Electronic arts reports q1 fy18 financial results
Redwood city, calif.--(business wire)--electronic arts inc. (nasdaq: ea) today announced preliminary financial results for its first fiscal quarter ended june 30, 2017. “q1 was an outstanding quarter, with thriving player communities in our top franchises like battlefield, our ea sports portfolio, star wars, and the sims continuing to grow our network and drive our digital business,” said chief executive officer andrew wilson. “we have built strong momentum, and now we are accelerating into a year of tremendous innovation, where extraordinary new games, content-rich live services, and expanding global competitions will deliver more fun for our players and fuel growth for electronic arts.” “we had a great start to the fiscal year, primarily due to our event-driven live services,” said chief financial officer blake jorgensen. “our operating cash flow was the highest ever for a first quarter, and underlines how live services have fundamentally transformed our business model. driven by innovation and live services, we expect to continue to grow our profitability and cash generation.” 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 sales* of $3.147 billion for the trailing-twelve-month period represents 63% of total net sales, up 23% year-over-year. ultimate teamtm total unique player population grew 11% year-over-year. battlefieldtm 1 had more than 21 million players joining the game as of quarter end. monthly active players for the simstm 4 on pc increased more than 20% year-over-year. fifa mobile unique player base grew to more than 95 million. since launching its first season, nba live mobile has engaged more than 70 million unique users. * net sales is defined as the net amount of products and services sold digitally or sold-in physically in the period. selected financial highlights and metrics: all financial measures are presented on a gaap basis. net cash provided by operating activities was $176 million, a record for the first fiscal quarter. net cash provided by operating activities for the trailing-twelve-months was a record $1.872 billion. in q1, ea repurchased 1.4 million shares for $150 million. quarterly financial highlights: *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 june 30, 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: statement ofoperations acquisition-relatedexpenses change indeferred netrevenue(online-enabledgames) stock-basedcompensation 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, 2017. business outlook as of july 27, 2017 the following forward-looking statements reflect expectations as of july 27, 2017. 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 $5.075 billion. change in deferred net revenue (online-enabled games) is expected to be approximately $25 million. change in deferred net revenue (online-enabled games) is expected to be approximately $25 million. net income is expected to be approximately $1.125 billion. diluted earnings per share is expected to be approximately $3.57. operating cash flow, reflecting the recently adopted accounting standard related to stock-based compensation discussed below, is expected to be approximately $1.575 billion. the company estimates a share count of 315 million for purposes of calculating fiscal year 2018 diluted earnings per share. operational metric: net sales is expected to be approximately $5.100 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: gaapguidance acquisition-relatedexpenses change indeferred netrevenue(online-enabledgames) stock-basedcompensation second quarter fiscal year 2018 expectations – ending september 30, 2017 financial metrics: net revenue is expected to be approximately $955 million. change in deferred net revenue (online-enabled games) is expected to be approximately $205 million. change in deferred net revenue (online-enabled games) is expected to be approximately $205 million. net loss is expected to be approximately ($57) million. loss per share is expected to be approximately ($0.18). the company estimates a gaap basic and diluted share count of 310 million shares due to a forecasted net loss. if the company reports net income instead of a net loss, diluted share count for calculating diluted earnings per share would be 314 million shares. operational metric: net sales is expected to be approximately $1.160 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: gaapguidance acquisition-relatedexpenses change indeferred netrevenue(online-enabledgames) stock-basedcompensation impact of recently adopted accounting standard at the beginning of fiscal 2018, ea adopted fasb asu 2016-09, related to stock-based compensation. in the first quarter of fiscal 2018, we recorded a $39 million benefit to income tax expense that would have been recognized in additional paid-in capital under rules in effect prior to adoption. this pronouncement also requires ea to change how it reports the cash effects of stock-based compensation in the consolidated statement of cash flow. it does not impact total cash and cash flow, but it does increase operating cash flow and decrease cash flow from financing activities. the following table reflects the impact of this standard on operating cash flow for the periods presented: conference call and supporting documents electronic arts will host a conference call on july 27, 2017 at 2:00 pm pt (5:00 pm et) to review its results for the first fiscal quarter ended june 30, 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 august 9, 2017 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 90758729. 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 july 27, 2017,” 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 annual report on form 10-k for the fiscal year ended march 31, 2017. these forward-looking statements are current as of july 27, 2017. 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 june 30, 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 june 30, 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, battlefield 1, the sims, need for speed, dragon age, and plants vs. zombies are trademarks of electronic arts inc. nba, john madden, nfl and fifa are the property of their respective owners and used with permission. results (in $ millions, except per share data) the following table reports the variance of the actuals versus our guidance for the three months ended june 30, 2017 plus a comparison to the actuals for the three months ended june 30, 2016. actuals actuals march 31, 20171 1derived from audited consolidated financial statements. june 30, 20162 2operating and financing cash flow figures for the three months ended june 30, 2016 have been recast to reflect the impact of asu 2016-09 which ea adopted at the beginning of fy18 operating income (loss) operating income (loss) fy17 fy17 operating cash flow6 operating cash flow6 - ttm depreciation 6operating cash flow has been recast to reflect the impact of asu 2016-09 which ea adopted at the beginning of fy18
