EX-99.1 2 earningsrelease050818.htm PRESS RELEASE Exhibit


Exhibit 99.1
 
Electronic Arts Reports Q4 FY18 and
graphic050614a07.jpg
 
 
 
 
Full Year FY18 Financial Results
 
REDWOOD CITY, CA - May 8, 2018 - Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its fourth fiscal quarter and fiscal year ended March 31, 2018.

“Fiscal 2018 was a year of strong growth and continued transformation for Electronic Arts, as we expanded the reach of our leading franchises like FIFA, Battlefield and The Sims to more players across more platforms and geographies,” said Chief Executive Officer Andrew Wilson. “In the year ahead, we will expand the world of play with amazing new experiences and new IP, more competition, and industry-leading subscription programs. There has never been a more exciting time to be engaging and entertaining global communities.”
“Electronic Arts had another record year,” said COO and CFO Blake Jorgensen. “Our success is driven by the way we have changed, and continue to change, our relationship with players. They want more depth in their favorite games, and fresh content that can hold their attention year-round. This has made our business much more stable and enabled us to deliver a dependable and growing cash flow to investors.”

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


Selected Operating Highlights and Metrics

Digital net bookings* was $3.538 billion for fiscal 2018, up 17% year-over-year and represents 68% of total net bookings.
The EA SPORTS™ franchises grew to nearly 90 million players on current generation consoles life to date.
Nearly 18 million players engaged in competitive gaming across FIFA 18 and Madden NFL 18, up more than 75% year-over-year.
The Battlefield™ community, across current generation consoles and PC HD, now has more than 54 million players life to date.
The Sims™ community had more than 80 million Sims players across PC and mobile in fiscal 2018.  

* 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 and, for periods after the fourth quarter of fiscal 2018, mobile platform fees.

Selected Financial Highlights and Metrics
All financial measures are presented on a GAAP basis.

Net cash provided by operating activities was $615 million for the fourth quarter and $1.692 billion for the fiscal year.
EA repurchased 1.2 million shares for $148 million during the quarter and 5.3 million shares for $601 million during the fiscal year.
EA announced a new $2.4 billion, two-year stock repurchase program.







Quarterly Financial Highlights
 
Three Months Ended
 
March 31,
 
2018
 
2017
(in $ millions, except per share amounts)
 
 
 
Digital net revenue
1,102

 
934

Packaged goods and other net revenue
480

 
593

          Total net revenue
1,582

 
1,527

 
 
 
 
Net income
607

 
566

Diluted earnings per share
1.95

 
1.81

 
 
 
 
Operating cash flow
615

 
437*

 
 
 
 
Value of shares repurchased
148

 
125

Number of shares repurchased
1.2

 
1.5

 
 
 
 
 
*At the beginning of fiscal 2018, EA adopted FASB ASU 2016-09, related to stock-based compensation. Operating cash flow for the three months ended March 31, 2017 has been recast to reflect the impact of this standard.


While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and tax rate of 21% was used internally by company management to adjust its fiscal 2018 GAAP results in order to assess EA’s operating results:
 
Three Months Ended March 31, 2018
 
 
 
GAAP-Based Financial Data
(in $ millions)
Statement of Operations
 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Stock-based compensation
Total net revenue
1,582

 

 
(327
)
 

          Cost of revenue
233

 
(1
)
 

 
(1
)
Gross profit
1,349

 
1

 
(327
)
 
1

          Total operating expenses
596

 
(5
)
 

 
(68
)
Operating income
753

 
6

 
(327
)
 
69

Interest and other income, net
1

 

 

 

Income before provision for income taxes
754

 
6

 
(327
)
 
69

Number of shares used in computation:
 
 
 
 
 
 
 
          Diluted
311

 
 
 
 
 
 

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended December 31, 2017.






Fiscal Year Financial Highlights
 
Twelve Months Ended
 
March 31,
 
2018
 
2017
(in $ millions, except per share amounts)
 
 
 
Digital net revenue
3,450

 
2,874

Packaged goods and other net revenue
1,700

 
1,971

          Total net revenue
5,150

 
4,845

 
 
 
 
Net income
1,043*

 
967

Diluted earnings per share
3.34*

 
3.08

 
 
 
 
 
 
 
 
Operating cash flow
1,692

 
1,578**

 
 
 
 
Value of shares repurchased
601

 
508

Number of shares repurchased
5.3

 
6.5

 
 
 
 
 
*During the twelve months ended March 31, 2018, EA recognized $235 million of incremental income tax expense, or approximately $0.75 per share, due to the application of the Tax Cuts and Jobs Act.
**At the beginning of fiscal 2018, EA adopted FASB ASU 2016-09, related to stock-based compensation. Operating cash flow for the twelve months ended March 31, 2017 has been recast to reflect impact of this standard.
While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and tax rate of 21% was used internally by company management to adjust its fiscal 2018 GAAP results in order to assess EA’s operating results:
 
Twelve Months Ended March 31, 2018
 
 
 
GAAP-Based Financial Data
(in $ millions)
Statement of Operations
 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Stock-based compensation
Total net revenue
5,150

 

 
30

 

          Cost of revenue
1,277

 
(2
)
 

 
(3
)
Gross profit
3,873

 
2

 
30

 
3

          Total operating expenses
2,439

 
(9
)
 

 
(239
)
Operating income
1,434

 
11

 
30

 
242

Interest and other income, net
15

 

 

 

Income before provision for income taxes
1,449

 
11

 
30

 
242

Number of shares used in computation:
 
 
 
 
 
 
 
          Diluted
312

 
 
 
 
 
 

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended December 31, 2017.







Operating Metric

The following is a calculation of our total net bookings for the periods presented:
 
Three Months Ended
March 31,
 
Twelve Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
(in $ millions)
 
 
 
 
 
 
 
Total net revenue
1,582

 
1,527

 
5,150

 
4,845

Change in deferred net revenue (online-enabled games)
(327
)
 
(435
)
 
30

 
97

Net bookings
1,255

 
1,092

 
5,180

 
4,942



Stock Repurchase Program

EA has announced a new two-year program to repurchase up to $2.4 billion of EA's common stock. This program supersedes and replaces the stock repurchase program announced in May 2017.
 
Under the program, EA may purchase stock in the open market or through privately negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. EA is not obligated to repurchase any specific number of shares under the program and the repurchase program may be modified, suspended or discontinued at any time.


Business Outlook as of May 8, 2018

The following forward-looking statements reflect expectations as of May 8, 2018. 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.

At the beginning of fiscal year 2019, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue; however, it will not materially impact net bookings, EA’s operational metric. For more information about the adoption of Topic 606 and information with respect to mobile platform fees, please refer to the FAQ document, dated as of May 8, 2018, posted on our IR website. The business outlook for fiscal year 2019 has been prepared in accordance with Topic 606.

EA has also revised its long-term tax rate from 21% to 18% primarily due to changes resulting from recent tax legislation in the United States. EA uses this rate internally to assess operating results and plans for future periods.







Fiscal Year 2019 Expectations - Ending March 31, 2019

Financial metrics:
Net revenue is expected to be approximately $5.600 billion.
Change in deferred net revenue (online-enabled games) is expected to be approximately $250 million.
Mobile platform fees are expected to be approximately ($300) million.
Net income is expected to be approximately $1.108 billion.
Diluted earnings per share is expected to be approximately $3.55.
Operating cash flow is expected to be approximately $1.825 billion.
The Company estimates a share count of 312 million for purposes of calculating fiscal year 2019 diluted earnings per share.

Operational metric:
Net bookings is expected to be approximately $5.550 billion.


In addition, the following outlook for GAAP-based financial data 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, 2019
 
 
 
GAAP-Based Financial Data
 
GAAP Guidance
 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Mobile platform fees
 
Stock-based compensation
(in $ millions)
 
 
 
 
 
 
 
 
 
Digital net revenue
4,150

 

 
200

 
(300
)
 

Packaged goods & other net revenue
1,450

 

 
50

 

 

Total net revenue
5,600

 

 
250

 
(300
)
 

Cost of revenue
1,581

 
(5
)
 

 
(300
)
 
(1
)
Operating expense
2,774

 
(15
)
 

 

 
(329
)
Income before provision for income taxes
1,245

 
20

 
250

 

 
330

Net income
1,108

 
 
 
 
 
 
 
 
Number of shares used in computation:
 
 
 
 
 
 
 
 
 
Diluted shares
312

 
 
 
 
 
 
 
 






First Quarter Fiscal Year 2019 Expectations - Ending June 30, 2018

Financial metrics:
Net revenue is expected to be approximately $1.080 billion.
Change in deferred net revenue (online-enabled games) is expected to be approximately ($300) million.
Mobile platform fees are expected to be approximately ($60) million.
Net income is expected to be approximately $200 million.
Diluted earnings per share is expected to be approximately $0.64.
The Company estimates a share count of 311 million for purposes of calculating first quarter fiscal year 2019 diluted earnings per share.

Operational metric:
Net bookings is expected to be approximately $720 million.


In addition, the following outlook for GAAP-based financial data 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 June 30, 2018
 
 
 
GAAP-Based Financial Data
 
GAAP Guidance
 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Mobile platform fees
 
Stock-based compensation
(in $ millions)
 
 
 
 
 
 
 
 
 
Total net revenue
1,080

 

 
(300
)
 
(60
)
 

Cost of revenue
226

 
(1
)
 

 
(60
)
 

Operating expense
634

 
(4
)
 

 

 
(75
)
Income before provision for income taxes
220

 
5

 
(300
)
 

 
75

Net Income
200

 
 
 
 
 
 
 
 
Number of shares used in computation:
 
 


 
 
 
 
 
 
Diluted shares
311

 
 
 
 
 
 
 
 

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended December 31, 2017. For more information about mobile platform fees, please refer to the FAQ document dated May 8, 2018 posted on our IR Website.








Conference Call and Supporting Documents
    
Electronic Arts will host a conference call on May 8, 2018 at 2:00 pm PT (5:00 pm ET) to review its results for the fourth fiscal quarter and fiscal year ended March 31, 2018 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number 844-215-4106 (domestic) or 918-534-8313 (international), using the password “EA” or via webcast at EA’s IR Website at http://ir.ea.com.

EA has posted a slide presentation and a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website.

A dial-in replay of the conference call will be available until May 22, 2018 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 9267936. 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 2019 expectations under the heading “Business Outlook as of May 8, 2018,” and other information regarding EA's fiscal 2019 expectations contain forward-looking statements that are subject to change.  Statements including words such as “anticipate,” “believe,” “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. 

Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s titles; the Company’s ability to develop and support digital products and services, including managing online security and privacy; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; the Company’s ability to realize the anticipated benefits of acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic conditions; and other factors described in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2017. 

These forward-looking statements are current as of May 8, 2018. 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 Annual Report on Form 10-K for the fiscal year ended March 31, 2018.  Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-K for the fiscal year ended March 31, 2018.









About Electronic Arts

Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers. EA has more than 300 million registered players around the world.
 
In fiscal year 2018, EA posted GAAP net revenue of $5.2 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™, Need for Speed™, Dragon Age™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.
 
EA SPORTS, Battlefield, The Sims, Need for Speed, Dragon Age, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL 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 Statements of Operations
(in $ millions, except share per data)
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
Twelve Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
Net revenue
 
 
 
 
 
 
 
Product
757

 
887

 
2,586

 
2,640

Service and other
825

 
640

 
2,564

 
2,205

Total net revenue
1,582

 
1,527

 
5,150

 
4,845

Cost of revenue
 
 
 
 
 
 
 
Product
106

 
97

 
822

 
893

Service and other
127

 
105

 
455

 
405

Total cost of revenue
233

 
202

 
1,277

 
1,298

Gross profit
1,349

 
1,325

 
3,873

 
3,547

Operating expenses:
 
 
 
 
 
 
 
Research and development
335

 
335

 
1,320

 
1,205

Marketing and sales
130

 
162

 
641

 
673

General and administrative
126

 
110

 
469

 
439

Amortization of intangibles
5

 
1

 
9

 
6

Total operating expenses
596

 
608

 
2,439

 
2,323

Operating income
753

 
717

 
1,434

 
1,224

Interest and other income (expense), net
1

 
(1
)
 
15

 
(14
)
Income before provision for income taxes
754

 
716

 
1,449

 
1,210

Provision for income taxes
147

 
150

 
406

 
243

Net income
607

 
566

 
1,043

 
967

Earnings per share
 
 
 
 
 
 
 
Basic
1.98

 
1.84

 
3.39

 
3.19

Diluted
1.95

 
1.81

 
3.34

 
3.08

Number of shares used in computation
 
 
 
 
 
 
 
Basic
307

 
308

 
308

 
303

Diluted
311

 
312

 
312

 
314
























Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus our guidance for the three months ended March 31, 2018 plus a comparison to the actuals for the three months ended March 31, 2017.


 
Three Months Ended March 31,
 
2018
 
 
 
2018
 
2017
 
Guidance
 
Variance
 
Actuals
 
Actuals
Net revenue
 
 
 
 
 
 
 
Net revenue
1,532

 
50

 
1,582

 
1,527

GAAP-based financial data
 
 
 
 
 
 
 
Change in deferred net revenue (online-enabled games)
(307
)
 
(20
)
 
(327
)
 
(435
)
Cost of revenue
 
 


 
 
 
 
Cost of revenue
234

 
(1
)
 
233

 
202

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

 
(1
)
 

Stock-based compensation
(1
)
 

 
(1
)
 
(1
)
Operating expenses
 
 


 
 
 
 
Operating expenses
619

 
(23
)
 
596

 
608

GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
(3
)
 
(2
)
 
(5
)
 
(1
)
Stock-based compensation
(74
)
 
6

 
(68
)
 
(51
)
Income before tax
 
 


 
 
 
 
Income before tax
677

 
77

 
754

 
716

GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
4

 
2

 
6

 
1

Change in deferred net revenue (online-enabled games)
(307
)
 
(20
)
 
(327
)
 
(435
)
Stock-based compensation
75

 
(6
)
 
69

 
52

Tax rate used for management reporting
21
%
 


 
21
%
 
21
%
Earnings per share
 
 
 
 
 
 
 
Basic
1.89

 
0.09

 
1.98

 
1.84

Diluted
1.86

 
0.09

 
1.95

 
1.81

Number of shares
 
 
 
 
 
 
 
Basic
307

 

 
307

 
308

Diluted
311

 

 
311

 
312



























ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in $ millions)
 
 
 
 
 
March 31, 2018
 
March 31, 20171
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
4,258

 
2,565

Short-term investments
1,073

 
1,967

Receivables, net of allowances of $165 and $145, respectively
385

 
359

Other current assets
288

 
308

Total current assets
6,004

 
5,199

Property and equipment, net
453

 
434

Goodwill
1,883

 
1,707

Acquisition-related intangibles, net
71

 
8

Deferred income taxes, net
84

 
286

Other assets
89

 
84

TOTAL ASSETS
8,584

 
7,718

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
48

 
87

Accrued and other current liabilities
821

 
789

Deferred net revenue (online-enabled games)
1,622

 
1,539

Total current liabilities
2,491

 
2,415

Senior notes, net
992

 
990

Income tax obligations
250

 
104

Deferred income taxes, net
1

 
1

Other liabilities
255

 
148

Total liabilities
3,989

 
3,658

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
3

 
3

Additional paid-in capital
657

 
1,049

Retained earnings
4,062

 
3,027

Accumulated other comprehensive loss
(127
)
 
(19
)
Total stockholders’ equity
4,595

 
4,060

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
8,584

 
7,718










1Derived from audited consolidated financial statements.







ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in $ millions)
 
 
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
Twelve Months Ended
March 31,
 
2018
 
20172
 
2018
 
2017 2
OPERATING ACTIVITIES
 
 
 
 
 
 
 
Net income
607

 
566

 
1,043

 
967

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation, amortization and accretion
39

 
32

 
136

 
172

Stock-based compensation
69

 
52

 
242

 
196

Change in assets and liabilities
 
 
 
 
 
 
 
Receivables, net
502

 
231

 
(25
)
 
(136
)
Other assets
(69
)
 
(37
)
 
10

 
3

Accounts payable
(60
)
 
11

 
(44
)
 
5

Accrued and other liabilities
(222
)
 
(86
)
 
43

 
190

Deferred income taxes, net
74

 
100

 
204

 
100

Deferred net revenue (online-enabled games)
(325
)
 
(432
)
 
83

 
81

Net cash provided by operating activities
615

 
437

 
1,692

 
1,578

INVESTING ACTIVITIES
 
 
 
 
 
 
 
Capital expenditures
(20
)
 
(29
)
 
(107
)
 
(123
)
Proceeds from maturities and sales of short-term investments
1,510

 
313

 
3,166

 
1,281

Purchase of short-term investments
(275
)
 
(545
)
 
(2,287
)
 
(1,917
)
Acquisition, net of cash acquired

 

 
(150
)
 

Net cash provided by (used in) investing activities
1,215

 
(261
)
 
622

 
(759
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
Payment of convertible notes

 

 

 
(163
)
Proceeds from issuance of common stock
21

 
39

 
78

 
72

Cash paid to taxing authorities for shares withheld from employees
(8
)
 
(18
)
 
(120
)
 
(130
)
Repurchase and retirement of common stock
(148
)
 
(125
)
 
(601
)
 
(508
)
Net cash used in financing activities
(135
)
 
(104
)
 
(643
)
 
(729
)
Effect of foreign exchange on cash and cash equivalents
(3
)
 
10

 
22

 
(18
)
Increase in cash and cash equivalents
1,692

 
82

 
1,693

 
72

Beginning cash and cash equivalents
2,566

 
2,483

 
2,565

 
2,493

Ending cash and cash equivalents
4,258

 
2,565

 
4,258

 
2,565





2Operating and financing cash flow figures for the three and twelve months ended March 31, 2017 have been recast to reflect the impact of ASU 2016-09 which EA adopted at the beginning of FY18.














ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
YOY %
 
FY17
 
FY18
 
FY18
 
FY18
 
FY18
 
Change
Net revenue
 
 
 
 
 
 
 
 
 
 
 
 Net revenue
1,527
 
1,449
 
959
 
1,160
 
1,582
 
4
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Change in deferred net revenue (online-enabled games)3
(435)
 
(674)
 
220
 
811
 
(327)
 
 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
Gross profit
1,325

 
1,295

 
570

 
659

 
1,349

 
2
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses

 

 

 
1

 
1

 
 
Change in deferred net revenue (online-enabled games)3
(435
)
 
(674
)
 
220

 
811

 
(327
)
 
 
Stock-based compensation
1

 
1

 
1

 

 
1

 
 
Gross profit (as a % of net revenue)
87
%
 
89
%
 
59
%
 
57
%
 
85
%
 
 
Operating income (loss)
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
717

 
743

 
(41
)
 
(21
)
 
753

 
5
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
1

 
1

 
2

 
2

 
6

 
 
Change in deferred net revenue (online-enabled games)3
(435
)
 
(674
)
 
220

 
811

 
(327
)
 
 
Stock-based compensation
52

 
48

 
62

 
63

 
69

 
 
Operating income (loss) (as a % of net revenue)
47
%
 
51
%
 
(4
%)
 
(2
%)
 
48
%
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
566

 
644

 
(22
)
 
(186
)
 
607

 
7
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
1

 
1

 
2

 
2

 
6

 
 
Change in deferred net revenue (online-enabled games)3
(435
)
 
(674
)
 
220

 
811

 
(327
)
 
 
Stock-based compensation
52

 
48

 
62

 
63

 
69

 
 
Tax rate used for management reporting
21
%
 
21
%
 
21
%
 
21
%
 
21
%
 


Net income (loss) (as a % of net revenue)
37
%
 
44
%
 
(2
%)
 
(16
%)
 
38
%
 


Diluted earnings (loss) per share
1.81

 
2.06

 
(0.07
)
 
(0.60
)
 
1.95

 
8
%
Number of diluted shares used in computation
 
 
 
 
 
 
 
 
 
 
 
Basic
308

 
309

 
309

 
308

 
307

 
 
Diluted
312

 
313

 
309

 
308

 
311

 
 
Anti-dilutive shares excluded for loss position4

 

 
3

 
3

 

 
 



3The 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 due to the impact of unrecognized gains/losses on cash flow hedges.


4Diluted 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.









ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
YOY %
 
 
FY17
 
FY18
 
FY18
 
FY18
 
FY18
 
Change
QUARTERLY NET REVENUE PRESENTATIONS
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by geography
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
644

 
611

 
427

 
452

 
600

 
(7
%)
International
 
883

 
838

 
532

 
708

 
982

 
11
%
Total net revenue
 
1,527

 
1,449

 
959

 
1,160

 
1,582

 
4
%
North America
 
(198
)
 
(287
)
 
59

 
313

 
(113
)
 
 
International
 
(237
)
 
(387
)
 
161

 
498

 
(214
)
 
 
Change in deferred net revenue (online-enabled games)3
 
(435
)
 
(674
)
 
220

 
811

 
(327
)
 
 
North America
 
42
%
 
42
%
 
45
%
 
39
%
 
38
%
 
 
International
 
58
%
 
58
%
 
55
%
 
61
%
 
62
%
 
 
Total net revenue %
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by composition
 
 
 
 
 
 
 
 
 
 
 
 
Full game downloads
 
259

 
209

 
123

 
143

 
232

 
(10
%)
Live services
 
510

 
501

 
408

 
476

 
698

 
37
%
Mobile
 
165

 
169

 
158

 
161

 
172

 
4
%
Total digital
 
934

 
879

 
689

 
780

 
1,102

 
18
%
Packaged goods and other
 
593

 
570

 
270

 
380

 
480

 
(19
%)
Total net revenue
 
1,527

 
1,449

 
959

 
1,160

 
1,582

 
4
%
Full game downloads
 
(67
)
 
(98
)
 
(4
)
 
117

 
(39
)
 
 
Live services
 
8

 
(81
)
 
(98
)
 
311

 
(19
)
 
 
Mobile
 
10

 
(19
)
 
(8
)
 
22

 
4

 
 
Total digital
 
(49
)
 
(198
)
 
(110
)
 
450

 
(54
)
 
 
Packaged goods and other
 
(386
)
 
(476
)
 
330

 
361

 
(273
)
 
 
Change in deferred net revenue (online-enabled games)3
 
(435
)
 
(674
)
 
220

 
811

 
(327
)
 
 
Full game downloads
 
17
%
 
14
%
 
13
%
 
12
%
 
15
%
 
 
Live services
 
33
%
 
35
%
 
43
%
 
41
%
 
44
%
 
 
Mobile
 
11
%
 
12
%
 
16
%
 
14
%
 
11
%
 
 
Total digital
 
61
%
 
61
%
 
72
%
 
67
%
 
70
%
 
 
Packaged goods and other
 
39
%
 
39
%
 
28
%
 
33
%
 
30
%
 
 
Total net revenue %
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 


3The 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 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
YOY %
 
 
FY17
 
FY18
 
FY18
 
FY18
 
FY18
 
Change
QUARTERLY NET REVENUE PRESENTATIONS
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by platform
 
 
 
 
 
 
 
 
 
 
 
 
Xbox One, PLAYSTATION 4, Switch
 
1,039

 
974

 
569

 
785

 
1,167

 
12
%
Other consoles
 
70

 
60

 
26

 
25

 
29

 
(59
%)
Total consoles
 
1,109

 
1,034

 
595

 
810

 
1,196

 
8
%
PC / Browser
 
246

 
240

 
196

 
181

 
210

 
(15
%)
Mobile
 
165

 
171

 
162

 
166

 
173

 
5
%
Other
 
7

 
4

 
6

 
3

 
3

 
(57
%)
Total net revenue
 
1,527

 
1,449

 
959

 
1,160

 
1,582

 
4
%
Xbox One, PLAYSTATION 4, Switch
 
(375
)
 
(548
)
 
244

 
705

 
(298
)
 
 
Other consoles
 
(40
)
 
(42
)
 
14

 
5

 
(15
)
 
 
Total consoles
 
(415
)
 
(590
)
 
258

 
710

 
(313
)
 
 
PC / Browser
 
(30
)
 
(61
)
 
(30
)
 
83

 
(20
)
 
 
Mobile
 
9

 
(20
)
 
(7
)
 
21

 
5

 
 
Other
 
1

 
(3
)
 
(1
)
 
(3
)
 
1

 
 
Change in deferred net revenue (online-enabled games)3
 
(435
)
 
(674
)
 
220

 
811

 
(327
)
 
 
Xbox One, PLAYSTATION 4, Switch
 
68
%
 
67
%
 
59
%
 
68
%
 
74
%
 
 
Other consoles
 
5
%
 
4
%
 
3
%
 
2
%
 
2
%
 
 
Total consoles
 
73
%
 
71
%
 
62
%
 
70
%
 
76
%
 
 
PC / Browser
 
16
%
 
17
%
 
20
%
 
16
%
 
13
%
 
 
Mobile
 
11
%
 
12
%
 
17
%
 
14
%
 
11
%
 
 
Other
 

 

 
1
%
 

 

 
 
Total net revenue %
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 


3The 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 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
YOY %
 
FY17
 
FY18
 
FY18
 
FY18
 
FY18
 
Change
CASH FLOW DATA
 
 
 
 
 
 
 
 
 
 
 
Operating cash flow5
437

 
176

 
52

 
849

 
615

 
41
%
Operating cash flow5 - TTM
1,578

 
1,872

 
1,802

 
1,514

 
1,692

 
7
%
Capital expenditures
29

 
33

 
30

 
24

 
20

 
(31
%)
Capital expenditures - TTM
123

 
116

 
117

 
116

 
107

 
(13
%)
Repurchase and retirement of common stock
125

 
150

 
153

 
150

 
148

 
18
%
DEPRECIATION
 
 
 
 
 
 
 
 
 
 
 
Depreciation expense
29

 
29

 
30

 
30

 
31

 
7
%
BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
2,565

 
2,248

 
2,067

 
2,566

 
4,258

 


Short-term investments
1,967

 
2,222

 
2,288

 
2,318

 
1,073

 


Cash and cash equivalents, and short-term investments
4,532

 
4,470

 
4,355

 
4,884

 
5,331

 
18
%
Receivables, net
359

 
222

 
812

 
886

 
385

 
7
%
STOCK-BASED COMPENSATION
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
1

 
1

 
1

 

 
1

 
 
Research and development
28

 
28

 
36

 
38

 
44

 
 
Marketing and sales
8

 
7

 
9

 
8

 
8

 
 
General and administrative
15

 
12

 
16

 
17

 
16

 
 
Total stock-based compensation
52

 
48

 
62

 
63

 
69

 
 






5Operating cash flow has been recast to reflect the impact of ASU 2016-09 which EA adopted at the beginning of FY18.