01—Abstract
Summary
Summary of the 10-K filed May 21, 2015. Cited figures are marked; the original filing is the authoritative source.
Electronic Arts Inc. (EA) reported strong financial performance for the fiscal year ending March 31, 2015, with net revenue increasing 26% to $4.515 billion, and net income surging to $875 milliona from $8 million in the prior year.
This significant growth was driven by key franchises like FIFA and Madden NFL, alongside the performance of Battlefield 4. The company continues its strategic shift towards digital revenue, which showed a substantial increase, indicating a successful transition from traditional packaged goods. EA also demonstrated a commitment to shareholder returns through an active stock repurchase program.
The company's strategy focuses on putting players first, embracing a digital-first approach, and operating as 'One EA.' EA maintained its position as a top publisher on current-generation consoles (PlayStation 4 and Xbox One) and saw significant engagement with its mobile titles, averaging over 165 million monthly active users. The company is investing in its digital platform to enhance player relationships and is seeing higher margins from digital revenue. Despite a competitive market and industry cyclicality related to console transitions, EA's diversified portfolio and focus on digital transformation position it for continued growth.
02—Key points
Key Highlights
- Net revenue increased by 26% to $4.515 billion in fiscal year 2015, driven by strong performance of key franchises like FIFA and Madden NFL.
- Net income saw a dramatic increase to $875 million, up from $8 million in fiscal year 2014.
- Digital net revenue grew by 24% to $2.230 billion, becoming an increasingly significant portion of the company's overall revenue.
- The company averaged over 165 million monthly active users (MAUs) on its mobile titles, highlighting strong player engagement.
- EA continued its focus on current-generation consoles, being a top publisher on PlayStation 4 and Xbox One.
- The company repurchased approximately 8.3 million shares for $337 million in fiscal year 2015 and announced a new $1 billion stock repurchase program in May 2015.
- Research and Development expenses slightly decreased to $1.094 billion, while Marketing and Sales expenses also decreased to $647 million, contributing to improved profitability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Electronic Arts kept $0.19.
- Revenue$4.51B100.0%
- Cost of revenue−$1.43B31.7%
- Gross profit$3.09B68.3%
- Operating costs−$2.14B47.4%
- Operating income$948.0M21.0%
- Interest, other & tax−$73.0M1.6%
- Net income$875.0M19.4%
Where FY2015 revenue went
$4.51B- Operating costs: $2.14B, 47% of revenue
- Cost of revenue: $1.43B, 32% of revenue
- Net income: $875.0M, 19% of revenue
- Interest, other & tax: $73.0M, 1.6% of revenue
Kept 19% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed May 21, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $4.51B$3.58B | +26.3% |
| Cost of Revenue | $1.43B$1.35B | +6.1% |
| Gross Profit | $3.09B$2.23B | +38.5% |
| Operating Expenses | $2.14B$2.19B | −2.6% |
| Operating Income | $948.00M$33.00M | +2772.7% |
| Interest Expense | $31.00M$30.00M | +3.3% |
| Net Income | $875.00M$8.00M | +10837.5% |
| EPS (Basic) | $2.81$0.03 | +9266.7% |
| EPS (Diluted) | $2.69$0.03 | +8866.7% |
| Shares Outstanding (Basic) | 311.00M308.00M | +1.0% |
| Shares Outstanding (Diluted) | 325.00M316.00M | +2.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of Electronic Arts' revenue growth in fiscal year 2015?
Revenue growth was primarily driven by strong sales from key franchises such as FIFA, Madden NFL, and Battlefield 4. The company also benefited from an increase in digital revenue, including full-game downloads and extra content, and a broader customer base for its mobile titles.
How is Electronic Arts navigating the transition to digital sales?
EA is actively investing in its digital platform and strategy, as evidenced by the significant increase in digital revenue. The company is focusing on delivering digitally-delivered content, features, and services that extend the life of its games and provide higher-margin revenue compared to traditional packaged goods.
What is the company's approach to returning capital to shareholders?
Electronic Arts demonstrated its commitment to shareholder returns by repurchasing approximately 8.3 million shares for $337 million during fiscal year 2015. Furthermore, the company announced a new $1 billion stock repurchase program in May 2015, indicating continued confidence in its financial position and future prospects.
How did foreign currency exchange rates impact EA's financial results?
The strengthening of the U.S. dollar during the second half of fiscal year 2015 negatively impacted reported international net revenue by approximately $30 million. However, it positively affected reported international operating expenses due to translation at lower rates. The company actively uses hedging contracts to mitigate some of this foreign currency risk.
06—Continue