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Electronic Arts Reports Q1 FY22 Financial Results

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Results Above Expectations, Raised Outlook for the Full Year

REDWOOD CITY, Calif., August 04, 2021--(BUSINESS WIRE)--Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its first fiscal quarter ended June 30, 2021.

"We’ve had a very strong start to the fiscal year with our incredible teams delivering experiences that continue to bring hundreds of millions of players together," said Andrew Wilson, CEO of Electronic Arts. "Our new launches, leading games, and live services all had an outstanding quarter. With our expanding EA SPORTS portfolio, more amazing experiences in Apex Legends, the groundbreaking new Battlefield 2042, and our leading live services including mobile, we’re set to deliver more great games and content to players this year."

"We delivered a big beat this quarter, primarily driven by outperformance from our recent launches coupled with continued strong execution in our live services," said COO and CFO Blake Jorgensen. "We’re looking forward to the launches of our sports titles this quarter and Battlefield 2042 in time for the holidays. Based on our strong performance this quarter and supported by our ongoing confidence in our live services, we are raising our outlook for the full year. Our strategic position has never been stronger, with growth drivers in place for this year, next year, and beyond."

Selected Operating Highlights and Metrics

  • Net bookings1 for the trailing twelve months was $6.136 billion, up 3% year-over-year.

  • More than 140 million players engaged with EA SPORTSTM games over the trailing twelve months.

  • Over 31 million players joined FIFA 21 on console and PC since launch.

  • FIFA Ultimate TeamTM matches are up 48% year-over-year for the quarter.

  • Season 9 for Apex LegendsTM averaged more than 13 million weekly active players and set a new record for peak daily players across all seasons.

Selected Financial Highlights and Metrics

  • Net cash (used in)/provided by operating activities was $(143) million for the quarter and $1.413 billion for the trailing twelve months.

  • EA repurchased 2.3 million shares for $325 million during the quarter, bringing the total for the last twelve months to 7.2 million shares for $976 million.

  • EA paid a cash dividend of $0.17 per share during the quarter.

Dividend

EA has declared a quarterly cash dividend of $0.17 per share of the Company’s common stock. The dividend is payable on September 22, 2021 to shareholders of record as of the close of business on September 1, 2021.

Quarterly Financial Highlights

Three Months Ended

June 30,

2021

2020

(in $ millions, except per share amounts)

Full game

322

359

Live services and other

1,229

1,100

Total net revenue

1,551

1,459

Net income

204

365

Diluted earnings per share

0.71

1.25

Operating cash flow

(143

)

378

Value of shares repurchased

325

78

Number of shares repurchased

2.3

0.7

The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

Three Months Ended June 30, 2021

GAAP-Based Financial Data

(in $ millions)

Statement of
Operations

Acquisition-
related
expenses

Change in
deferred net
revenue
(online-
enabled
games)

Stock-based
compensation

Total net revenue

1,551

-

(215

)

-

Cost of revenue

315

(22

)

-

(1

)

Gross profit

1,236

22

(215

)

1

Total operating expenses

914

(40

)

-

(124

)

Operating income

322

62

(215

)

125

Interest and other income (expense), net

(14

)

-

-

-

Income before provision for income taxes

308

62

(215

)

125

Number of shares used in computation:

Diluted

289

Trailing Twelve Months Financial Highlights

Twelve Months Ended

June 30,

2021

2020

(in $ millions)

Full game

1,576

1,984

Live services and other

4,145

3,803

Total net revenue

5,721

5,787

Net income

676

1,983*

Operating cash flow

1,413

2,017

Value of shares repurchased

976

980

Number of shares repurchased

7.2

9.8

*Includes the impact of one-time tax benefits recognized during the period.

The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

Twelve Months Ended June 30, 2021

GAAP-Based Financial Data

(in $ millions)

Statement of
Operations

Acquisition-
related
expenses

Change in
deferred net
revenue
(online-
enabled
games)

Stock-based
compensation

Total net revenue

5,721

-

415

-

Cost of revenue

1,521

(26

)

-

(5

)

Gross profit

4,200

26

415

5

Total operating expenses

3,303

(65

)

-

(453

)

Operating income

897

91

415

458

Interest and other income (expense), net

(40

)

-

-

-

Income before provision for income taxes

857

91

415

458

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,

2021

2020

2021

2020

(in $ millions)

Total net revenue

1,551

1,459

5,721

5,787

Change in deferred net revenue (online-enabled games)

(215

)

(69

)

415

193

Net bookings

1,336

1,390

6,136

5,980

Business Outlook as of August 4, 2021

Our financial expectations for the second fiscal quarter ending September 30, 2021 and the fiscal year ending March 31, 2022 include estimates of the impact of our completed acquisitions on consolidated results. The GAAP and operating cash flow estimates could be materially impacted as we integrate these recent acquisitions.

Fiscal Year 2022 Expectations – Ending March 31, 2022

Financial metrics:

  • Net revenue is expected to be approximately $6.850 billion.

    • Change in deferred net revenue (online-enabled games) is expected to be approximately $550 million.

  • Net income is expected to be approximately $456 million.

  • Diluted earnings per share is expected to be approximately $1.58.

  • Operating cash flow is expected to be approximately $1.850 billion.

  • The Company estimates a share count of 289 million for purposes of calculating fiscal year 2022 diluted earnings per share.

Operational metric:

  • Net bookings1 is expected to be approximately $7.400 billion.

In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% 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, 2022

GAAP-Based Financial Data

GAAP
Guidance

Acquisition-
related
expenses

Change in
deferred net
revenue (online-
enabled games)

Stock-based
compensation

(in $ millions)

Total net revenue

6,850

-

550

-

Cost of revenue

1,921

(140

)

-

(5

)

Operating expense

4,015

(160

)

-

(545

)

Income before provision for income taxes

856

300

550

550

Net income

456

Number of shares used in computation:

Diluted shares

289

Second Quarter Fiscal Year 2022 Expectations – Ending September 30, 2021

Financial metrics:

  • Net revenue is expected to be approximately $1.775 billion.

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

  • Net income is expected to be approximately $105 million.

  • Diluted earnings per share is expected to be approximately $0.36.

  • The Company estimates a share count of 288 million for purposes of calculating second quarter fiscal 2022 diluted earnings per share.

Operational metric:

  • Net bookings1 is expected to be approximately $1.725 billion.

In addition, the following outlook for GAAP-based financial data2 and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:

Three Months Ending September 30, 2021

GAAP-Based Financial Data

GAAP
Guidance

Acquisition-
related
expenses

Change in deferred
net revenue (online-
enabled games)

Stock-based
compensation

(in $ millions)

Total net revenue

1,775

-

(50

)

-

Cost of revenue

518

(35

)

-

-

Operating expense

1,030

(40

)

-

(150

)

Income before provision for income taxes

212

75

(50

)

150

Net income

105

Number of shares used in computation:

Diluted shares

288

Conference Call and Supporting Documents

Electronic Arts will host a conference call on August 4, 2021 at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal quarter ended June 30, 2021 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 (866) 324-3683 (domestic) or (509) 844-0959 (international), using the conference code 1183378 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 18, 2021 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 1183378. 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 August 4, 2021," and other information regarding EA's fiscal 2022 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: the impact of the COVID-19 pandemic, 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 among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic 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 August 4, 2021. 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, 2021. 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, 2021.

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 2021, EA posted GAAP net revenue of $5.6 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and F1®. More information about EA is available at www.ea.com/news.

EA SPORTS, Ultimate Team, Battlefield, Need for Speed, Apex Legends, The Sims, 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.

2

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2021.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in $ millions, except per share data)

Three Months Ended

June 30,

2021

2020

Net revenue

1,551

1,459

Cost of revenue

315

288

Gross profit

1,236

1,171

Operating expenses:

Research and development

515

438

Marketing and sales

190

121

General and administrative

169

136

Amortization of intangibles

40

5

Total operating expenses

914

700

Operating income

322

471

Interest and other income (expense), net

(14

)

(3

)

Income before provision for income taxes

308

468

Provision for income taxes

104

103

Net income

204

365

Earnings per share

Basic

0.71

1.27

Diluted

0.71

1.25

Number of shares used in computation

Basic

286

288

Diluted

289

292

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on May 11, 2021 for the three months ended June 30, 2021 plus a comparison to the actuals for the three months ended June 30, 2020.

Three Months Ended June 30,

2021

2021

2020

Guidance

Variance

Actuals

Actuals

Net revenue

Net revenue

1,475

76

1,551

1,459

GAAP-based financial data

Change in deferred net revenue (online-enabled games)1

(225

)

10

(215

)

(69

)

Cost of revenue

Cost of revenue

287

28

315

288

GAAP-based financial data

Acquisition-related expenses

(5

)

(17

)

(22

)

Stock-based compensation

(1

)

(1

)

(1

)

Operating expenses

Operating expenses

955

(41

)

914

700

GAAP-based financial data

Acquisition-related expenses

(70

)

30

(40

)

(5

)

Stock-based compensation

(125

)

1

(124

)

(101

)

Income before tax

Income before tax

220

88

308

468

GAAP-based financial data

Acquisition-related expenses

75

(13

)

62

5

Change in deferred net revenue (online-enabled games)1

(225

)

10

(215

)

(69

)

Stock-based compensation

125

125

102

Tax rate used for management reporting

18

%

18

%

18

%

Earnings per share

Basic

0.24

0.47

0.71

1.27

Diluted

0.24

0.47

0.71

1.25

Number of shares

Basic

287

(1

)

286

288

Diluted

291

(2

)

289

292

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, 2021

March 31, 20212

ASSETS

Current assets:

Cash and cash equivalents

2,838

5,260

Short-term investments

881

1,106

Receivables, net

557

521

Other current assets

401

326

Total current assets

4,677

7,213

Property and equipment, net

510

491

Goodwill

4,256

2,868

Acquisition-related intangibles, net

909

309

Deferred income taxes, net

1,960

2,045

Other assets

422

362

TOTAL ASSETS

12,734

13,288

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

73

96

Accrued and other current liabilities

1,093

1,341

Deferred net revenue (online-enabled games)

1,305

1,527

Total current liabilities

2,471

2,964

Senior notes, net

1,877

1,876

Income tax obligations

321

315

Deferred income taxes, net

24

43

Other liabilities

313

250

Total liabilities

5,006

5,448

Stockholders’ equity:

Common stock

3

3

Retained earnings

7,760

7,887

Accumulated other comprehensive loss

(35

)

(50

)

Total stockholders’ equity

7,728

7,840

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

12,734

13,288

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,

2021

2020

OPERATING ACTIVITIES

Net income

204

365

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation, amortization and accretion

105

37

Stock-based compensation

125

102

Change in assets and liabilities

Receivables, net

12

(44

)

Other assets

(74

)

44

Accounts payable

(19

)

(3

)

Accrued and other liabilities

(302

)

(66

)

Deferred income taxes, net

28

10

Deferred net revenue (online-enabled games)

(222

)

(67

)

Net cash provided by (used in) operating activities

(143

)

378

INVESTING ACTIVITIES

Capital expenditures

(44

)

(38

)

Proceeds from maturities and sales of short-term investments

507

694

Purchase of short-term investments

(285

)

(664

)

Acquisitions, net of cash acquired

(1,989

)

Net cash used in investing activities

(1,811

)

(8

)

FINANCING ACTIVITIES

Proceeds from issuance of common stock

3

Cash dividends paid

(49

)

Cash paid to taxing authorities for shares withheld from employees

(105

)

(69

)

Repurchase and retirement of common stock

(325

)

(78

)

Net cash used in financing activities

(479

)

(144

)

Effect of foreign exchange on cash and cash equivalents

11

19

Change in cash and cash equivalents

(2,422

)

245

Beginning cash and cash equivalents

5,260

3,768

Ending cash and cash equivalents

2,838

4,013

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions, except per share data)

Q1

Q2

Q3

Q4

Q1

YOY %

FY21

FY21

FY21

FY21

FY22

Change

Net revenue

Net revenue

1,459

1,151

1,673

1,346

1,551

6

%

GAAP-based financial data

Change in deferred net revenue (online-enabled games)1

(69

)

(241

)

727

144

(215

)

Gross profit

Gross profit

1,171

865

1,072

1,027

1,236

6

%

Gross profit (as a % of net revenue)

80

%

75

%

64

%

76

%

80

%

GAAP-based financial data

Acquisition-related expenses

4

22

Change in deferred net revenue (online-enabled games)1

(69

)

(241

)

727

144

(215

)

Stock-based compensation

1

2

1

1

1

Operating income

Operating income

471

149

251

175

322

(32

%)

Operating income (as a % of net revenue)

32

%

13

%

15

%

13

%

21

%

GAAP-based financial data

Acquisition-related expenses

5

6

5

18

62

Change in deferred net revenue (online-enabled games)1

(69

)

(241

)

727

144

(215

)

Stock-based compensation

102

113

111

109

125

Net income

Net income

365

185

211

76

204

(44

%)

Net income (as a % of net revenue)

25

%

16

%

13

%

6

%

13

%

GAAP-based financial data

Acquisition-related expenses

5

6

5

18

62

Change in deferred net revenue (online-enabled games)1

(69

)

(241

)

727

144

(215

)

Stock-based compensation

102

113

111

109

125

Tax rate used for management reporting

18

%

18

%

18

%

18

%

18

%

Diluted earnings per share

1.25

0.63

0.72

0.26

0.71

(43

%)

Number of diluted shares used in computation

Basic

288

289

290

288

286

Diluted

292

293

292

290

289

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 %

FY21

FY21

FY21

FY21

FY22

Change

QUARTERLY NET REVENUE PRESENTATIONS

Net revenue by composition

Full game downloads

223

163

347

185

233

4

%

Packaged goods

136

119

375

65

89

(35

%)

Full game

359

282

722

250

322

(10

%)

Live services and other

1,100

869

951

1,096

1,229

12

%

Total net revenue

1,459

1,151

1,673

1,346

1,551

6

%

Full game

25

%

25

%

43

%

19

%

21

%

Live services and other

75

%

75

%

57

%

81

%

79

%

Total net revenue %

100

%

100

%

100

%

100

%

100

%

GAAP-based financial data

Full game downloads

(5

)

(2

)

53

(19

)

(5

)

Packaged goods

(67

)

(14

)

83

(44

)

(35

)

Full game

(72

)

(16

)

136

(63

)

(40

)

Live services and other

3

(225

)

591

207

(175

)

Total change in deferred net revenue (online-enabled games) by composition1

(69

)

(241

)

727

144

(215

)

Net revenue by platform

Console

932

714

1,191

879

972

4

%

PC & Other

325

249

326

295

361

11

%

Mobile

202

188

156

172

218

8

%

Total net revenue

1,459

1,151

1,673

1,346

1,551

6

%

GAAP-based financial data

Console

(108

)

(201

)

619

71

(278

)

PC & Other

15

(24

)

73

51

9

Mobile

24

(16

)

35

22

54

Total change in deferred net revenue (online-enabled games) by platform1

(69

)

(241

)

727

144

(215

)

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 %

FY21

FY21

FY21

FY21

FY22

Change

CASH FLOW DATA

Operating cash flow

378

61

1,124

371

(143

)

(138

%)

Operating cash flow - TTM

2,017

2,041

2,061

1,934

1,413

(30

%)

Capital expenditures

38

25

30

31

44

16

%

Capital expenditures - TTM

133

131

133

124

130

(2

%)

Repurchase and retirement of common stock

78

326

325

325

317

%

Cash dividends paid

49

49

49

100

%

DEPRECIATION

Depreciation expense

31

32

37

38

40

29

%

BALANCE SHEET DATA

Cash and cash equivalents

4,013

4,059

4,772

5,260

2,838

Short-term investments

1,947

1,972

1,938

1,106

881

Cash and cash equivalents, and short-term investments

5,960

6,031

6,710

6,366

3,719

(38

%)

Receivables, net

507

423

778

521

557

10

%

STOCK-BASED COMPENSATION

Cost of revenue

1

2

1

1

1

Research and development

66

74

74

71

85

Marketing and sales

11

12

11

12

12

General and administrative

24

25

25

25

27

Total stock-based compensation

102

113

111

109

125

Category: Company News

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804005984/en/

Contacts

Chris Evenden
Vice President, Investor Relations
650-628-0255
cevenden@ea.com

John Reseburg
Vice President, Global Communications
650-628-3601
jreseburg@ea.com