10-KPeriod: FY2019

ELECTRONIC ARTS INC. Annual Report, Year Ended Mar 31, 2019

Filed May 24, 2019For Securities:EA

Summary

Electronic Arts Inc. (EA) reported a net revenue of $4.95 billion for the fiscal year ended March 31, 2019, a decrease of 4% year-over-year. This decline was primarily attributed to a decrease in revenue from franchises like Battlefield and Mass Effect: Andromeda, partially offset by growth in FIFA and The Sims. The company's strategic shift towards digital revenue continued, with digital net revenue increasing by 8% to $3.71 billion, representing 75% of total net revenue, up from 67% in the prior year. This trend is expected to continue, driven by live services and digital downloads. EA continued its focus on player engagement through new IP launches like Apex Legends and Anthem, and investments in subscription services. The company also actively repurchased shares, spending approximately $1.19 billion under its stock repurchase program. Despite a decrease in operating income and net income compared to the previous year, the company maintained a strong cash position and positive operating cash flow.

Financial Highlights

49 data points
Beta

Revenue

$4.95B

73.3% Gross Margin

Net Income

$1.02B

20.6% Net Margin

EPS (Diluted)

$3.33

Total Assets

$8.96B

Cash & Equivalents

$4.71B

Free Cash Flow

$1.55B

Financial Statements
Beta
Revenue$4.95B
Cost of Revenue$1.32B
Gross Profit$3.63B
Operating Expenses$2.63B
Operating Income$996.00M
Interest Expense$45.00M
Net Income$1.02B
EPS (Basic)$3.36
EPS (Diluted)$3.33
Shares Outstanding (Basic)303.00M
Shares Outstanding (Diluted)306.00M

Key Highlights

  • 1Total net revenue for FY2019 was $4.95 billion, a 4% decrease year-over-year.
  • 2Digital net revenue increased by 8% to $3.71 billion, now representing 75% of total revenue, highlighting the company's successful digital transformation.
  • 3Live services accounted for 45% of total net revenue, with the Ultimate Team mode contributing significantly (28% of total net revenue).
  • 4The company launched two new intellectual properties: Anthem and Apex Legends.
  • 5EA repurchased approximately $1.19 billion of its common stock during FY2019 under its $2.4 billion repurchase program.
  • 6Operating income decreased by 31% year-over-year to $996 million, primarily due to increased operating expenses and a decline in net revenue.
  • 7Despite a decrease in net revenue and operating income, the company generated $1.55 billion in net cash from operating activities.

Frequently Asked Questions

In fiscal year 2019, Electronic Arts Inc. reported total net revenue of $4.95 billion, a 4% decrease from the previous year. Operating income saw a more significant decline of 31% to $996 million, while net income decreased by 2% to $1.02 billion. The company generated $1.55 billion in operating cash flow.

EA continues to see a strong shift towards digital revenue. Digital net revenue grew 8% to $3.71 billion, accounting for 75% of total net revenue in FY2019, up from 67% in FY2018. This trend reflects increased player engagement with digital downloads and live services.

Live services, which include in-game purchases, downloadable content, and subscriptions, are a significant revenue driver for EA, making up 45% of total net revenue in FY2019. The Ultimate Team mode, particularly within the FIFA franchise, is a major contributor, representing approximately 28% of total net revenue.

EA is committed to a 'Players First' strategy, which includes investing in new intellectual properties. In FY2019, they launched two new IPs: Anthem and Apex Legends. Apex Legends was also notable as EA's first free-to-play console game, demonstrating a willingness to innovate business models to reach a broader audience.