Results Above Expectations, Raised Outlook
for the Full Year
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
ofOperations Acquisition-relatedexpenses Change
indeferred netrevenue(online-enabledgames)
Stock-basedcompensation 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 ofOperations
Acquisition-relatedexpenses Change indeferred
netrevenue(online-enabledgames) Stock-basedcompensation
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 GAAPGuidance Acquisition-relatedexpenses
Change indeferred netrevenue (online-enabled games)
Stock-basedcompensation (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 GAAPGuidance
Acquisition-relatedexpenses Change in deferrednet revenue
(online-enabled games) Stock-basedcompensation (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/
Chris Evenden Vice President, Investor Relations 650-628-0255
cevenden@ea.com
John Reseburg Vice President, Global Communications 650-628-3601
jreseburg@ea.com
Electronic Arts (NASDAQ:EA)
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