10-KPeriod: FY2011

ELECTRONIC ARTS INC. Annual Report, Year Ended Mar 31, 2011

Filed May 24, 2011For Securities:EA

Summary

Electronic Arts Inc. (EA) reported its annual results for the fiscal year ending March 31, 2011. The company experienced a slight decline in overall net revenue to $3.59 billion, a decrease from $3.65 billion in the previous year. This revenue dip was primarily attributed to a strategic decision to reduce the number of games published, focusing on higher-margin opportunities and established franchises like FIFA, Battlefield, and Madden NFL. Despite the revenue decrease, EA significantly narrowed its net loss to $276 million from $677 million in the prior year, driven by improved gross profit margins and cost reduction initiatives, including a decrease in research and development expenses. Key developments during the fiscal year included the announcement of a $600 million stock repurchase program and continued strategic investments in digital content distribution and mobile platforms, highlighted by the acquisition of Chillingo. The company is also preparing for the launch of highly anticipated titles such as "Star Wars: The Old Republic." EA's international revenue showed growth, now representing 49% of total net revenue, indicating a strong performance outside of North America. Investors should note the ongoing shift towards digital distribution and services as a key growth driver.

Financial Highlights

49 data points
Beta

Revenue

$3.59B

58.2% Gross Margin

Net Income

-$276.00M

-7.7% Net Margin

EPS (Diluted)

$-0.84

Total Assets

$4.93B

Cash & Equivalents

$1.58B

Free Cash Flow

-$320.00M

Financial Statements
Beta
Revenue$3.59B
Cost of Revenue$1.50B
Gross Profit$2.09B
Operating Expenses$2.40B
Operating Income-$312.00M
Interest Expense$1.00M
Net Income-$276.00M
EPS (Basic)$-0.84
EPS (Diluted)$-0.84
Shares Outstanding (Basic)330.00M
Shares Outstanding (Diluted)330.00M

Key Highlights

  • 1Net revenue decreased slightly to $3.59 billion from $3.65 billion in the prior fiscal year.
  • 2Net loss narrowed significantly to $276 million from $677 million in the prior fiscal year, demonstrating improved profitability.
  • 3The company reduced its total published titles from 54 in FY2010 to 36 in FY2011, focusing on higher-margin opportunities and key franchises.
  • 4Digital content distribution and services revenue increased to $743 million, a significant growth from $522 million in FY2010.
  • 5Announced a $600 million stock repurchase program, signaling confidence and a commitment to shareholder returns.
  • 6International net revenue grew by 8% to $1.75 billion, representing 49% of total net revenue.
  • 7Acquired Chillingo Limited, a key player in the mobile games market, to strengthen its digital and mobile offerings.

Frequently Asked Questions

For the fiscal year ending March 31, 2011, Electronic Arts Inc. reported a net revenue of $3.59 billion, a slight decrease from the prior year's $3.65 billion. The company significantly reduced its net loss to $276 million from $677 million in the previous year, reflecting improved cost management and a strategic focus on higher-margin products.

EA is strategically shifting its focus towards digital content distribution and services, as well as mobile gaming platforms. This is evidenced by revenue growth in these segments and the acquisition of mobile game publisher Chillingo. The company is also reducing the number of titles it publishes to concentrate on its most promising intellectual properties and franchises.

EA has strategically reduced the number of games it develops and publishes, moving from 54 primary titles in FY2010 to 36 in FY2011, with plans for about 22 primary titles in FY2012. This strategy aims to concentrate development spending on fewer, higher-potential titles. Research and development expenses also decreased by 6% to $1.15 billion, reflecting these cost-reduction initiatives.

EA announced a $600 million stock repurchase program in February 2011, indicating a commitment to returning capital to shareholders. The company has not paid dividends historically and does not anticipate doing so in the near future, prioritizing reinvestment in the business and share repurchases.