01—Abstract
Summary
Summary of the 10-K filed May 24, 2019. Cited figures are marked; the original filing is the authoritative source.
Electronic Arts Inc. (EA) reported a net revenue of $4.95 billiona 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 billionb, 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 billionc 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.
02—Key points
Key Highlights
- Total net revenue for FY2019 was $4.95 billion, a 4% decrease year-over-year.
- Digital net revenue increased by 8% to $3.71 billion, now representing 75% of total revenue, highlighting the company's successful digital transformation.
- Live services accounted for 45% of total net revenue, with the Ultimate Team mode contributing significantly (28% of total net revenue).
- The company launched two new intellectual properties: Anthem and Apex Legends.
- EA repurchased approximately $1.19 billion of its common stock during FY2019 under its $2.4 billion repurchase program.
- Operating income decreased by 31% year-over-year to $996 million, primarily due to increased operating expenses and a decline in net revenue.
- Despite a decrease in net revenue and operating income, the company generated $1.55 billion in net cash from operating activities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Electronic Arts kept $0.21.
- Revenue$4.95B100.0%
- Cost of revenue−$1.32B26.7%
- Gross profit$3.63B73.3%
- Operating costs−$2.63B53.2%
- Operating income$996.0M20.1%
- Interest, other & tax$23.0M0.5%
- Net income$1.02B20.6%
Where FY2019 revenue went
$4.95B- Operating costs: $2.63B, 53% of revenue
- Cost of revenue: $1.32B, 27% of revenue
- Operating income: $996.0M, 20% of revenue
Kept 20% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed May 24, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $4.95B$5.15B | −3.9% |
| Cost of Revenue | $1.32B$1.28B | +3.5% |
| Gross Profit | $3.63B$3.87B | −6.3% |
| Operating Expenses | $2.63B$2.44B | +7.9% |
| Operating Income | $996.00M$1.43B | −30.5% |
| Interest Expense | $45.00M$44.00M | +2.3% |
| Net Income | $1.02B$1.04B | −2.3% |
| EPS (Basic) | $3.36$3.39 | −0.9% |
| EPS (Diluted) | $3.33$3.34 | −0.3% |
| Shares Outstanding (Basic) | 303.00M308.00M | −1.6% |
| Shares Outstanding (Diluted) | 306.00M312.00M | −1.9% |
05—Questions
Frequently Asked Questions
What was EA's overall financial performance in FY2019?
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.
How is EA's revenue shifting between digital and physical sales?
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.
What are the key drivers for EA's live services revenue?
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.
What is EA's strategy regarding new game launches and intellectual property?
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.
06—Continue