- Net cash provided by operating activities for the trailing twelve months was $1.514 billion.
- During the quarter, EA repurchased 1.4 million shares for $150 million.
- For the trailing twelve months, EA repurchased 5.6 million shares for $578 million.
Quarterly Financial Highlights
|
Three Months Ended |
||||||||
| 2017 | 2016 | |||||||
| (in $ millions, except per share amounts) | ||||||||
| Digital net revenue | 780 | 685 | ||||||
| Packaged goods and other net revenue | 380 | 464 | ||||||
| Total net revenue | 1,160 | 1,149 | ||||||
| Net loss | (186)* | (1 | ) | |||||
| Loss per share | (0.60)* | (0.00 | ) | |||||
| Operating cash flow | 849 | 1,137** | ||||||
| Value of shares repurchased | 150 | 127 | ||||||
| Number of shares repurchased | 1.4 | 1.5 | ||||||
| *During the three months ended December 31, 2017, EA recognized $176 million of incremental income tax expense, or approximately $0.57 per share, due to the application of the Tax Cuts and Jobs Act, enacted on December 22, 2017. This amount is a reasonable estimate provided in accordance with Securities and Exchange Commission guidance. EA will provide additional information about these reasonable estimates in its forthcoming Form 10-Q for the fiscal quarter ending December 31, 2017. |
| **At the beginning of fiscal 2018, EA adopted FASB ASU 2016-09, related to stock-based compensation. Operating cash flow for the three months ended December 31, 2016 has been recast to reflect the impact of this standard. |
While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and a long-term tax rate of 21% are used internally by company management to adjust its GAAP results in order to assess EA’s operating results:
|
Three Months Ended December 31, 2017 |
|||||||||||||
| GAAP-Based Financial Data | |||||||||||||
| (in $ millions) |
Statement of |
Acquisition- |
Change in |
Stock-based
|
|||||||||
| Total net revenue | 1,160 | - | 811 | - | |||||||||
| Cost of revenue | 501 | (1 | ) | - | - | ||||||||
| Gross profit | 659 | 1 | 811 | - | |||||||||
| Total operating expenses | 680 | (1 | ) | - | (63 | ) | |||||||
| Operating income (loss) | (21 | ) | 2 | 811 | 63 | ||||||||
| Interest and other income, net | 5 | - | - | - | |||||||||
| Income (loss) before provision for (benefit from) income taxes | (16 | ) | 2 | 811 | 63 | ||||||||
| Number of shares used in computation: | |||||||||||||
| Basic and diluted | 308 | ||||||||||||
EA's GAAP loss per share for the three months ended December 31, 2017 was calculated using the basic share count of 308 million. Had EA reported a profit, the diluted share count would have been 311 million shares.
For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended September 30, 2017.
TTM Financial Highlights
| TTM Ended December 31, | ||||
| 2017 | 2016 | |||
| (in $ millions) | ||||
| Digital net revenue | 3,282 | 2,655 | ||
| Packaged goods and other net revenue | 1,813 | 1,971 | ||
| Total net revenue | 5,095 | 4,626 | ||
| Net income | 1,002* | 1,300 | ||
| Operating cash flow** | 1,514 | 1,555 | ||
| Value of shares repurchased | 578 | 1,017 | ||
| Number of shares repurchased | 5.6 | 14.9 | ||
| *During the trailing twelve months ended December 31, 2017, EA recognized $176 million of incremental income tax expense due to the application of the Tax Cuts and Jobs Act, enacted on December 22, 2017. This amount is a reasonable estimate provided in accordance with Securities and Exchange Commission guidance. EA will provide additional information about these reasonable estimates in its forthcoming Form 10-Q for the fiscal quarter ending December 31, 2017. |
| **At the beginning of fiscal 2018, EA adopted FASB ASU 2016-09, related to stock-based compensation. Operating cash flow has been recast to reflect the impact of this standard. |
While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and a long-term tax rate of 21% are used internally by company management to adjust its GAAP results in order to assess EA’s operating results:
| TTM Ended December 31, 2017 | |||||||||||||
| GAAP-Based Financial Data | |||||||||||||
| (in $ millions) |
Statement of |
Acquisition- |
Change in |
Stock-based
|
|||||||||
| Total net revenue | 5,095 | - | (78 | ) | - | ||||||||
| Cost of revenue | 1,246 | (1 | ) | - | (3 | ) | |||||||
| Gross profit | 3,849 | 1 | (78 | ) | 3 | ||||||||
| Total operating expenses | 2,451 | (5 | ) | - | (222 | ) | |||||||
| Operating income | 1,398 | 6 | (78 | ) | 225 | ||||||||
| Interest and other income, net | 13 | - | - | - | |||||||||
| Income before provision for income taxes | 1,411 | 6 | (78 | ) | 225 | ||||||||
For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended September 30, 2017.
Operating Metric
The following is a calculation of our total net bookings for the periods presented:
| Three Months Ended | TTM Ended | ||||||||
| December 31, | December 31, | ||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||
| (in $ millions) | |||||||||
| Total net revenue | 1,160 | 1,149 | 5,095 | 4,626 | |||||
| Change in deferred net revenue (online-enabled games) | 811 | 921 | (78 | ) | 148 | ||||
| Net bookings | 1,971 | 2,070 | 5,017 | 4,774 | |||||
Business Outlook as of January 30, 2018
The following forward-looking statements reflect expectations as of January 30, 2018. Electronic Arts assumes no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this release and in EA’s annual and quarterly SEC filings.
Fiscal Year 2018 Expectations – Ending March 31, 2018
Financial metrics:
-
Net revenue is expected to be approximately $5.100 billion.
- Change in deferred net revenue (online-enabled games) is expected to be approximately $50 million.
- Net income is expected to be approximately $1.015 billion.
-
Diluted earnings per share is expected to be approximately $3.25.
- Includes the net impact of approximately ($0.48) per share due to the application of the Tax Cuts and Jobs Act.
- Operating cash flow is expected to be approximately $1.600 billion.
- The Company estimates a share count of 312 million for purposes of calculating fiscal year 2018 diluted earnings per share.
Operational metric:
- Net bookings is expected to be approximately $5.150 billion.
In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 21% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:
| Twelve Months Ending March 31, 2018 | ||||||||||||||||
| GAAP-Based Financial Data | ||||||||||||||||
|
GAAP |
Acquisition- |
Change in |
Stock-based |
|||||||||||||
| (in $ millions) | ||||||||||||||||
| Digital net revenue | 3,405 | - | 120 | - | ||||||||||||
| Packaged goods & other net revenue | 1,695 | - | (70 | ) | - | |||||||||||
| Total net revenue | 5,100 | - | 50 | - | ||||||||||||
| Cost of revenue | 1,278 | (2 | ) | - | (3 | ) | ||||||||||
| Operating expense | 2,462 | (7 | ) | - | (245 | ) | ||||||||||
| Income before provision for income taxes | 1,372 | 9 | 50 | 248 | ||||||||||||
| Net income | 1,015 | |||||||||||||||
| Number of shares used in computation: | ||||||||||||||||
| Diluted shares | 312 | |||||||||||||||
Fourth Quarter Fiscal Year 2018 Expectations – Ending March 31, 2018
Financial metrics:
-
Net revenue is expected to be approximately $1.532 billion.
- Change in deferred net revenue (online-enabled games) is expected to be approximately ($307) million.
- Net income is expected to be approximately $579 million.
- Diluted earnings per share is expected to be approximately $1.86.
- The Company estimates a share count of 311 million for purposes of calculating fourth quarter fiscal year 2018 diluted earnings per share.
Operational metric:
- Net bookings is expected to be approximately $1.225 billion.
In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 21% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:
| Three Months Ending March 31, 2018 | |||||||||||||||
| GAAP-Based Financial Data | |||||||||||||||
|
GAAP |
Acquisition- |
Change in |
Stock-based |
||||||||||||
| (in $ millions) | |||||||||||||||
| Total net revenue | 1,532 | - | (307 | ) | - | ||||||||||
| Cost of revenue | 234 | (1 | ) | - | (1 | ) | |||||||||
| Operating expense | 619 | (3 | ) | - | (74 | ) | |||||||||
| Income before provision for income taxes | 677 | 4 | (307 | ) | 75 | ||||||||||
| Net income | 579 | ||||||||||||||
| Number of shares used in computation: | |||||||||||||||
| Diluted shares | 311 | ||||||||||||||
Conference Call and Supporting Documents
Electronic Arts will host a conference call on January 30, 2018 at 2:00 pm PT (5:00 pm ET) to review its results for the third fiscal quarter ended December 31, 2017 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 844-215-4106 (domestic) or 918-534-8313 (international), using the password “EA” or via webcast at EA’s IR Website at http://ir.ea.com.
EA has posted a slide presentation and 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 February 13, 2018 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 6194018. 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 fiscal 2018 expectations under the heading “Business Outlook as of January 30, 2018,” and information regarding EA's fiscal 2019 expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth 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 titles; the Company’s ability to develop and support digital products and services, including managing online security and privacy; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; the Company’s ability to realize the anticipated benefits of acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic conditions; and other factors described in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017.
These forward-looking statements are current as of January 30, 2018. Electronic Arts assumes no obligation and does not intend to update these forward-looking statements. 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 December 31, 2017. 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 December 31, 2017.
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. EA has more than 300 million registered players around the world.
In fiscal year 2017, EA posted GAAP net revenue of $4.8 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™, Need for Speed™, Dragon Age™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.
Ultimate Team, EA SPORTS, Battlefield, The Sims, Need for Speed, Dragon Age, and Plants vs. Zombies are trademarks of Electronic Arts Inc. STAR WARS © & TM 2018 Lucasfilm Ltd. All rights reserved. John Madden, NFL and FIFA are the property of their respective owners and used with permission.
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statement of Operations (in $ millions, except share per data) |
||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| Net revenue | ||||||||||||
| Product | 547 | 649 | 1,829 | 1,753 | ||||||||
| Service and other | 613 | 500 | 1,739 | 1,565 | ||||||||
| Total net revenue | 1,160 | 1,149 | 3,568 | 3,318 | ||||||||
| Cost of revenue | ||||||||||||
| Product | 352 | 389 | 716 | 796 | ||||||||
| Service and other | 149 | 127 | 328 | 300 | ||||||||
| Total cost of revenue | 501 | 516 | 1,044 | 1,096 | ||||||||
| Gross profit | 659 | 633 | 2,524 | 2,222 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 329 | 285 | 985 | 870 | ||||||||
| Marketing and sales | 230 | 240 | 511 | 511 | ||||||||
| General and administrative | 120 | 110 | 343 | 329 | ||||||||
| Amortization of intangibles | 1 | 2 | 4 | 5 | ||||||||
| Total operating expenses | 680 | 637 | 1,843 | 1,715 | ||||||||
| Operating income (loss) | (21 | ) | (4 | ) | 681 | 507 | ||||||
| Interest and other income (expense), net | 5 | (2 | ) | 14 | (13 | ) | ||||||
| Income (loss) before provision for (benefit from) income taxes | (16 | ) | (6 | ) | 695 | 494 | ||||||
| Provision for (benefit from) income taxes | 170 | (5 | ) | 259 | 93 | |||||||
| Net income (loss) | (186 | ) | (1 | ) | 436 | 401 | ||||||
| Earnings (loss) per share | ||||||||||||
| Basic | (0.60 | ) | (0.00 | ) | 1.41 | 1.33 | ||||||
| Diluted | (0.60 | ) | (0.00 | ) | 1.40 | 1.28 | ||||||
| Number of shares used in computation | ||||||||||||
| Basic | 308 | 303 | 309 | 302 | ||||||||
| Diluted | 308 | 303 | 312 | 314 | ||||||||
Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus our guidance for the three months ended December 31, 2017 plus a comparison to the actuals for the three months ended December 31, 2016.
| Three Months December 31, | ||||||||||||
|
2017 Guidance |
Variance |
2017 Actuals |
2016 Actuals |
|||||||||
| Net revenue | ||||||||||||
| Net revenue | 1,135 | 25 | 1,160 | 1,149 | ||||||||
| GAAP-based financial data | ||||||||||||
| Change in deferred net revenue (online-enabled games) | 865 | (54 | ) | 811 | 921 | |||||||
| Cost of revenue | ||||||||||||
| Cost of revenue | 521 | (20 | ) | 501 | 516 | |||||||
| GAAP-based financial data | ||||||||||||
| Acquisition-related expenses | — | (1 | ) | (1 | ) | (18 | ) | |||||
| Stock-based compensation | (1 | ) | 1 | — | — | |||||||
| Operating expenses | ||||||||||||
| Operating expenses | 690 | (10 | ) | 680 | 637 | |||||||
| GAAP-based financial data | ||||||||||||
| Acquisition-related expenses | (1 | ) | — | (1 | ) | (2 | ) | |||||
| Stock-based compensation | (64 | ) | 1 | (63 | ) | (48 | ) | |||||
| Loss before tax | ||||||||||||
| Loss before tax | (79 | ) | 63 | (16 | ) | (6 | ) | |||||
| GAAP-based financial data | ||||||||||||
| Acquisition-related expenses | 1 | 1 | 2 | 20 | ||||||||
| Change in deferred net revenue (online-enabled games) | 865 | (54 | ) | 811 | 921 | |||||||
| Stock-based compensation | 65 | (2 | ) | 63 | 48 | |||||||
| Tax rate used for management reporting | 21 | % | 21 | % | 21 | % | ||||||
| Loss per share | ||||||||||||
| Basic | (0.21 | ) | (0.39 | ) | (0.60 | ) | (0.00 | ) | ||||
| Diluted | (0.21 | ) | (0.39 | ) | (0.60 | ) | (0.00 | ) | ||||
| Number of shares | ||||||||||||
| Basic | 309 | (1 | ) | 308 | 303 | |||||||
| Diluted | 309 | (1 | ) | 308 | 303 | |||||||
| Anti-dilutive shares excluded for loss position1 | 4 | (1 | ) | 3 | 10 | |||||||
1Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable through stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive.
| ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||||
| Unaudited Condensed Consolidated Balance Sheets | ||||||
| (in $ millions) | ||||||
| December 31, 2017 | March 31, 20172 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | 2,566 | 2,565 | ||||
| Short-term investments | 2,318 | 1,967 | ||||
| Receivables, net of allowances of $231 and $145, respectively | 886 | 359 | ||||
| Other current assets | 196 | 308 | ||||
| Total current assets | 5,966 | 5,199 | ||||
| Property and equipment, net | 447 | 434 | ||||
| Goodwill | 1,879 | 1,707 | ||||
| Acquisition-related intangibles, net | 81 | 8 | ||||
| Deferred income taxes, net | 159 | 286 | ||||
| Other assets | 110 | 84 | ||||
| TOTAL ASSETS | 8,642 | 7,718 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | 91 | 87 | ||||
| Accrued and other current liabilities | 1,070 | 789 | ||||
| Deferred net revenue (online-enabled games) | 1,946 | 1,539 | ||||
| Total current liabilities | 3,107 | 2,415 | ||||
| Senior notes, net | 992 | 990 | ||||
| Income tax obligations | 194 | 104 | ||||
| Deferred income taxes, net | 2 | 1 | ||||
| Other liabilities | 261 | 148 | ||||
| Total liabilities | 4,556 | 3,658 | ||||
| Stockholders’ equity: | ||||||
| Common stock | 3 | 3 | ||||
| Additional paid-in capital | 723 | 1,049 | ||||
| Retained earnings | 3,455 | 3,027 | ||||
| Accumulated other comprehensive loss | (95 | ) | (19 | ) | ||
| Total stockholders’ equity | 4,086 | 4,060 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 8,642 | 7,718 | ||||
2Derived from audited consolidated financial statements.
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in $ millions) |
||||||||||||
|
Three Months Ended December 31, |
Nine Months Ended December 31, |
|||||||||||
| 2017 | 20163 | 2017 | 2016 3 | |||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net income (loss) | (186 | ) | (1 | ) | 436 | 401 | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
| Depreciation, amortization and accretion | 34 | 49 | 97 | 140 | ||||||||
| Stock-based compensation | 63 | 48 | 173 | 144 | ||||||||
| Change in assets and liabilities | ||||||||||||
| Receivables, net | (73 | ) | 126 | (527 | ) | (367 | ) | |||||
| Other assets | 13 | 3 | 79 | 40 | ||||||||
| Accounts payable | (88 | ) | (139 | ) | 16 | (6 | ) | |||||
| Accrued and other liabilities | 165 | 167 | 265 | 276 | ||||||||
| Deferred income taxes, net | 90 | (20 | ) | 130 | — | |||||||
| Deferred net revenue (online-enabled games) | 831 | 904 | 408 | 513 | ||||||||
| Net cash provided by operating activities | 849 | 1,137 | 1,077 | 1,141 | ||||||||
| INVESTING ACTIVITIES | ||||||||||||
| Capital expenditures | (24 | ) | (25 | ) | (87 | ) | (94 | ) | ||||
| Proceeds from maturities and sales of short-term investments | 606 | 324 | 1,656 | 968 | ||||||||
| Purchase of short-term investments | (617 | ) | (548 | ) | (2,012 | ) | (1,372 | ) | ||||
| Acquisition, net of cash acquired | (150 | ) | — | (150 | ) | — | ||||||
| Net cash used in investing activities | (185 | ) | (249 | ) | (593 | ) | (498 | ) | ||||
| FINANCING ACTIVITIES | ||||||||||||
| Payment of convertible notes | — | — | — | (163 | ) | |||||||
| Proceeds from issuance of common stock | — | 2 | 57 | 33 | ||||||||
| Cash paid to taxing authorities for shares withheld from employees | (7 | ) | (6 | ) | (112 | ) | (112 | ) | ||||
| Repurchase and retirement of common stock | (150 | ) | (127 | ) | (453 | ) | (383 | ) | ||||
| Net cash used in financing activities | (157 | ) | (131 | ) | (508 | ) | (625 | ) | ||||
| Effect of foreign exchange on cash and cash equivalents | (8 | ) | (20 | ) | 25 | (28 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 499 | 737 | 1 | (10 | ) | |||||||
| Beginning cash and cash equivalents | 2,067 | 1,746 | 2,565 | 2,493 | ||||||||
| Ending cash and cash equivalents | 2,566 | 2,483 | 2,566 | 2,483 | ||||||||
3Operating and financing cash flow figures for the three and nine months ended December 31, 2016 have been recast to reflect the impact of ASU 2016-09 which EA adopted at the beginning of FY18.
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions, except per share data) |
||||||||||||||||||
|
Q3 FY17 |
Q4 FY17 |
Q1 FY18 |
Q2 FY18 |
Q3 FY18 |
YOY % Change |
|||||||||||||
| Net revenue | ||||||||||||||||||
| Net revenue | 1,149 | 1,527 | 1,449 | 959 | 1,160 | 1 | % | |||||||||||
| GAAP-based financial data | ||||||||||||||||||
| Change in deferred net revenue (online-enabled games)4 | 921 | (435 | ) | (674 | ) | 220 | 811 | |||||||||||
| Gross profit | ||||||||||||||||||
| Gross profit | 633 | 1,325 | 1,295 | 570 | 659 | 4 | % | |||||||||||
| GAAP-based financial data | ||||||||||||||||||
| Acquisition-related expenses | 18 | — | — | — | 1 | |||||||||||||
| Change in deferred net revenue (online-enabled games)4 | 921 | (435 | ) | (674 | ) | 220 | 811 | |||||||||||
| Stock-based compensation | — | 1 | 1 | 1 | — | |||||||||||||
| Gross profit (as a % of net revenue) | 55 | % | 87 | % | 89 | % | 59 | % | 57 | % | ||||||||
| Operating income (loss) | ||||||||||||||||||
| Operating income (loss) | (4 | ) | 717 | 743 | (41 | ) | (21 | ) | (425 | %) | ||||||||
| GAAP-based financial data | ||||||||||||||||||
| Acquisition-related expenses | 20 | 1 | 1 | 2 | 2 | |||||||||||||
| Change in deferred net revenue (online-enabled games)4 | 921 | (435 | ) | (674 | ) | 220 | 811 | |||||||||||
| Stock-based compensation | 48 | 52 | 48 | 62 | 63 | |||||||||||||
| Operating income (loss) (as a % of net revenue) | — | 47 | % | 51 | % | (4 | %) | (2 | %) | |||||||||
| Net income (loss) | ||||||||||||||||||
| Net income (loss) | (1 | ) | 566 | 644 | (22 | ) | (186 | ) | (18,500 | %) | ||||||||
| GAAP-based financial data | ||||||||||||||||||
| Acquisition-related expenses | 20 | 1 | 1 | 2 | 2 | |||||||||||||
| Change in deferred net revenue (online-enabled games)4 | 921 | (435 | ) | (674 | ) | 220 | 811 | |||||||||||
| Stock-based compensation | 48 | 52 | 48 | 62 | 63 | |||||||||||||
| Tax rate used for management reporting | 21 | % | 21 | % | 21 | % | 21 | % | 21 | % | ||||||||
| Net income (loss) (as a % of net revenue) | — | 37 | % | 44 | % | (2 | %) | (16 | %) | |||||||||
| Diluted earnings (loss) per share | (0.00 | ) | 1.81 | 2.06 | (0.07 | ) | (0.60 | ) | - | |||||||||
| Number of diluted shares used in computation | ||||||||||||||||||
| Basic | 303 | 308 | 309 | 309 | 308 | |||||||||||||
| Diluted | 303 | 312 | 313 | 309 | 308 | |||||||||||||
| Anti-dilutive shares excluded for loss position1 | 10 | — | — | 3 | 3 | |||||||||||||
4The difference between the balances of deferred net revenue (online-enabled games) in the unaudited condensed consolidated balance sheets does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows due to the impact of unrecognized gains/losses on cash flow hedges.
1Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable through stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive.
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ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions) |
||||||||||||||||||
|
Q3 FY17 |
Q4 FY17 |
Q1 FY18 |
Q2 FY18 |
Q3 FY18 |
YOY % Change |
|||||||||||||
| QUARTERLY NET REVENUE PRESENTATIONS | ||||||||||||||||||
| Net revenue by geography | ||||||||||||||||||
| North America | 561 | 644 | 611 | 427 | 452 | (19 | %) | |||||||||||
| International | 588 | 883 | 838 | 532 | 708 | 20 | % | |||||||||||
| Total net revenue | 1,149 | 1,527 | 1,449 | 959 | 1,160 | 1 | % | |||||||||||
| North America | 370 | (198 | ) | (287 | ) | 59 | 313 | |||||||||||
| International | 551 | (237 | ) | (387 | ) | 161 | 498 | |||||||||||
| Change in deferred net revenue (online-enabled games)4 | 921 | (435 | ) | (674 | ) | 220 | 811 | |||||||||||
| North America | 49 | % | 42 | % | 42 | % | 45 | % | 39 | % | ||||||||
| International | 51 | % | 58 | % | 58 | % | 55 | % | 61 | % | ||||||||
| Total net revenue % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
| Net revenue by composition | ||||||||||||||||||
| Full game downloads | 169 | 259 | 209 | 123 | 143 | (15 | %) | |||||||||||
| Live services5 | 369 | 510 | 501 | 408 | 476 | 29 | % | |||||||||||
| Mobile | 147 | 165 | 169 | 158 | 161 | 10 | % | |||||||||||
| Total digital | 685 | 934 | 879 | 689 | 780 | 14 | % | |||||||||||
| Packaged goods and other | 464 | 593 | 570 | 270 | 380 | (18 | %) | |||||||||||
| Total net revenue | 1,149 | 1,527 | 1,449 | 959 | 1,160 | 1 | % | |||||||||||
| Full game downloads | 186 | (67 | ) | (98 | ) | (4 | ) | 117 | ||||||||||
| Live services5 | 197 | 8 | (81 | ) | (98 | ) | 311 | |||||||||||
| Mobile | 27 | 10 | (19 | ) | (8 | ) | 22 | |||||||||||
| Total digital | 410 | (49 | ) | (198 | ) | (110 | ) | 450 | ||||||||||
| Packaged goods and other | 511 | (386 | ) | (476 | ) | 330 | 361 | |||||||||||
| Change in deferred net revenue (online-enabled games)4 | 921 | (435 | ) | (674 | ) | 220 | 811 | |||||||||||
| Full game downloads | 15 | % | 17 | % | 14 | % | 13 | % | 12 | % | ||||||||
| Live services5 | 32 | % | 33 | % | 35 | % | 43 | % | 41 | % | ||||||||
| Mobile | 13 | % | 11 | % | 12 | % | 16 | % | 14 | % | ||||||||
| Total digital | 60 | % | 61 | % | 61 | % | 72 | % | 67 | % | ||||||||
| Packaged goods and other | 40 | % | 39 | % | 39 | % | 28 | % | 33 | % | ||||||||
| Total net revenue % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
4The difference between the balances of deferred net revenue (online-enabled games) in the unaudited condensed consolidated balance sheets does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows due to the impact of unrecognized gains/losses on cash flow hedges.
5Live services includes net revenue previously presented as “Extra Content” and “Subscriptions, Advertising and Other” through Q4 FY17.
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES Unaudited Supplemental Financial Information and Business Metrics (in $ millions) |
||||||||||||||||||
|
Q3 FY17 |
Q4 FY17 |
Q1 FY18 |
Q2 FY18 |
Q3 FY18 |
YOY % Change |
|||||||||||||
| QUARTERLY NET REVENUE PRESENTATIONS | ||||||||||||||||||
| Net revenue by platform | ||||||||||||||||||
| Xbox One, PLAYSTATION 4, Switch | 728 | 1,039 | 974 | 569 | 785 | 8 | % | |||||||||||
| Other consoles | 65 | 70 | 60 | 26 | 25 | (62 | %) | |||||||||||
| Total consoles | 793 | 1,109 | 1,034 | 595 | 810 | 2 | % | |||||||||||
| PC / Browser | 190 | 246 | 240 | 196 | 181 | (5 | %) | |||||||||||
| Mobile | 148 | 165 | 171 | 162 | 166 | 12 | % | |||||||||||
| Other | 18 | 7 | 4 | 6 | 3 | (83 | %) | |||||||||||
| Total net revenue | 1,149 | 1,527 | 1,449 | 959 | 1,160 | 1 | % | |||||||||||
| Xbox One, PLAYSTATION 4, Switch | 762 | (375 | ) | (548 | ) | 244 | 705 | |||||||||||
| Other consoles | 3 | (40 | ) | (42 | ) | 14 | 5 | |||||||||||
| Total consoles | 765 | (415 | ) | (590 | ) | 258 | 710 | |||||||||||
| PC / Browser | 127 | (30 | ) | (61 | ) | (30 | ) | 83 | ||||||||||
| Mobile | 27 | 9 | (20 | ) | (7 | ) | 21 | |||||||||||
| Other | 2 | 1 | (3 | ) | (1 | ) | (3 | ) | ||||||||||
| Change in deferred net revenue (online-enabled games)4 | 921 | (435 | ) | (674 | ) | 220 | 811 | |||||||||||
| Xbox One, PLAYSTATION 4, Switch | 63 | % | 68 | % | 67 | % | 59 | % | 68 | % | ||||||||
| Other consoles | 6 | % | 5 | % | 4 | % | 3 | % | 2 | % | ||||||||
| Total consoles | 69 | % | 73 | % | 71 | % | 62 | % | 70 | % | ||||||||
| PC / Browser | 17 | % | 16 | % | 17 | % | 20 | % | 16 | % | ||||||||
| Mobile | 13 | % | 11 | % | 12 | % | 17 | % | 14 | % | ||||||||
| Other | 1 | % | — | — | 1 | % | — | |||||||||||
| Total net revenue % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
4The difference between the balances of deferred net revenue (online-enabled games) in the unaudited condensed consolidated balance sheets does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows 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) |
|||||||||||||
|
Q3 FY17 |
Q4 FY17 |
Q1 FY18 |
Q2 FY18 |
Q3 FY18 |
YOY % Change |
||||||||
| CASH FLOW DATA | |||||||||||||
| Operating cash flow6 | 1,137 | 437 | 176 | 52 | 849 | (25 | %) | ||||||
| Operating cash flow6 - TTM | 1,555 | 1,578 | 1,872 | 1,802 | 1,514 | (3 | %) | ||||||
| Capital expenditures | 25 | 29 | 33 | 30 | 24 | (4 | %) | ||||||
| Capital expenditures - TTM | 124 | 123 | 116 | 117 | 116 | (6 | %) | ||||||
| Repurchase and retirement of common stock | 127 | 125 | 150 | 153 | 150 | 18 | % | ||||||
| DEPRECIATION | |||||||||||||
| Depreciation expense | 29 | 29 | 29 | 30 | 30 | 3 | % | ||||||
| BALANCE SHEET DATA | |||||||||||||
| Cash and cash equivalents | 2,483 | 2,565 | 2,248 | 2,067 | 2,566 | ||||||||
| Short-term investments | 1,736 | 1,967 | 2,222 | 2,288 | 2,318 | ||||||||
| Cash and cash equivalents, and short-term investments | 4,219 | 4,532 | 4,470 | 4,355 | 4,884 | 16 | % | ||||||
| Receivables, net | 587 | 359 | 222 | 812 | 886 | 51 | % | ||||||
| STOCK-BASED COMPENSATION | |||||||||||||
| Cost of revenue | — | 1 | 1 | 1 | — | ||||||||
| Research and development | 27 | 28 | 28 | 36 | 38 | ||||||||
| Marketing and sales | 8 | 8 | 7 | 9 | 8 | ||||||||
| General and administrative | 13 | 15 | 12 | 16 | 17 | ||||||||
| Total stock-based compensation | 48 | 52 | 48 | 62 | 63 | ||||||||
6Operating cash flow has been recast to reflect the impact of ASU 2016-09 which EA adopted at the beginning of FY18.
