EX-99.1 2 earningsrelease102919.htm PRESS RELEASE Exhibit


Exhibit 99.1
 
Electronic Arts Reports Q2 FY20 Financial Results
graphic050614a10.jpg
 
 
 
 
 
REDWOOD CITY, CA – October 29, 2019 – Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second fiscal quarter ended September 30, 2019.

“It was an excellent second quarter for Electronic Arts. Our new EA SPORTS titles are thrilling core fans and bringing in new players, and our ongoing live services are growing with deeply-engaged communities,” said CEO Andrew Wilson. “With new games like Star Wars Jedi: Fallen Order, Need for Speed, Plants vs. Zombies and more great content across our top franchises, we’re set to deliver a lot of fun and excitement to players this holiday season, and continue our momentum in this fiscal year.”

“The strong results this quarter illustrate the power of our live services and our core franchises. Strength in Ultimate Team, The Sims 4 and FIFA Online drove live services performance above our expectations,” said COO and CFO Blake Jorgensen. “Looking ahead, we are doubling down on live services combined with our core franchises. We’re investing in games that people play for longer and engage with much more deeply. This focus will continue to drive growth and profitability for the company through the remainder of this year and beyond.”   

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* for the trailing twelve months was a record $3.883 billion, up 8% year-over-year and represents 78% of total net bookings.
•
The number of FIFA Ultimate TeamTM unique players increased 22% year-over-year.
•
The number of Madden Ultimate TeamTM unique players increased 19% year-over-year.
•
Apex LegendsTM has had 70 million players life to date.
•
The Sims TM 4 monthly average players are up more than 40% year-over-year.

* 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 mobile platform fees.

Selected Financial Highlights and Metrics
•
Net cash provided by operating activities was $37 million for the quarter and $1.748 billion for the trailing twelve months.
•
EA repurchased 3.3 million shares for $306 million during the quarter, bringing the total to 12.9 million shares for $1.204 billion during the trailing twelve months.

Impact of Certain Tax Matters
During the six months ended September 30, 2019, three separate tax events occurred:
1.
During the three months ended June 30, 2019, EA completed an internal transfer of some of its intellectual property rights to its Swiss subsidiary, where EA’s international business is headquartered;
2.
Also during the three months ended June 30, 2019, a decision by the Ninth Circuit Court of Appeals in Altera Corp. v. Commissioner regarding stock-based compensation expenses required EA to record a tax accrual; and





3.
During the three months ended September 30, 2019, Switzerland changed its income tax rates.

As a result of these events, EA has recognized an income tax benefit of $1.705 billion, or $5.74 of earnings per share, during the fiscal year ending March 31, 2020. EA recognized $1.080 billion, or $3.61 of earnings per share, of this income tax benefit during the three months ended June 30, 2019 and $625 million, or $2.11 of earnings per share, during the three months ended September 30, 2019.

Quarterly Financial Highlights
 
Three Months Ended
 
September 30,
 
2019
 
2018
(in $ millions, except per share amounts)
 
 
 
Digital net revenue
922

 
780

Packaged goods and other net revenue
426

 
506

          Total net revenue
1,348

 
1,286

 
 
 
 
Net income
854*

 
255

Earnings per share
2.89*

 
0.83

 
 
 
 
Operating cash flow
37

 
(126
)
 
 
 
 
Value of shares repurchased
306

 
299

Number of shares repurchased
3.3

 
2.3

 
 
 
 
 
*Refer to the above section titled “Impact of Certain Tax Matters” for additional details.


The following GAAP-based financial data and tax rate of 18% was used internally by company management to adjust its fiscal GAAP results in order to assess EA’s operating results:
 
Three Months Ended September 30, 2019
 
 
 
GAAP-Based Financial Data
(in $ millions)
Statement of Operations
 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Mobile platform fees
 
Stock-based compensation
Total net revenue
1,348

 
—

 
(35
)
 
(36
)
 
—

          Cost of revenue
405

 
(2
)
 
—

 
(36
)
 
(1
)
Gross profit
943

 
2

 
(35
)
 
—

 
1

          Total operating expenses
675

 
(8
)
 
—

 
—

 
(91
)
Operating income
268

 
10

 
(35
)
 
—

 
92

Interest and other income, net
16

 
—

 
—

 
—

 
—

Income before provision for income taxes
284

 
10

 
(35
)
 
—

 
92

Number of shares used in computation:
 
 
 
 
 
 
 
 
 
          Diluted
296

 
 
 
 
 
 
 
 

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 June 30, 2019.





TTM Financial Highlights
 
Twelve Months Ended
 
September 30,
 
2019
 
2018
(in $ millions)
 
 
 
Digital net revenue
3,944

 
3,619

Packaged goods and other net revenue
1,140

 
1,546

          Total net revenue
5,084

 
5,165

 
 
 
 
Net income
2,746*

 
969

 
 
 
 
Operating cash flow
1,748

 
1,458

 
 
 
 
Value of shares repurchased
1,204

 
897

Number of shares repurchased
12.9

 
7.2

 
 
 
 
 
*Refer to the above section titled “Impact of Certain Tax Matters” for additional details.


The following GAAP-based financial data 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 September 30, 2019
 
 
 
GAAP-Based Financial Data
(in $ millions)
Statement of Operations
 
Acquisition-related expenses
 
Change in deferred net revenue (online-enabled games)
 
Mobile platform fees
 
Stock-based compensation
Total net revenue
5,084

 
—

 
79

 
(170
)
 
—

          Cost of revenue
1,281

 
(6
)
 
—

 
(170
)
 
(4
)
Gross profit
3,803

 
6

 
79

 
—

 
4

          Total operating expenses
2,682

 
(37
)
 
—

 
—

 
(309
)
Operating income
1,121

 
43

 
79

 
—

 
313

Interest and other income, net
83

 
—

 
—

 
—

 
—

Income before provision for income taxes
1,204

 
43

 
79

 
—

 
313


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 June 30, 2019.

Operating Metric
The following is a calculation of our total net bookings for the periods presented:
 
Three Months Ended
September 30,
 
TTM Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(in $ millions)
 
 
 
 
 
 
 
Total net revenue
1,348

 
1,286

 
5,084

 
5,165

Change in deferred net revenue (online-enabled games)
(35
)
 
(20
)
 
79

 
125

Mobile platform fees
(36
)
 
(44
)
 
(170
)
 
(93
)
Net bookings
1,277

 
1,222

 
4,993

 
5,197







Business Outlook as of October 29, 2019
The following forward-looking statements reflect expectations as of October 29, 2019. 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 2020 Expectations – Ending March 31, 2020

Financial metrics:
•
Net revenue is expected to be approximately $5.410 billion.
◦
Change in deferred net revenue (online-enabled games) is expected to be approximately $(130) million.
◦
Mobile platform fees are expected to be approximately $(155) million.
•
Net income is expected to be approximately $2.841 billion, approximately $1.705 billion of which is related to the one-time income tax benefits discussed above.
•
Diluted earnings per share is expected to be approximately $9.57, approximately $5.74 of which is related to the one-time income tax benefits discussed above.
•
Operating cash flow is expected to be approximately $1.625 billion.
•
The Company estimates a share count of 297 million for purposes of calculating fiscal year 2020 diluted earnings per share.


Operational metric:
•
Net bookings is expected to be approximately $5.125 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, 2020
 
 
 
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
4,230

 
—

 
(75
)
 
(155
)
 
—

Packaged goods & other net revenue
1,180

 
—

 
(55
)
 
—

 
—

Total net revenue
5,410

 
—

 
(130
)
 
(155
)
 
—

Cost of revenue
1,332

 
(12
)
 
—

 
(155
)
 
(2
)
Operating expense
2,746

 
(23
)
 
—

 
—

 
(353
)
Income before provision for income taxes
1,387

 
35

 
(130
)
 
—

 
355

Net income
2,841

 
 
 
 
 
 
 
 
Number of shares used in computation:
 
 
 
 
 
 
 
 
 
Diluted shares
297

 
 
 
 
 
 
 
 






Third Quarter Fiscal Year 2020 Expectations – Ending December 31, 2019
Financial metrics:
•
Net revenue is expected to be approximately $1.510 billion.
◦
Change in deferred net revenue (online-enabled games) is expected to be approximately $470 million.
◦
Mobile platform fees are expected to be approximately $(40) million.
•
Net income is expected to be approximately $272 million.
•
Diluted earnings per share is expected to be approximately $0.92.
•
The Company estimates a share count of 295 million for purposes of calculating third quarter fiscal year 2020 diluted earnings per share.


Operational metric:
•
Net bookings is expected to be approximately $1.940 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:
 
Three Months Ending December 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)
 
 
 
 
 
 
 
 
 
Total net revenue
1,510

 
—

 
470

 
(40
)
 
—

Cost of revenue
482

 
(6
)
 
—

 
(40
)
 
—

Operating expense
733

 
(5
)
 
—

 
—

 
(95
)
Income before provision for income taxes
306

 
11

 
470

 
—

 
95

Net Income
272

 
 
 
 
 
 
 
 
Number of shares used in computation:
 
 


 
 
 
 
 
 
Diluted shares
295

 
 
 
 
 
 
 
 

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 June 30, 2019.

Conference Call and Supporting Documents
Electronic Arts will host a conference call on October 29, 2019 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2019 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) 393-4306 (domestic) or (734) 385-2616 (international), using conference code 9877505 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 and Investor Accounting FAQ 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 13, 2019 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 9877505. 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 2020 expectations under the heading “Business Outlook as of October 29, 2019,” and other information regarding EA's fiscal 2020 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: 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 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 II, Item 1A of Electronic Arts’ latest Quarterly Report on Form 10-Q under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2019. 

These forward-looking statements are current as of October 29, 2019. 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 September 30, 2019.  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, 2019, except as required by law.

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 2019, EA posted GAAP net revenue of $4.95 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™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.






EA SPORTS, Ultimate Team, Apex Legends, Battlefield, Need for Speed, Titanfall, The Sims 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 per share data)
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Six Months Ended September 30,
 
2019
 
2018
 
2019
2018
Net revenue
 
 
 
 
 
 
Product
568

 
623

 
734

825

Service and other
780

 
663

 
1,823

1,598

Total net revenue
1,348

 
1,286

 
2,557

2,423

Cost of revenue
 
 
 
 
 
 
Product
193

 
222

 
228

290

Service and other
212

 
196

 
364

343

Total cost of revenue
405

 
418

 
592

633

Gross profit
943

 
868

 
1,965

1,790

Operating expenses:
 
 
 
 
 
 
Research and development
387

 
339

 
768

701

Marketing and sales
152

 
146

 
262

286

General and administrative
128

 
117

 
238

231

Acquisition-related contingent consideration
2

 
2

 
3

2

Amortization of intangibles
6

 
6

 
11

12

Total operating expenses
675

 
610

 
1,282

1,232

Operating income
268

 
258

 
683

558

Interest and other income (expense), net
16

 
18

 
37

37

Income before provision for (benefit from) income taxes
284

 
276

 
720

595

Provision for (benefit from) income taxes
(570
)
 
21

 
(1,555
)
47

Net income
854

 
255

 
2,275

548

Earnings per share
 
 
 
 
 
 
Basic
2.89

 
0.84

 
7.69

1.80

Diluted
2.89

 
0.83

 
7.66

1.77

Number of shares used in computation
 
 
 
 
 
 
Basic
295

 
305

 
296

305

Diluted
296

 
307

 
297

309
























Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus our guidance provided on July 30, 2019 for the three months ended September 30, 2019 plus a comparison to the actuals for the three months ended September 30, 2018.


 
Three Months Ended September 30,
 
2019
 
 
 
2019
 
2018
 
Guidance
 
Variance
 
Actuals
 
Actuals
Net revenue
 
 
 
 
 
 
 
Net revenue
1,315

 
33

 
1,348

 
1,286

GAAP-based financial data
 
 
 
 
 
 
 
Change in deferred net revenue (online-enabled games)
(50
)
 
15

 
(35
)
 
(20
)
Mobile platform fees
(35
)
 
(1
)
 
(36
)
 
(44
)
Cost of revenue
 
 


 
 
 
 
Cost of revenue
407

 
(2
)
 
405

 
418

GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
(2
)
 
—

 
(2
)
 
(1
)
Stock-based compensation
(1
)
 
—

 
(1
)
 
(1
)
Mobile platform fees
(35
)
 
(1
)
 
(36
)
 
(44
)
Operating expenses
 
 


 
 
 
 
Operating expenses
679

 
(4
)
 
675

 
610

GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
(5
)
 
(3
)
 
(8
)
 
(8
)
Stock-based compensation
(89
)
 
(2
)
 
(91
)
 
(65
)
Income before tax
 
 


 
 
 
 
Income before tax
243

 
41

 
284

 
276

GAAP-based financial data
 
 
 
 
 
 
 
Acquisition-related expenses
7

 
3

 
10

 
9

Change in deferred net revenue (online-enabled games)
(50
)
 
15

 
(35
)
 
(20
)
Mobile platform fees
—

 
—

 
—

 
—

Stock-based compensation
90

 
2

 
92

 
66

Tax rate used for management reporting
18
%
 


 
18
%
 
18
%
Earnings per share
 
 
 
 
 
 
 
Basic
2.62

 
0.27

 
2.89

 
0.84

Diluted
2.60

 
0.29

 
2.89

 
0.83

Number of shares
 
 
 
 
 
 
 
Basic
296

 
(1
)
 
295

 
305

Diluted
298

 
(2
)
 
296

 
307

















ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in $ millions)
 
 
 
 
 
September 30, 2019
 
March 31, 20191
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
2,940

 
4,708

Short-term investments
1,943

 
737

Receivables, net
856

 
623

Other current assets
301

 
313

Total current assets
6,040

 
6,381

Property and equipment, net
442

 
448

Goodwill
1,890

 
1,892

Acquisition-related intangibles, net
72

 
87

Deferred income taxes, net
1,835

 
35

Other assets
314

 
114

TOTAL ASSETS
10,593

 
8,957

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
148

 
113

Accrued and other current liabilities
1,024

 
1,052

Deferred net revenue (online-enabled games)
646

 
1,100

Total current liabilities
1,818

 
2,265

Senior notes, net
995

 
994

Income tax obligations
361

 
233

Deferred income taxes, net
2

 
2

Other liabilities
259

 
132

Total liabilities
3,435

 
3,626

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
3

 
3

Retained earnings
7,165

 
5,358

Accumulated other comprehensive loss
(10
)
 
(30
)
Total stockholders’ equity
7,158

 
5,331

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
10,593

 
8,957




1Derived 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,
 
2019
 
2018
 
2019
 
2018
OPERATING ACTIVITIES
 
 
 
 
 
 
 
Net income
854

 
255

 
2,275

 
548

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation, amortization and accretion
35

 
36

 
72

 
74

Stock-based compensation
92

 
66

 
165

 
136

Change in assets and liabilities
 
 
 
 
 
 
 
Receivables, net
(529
)
 
(591
)
 
(235
)
 
(422
)
Other assets
9

 
(28
)
 
33

 
20

Accounts payable
91

 
124

 
51

 
132

Accrued and other liabilities
144

 
60

 
88

 
(25
)
Deferred income taxes, net
(626
)
 
(20
)
 
(1,800
)
 
(94
)
Deferred net revenue (online-enabled games)
(33
)
 
(28
)
 
(454
)
 
(375
)
Net cash provided by (used in) operating activities
37

 
(126
)
 
195

 
(6
)
INVESTING ACTIVITIES
 
 
 
 
 
 
 
Capital expenditures
(27
)
 
(31
)
 
(72
)
 
(63
)
Proceeds from maturities and sales of short-term investments
435

 
239

 
793

 
446

Purchase of short-term investments
(721
)
 
(801
)
 
(1,984
)
 
(1,029
)
Acquisitions, net of cash acquired
—

 
(8
)
 
—

 
(58
)
Net cash used in investing activities
(313
)
 
(601
)
 
(1,263
)
 
(704
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
Proceeds from issuance of common stock
30

 
35

 
33

 
36

Cash paid to taxing authorities for shares withheld from employees
(4
)
 
(7
)
 
(55
)
 
(96
)
Repurchase and retirement of common stock
(306
)
 
(299
)
 
(611
)
 
(599
)
Payment of contingent consideration
(32
)
 
—

 
(64
)
 
—

Net cash used in financing activities
(312
)
 
(271
)
 
(697
)
 
(659
)
Effect of foreign exchange on cash and cash equivalents
(5
)
 
3

 
(3
)
 
(8
)
Change in cash and cash equivalents
(593
)
 
(995
)
 
(1,768
)
 
(1,377
)
Beginning cash and cash equivalents
3,533

 
3,876

 
4,708

 
4,258

Ending cash and cash equivalents
2,940

 
2,881

 
2,940

 
2,881




















ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
YOY %
 
FY19
 
FY19
 
FY19
 
FY20
 
FY20
 
Change
Net revenue
 
 
 
 
 
 
 
 
 
 
 
 Net revenue
1,286

 
1,289

 
1,238

 
1,209

 
1,348

 
5
%
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Change in deferred net revenue (online-enabled games)2
(20
)
 
368

 
173

 
(427
)
 
(35
)
 
 
Mobile platform fees
(44
)
 
(48
)
 
(47
)
 
(39
)
 
(36
)
 
 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
Gross profit
868

 
876

 
962

 
1,022

 
943

 
9
%
Gross profit (as a % of net revenue)
67
%
 
68
%
 
78
%
 
85
%
 
70
%
 
 
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
1

 
1

 
1

 
2

 
2

 
 
Change in deferred net revenue (online-enabled games)2
(20
)
 
368

 
173

 
(427
)
 
(35
)
 
 
Mobile platform fees
—

 
—

 
—

 
—

 
—

 
 
Stock-based compensation
1

 
1

 
1

 
1

 
1

 
 
Operating income
 
 
 
 
 
 
 
 
 
 
 
Operating income
258

 
242

 
196

 
415

 
268

 
4
%
Operating income (as a % of net revenue)
20
%
 
19
%
 
16
%
 
34
%
 
20
%
 
 
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
9

 
8

 
17

 
8

 
10

 
 
Change in deferred net revenue (online-enabled games)2
(20
)
 
368

 
173

 
(427
)
 
(35
)
 
 
Stock-based compensation
66

 
75

 
73

 
73

 
92

 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
Net income
255

 
262

 
209

 
1,421

 
854

 
235
%
Net income (as a % of net revenue)
20
%
 
20
%
 
17
%
 
118
%
 
63
%
 
 
GAAP-based financial data
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
9

 
8

 
17

 
8

 
10

 
 
Change in deferred net revenue (online-enabled games)2
(20
)
 
368

 
173

 
(427
)
 
(35
)
 
 
Stock-based compensation
66

 
75

 
73

 
73

 
92

 
 
Tax rate used for management reporting
18
%
 
18
%
 
18
%
 
18
%
 
18
%
 


Diluted earnings per share
0.83

 
0.86

 
0.69

 
4.75

 
2.89

 
248
%
Number of diluted shares used in computation
 
 
 
 
 
 
 
 
 
 
 
Basic
305

 
302

 
299

 
297

 
295

 
 
Diluted
307

 
304

 
301

 
299

 
296

 
 



2The 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
YOY %
 
 
FY19
 
FY19
 
FY19
 
FY20
 
FY20
 
Change
QUARTERLY NET REVENUE PRESENTATIONS
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by composition
 
 
 
 
 
 
 
 
 
 
 
 
Full game downloads
 
148

 
247

 
169

 
132

 
180

 
22
%
Live services
 
412

 
480

 
714

 
731

 
573

 
39
%
Mobile
 
220

 
181

 
182

 
186

 
169

 
(23
%)
Total digital
 
780

 
908

 
1,065

 
1,049

 
922

 
18
%
Packaged goods and other
 
506

 
381

 
173

 
160

 
426

 
(16
%)
Total net revenue
 
1,286

 
1,289

 
1,238

 
1,209

 
1,348

 
5
%
Total digital
 
61
%
 
70
%
 
86
%
 
87
%
 
68
%
 
 
Packaged goods and other
 
39
%
 
30
%
 
14
%
 
13
%
 
32
%
 
 
Total net revenue %
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
GAAP-based financial data
 
 
 
 
 
 
Full game downloads
 
9

 
26

 
44

 
(57
)
 
(5
)
 
 
Live services
 
(84
)
 
304

 
131

 
(227
)
 
(80
)
 
 
Mobile
 
(24
)
 
9

 
—

 
(25
)
 
(11
)
 
 
Total digital
 
(99
)
 
339

 
175

 
(309
)
 
(96
)
 
 
Packaged goods and other
 
79

 
29

 
(2
)
 
(118
)
 
61

 
 
Total change in deferred net revenue (online-enabled games) by composition2
 
(20
)
 
368

 
173

 
(427
)
 
(35
)
 
 
Mobile platform fees
 
(44
)
 
(48
)
 
(47
)
 
(39
)
 
(36
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue by platform
 
 
 
 
 
 
 
 
 
 
 
 
Console
 
917

 
885

 
826

 
760

 
923

 
1
%
PC/Browser
 
149

 
217

 
217

 
249

 
242

 
62
%
Mobile
 
220

 
181

 
190

 
196

 
177

 
(20
%)
Other
 
—

 
6

 
5

 
4

 
6

 
100
%
Total net revenue
 
1,286

 
1,289

 
1,238

 
1,209

 
1,348

 
5
%
GAAP-based financial data
 
 
 
 
 


Console
 
8

 
323

 
87

 
(344
)
 
8

 
 
PC/Browser
 
(4
)
 
33

 
88

 
(59
)
 
(31
)
 
 
Mobile
 
(24
)
 
11

 
(2
)
 
(25
)
 
(11
)
 
 
Other
 
—

 
1

 
—

 
1

 
(1
)
 
 
Total change in deferred net revenue (online-enabled games) by platform2
 
(20
)
 
368

 
173

 
(427
)
 
(35
)
 
 
Mobile platform fees
 
(44
)
 
(48
)
 
(47
)
 
(39
)
 
(36
)
 
 




2The 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
YOY %
 
FY19
 
FY19
 
FY19
 
FY20
 
FY20
 
Change
CASH FLOW DATA
 
 
 
 
 
 
 
 
 
 
 
Operating cash flow
(126
)
 
954

 
599

 
158

 
37

 
129
%
Operating cash flow - TTM
1,458

 
1,563

 
1,547

 
1,585

 
1,748

 
20
%
Capital expenditures
31

 
21

 
35

 
45

 
27

 
(13
%)
Capital expenditures - TTM
107

 
104

 
119

 
132

 
128

 
20
%
Repurchase and retirement of common stock
299

 
292

 
301

 
305

 
306

 
2
%
DEPRECIATION
 
 
 
 
 
 
 
 
 
 
 
Depreciation expense
30

 
30

 
31

 
30

 
30

 
—

BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
2,881

 
3,887

 
4,708

 
3,533

 
2,940

 


Short-term investments
1,664

 
1,274

 
737

 
1,654

 
1,943

 


Cash and cash equivalents, and short-term investments
4,545

 
5,161

 
5,445

 
5,187

 
4,883

 
7
%
Receivables, net
966

 
806

 
623

 
329

 
856

 
(11
%)
STOCK-BASED COMPENSATION
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
1

 
1

 
1

 
1

 
1

 
 
Research and development
39

 
49

 
49

 
49

 
61

 
 
Marketing and sales
9

 
8

 
9

 
7

 
10

 
 
General and administrative
17

 
17

 
14

 
16

 
20

 
 
Total stock-based compensation
66

 
75

 
73

 
73

 
92