Electronic Arts Inc. (EA) on Q4 2021 Results - Earnings Call Transcript

Operator: Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Electronic Arts Q4 2021 Earnings Conference Call. Mr. Chris Evenden, VP of Investor Relations, you may begin your conference. Chris Evenden: Thanks, Mike. Welcome everyone to EA’s fourth quarter fiscal 2021 earnings call. With me from their homes today are Andrew Wilson, our CEO, and Blake Jorgensen, our CFO and COO. Please note that our SEC filings and our earnings release are available at ir.ea.com. In addition, we have posted earnings slides to accompany our prepared remarks. Lastly, after the call, we will post our prepared remarks, an audio replay of this call, our financial model, and a transcript. Andrew Wilson: Thanks, Chris. I hope this finds all of you staying healthy and well. I want to start today by saying welcome to our newest teammates from Codemasters, Glu Mobile, and Metalhead Software. We’re very excited to have added these incredibly talented teams to the EA family, and we’re looking forward to creating some amazing new experiences together. FY2021 was a record year for Electronic Arts. Engagement in our games continues to expand worldwide, leading industry transformation and fueling demand from a new generation of players that will continue for years to come. We delivered 13 new games in FY 2021, and welcomed more than 42 million new players to our network of more than 500 million unique accounts. The tremendous engagement across our leading live services is a powerful demonstration of how players are coming together and forming social networks through our experiences. We drove net bookings growth of more than $600 million above our original guidance for the fiscal year, and achieved bottom line results significantly ahead of our expectations. Our teams continue to deliver for our players despite the challenges of the pandemic, and our execution of long-term strategies to create exceptional, high-quality experiences, drive growth through our leading live services, and expand our reach to more players, are continuing to build strength in our business. As we look forward into FY2022, we are accelerating, powered by organic growth in our existing business, development of new businesses, and layering in growth from recent acquisitions. We’re forecasting strong growth in FY2022. Our net bookings guidance reflects 18% year-over-year growth to $7.3 billion. This includes organic growth in our core business and the addition of the Glu, Codemasters and Metalhead acquisitions. From this position of strength, we are also investing in the future of our business, and we expect to continue to grow underlying profitability. A - Blake Jorgensen: Thanks, Andrew. We delivered a big beat this quarter, driven by live services, primarily, an extraordinary performance by Apex Legends. GAAP net revenue was $1.35 billion and net bookings of $1.49 billion which were new records for Q4. Andrew gave you Apex’s phenomenal engagement stats. As a result of that engagement, Apex delivered its largest net bookings quarter on record. It also delivered the best day, the best 24-hour period, the best week, the best month and best in-game event. We suggested it would deliver over $1 billion in life-to-date net bookings by the end of the quarter; it actually passed that milestone with half of the quarter to go. Apex Legends delivered over $600 million for the year, well above our original expectation of $300 million to $400 million. Importantly, Apex Legends steadily grew through the last year. While Apex surely benefited from a stay-at-home tailwind, the upwards trajectory is driven by the game teams and the content they are delivering. That is, this strength is structural. Andrew Wilson: Thanks, Blake. As we wrap up our remarks here, I want to share a heartfelt congratulations to Respawn Entertainment. The team achieved another amazing milestone last month, when they received the gaming industry's first Academy Award for co-producing the documentary short subject Colette, which was released within the Medal of Honor: Above & Beyond VR experience. Congratulations to Vince, Dusty, Peter and the entire team, it is a truly outstanding achievement, and such an incredible recognition of the creativity and passion for groundbreaking work that all of our teams put into our games. Games are bringing joy to more players around the world than ever before, and our experiences are bringing hundreds of millions of players together. Our business has never been stronger, we have clear growth drivers accelerating our trajectory in FY2022, and our acquisitions are new catalysts for growth. As we continue building blockbuster franchises with best-in-class live services that reach and connect players on more platforms and in more geographies around the world, we see significant upside for Electronic Arts this year and in the years to come. Thank you to our teams for their incredible work delivering for our players every day. Now Blake and I are here for your questions. Operator: Your first question comes from Colin Sebastian from Baird. Colin Sebastian: Great. Thanks. Good afternoon everyone. First off, Blake, it looks like services on console and PC increased almost 40% in fiscal Q4 if I have the apples to apples numbers there, right. So curious how you expect that portion of the business to track in Q1 and in the next fiscal year? And then, secondly, Andrew within core EA, it sounds like you have a pretty ambitious roadmap for new releases in live ops So I'm curious if you have the studio structure and the development team and resources in place now where you're comfortable with in order to execute in that pipeline? Or are there still some gaps that need to be filled in? Thanks. Blake Jorgensen: Thanks, Colin. It's Blake. We've seen across the board live services increases. Clearly, Apex has driven a huge change in that business. It's up dramatically year-over-year. In the fourth quarter alone year-over-year, it's up 145%. And the way we've done that as you know is continue to add amazing content, amazing characters, amazing things for people to play, and it's engaging more and more people all the time. While COVID as horrible as it has been brought a lot of people into gaming and what we've done is try to do our best to bring more and more people into social networks around the games they love, be it sports, be it shooter game, be it The Sims and that's what we've been able to leverage over time and those people stay in those social networks because they enjoy the game and enjoy the people they're playing with. And so, we see across all of our live services, Ultimate Team, Apex, The Sims, all of our mobile games that have helped us get the confidence that we could give the guidance that we just provided for next year. And I think you're going to continue to see that as a huge part of our business. It's going to be a huge part of the industry business as we've already seen, but it will continue on for us and we'll continue to add to that with new content, new ways to play, new opportunities for people to deeply get connected with other people that like what they like to do. Andrew Wilson: And on the same question, great question, we feel really good about our studio organization, as you heard in the prepared remarks and you've heard me talk about before over the last year we really reorganized our mobile group. We brought in new leadership, both at the very top of the organization and throughout the organization, who really bring great global expertise and experience and knowledge and know-how, and of course, bringing in Codemasters – bringing in Glu Mobile to that group puts us in a really, really strong position for an increased focus on mobile, where we see tremendous growth opportunity. Across the rest of our studio structure, I also feel really, really good about our leadership and all of our creative talent there. Again, we've brought in Codemasters, which are some of the leading racing developers in the world. You'll see more from us around our holistic racing strategy, but F1 is already looking really, really strong for this year. And we've been recruiting over the last 12 to 18 months, some amazing industry-leading talent, some of those have been announced, some announced yet, but we have a very ambitious growth plan ahead and we feel really good about the structure we have in place. Of course we'll always be tuning and balancing that all the time, but I feel blessed and lucky to have the creative leadership and the creative talent that we do to achieve the things that we have planned. Colin Sebastian: All right. Thanks guys. Operator: Your next question comes from Stephen Ju from Credit Suisse. Stephen Ju: Okay, thank you. So, Andrew, Blake I think investors have been waiting for the audience unlock from mobile for some time now, particularly as it comes to your larger franchises. So, can you talk about the initial integration plans with the good folks at Glu and you know what that might look like from a franchise by franchise standpoint? So, what are the opportunities to get you to one plus one to be more than two so that, Blake, your forecasting guidance parameters that's going to be greater than just a straight forward addition of these on to EA's existing results. Thanks. Andrew Wilson: I would say from a philosophical standpoint, our orientation around Glu is to protect and amplify ensure that we protect the creative integrity, the cultural integrity of that organization. They have been very, very successful in developing great games like Design Home and Tap Sports Baseball and many others. But we also want to give them access to our IP, to our technology, to our market, our global marketing reach and the network of 500 million unique accounts that we have and we feel that the combination of those two things represents an extraordinary opportunity. But at the same time also been working on our organic – on the EA model team around organic growth and you’ve heard me talk about significant increase in the S&R franchise, a relaunch of Madden and UFC, aggressive plans around The Sims and a number of other properties including Battlefield and Apex Legends. And so our sense is we expect with the reorganization and focus on mobile, bringing in Glu to the organization with kind of protect and amplify orientation and the collective growth plans that we have an investment that we’re making, we have tremendous upside opportunity at a time where brands are breaking through more stronger than most anything else in the mobile market. Stephen Ju: Thank you. Operator: Your next question comes from Brian Fitzgerald from Wells Fargo. Brian Fitzgerald: Thanks, maybe but follow-on to Stephen’s question. And that’s around with all the M&A activity you’ve seen on the mobile side, AppLovin and Machine Zone, and then they also just bought Adjust and then you guys the Glu and Zynga with Chartboost. Is the mobile piece, the advertising piece of that and the cross platform piece is that an initiative that’s going to kind of catalyze a more vertically integrated approach to the business, a more holistic and robust approach to consumer engagement and how you monetize those guys lifetime value yield perspective. Are you missing anything on the ad tech side, do you think for premier kind of holistic mobile approach? Blake Jorgensen: Yes, I would say it’s too early to say on ad tech. We know there is a lot of changes going on in the market as you guys know and we’ll watch closely as to how those changes may impact advertising inside of the mobile games. We also know that most mobile gaming advertising is for other mobile games and we’ve always wanted to try to keep people in our own network, right or wrong, but that’s been our focus. I think the near-term opportunity is really the talent that these teams have that could impact our own franchises in the IP that we have in those franchises. So building more casual games for example, building new sports games. I think that’s where we were most excited about Glu and the reason we bought them. And I think longer-term, over the next couple of years as we see how the ad business changes, we might be more aggressive there, but really this is about building new franchises with great talent. Brian Fitzgerald: Got it. Thanks Blake, appreciate it. Operator: Your next question comes from Alexia Quadrani from JP Morgan. Alexia Quadrani: Hi, thank you. Can you elaborate on the success, the tremendous success you’ve seen in Apex Legends? I mean is it a core group of players playing the game more and more season after season? Or have you notably expanded the player bases well? And any update on timeline of Apex for China? Andrew Wilson: I would say as we look at the data on Apex Legends, we have seen from season to season, what the Apex Legends team have been able to do is grow pretty much every meaningful metric around the business. The amount of players, the amount of time players spend, the amount of connections players have in the game, the amount of touch point the players have and of course revenue generation from that growing player base. I think as we project forward, what they have done from the very beginning is ensure that they always protect the gaming community, but they’re very close and listen to the gaming community offering what that community wants, the day to day retention is off the charts for free to play game and that’s why we are confident in projecting future growth around both the existing base and then of course Apex Mobile. And what we talked about is releasing or soft launching Apex Mobile later this year as is the nature of mobile games, we have a series of closed beta tests, open beta tests and then soft launches to ensure we are appropriately treating the metrics. We’ve not gotten big numbers in our plan this year forward, Blake can comment more on that. But what we’ve really done is apply the same orientation the team has had around the core franchise, which is let’s make sure we get the game play right, let’s make sure we get the event strategy around the game play right and let’s make sure we’re looking at players and delivering on what players want out of that experience. That is growing every meaningful metric of Apex Legends every single season since launch and our expectation is that we’ll also be able to grow that in the same way in mobile. Blake Jorgensen: Yes, and we’ve put really – as I think Andrew mentioned in his prepared remarks, we’ve put relatively little revenue in for Apex Mobile in this coming year because you don’t know exactly when you will release the mobile game. You want to make sure you test it, tune it and then release it at the right time and that’s globally, including China. We believe there are some huge markets for Apex mobile, as Andrew also mentioned, Japan is one of our largest markets for the console and PC game and the switch game. And so, we believe it will be a huge market for mobile, so we will prioritize some of those markets, but we also know people love the game all around the world, so more to come on that. I would just trust that we have not put a large number in our forecast for Apex mobile yet, because of some of those unknowns. Alexia Quadrani: Thank you. Operator: Your next question comes from Mike Ng from Goldman Sachs. Michael Ng: Hi, thank you very much for the question. I was just wondering if you could elaborate a little bit on the comment about how the new EA SPORTS or design for next-gen, what does that enable from a pricing perspective. And then separately, I think, you made similar comments around Battlefield as well. For Battlefield, specifically, will that be available for both current gen and next-gen? Thank you. Andrew Wilson: So yes, Battlefield will be available for both current gen and next-gen as well as sports titles. The reference specifically from our prepared remarks is around the nature of game play, what we can do with fidelity of the game, what we can do with physics, artificial intelligence and the immersive nature of the game. And in the case of Battlefield, what we can do with respect to the amount of plays that we can have in the game and the nature of destruction of those only in Battlefield moments that are truly next-gen opportunities that we’re able to do in the context of our next-gen franchises, because of the increased processing power in memory and output of the new consoles. We’re really excited about that what that means for our products. If you go back to the history of our industry, every time we were able to deliver high fidelity, more meaningfully immersive products as a result of increased processing powered platform transitions, we’ve been able to grow the market dramatically. And sports and games like Battlefield have been leaders on that every platform generation shift. And we’re excited by the fact our entire EA SPORTS portfolio and Battlefield will be developed specifically around features for next-gen players. Michael Ng: Great, thank you very much. And just a follow-up if I may. I was just wondering if you could talk a little bit more about Ultimate Team live services content in the quarter and if you have any outlook for the year. Are there any notable events that you’ll be rolling out? And sorry if I missed it, but did you talk about Ultimate Team growth in the quarter? Thank you. Blake Jorgensen: Yes, we didn’t call out Ultimate Team growth in the coming quarter, which we don’t typically do. We just talked about Ultimate Team growth in last quarter, which year-over-year it was up 30%. The team has done an amazing job across all sports to find ways to continue to innovate and add new events. And that’s what’s always drives, brings people in to Ultimate Team and drives people to play Ultimate Team and we’ve gotten better and better that over the life of the product and we’ll continue to do that and we have optimism for the coming year and many years to come around all the sports Ultimate Teams because we will continue to innovate on those and look for new ways for people to play them. Michael Ng: Great, thank you, Blake. Thanks, Andrew. Operator: Your next question comes from Mario Lu from Barclays. Mario Lu: Great, thanks for taking the questions. I have one on Apex and one on Battlefield. So, the first one on Apex. I know it’s only been a week since the launch, but can you comment on how the second permanent mode arena is performing versus your expectations. And do you expect this mode to kind of bring in more new players or just increasing the engagement of existing? Andrew Wilson: It’s still too early to tell in terms of macro numbers, other than the demand was pretty incredible. First, we can add to the point where we had a few stability issues in the community, we're able to resolve those very quickly just the nature of demand was so extraordinary. In terms of do we expect that just to engage more existing players are bringing new players? I think, we believe both of those things will happen. What you have seen from the Apex team each and every season whether it’s launching new maps, new characters or new modalities of play, every season has grown both players and the engagement of the existing player base and the player investment that comes from those two things. And so, it’s still early to tell. I’m going to say Season 8 is the biggest since Season 1 in 2019 and Season 9 as of right now looks like it will be bigger than Season 8 meaningfully so. And we’re very excited about what these new modes will do. And you should expect many more new modes from Apex over the coming years. Mario Lu: Okay, thanks. And then the one on Battlefield, the new mobile title that’s coming in late fiscal 2022, I believe it’s developed by Industrial Toys. So can you provide some background on how you decided to choose that studio versus partnering with one of the Chinese companies like Tencent or NetEase. Thanks. Andrew Wilson: Great question. Industrial Toys, we acquired some number of years ago now. It’s led by the original team who helped to create Halo as a franchise and then it'd gone on to work in a number kind of mobile companies. And we're really committed to building a truly innovative experience around first-person shooter mechanics. When we met the team, we just feel that an incredible team. They had really unbelievable design ideas. And when we talked with them about the opportunity to work on Battlefield, they were as excited as we were. And so, we brought that team and the company a while ago now. They’ve been working a number of the – a number of years through a number of cycles. And we got to a place where we’re really very excited about the mechanics. It’s a different kind of shooting mechanic to our Apex Legends. We believe they will speak with two very different markets both which have tremendous upside and tremendous opportunity for us and both games are coming from really talented studios. Mario Lu: Great. Thanks, Andrew. Operator: Your next question comes from Mike Hickey from Benchmark Company. Mike Hickey: Hi, Andrew, Blake. Congrats on the quarter guys. Thanks for taking my questions. Just curious, again on Battlefield here, if you're seeing opportunity to annualize the premium experience, obviously, you've done well with that in sports. And prior Battlefield, I think, you had some experience with the Battle Royale. I am curious if that’s still a consideration for the year and for the franchise moving forward. Andrew Wilson: Nothing to announce at the moment on either an annualized Battlefield and/or the nature of the modes in the upcoming Battlefield game, we’re going to talk about a lot around that in the months to come starting next month with our reveal trailer, which I have a chance of seeing the work in progress last week and it is incredible. What the team has been able to do in the context of next-generation consoles and epic scale battles, unbelievable player accounts, destruction in terms of those which is really incredible, and it’s a very innovative and creative mode for the future of the franchise. The other thing that you should know and I talked about in the prepared remarks is we do have a blueprint, which is how do we start with our AAA premium experience that is truly innovative in its category, how do we build out live service for long-term engagement and then how do we think about modalities at play and business models to further extend our reach and penetration of that game on a global basis across platforms, across geographies, across business models. And so you’ll hear a lot more from us in the months ahead, but I would just – I would finish by saying we're really excited about Battlefield, everything I’ve seen in the game is spectacular. And I think it’s going to be an amazing relaunch of that franchise this year and will lead us into an incredible live service for the future. Blake Jorgensen: Yes, Mike you know that we do believe that won't give the Battlefield fans many ways to play and let them play for a long time. And I think you’ll see that and what we’ll talk about in the future, it is an opportunity to extend the Battlefield experience for people because it is such an engaged community. I’d love to tell you what I said when I saw the trailer last week, but I would – I can’t because it would get censored, but it’s just to emphasize Andrew’s point, I think people are going to be really blown away. And I’ll tell you on gen-five, it is even more spectacular, but it will be great on either console, but it’s going to be very exciting, I think. Mike Hickey: Nice, excited to play in. Last question for me, I think last call you noted that development of Battlefield is ahead of expectations, obviously you’ve seen it exciting, maybe buzz building, but at the same time it looks like we view Criterion that studio to do additional work with the base. And I am just curious on the decision to do that and what your plans are for Need for Speed in the future? Thanks guys. Andrew Wilson: Yes, there are two things at play here. One is we have incredible ambition around Battlefield. We’ve got DICE Stockholm, DICE LA, at Criterion our technology team in Gothenburg. And our entire Frostbite team, quite honestly, focused on making this the best possible Battlefield it can be. We've made tremendous progress. The teams have unbelievable ambition to be truly creative and innovative experience. And having Criterion who have delivered some of the most amazing experiences in our history and have worked really closely with DICE in the past come together to help realize the fullness of that ambition, which is the no brainer for us this year. What has also happened, of course, as we had acquired Codemasters and a number of new racing games, including the F1 franchise, which is shaping up to be really strong this year. And it was an opportunity for us to really think more broadly about our holistic racing strategy. Need for Speed will absolutely be a meaningful part of our future. We actually think there is with the combination of EA and Codemasters, we can actually expand and extend and enhance an interesting franchise, but those two things together meant that having Criterion work on Battlefield this year was absolutely the right choice for us. Blake Jorgensen: Yes, Mike, you know that Criterion actually delivered much – associated with – or flying associated with Battlefront I and Battlefront II. They’ve worked very closely with DICE for a long time. And they are experts in driving, flying the things that are really hard to do. And so, it’s not the first time that we pulled them into projects and they love it. They love to be able and we’ve tried to create a culture where people want to work together. And I think that’s what you’re seeing here versus some other idea that well something must be wrong. No, no. This is an opportunity to put talent in at the right time and we always are measuring how that might impact future schedules. But as Andrew said, with the addition of Codemasters, we have a plethora of driving game opportunities right now that we can go after. And Criterion will continue to work on those going forward. Mike Hickey: Thanks guys. Operator: Your next question comes from Drew Crum from Stifel. Drew Crum: Okay, thanks. Hi, guys. Good afternoon. I’m wondering if you’d be willing to discuss the pipeline for Glu and what’s contemplated in fiscal 2022 net bookings guidance. They've previously planned to release a new Deer Hunter game and Table & Taste? And then separately, Blake, I think you mentioned some one-time expenses related to the Codemasters and Glu acquisitions. Are those cash or non-cash? And is it embedded in the 17% non-GAAP EPS growth that you’re forecasting? And if not, what’s the disconnect between that and the 18% net bookings growth that you’re forecasting? Thanks. Blake Jorgensen: Yes. We basically took their forecast that we used when we did the acquisition, which were fairly consistent with what they had done in the past. We didn’t want to – we wanted to make sure we didn’t over inflate those. We wanted to make sure we were pretty consistent with how they have talked about there for past. So you should assume they’re pretty similar to what you’ve seen historically. In terms of the one-time costs, they are cash costs. They are – in most cases, there might be some tax or R&D capitalization that occurs that will go into our P&L. But at the end of the day, the core cost in OpEx or things like deal fees, legal fees, closing fees, integration fees and those impact mainly the first quarter and not the full year. But there will be longer term on our GAAP EPS. There will be some accounting for acquisitions that are collection of buying in of IP, which is a positive right because they have great IP. So the amortization of intangibles related to the acquisition and some one-time cash tax charges that may impact cash taxes and the cash flow. The other two that I mentioned was most likely will not impact cash flow. So but we wanted to make sure we were transparent about that. I would not worry about it because I think we will be able to continue to grow these businesses and generate higher returns off for businesses than they have in the past. And as I said, we did not put into our forecast any of the synergies associated with those acquisitions yet. More to come on that in the couple of – next couple of quarters. Just we literally just closed Glu what a few weeks ago and Codemasters a month ago. So we’re just getting to a point where we truly understand what the integrations are going to look like, what cash and non-cash charges will look like, we will keep everyone informed. I would say it is not a big swing in the year on a non-GAAP side. It’s only a swing on a GAAP EPS side, just because the way the accounting works for acquisition. Drew Crum: Okay. Thanks, Blake. Operator: Your next question comes from Andrew Uerkwitz from Jefferies. Andrew Uerkwitz: Hi, thanks gentlemen, just two quick ones. The first one, how should we read into EA Play moving into July from June? Lots of reasons why that could be move back, just curious how you’re thinking about that in the future of marketing for your titles. And then secondly, it sounds like Battlefield and your future for sports franchises are really trying to take advantage of next-gen consoles. How should we think about obviously some games that have tried doing that struggled on previous consoles were being too ambitious. How should we think about those titles relative to the two different generation of consoles? Thanks guys. Andrew Wilson: Yes, on EA Play, I think that typically E3 govern the key promotional timeframe across most of the industry happened in June given COVID and virtual marketing and the nature of these things. I think we’ve been able to kind of thinking about what’s the most appropriate time line for us and given the launch schedules at our guidance we feel like July is the right time frame from that, but what I’d also say is as we talked about. You’ll hear a lot from us – in June and we'll kind of ramp up after that July. So it’s not like you won’t hear anything inform us until July. The July timeframe just optimally time for our title launches better suits us. We’ve showed up in June in the past because the whole industry has at that time, while with the world that we live in now we have greater flexibility to do what’s more relevant for our business. With respect to the current generation versus next generation titles or maybe we should say current generation versus past generation platform titles, I mean this is we have done exceptionally well for decades. I had a great fortunate growing up in this company and building games on multiple generations. And I think when you think about our infrastructure around our Frostbite team, our digital services teams and our game teams who have unbelievable experience getting the very best out of the past generation consoles to ensure that even as we move to the next generation, we’re getting more and more out of the old generation platforms. And so those games are going to look great. When we think about new platform generations, again with the advances that we’re making in Frostbite with the advances that we’re making in our digital ecosystem and with the advances that we’re making at a future design level with the new unlocks that come from power, the gains on next generation consoles are going to be extraordinary. And then we’ve already launched FIFA and Madden on those platforms. And so, we’re going into year two of those and we gain a lot of learning with our other franchises as we move into the second year of the platform. Andrew Uerkwitz: Awesome, thank you. Blake Jorgensen: Yes, the only other thing I would add to that is remember if our business is approaching 70% plus live services what is critical is getting people into a franchise because once they are in a franchise or in a social network with other people that love the same thing they do and that means they will engage in the live service, which means they’re going to stay longer, they may spend, but most importantly it becomes something that they do for a long time, because it is that network that holds them together. If you love football, you want to engage in football with all the people that love the same thing you do, the same team, the same league, whatever it might be. So a part of the logic around building out the subscription platform on multiple vehicles is making sure we’re continuing to bring people to live services, which we know people will love over time to play. Andrew Uerkwitz: Got it, thank you. Operator: Your next question comes from Matthew Thornton from Truist Securities. Matthew Thornton: Hi, Andrew. Hi, Blake. Thanks for taking the question. Maybe a couple of quick ones from me. First on Apex, you talked about, obviously, layering in mobile growth. I guess if we think about just the base game this year, do you expect growth in the base game maybe just driven by the full year of the launch on Apex, any color there. Secondly, as it relates to Battlefield, I don’t know if you can maybe give us any context as to how you’re thinking about that in the fiscal 2022 guidance, maybe relative to prior precedent for the game, again any color there. And then just lastly, I’m not sure if you'd be willing to buy it, but on any developments or progress you’d be willing to talk about as it relates to maybe the out-year pipeline in several of the titles that you’ve disclosed and discussed in the past. Thanks guys. Blake Jorgensen: Well, I’ll start. What I would say is in our guidance we're traditionally conservative. So in our guidance for Battlefield, we have a lot of expectations, a lot of excitement, but I would tell you, we don’t have a number that is unachievable there. I think we clearly can achieve it and we hope to exceed it because we know that the Battlefield title is going to be very strong. Apex we’ve seen growth year or quarter-over-quarter basically since it started and we have high confidence that the team can continue to do that even before the mobile product comes out and mobile obviously will accelerate that. And I think, as we said earlier, we don’t have a giant number in there for mobile this year because we don’t – it’s hard to predict exactly when it goes live and monetizes. So, I think, we – if you look at our forecast, it’s a large forecast, probably the biggest than we’ve ever done, but I would say there is still conservatism in that forecast around both mobile, Battlefield and other titles where we are all focused on trying to grow. I can’t remember what's your third question was, so apologize. Matthew Thornton: It was around out year content and what do we buy from that? Andrew Wilson: So what I would offer is I think that what we talked about earlier was we have been recruiting amazing talent into the organization from across the industry and we feel really, really good about our better strength both in the context of mobile and the context of our HD organization and you’ve also seen us growing in really good ways in Asia. We’ve talked about a college football game, we’ve talked about a skate game, we’ve talked about a new game from Motive, we talked about new game – Apex. We’ve talked about a number of new FIFA titles from our mobile group and new mobile titles in Asia. I would tell you that we still feel really good and really strong about all of those that are tracking as we believe they had including a new title coming out of BioWare. So nothing new to give you beyond that other than we still feel very confident in our outgoing or out-year portfolio. And we also have some other things that we are kind of incubating that we think will further add to them in the year to come. Operator: Your next question comes from Todd Juenger from Sanford Bernstein. Todd Juenger: Hi, thanks, good afternoon. Appreciate you squeezing me here at the end, which is perfect for this question, I think, I guess I’m struck having been sitting here listening that the issue how consumers will behave as we move through this next year and beyond has barely been discussed, especially given the fact that you’re in a position on the calendar where you’re giving us thank you for – for a year forward. So I guess I just wanted to visit that briefly in just given everything you’ve observed and learned during this – have you – do you wanted to share with us what your underlying assumptions are in your guidance for however consumers are going to change their lives as we move through this? And have you basically concluded that it doesn’t matter that much to your own success? Or how should we be thinking about that? I appreciate it. Blake Jorgensen: Yes, we – go ahead, sorry Andrew. Andrew Wilson: Sorry. I’ll let Blake kind of get some sort of things around these, but I would say pre-pandemic, we had seen two fundamental secular trends, social interaction was moving from digital to digital and the consumption of sport and entertainment was moving from linear to interactive. So that was already happening. What happened through COVID was those two secular trends were accelerated exponentially and we sold almost all interaction happen digitally and almost all consumption of sport and much of entertainment was done to . As we project forward, we don’t see that going backwards in any meaningful way. In fact, we think it will continue to grow stronger as we’ve really established social networks inside out of our games and inside of our network. And we're really offering players I mean in a more way to connect with the sports and leads and teams and entertainment content may love. So we think that the growth of our business, we think that – we don’t think anything ever goes back to where it was before. We think this growth continues. There will, of course, be some changes as various parts of the world moves through, the post-pandemic stages, but there is notion of social interaction moves from digital to digital and the consumption of sport and entertainment moving from linear to interactive. We don’t think that goes back. And we think that underpinned and it’s foundational to the ongoing strength of our business going forward. Blake Jorgensen: Yes, I just add to that. We obviously know that our Q1 last year was extremely strong, because that was when everyone essentially went home and many people even didn’t work, right. So clearly, we benefited from that, but if you look at Q2 through Q4 of last year, what you saw is still strength not strength of Q1 but still strength every quarter, beating guidance every quarter, unbelievable strength across Ultimate Team, Apex and others. And to Andrew’s point we were able to steer people into games and social networks that were very – for them, and they stayed around. And we’re seeing that trend going forward. And even if we all go back because maybe someday normal life, which we all hope, we believe we brought a lot of new people into games and into social networks that they want to be in and they enjoy being in and we’ll continue to plan. So we – no one quite knows how to predict COVID going forward, but we’re very confident that we have done something that we never anticipated at the start of last year, but it is work to our advantage to bring people into games that they love and networks that they love. And we think that will help us long-term. Blake Jorgensen: So with that, I think that was our last question. We appreciate everybody’s constant attention and help and look forward to seeing people hopefully in-person one day, but if not, by Zoom. So, thank you for everybody taking your time today. Andrew Wilson: Thank you all. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
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EA Misses Earnings, Lowers Guidance, But Stock Rises on $1 Billion Buyback

Electronic Arts (NASDAQ:EA) fell short of Wall Street’s earnings expectations and delivered a weaker-than-anticipated outlook for the fourth quarter. However, investor sentiment remained positive, with shares rising over 2% in pre-market trading Wednesday following the announcement of a $1 billion share repurchase program.

For the third quarter, EA reported earnings per share of $2.83, missing analysts’ projections of $2.88. On the bright side, bookings came in at $2.22 billion, slightly exceeding the $2.21 billion consensus estimate.

Looking ahead, the company’s fourth-quarter forecast disappointed investors. EA expects earnings between $0.76 and $1.17 per share, falling short of the anticipated $1.35. Projected bookings of $1.44 billion to $1.59 billion also came in below Wall Street’s $1.65 billion estimate.

The company reaffirmed its full-year outlook but provided a cautious range that left the high end of its earnings and bookings guidance below analyst expectations. EA anticipates fiscal 2025 earnings between $6.25 and $6.65 per share, slightly under the projected $6.69. Bookings are expected to range between $7 billion and $7.15 billion, with the upper bound aligning with analyst forecasts.

The cautious guidance follows EA’s recent decision to trim its annual bookings forecast, citing weaker in-game spending on "FC 25" and disappointing early performance of its latest Dragon Age installment.

Electronic Arts Inc. (NASDAQ: EA) Under Investigation: Impact on Stock Performance

  • Rosen Law Firm investigates potential securities claims against Electronic Arts Inc. (NASDAQ: EA) for possibly misleading investors.
  • EA's stock experienced a significant 16% drop following a revised fiscal year 2025 guidance announcement.
  • BMO Capital downgrades EA's stock rating from "Outperform" to "Market Perform" amidst concerns over future performance.

Electronic Arts Inc. (NASDAQ: EA) is a major player in the video game industry, known for popular franchises like FIFA, Madden NFL, and The Sims. Recently, EA has come under scrutiny as the Rosen Law Firm investigates potential securities claims against the company. This investigation is due to allegations that EA may have misled investors with inaccurate business information. The situation intensified after EA revised its fiscal year 2025 guidance, predicting a mid-single-digit decline in live services net bookings, primarily due to changes in Global Football. This announcement led to a significant 16% drop in EA's stock on January 23, 2025.

The Rosen Law Firm, known for its expertise in securities class actions, is preparing a class action to recover investor losses. They offer a contingency fee arrangement for those who purchased EA securities. The firm has a track record of successful settlements, including the largest ever against a Chinese company. Investors are encouraged to contact the Rosen Law Firm to join the prospective class action and seek compensation.

On the same day as EA's stock drop, BMO Capital downgraded EA from an "Outperform" rating to a "Market Perform" rating, as highlighted by TheFly. At the time of this downgrade, EA's stock was priced at $142.35. This downgrade reflects concerns about EA's future performance following the revised guidance. The current stock price of EA is $115.83, showing a decrease of 1.76% or $2.08, with fluctuations between $115.36 and $117.585 today.

Over the past year, EA's stock has seen a high of $168.5 and a low of $115.21. The company's market capitalization stands at approximately $30.38 billion, with a trading volume of 2,013,409 shares. These figures indicate the volatility and uncertainty surrounding EA's stock in light of recent developments. Investors are closely monitoring the situation as the investigation unfolds and the class action progresses.

Electronic Arts Inc. (NASDAQ:EA) Quarterly Earnings Preview

  • Electronic Arts Inc. (NASDAQ:EA) is expected to report a significant year-over-year increase in earnings and revenue, driven by its strong gaming portfolio.
  • Analysts have adjusted the consensus EPS estimate upward by 0.1% over the past month, reflecting a positive outlook on EA's financial performance.
  • EA's financial metrics, including a P/E ratio of 33.56, price-to-sales ratio of 5.26, and a debt-to-equity ratio of 0.29, underscore its robust market valuation and financial health.

Electronic Arts Inc. (NASDAQ:EA) is a major player in the gaming industry, known for its popular franchises like FIFA, Madden NFL, and The Sims. As EA prepares to release its quarterly earnings on October 29, 2024, analysts are closely watching the company's financial performance. Wall Street estimates EA's earnings per share (EPS) to be $2.03, with projected revenue of $2.04 billion.

The gaming giant is expected to report a year-over-year increase in earnings, driven by a robust gaming portfolio. Analysts project an EPS of $2.02, marking a 38.4% increase from the previous year. Revenue is anticipated to reach $2.03 billion, reflecting an 11.6% rise from the same quarter last year. These figures suggest strong growth, supported by the popularity of EA's franchises.

Over the past month, the consensus EPS estimate has been adjusted upward by 0.1%, indicating a positive reassessment by analysts. Such revisions are important as they can influence investor reactions and impact EA's short-term stock price performance. A positive earnings surprise could boost the stock, while a miss might lead to a decline.

EA's financial metrics provide further insight into its market valuation. The company has a price-to-earnings (P/E) ratio of 33.56, indicating how the market values its earnings. Its price-to-sales ratio is 5.26, reflecting the market's valuation of its revenue. Additionally, EA's enterprise value to sales ratio is 5.23, suggesting the market's valuation of its total value relative to sales.

The company's debt-to-equity ratio is 0.29, indicating a relatively low level of debt compared to its equity. EA also maintains a current ratio of 1.45, showing its ability to cover short-term liabilities with short-term assets. These financial metrics highlight EA's strong position in the gaming industry as it prepares to release its earnings.

Electronic Arts Downgraded to Hold at Deutsche Bank

Deutsche Bank analysts downgraded Electronic Arts Inc. (NASDAQ:EA) to Hold from Buy and lowered their price target on the stock to $125 from $157 amid slower growth and strategic reset.

The downgrade is due to a negative impact on EA's fundamental outlook caused by various factors. These factors include greater macro-related challenges, a reset of EA's mobile strategy, and less new content than previously anticipated for next year.

As a result, the analysts are forecasting lower levels of growth for 2023-2025 compared to previous expectations. EA's initial guidance for 2024 also calls for mid-single-digit topline growth, which is lower than the prior forecast and Street estimate at that time. This implies that EA's net bookings will be around $7.5 billion, which compares to the Street estimate of $8.2 billion.

Electronic Arts Downgraded to Hold at Deutsche Bank

Deutsche Bank analysts downgraded Electronic Arts Inc. (NASDAQ:EA) to Hold from Buy and lowered their price target on the stock to $125 from $157 amid slower growth and strategic reset.

The downgrade is due to a negative impact on EA's fundamental outlook caused by various factors. These factors include greater macro-related challenges, a reset of EA's mobile strategy, and less new content than previously anticipated for next year.

As a result, the analysts are forecasting lower levels of growth for 2023-2025 compared to previous expectations. EA's initial guidance for 2024 also calls for mid-single-digit topline growth, which is lower than the prior forecast and Street estimate at that time. This implies that EA's net bookings will be around $7.5 billion, which compares to the Street estimate of $8.2 billion.

Electronic Arts Reports Q2 Miss, Lowers Outlook

Electronic Arts (NASDAQ:EA) reported its Q2 results, with EPS of $1.07 coming in worse than the Street estimate of $1.36. Net bookings were $1.75 billion, worse than the Street estimate of $1.81 billion.

For Q3/23, the company anticipates net bookings to be in the range of $2.425-2.525 billion, compared to the Street estimate of $2.6 billion. For the full 2023 year, the company lowered its net bookings guidance to a range of $7.65-7.85 billion, compared to the Street estimate of $7.97 billion. Full-year guidance cut is attributed to FX. The cut is well within investor expectations given the well-understood FX movements and weakness in mobile gaming.

The company's sports franchises were highlights of the quarter. Both delivered record-breaking metrics: FIFA had its biggest launch on console/PC in the franchise's history with 6% growth in FUT (FIFA Ultimate Team) players; Madden UT and net bookings are both up double-digits.

Electronic Arts Shares Up 3% on Q1 Beat, Provides 2023 Guidance

Electronic Arts Inc. (NASDAQ:EA) shares closed more than 3% higher today following the company’s reported Q1 results, with EPS of $1.11 coming in better than the Street estimate of $0.33. Net bookings came in at $1.3 billion, compared to the consensus estimate of $1.26 billion.

Total net bookings declined 3% year-over-year due to one game launch in Q1 versus two a year ago, but partially offset by FIFA's strength, the Playdemic acquisition, and the launch of Apex Legends Mobile. Live Services grew 8% year-over-year and accounted for 73% of TTM Net Bookings.

The company maintained its full 2023-year net bookings/non-GAAP EPS targets despite incrementally stronger FX headwinds for the remaining three quarters of 2023. The company expects 2023 net bookings in the range of $7.9-8.1 billion, compared to the Street estimate of $7.99 billion.