10-QPeriod: Q1 FY2002

ELECTRONIC ARTS INC. Quarterly Report for Q1 Ended Jun 30, 2001

Filed August 14, 2001For Securities:EA

Summary

Electronic Arts Inc. (EA) reported its financial results for the quarter ending June 30, 2001. The company experienced a net loss of $45.25 million for the quarter, an increase from the $42.27 million loss in the same period last year. Revenue, however, grew by 17.5% to $181.95 million, driven by strong performance in North America, particularly from PlayStation 2 titles. The company is navigating a significant industry transition with the introduction of new gaming consoles (PlayStation 2, Xbox, GameCube), which is impacting sales of older platform games and creating technical and business model uncertainties. EA continues to invest heavily in its EA.com online segment, which also incurred significant losses during the quarter. The company is focused on growing its online presence, including subscription services and advertising, but faces challenges related to the evolving e-commerce landscape and the inherent risks of online gaming development. Despite the net loss and ongoing platform transition, EA's management believes its current cash, cash equivalents, and short-term investments are sufficient to meet its financial obligations and investment needs.

Key Highlights

  • 1Net loss for the quarter increased to $45.25 million from $42.27 million in the prior year's quarter.
  • 2Total net revenues increased by 17.5% to $181.95 million, driven by a 43.6% surge in North American sales.
  • 3PlayStation 2 revenues saw substantial growth, up 391.4% to $50.52 million, indicating strong adoption of the new platform.
  • 4Sales of older platform games, such as PlayStation and Nintendo 64, continued to decline.
  • 5The company is experiencing operational losses in its EA.com online segment, despite investments in subscription services and advertising.
  • 6EA.com incurred $39.2 million in operating losses for the quarter, contributing significantly to the overall company net loss.
  • 7Cash, cash equivalents, and short-term investments totaled $460.19 million, providing ample liquidity for ongoing operations and investments.

Frequently Asked Questions

Electronic Arts reported a net loss of $45.25 million for the quarter ended June 30, 2001, compared to a net loss of $42.27 million for the same period in the prior year.

Total net revenues increased by 17.5% to $181.95 million for the quarter ended June 30, 2001, up from $154.79 million in the prior year's quarter. This growth was primarily driven by a strong performance in North America, particularly from PlayStation 2 titles.

The EA.com segment continues to incur significant operating losses, reporting a loss of $38.82 million for the quarter ended June 30, 2001. While the company is investing in online subscriptions and advertising, this segment's performance is a drag on overall profitability.

As of June 30, 2001, Electronic Arts had $460.19 million in cash, cash equivalents, and short-term investments, which management believes is sufficient to meet its short-term and long-term cash and investment requirements.