EX-99.1 2 earningsrelease1112016.htm PRESS RELEASE Exhibit


Exhibit 99.1
 
ELECTRONIC ARTS REPORTS Q2 FY17
graphic050614a03.jpg
 
 
 
 
FINANCIAL RESULTS

 
REDWOOD CITY, CA - November 1, 2016 - Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second fiscal quarter ended September 30, 2016.

“Q2 was an excellent quarter for Electronic Arts, led by breakthrough new EA SPORTS titles engaging players across console and mobile,” said Chief Executive Officer Andrew Wilson. “We are in an outstanding position for the quarter ahead, with two of the highest-rated games of this console generation in Battlefield 1 and Titanfall 2, global competitive gaming tournaments underway, and our first virtual reality experiences coming soon. Across all platforms, this holiday season will be a fantastic time to play.”

“Net sales in the quarter were better than expected driven by outperformance in FIFA, and supported by strong year-on-year growth in mobile,” said Chief Financial Officer Blake Jorgensen. “We are raising our annual guidance today based on the strength of our holiday slate and FIFA 17’s strong performance to date.”

News and ongoing updates regarding EA and our games are available on EA’s blog at www.ea.com/news.

Selected Operating Highlights and Metrics:

•
Net sales* of $4.507 billion for the trailing twelve-month period are up 8% year-over-year.
•
Battlefield™ 1 total player base for the first week was nearly double that of Battlefield 4™, and it continues to grow.
•
In the first week of FIFA 17, 20% more players were engaged in the game compared to the first week of FIFA 16 last year and nearly 2/3 of all FIFA 17 players have engaged in “The Journey” story mode.
•
Net sales from FIFA, Madden NFL and Hockey Ultimate Team™ are collectively up 15% for the trailing twelve months compared to last year.
•
FIFA Mobile reached #1 on the App Store Free Games chart in 138 countries.
•
Titanfall™ 2 has been rated 90 or above by more than 40 top outlets.

* Net sales is defined as the net amount of products and services sold digitally or sold-in physically in the period.

Selected Financial Highlights:

All financial measures are presented on a GAAP basis.

•
For the quarter, net revenue was $898 million. Of the total net revenue 63%, or $566 million, was digital. Diluted loss per share of $(0.13) was above guidance of $(0.17).
•
For the quarter, change in deferred net revenue was $200 million, of which $(80) million was digital.
•
Net cash provided by operating activities for the quarter was $109 million. Trailing twelve month operating cash flow was $1.1 billion.
•
EA repurchased 1.6 million shares in Q2 for $127 million.







(in millions of $, except per share amounts)
Quarter Ended
9/30/16
Quarter Ended
9/30/15
Digital Net Revenue
$
566

$
502

Packaged Goods and Other Net Revenue
332

313

          Total Net Revenue
$
898

$
815

 
 
 
Digital Change in Deferred Net Revenue
$
(80
)
$
(22
)
Packaged Goods and Other Change in Deferred Net Revenue
280

353

          Change in Deferred Net Revenue
$
200

$
331

 
 
 
Net Loss
$
(38
)
$
(140
)
Diluted Loss Per Share
$
(0.13
)
$
(0.45
)
 
 
 
Operating Cash Flow
$
109

$
9



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 our GAAP results in order to assess EA’s operating results:

 
Three Months Ended Sep 30, 2016
 
 
 
GAAP-Based Financial Data
 
Statement of Operations

 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Stock-based compensation
Net revenue
898

 
-

 
200

 
-

          Cost of revenue
401

 
(12
)
 
-

 
(1
)
Gross profit
497

 
12

 
200

 
1

          Total operating expenses
546

 
(1
)
 
-

 
(47
)
Operating income (loss)
(49
)
 
13

 
200

 
48

Interest and other income (expense), net
(3
)
 
-

 
-

 
-

Income before provision for (benefit from) income taxes
(52
)
 
13

 
200

 
48

Provision for (benefit from) income taxes
(14
)
 
-

 
-

 
-

Net income (loss)
(38
)
 
13

 
200

 
48

Loss per share
 
 
 
 
 
 
 
          Basic & Diluted
(0.13
)
 
 
 
 
 
 
Number of shares used in computation
 
 
 
 
 
 
 
          Basic & Diluted
301

 
 
 
 
 
 

EA’s GAAP loss per share for the three months ended September 30, 2016 was calculated off the basic share count of 301 million. Had EA reported a profit, the diluted share count would have been 314 million shares. For additional information on the GAAP-based financial data, please refer to EA’s Form 10-Q for the quarter ended June 30, 2016.










TTM Financial Highlights:
(in millions)
TTM Ended
9/30/16
TTM Ended
9/30/15
Digital Net Revenue
$
2,539

$
2,280

Packaged Goods and Other Net Revenue
2,008

2,049

          Total Net Revenue
$
4,547

$
4,329

 
 
 
Digital Change in Deferred Net Revenue
$
34

$
27

Packaged Goods and Other Change in Deferred Net Revenue
(74
)
(193
)
          Change in Deferred Net Revenue
$
(40
)
$
(166
)
 
 
 
Net Income
$
1,256

$
839

 
 
 
Operating Cash Flow
$
1,146

$
818

 
 
 
Value of Shares Repurchased
$
1,016

$
450

Number of Shares Repurchased
15.2

8.3



Business Outlook as of November 1, 2016

The following forward-looking statements, as well as those made above, reflect expectations as of November 1, 2016. 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 2017 Expectations - Ending March 31, 2017
•
Net revenue is expected to be approximately $4.775 billion.
•
Change in deferred net revenue is expected to be approximately $150 million.
•
Net income is expected to be approximately $848 million.
•
Diluted earnings per share is expected to be approximately $2.69.
•
Operating cash flow is expected to be approximately $1.3 billion.
•
The Company estimates a share count of 315 million for purposes of calculating fiscal year 2017 diluted earnings per share.

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:
 
GAAP Guidance
 
Acquisition-related expenses
 
Amortization of debt discount and loss on conversion of notes
 
Change in deferred net revenue (online-enabled games)
 
Shares from convertible bond hedge
 
Stock-based compensation
Digital Net Revenue
$
2,800

 
-

 
-
 
100

 
-

 
-

Packaged Goods & Other Net Revenue
$
1,975

 
-

 
-
 
50

 
-

 
-

Total Net Revenue
$
4,775

 
-

 
-
 
150

 
-

 
-

Cost of Revenue
$
1,387

 
(31
)
 
-
 
-

 
-

 
(2
)
Operating Expense
$
2,304

 
(6
)
 
-
 
-

 
-

 
(198
)
Profit Before Tax
$
1,060

 
37

 
2
 
150

 
-

 
200

Diluted Shares
315

 
-

 
-
 
-

 
(1
)
 
-

Note: in millions
 
 
 
 
 
 
 
 
 
 
 





Third Quarter Fiscal Year 2017 Expectations - Ending December 31, 2016

•
Net revenue is expected to be approximately $1.125 billion.
•
Change in deferred net revenue is expected to be approximately $910 million.
•
Net loss is expected to be approximately $(53) million.
•
Loss per share is expected to be approximately $(0.17).
•
The Company estimates a share count of 304 million for purposes of calculating third quarter fiscal 2017 loss per share. If EA reports a profit, the diluted share count is expected to be 315 million shares.

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:

 
GAAP Guidance
 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Stock-based compensation
Total Net Revenue
$
1,125

 
-

 
910

 
-

Cost of Revenue
$
532

 
(3
)
 
-

 
-

Operating Expense
$
652

 
(2
)
 
-

 
(50
)
Profit/(Loss) Before Tax
$
(66
)
 
5

 
910

 
50

Basic Shares
304

 


 
 
 
 
Note: in millions
 
 
 
 
 
 
 

Conference Call and Supporting Documents
    
Electronic Arts will host a conference call on November 1, 2016 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2016 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 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 November 14, 2016 at 855-859-2056 (domestic) or 404-537-3406 (international). 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 2017 expectations under the heading “Business Outlook as of November 1, 2016,” 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 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 service and support digital product offerings, including managing online security; general economic conditions; and other factors described in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016. 

These forward-looking statements are current as of November 1, 2016. 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 September 30, 2016.  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 September 30, 2016.


About Electronic Arts

Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company delivers games, content and online services for Internet-connected consoles, personal computers, mobile phones and tablets. EA has more than 300 million registered players around the world.
 
In fiscal year 2016, EA posted GAAP net revenue of $4.4 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality blockbuster brands such as The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™, Dragon Age™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.
 
EA SPORTS, Battlefield, Battlefield 4, The Sims, Dragon Age, Ultimate Team and Plants vs. Zombies are trademarks of Electronic Arts Inc. STAR WARS © & TM 2015 Lucasfilm Ltd. All rights reserved. Titanfall is a trademark of Respawn Entertainment, LLC. John Madden, NFL, NBA and FIFA are the property of their respective owners and used with permission.


For additional information, please contact:
Chris Evenden
John Reseburg
Vice President, Investor Relations
Vice President, Corporate Communications
650-628-0255
650-628-3601
cevenden@ea.com
jreseburg@ea.com





    
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Operations
(in $ millions, except share per data)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Six Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Net revenue
 
 
 
 
 
 
 
Product
420

 
434

 
1,104

 
1,177

Service and other
478

 
381

 
1,065

 
841

Total net revenue
898

 
815

 
2,169

 
2,018

Cost of revenue
 
 
 
 
 
 
 
Product
317

 
335

 
407

 
429

Service and other
84

 
74

 
173

 
153

Total cost of revenue
401

 
409

 
580

 
582

Gross profit
497

 
406

 
1,589

 
1,436

Operating expenses:
 
 
 
 
 
 
 
Research and development
291

 
265

 
585

 
561

Marketing and sales
143

 
156

 
271

 
279

General and administrative
111

 
101

 
219

 
199

Amortization of intangibles
1

 
3

 
3

 
4

Total operating expenses
546

 
525

 
1,078

 
1,043

Operating income (loss)
(49
)
 
(119
)
 
511

 
393

Interest and other income (expense), net
(3
)
 
(9
)
 
(11
)
 
(12
)
Income before provision for (benefit from) income taxes
(52
)
 
(128
)
 
500

 
381

Provision for (benefit from) income taxes
(14
)
 
12

 
98

 
79

Net income (loss)
(38
)
 
(140
)
 
402

 
302

Earnings (loss) per share
 
 
 
 
 
 
 
Basic
(0.13
)
 
(0.45
)
 
1.34

 
0.97

Diluted
(0.13
)
 
(0.45
)
 
1.28

 
0.90

Number of shares used in computation
 
 
 
 
 
 
 
Basic
301

 
312

 
301

 
311

Diluted
301

 
312

 
315

 
334

























Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus our guidance for the three months ended September 30, 2016 plus a comparison to the actuals for the three months ended September 30, 2015.


 
Three Months Ended September 30,
 
2016
 
 
 
2016
 
2015
 
Guidance
 
Variance
 
Actuals
 
Actuals
Net revenue
 
 
 
 
 
 
 
Net revenue
915

 
(17
)
 
898

 
815

GAAP-based financial data
 
 
 
 
 
 
 
Change in deferred net revenue (online-enabled games)
160

 
40

 
200

 
331

Cost of revenue
 
 


 
 
 
 
Cost of revenue
405

 
(4
)
 
401

 
409

GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
(13
)
 
1

 
(12
)
 
(11
)
Stock-based compensation
—

 
(1
)
 
(1
)
 
(1
)
Operating expenses
 
 


 
 
 
 
Operating expenses
566

 
(20
)
 
546

 
525

GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
(1
)
 
—

 
(1
)
 
(3
)
Stock-based compensation
(50
)
 
3

 
(47
)
 
(43
)
Loss before tax
 
 


 
 
 
 
Loss before tax
(65
)
 
13

 
(52
)
 
(128
)
GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
14

 
(1
)
 
13

 
14

Amortization of debt discount and loss on conversion of notes
—

 
—

 
—

 
11

Change in deferred net revenue (online-enabled games)
160

 
40

 
200

 
331

Stock-based compensation
50

 
(2
)
 
48

 
44

Tax rate used for management reporting
21
%
 


 
21
%
 
22
%
Loss per share
 
 
 
 
 
 
 
Basic
(0.17
)
 
0.04

 
(0.13
)
 
(0.45
)
Diluted1
(0.17
)
 
0.04

 
(0.13
)
 
(0.45
)
Number of shares
 
 
 
 
 
 
 
Basic
302

 
(1
)
 
301

 
312

Diluted1
302

 
(1
)
 
301

 
312













1 Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable through stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive.







Guidance (in $ millions, except per share data)
The following tables provide the Company’s guidance for the three months ended December 31, 2016 and the twelve months ended March 31, 2017.


 
 
Three Months Ended
 
Twelve Months Ended
 
Dec 31, 2016
 
Mar 31, 2017
Net revenue
 
 
 
Net revenue
1,125

 
4,775

GAAP-based financial data
 
 
 
Change in deferred net revenue (online-enabled games)
910

 
150

Cost of revenue


 


Cost of revenue
532

 
1,387

GAAP-based financial data
 
 
 
Acquisition-related expenses
(3
)
 
(31
)
Stock-based compensation
—

 
(2
)
Operating expenses
 
 
 
Operating expenses
652

 
2,304

GAAP-based financial data
 
 
 
Acquisition-related expenses
(2
)
 
(6
)
Stock-based compensation
(50
)
 
(198
)
Income before tax
 
 


Income (loss) before tax
(66
)
 
1,060

GAAP-based financial data
 
 
 
Acquisition-related expenses
5

 
37

Amortization of debt discount and loss on conversion of notes
—

 
2

Change in deferred net revenue (online-enabled games)
910

 
150

Stock-based compensation
50

 
200

Tax rate used for management reporting
21
%
 
21
%
Earnings (loss) per share
 
 
 
Basic
(0.17
)
 
2.79

Diluted
(0.17
)
 
2.69

Number of shares
 
 
 
Basic
304

 
304

Diluted2
304

 
315
















2If the Company reports net income instead of a net loss for the 3 months ended December 31, 2016, GAAP expected diluted share count for calculating diluted earnings per share would be 315 million shares.






ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in $ millions)
 
 
 
 
 
September 30,
2016
 
March 31,
2016 3
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
1,746

 
2,493

Short-term investments
1,520

 
1,341

Receivables, net of allowances of $105 and $159, respectively
723

 
233

Inventories
50

 
33

Other current assets
221

 
254

Total current assets
4,260

 
4,354

Property and equipment, net
431

 
439

Goodwill
1,709

 
1,710

Acquisition-related intangibles, net
28

 
57

Deferred income taxes, net
366

 
387

Other assets
98

 
103

TOTAL ASSETS
6,892

 
7,050

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
206

 
89

Accrued and other current liabilities
777

 
710

0.75% convertible senior notes due 2016, net
—

 
161

Deferred net revenue (online-enabled games)
1,067

 
1,458

Total current liabilities
2,050

 
2,418

Senior notes, net
990

 
989

Income tax obligations
86

 
80

Deferred income taxes, net
2

 
2

Other liabilities
156

 
163

Total liabilities
3,284

 
3,652

0.75% convertible senior notes due 2016
—

 
2

 
 
 
 
Common stock
3

 
3

Additional paid-in capital
1,153

 
1,349

Retained earnings
2,462

 
2,060

Accumulated other comprehensive loss
(10
)
 
(16
)
Total stockholders’ equity
3,608

 
3,396

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
6,892

 
7,050








3Derived from audited consolidated financial statements.





ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in $ millions)
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Six Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
OPERATING ACTIVITIES
 
 
 
 
 
 
 
Net income (loss)
(38
)
 
(140
)
 
402

 
302

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation, amortization and accretion
45

 
50

 
91

 
99

Stock-based compensation
48

 
44

 
96

 
89

Loss on conversion of convertible notes
—

 
6

 
—

 
6

Change in assets and liabilities:
 
 
 
 
 
 
 
Receivables, net
(481
)
 
(598
)
 
(493
)
 
(379
)
Inventories
(24
)
 
(29
)
 
(17
)
 
(26
)
Other assets
55

 
13

 
54

 
39

Accounts payable
165

 
142

 
133

 
126

Accrued and other liabilities
168

 
182

 
(34
)
 
(149
)
Deferred income taxes, net
(23
)
 
1

 
20

 
1

Deferred net revenue (online-enabled games)
194

 
338

 
(391
)
 
(170
)
Net cash provided by (used in) operating activities
109

 
9

 
(139
)
 
(62
)
INVESTING ACTIVITIES
 
 
 
 
 
 
 
Capital expenditures
(29
)
 
(18
)
 
(69
)
 
(42
)
Proceeds from maturities and sales of short-term investments
368

 
264

 
644

 
513

Purchase of short-term investments
(507
)
 
(186
)
 
(824
)
 
(551
)
Net cash provided by (used in) investing activities
(168
)
 
60

 
(249
)
 
(80
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
Payment of convertible notes
(136
)
 
(198
)
 
(163
)
 
(198
)
Proceeds from issuance of common stock
27

 
39

 
31

 
84

Excess tax benefit from stock-based compensation
4

 
25

 
37

 
65

Repurchase and retirement of common stock
(127
)
 
(126
)
 
(256
)
 
(258
)
Net cash used in financing activities
(232
)
 
(260
)
 
(351
)
 
(307
)
Effect of foreign exchange on cash and cash equivalents
(5
)
 
(21
)
 
(8
)
 
(21
)
Decrease in cash and cash equivalents
(296
)
 
(212
)
 
(747
)
 
(470
)
Beginning cash and cash equivalents
2,042

 
1,810

 
2,493

 
2,068

Ending cash and cash equivalents
1,746

 
1,598

 
1,746

 
1,598









ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
YOY %
 
FY16
 
FY16
 
FY16
 
FY17
 
FY17
 
Change
Net revenue
 
 
 
 
 
 
 
 
 
 
 
 Net revenue
815
 
1,070
 
1,308
 
1,271
 
898
 
10
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Change in deferred net revenue (online-enabled games)
331
 
733
 
(384)
 
(589)
 
200
 
 
Gross Profit
 
 
 
 
 
 
 
 
 
 
 
Gross profit
406

 
524

 
1,082

 
1,092

 
497

 
22
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
11

 
12

 
12

 
13

 
12

 
 
Change in deferred net revenue (online-enabled games)
331

 
733

 
(384
)
 
(589
)
 
200

 
 
Stock-based compensation
1

 
—

 
1

 
1

 
1

 
 
Gross profit % (as a % of net revenue)
50
%
 
49
%
 
83
%
 
86
%
 
55
%
 
 
Operating income
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
(119
)
 
(31
)
 
536

 
560

 
(49
)
 
59
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
14

 
14

 
13

 
15

 
13

 
 
Change in deferred net revenue (online-enabled games)
331

 
733

 
(384
)
 
(589
)
 
200

 
 
Stock-based compensation
44

 
42

 
47

 
48

 
48

 
 
Operating income (loss) % (as a % of net revenue)
(15
%)
 
(3
%)
 
41
%
 
44
%
 
(5
%)
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
(140
)
 
(45
)
 
899

 
440

 
(38
)
 
73
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
14

 
14

 
13

 
15

 
13

 
 
Amortization of debt discount and loss on conversion of notes
11

 
5

 
5

 
2

 
—

 
 
Change in deferred net revenue (online-enabled games)
331

 
733

 
(384
)
 
(589
)
 
200

 
 
Stock-based compensation
44

 
42

 
47

 
48

 
48

 
 
Tax rate used for management reporting
22
 %
 
22
 %
 
22
%
 
21
%
 
21
 %
 
 
Net income (loss) % (as a % of net revenue)
(17
%)
 
(4
%)
 
69
%
 
35
%
 
(4
%)
 
 
Diluted earnings (loss) per share
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share
(0.45
)
 
(0.14
)
 
2.79

 
1.40

 
(0.13
)
 
71
%
Number of diluted shares used in computation
 
 
 
 
 
 
 
 
 
 
 
Basic
312

 
311

 
307

 
301

 
301

 
 
Diluted
312

 
311

 
322

 
315

 
301

 
 
Anti-dilutive shares excluded for loss position1
21

 
20

 
—

 
—

 
13

 
 
Shares from convertible bond hedge
(7
)
 
(6
)
 
(3
)
 
(2
)
 
—

 
 







ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
YOY %
 
 
FY16
 
FY16
 
FY16
 
FY17
 
FY17
 
Change
QUARTERLY NET REVENUE PRESENTATIONS
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by geography
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
381

 
448

 
572

 
525

 
389

 
2
%
International
 
434

 
622

 
736

 
746

 
509

 
17
%
Total net revenue
 
815

 
1,070

 
1,308

 
1,271

 
898

 
10
%
North America
 
91

 
403

 
(147
)
 
(245
)
 
58

 
 
International
 
240

 
330

 
(237
)
 
(344
)
 
142

 
 
Change in deferred net revenue (online-enabled games)
 
331

 
733

 
(384
)
 
(589
)
 
200

 
 
North America
 
47
%
 
42
%
 
44
%
 
41
%
 
43
%
 
 
International
 
53
%
 
58
%
 
56
%
 
59
%
 
57
%
 
 
Total net revenue %
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by composition
 
 
 
 
 
 
 
 
 
 
 
 
Full game downloads
 
82

 
112

 
152

 
137

 
94

 
15
%
Extra content
 
213

 
241

 
317

 
300

 
240

 
13
%
Subscriptions, advertising and other
 
84

 
89

 
94

 
87

 
83

 
(1
%)
Mobile
 
123

 
127

 
152

 
165

 
149

 
21
%
Total Digital
 
502

 
569

 
715

 
689

 
566

 
13
%
Packaged goods and other
 
313

 
501

 
593

 
582

 
332

 
6
%
Total net revenue
 
815

 
1,070

 
1,308

 
1,271

 
898

 
10
%
Full game downloads
 
7

 
83

 
(18
)
 
(53
)
 
(1
)
 
 
Extra content
 
(18
)
 
119

 
(7
)
 
(42
)
 
(68
)
 
 
Subscriptions, advertising and other
 
(1
)
 
1

 
1

 
(2
)
 
—

 
 
Mobile
 
(10
)
 
35

 
21

 
(24
)
 
(11
)
 
 
Total Digital
 
(22
)
 
238

 
(3
)
 
(121
)
 
(80
)
 
 
Packaged goods and other
 
353

 
495

 
(381
)
 
(468
)
 
280

 
 
Change in deferred net revenue (online-enabled games)
 
331

 
733

 
(384
)
 
(589
)
 
200

 
 
Full game downloads
 
10
%
 
10
%
 
12
%
 
11
%
 
10
%
 
 
Extra content
 
26
%
 
23
%
 
24
%
 
23
%
 
27
%
 
 
Subscriptions, advertising and other
 
11
%
 
8
%
 
7
%
 
7
%
 
9
%
 
 
Mobile
 
15
%
 
12
%
 
12
%
 
13
%
 
17
%
 
 
Total Digital
 
62
%
 
53
%
 
55
%
 
54
%
 
63
%
 
 
Packaged goods and other
 
38
%
 
47
%
 
45
%
 
46
%
 
37
%
 
 
Total net revenue %
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
















ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
YOY %
 
 
FY16
 
FY16
 
FY16
 
FY17
 
FY17
 
Change
QUARTERLY NET REVENUE PRESENTATIONS
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by platform
 
 
 
 
 
 
 
 
 
 
 
 
Xbox One, PLAYSTATION 4
 
332

 
571

 
793

 
776

 
513

 
55
%
Xbox 360, PLAYSTATION 3
 
155

 
157

 
147

 
133

 
64

 
(59
%)
Other consoles
 
1

 
3

 
1

 
1

 
1

 
—

Total consoles
 
488

 
731

 
941

 
910

 
578

 
18
%
PC / Browser
 
184

 
182

 
195

 
179

 
158

 
(14
%)
Mobile
 
124

 
128

 
151

 
165

 
149

 
20
%
Other
 
19

 
29

 
21

 
17

 
13

 
(32
%)
Total net revenue
 
815

 
1,070

 
1,308

 
1,271

 
898

 
10
%
Xbox One, PLAYSTATION 4
 
310

 
626

 
(287
)
 
(441
)
 
177

 
 
Xbox 360, PLAYSTATION 3
 
55

 
16

 
(93
)
 
(92
)
 
43

 
 
Other consoles
 
1

 
(1
)
 
(1
)
 
—

 
—

 
 
Total consoles
 
366

 
641

 
(381
)
 
(533
)
 
220

 
 
PC / Browser
 
(19
)
 
55

 
(27
)
 
(30
)
 
(9
)
 
 
Mobile
 
(12
)
 
35

 
23

 
(24
)
 
(11
)
 
 
Other
 
(4
)
 
2

 
1

 
(2
)
 
—

 
 
Change in deferred net revenue (online-enabled games)
 
331

 
733

 
(384
)
 
(589
)
 
200

 
 
Xbox One, PLAYSTATION 4
 
41
%
 
53
%
 
61
%
 
61
%
 
57
%
 
 
Xbox 360, PLAYSTATION 3
 
19
%
 
15
%
 
11
%
 
11
%
 
7
%
 
 
Other consoles
 
—

 
—

 
—

 
—

 
—

 
 
Total consoles
 
60
%
 
68
%
 
72
%
 
72
%
 
64
%
 
 
PC / Browser
 
23
%
 
17
%
 
15
%
 
14
%
 
18
%
 
 
Mobile
 
15
%
 
12
%
 
11
%
 
13
%
 
17
%
 
 
Other
 
2
%
 
3
%
 
2
%
 
1
%
 
1
%
 
 
Total net revenue %
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 







ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
YOY %
 
FY16
 
FY16
 
FY16
 
FY17
 
FY17
 
Change
CASH FLOW DATA
 
 
 
 
 
 
 
 
 
 
 
Operating cash flow
9

 
889

 
396

 
(248
)
 
109

 
1,111
%
Operating cash flow - TTM
818

 
1,025

 
1,223

 
1,046

 
1,146

 
40
%
Capital expenditures
18

 
21

 
30

 
40

 
29

 
61
%
Capital expenditures - TTM
89

 
95

 
93

 
109

 
120

 
35
%
Repurchase and retirement of common stock
126

 
126

 
634

 
129

 
127

 
1
%
BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
1,598

 
2,263

 
2,493

 
2,042

 
1,746

 


Short-term investments
990

 
966

 
1,341

 
1,385

 
1,520

 


Cash and cash equivalents, and short-term investments
2,588

 
3,229

 
3,834

 
3,427

 
3,266

 
26
%
Receivables, net
737

 
621

 
233

 
246

 
723

 
(2
%)
Deferred net revenue (online-enabled games)
 
 
 
 
 
 
 
 
 
 
 
End of the quarter
1,113

 
1,844

 
1,458

 
873

 
1,067

 
(4
%)
Less: Beginning of the quarter
775

 
1,113

 
1,844

 
1,458

 
873

 
 
Change in deferred net revenue (online-enabled games)4
338

 
731

 
(386
)
 
(585
)
 
194

 
 
STOCK-BASED COMPENSATION
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
1

 
—

 
1

 
1

 
1

 
 
Research and development
25

 
26

 
26

 
27

 
27

 
 
Marketing and sales
7

 
5

 
7

 
7

 
8

 
 
General and administrative
11

 
11

 
13

 
13

 
12

 
 
Total stock-based compensation
44

 
42

 
47

 
48

 
48

 
 
























4The difference between the balances of deferred net revenue (online-enabled games) does not always equal the change in deferred net revenue (online-enabled games) in the consolidated statement of operations due to the impact of unrecognized gains/losses on cash flow hedges.