Summary
Electronic Arts Inc. (EA) reported revenues of $3.575 billion for the fiscal year ended March 31, 2014, a decrease of 6% from the prior year. This decline was primarily attributed to a shift in revenue recognition for online-enabled games and fewer major title releases. Despite the revenue dip, EA saw a significant increase in its digital revenue, which grew by 8% to $1.793 billion (before revenue deferral), highlighting a successful transition towards digital distribution and services. Financially, the company posted a net income of $8 million ($0.03 diluted EPS), a substantial decrease from $98 million ($0.31 diluted EPS) in the previous year, largely due to increased costs related to a litigation settlement and a change in revenue deferral policies. EA is strategically focusing on fewer, higher-quality 'hit' titles across multiple platforms, including new console generation games for PlayStation 4 and Xbox One, and is investing in its digital offerings and direct-to-consumer relationships through platforms like Origin. The company also announced a new $750 million stock repurchase program, indicating a commitment to shareholder returns.
Financial Highlights
51 data points| Revenue | $3.58B |
| Cost of Revenue | $1.35B |
| Gross Profit | $2.23B |
| Operating Expenses | $2.19B |
| Operating Income | $33.00M |
| Interest Expense | $30.00M |
| Net Income | $8.00M |
| EPS (Basic) | $0.03 |
| EPS (Diluted) | $0.03 |
| Shares Outstanding (Basic) | 308.00M |
| Shares Outstanding (Diluted) | 316.00M |
Key Highlights
- 1Total net revenue decreased by 6% to $3.575 billion in fiscal year 2014.
- 2Digital revenue (before deferral) increased by 8% to $1.793 billion, demonstrating a shift towards digital sales.
- 3Net income declined significantly to $8 million ($0.03/share) from $98 million ($0.31/share) in the prior year, impacted by revenue deferral changes and a litigation settlement accrual.
- 4The company published significantly fewer titles (11 in FY14 vs. over 30 in FY11) to focus on 'hit' potential.
- 5EA is actively developing for new console platforms (PlayStation 4 and Xbox One).
- 6A new $750 million stock repurchase program was authorized, superseding the previous $500 million program.
- 7The company incurred a $30 million accrual for an anticipated settlement of lawsuits concerning college athlete likenesses.