Summary
Electronic Arts Inc. (EA) reported its financial results for the quarter and six months ended September 29, 2013. The company experienced a decrease in net revenue for the three-month period compared to the prior year, primarily due to a decline in product revenue, although service and other revenue saw a significant increase. Net loss improved year-over-year for the quarter, driven by reduced operating expenses, including lower marketing and sales costs and a decrease in acquisition-related contingent consideration. The company is navigating the transition to new console platforms and continues to invest in digital content distribution and mobile gaming, which are key growth areas. EA's liquidity remains a focus, with a decrease in cash and cash equivalents and short-term investments. The company highlighted efforts to manage its cost structure and strategic focus on fewer, higher-quality titles. Significant legal matters, particularly concerning college athlete likenesses, have resulted in an accrual for a settlement. The company reiterates its belief that its current cash, investments, and financing facilities are sufficient to meet its operating requirements for the next 12 months.
Financial Highlights
49 data points| Revenue | $695.00M |
| Cost of Revenue | $413.00M |
| Gross Profit | $282.00M |
| Operating Expenses | $534.00M |
| Operating Income | -$252.00M |
| Interest Expense | -$8.00M |
| Net Income | -$273.00M |
| EPS (Basic) | $-0.89 |
| EPS (Diluted) | $-0.89 |
| Shares Outstanding (Basic) | 308.00M |
| Shares Outstanding (Diluted) | 308.00M |
Key Highlights
- 1Net revenue for the three months ended September 29, 2013, was $695 million, a 2% decrease from the prior year, primarily driven by a 27% decline in product revenue, partially offset by a 50% increase in service and other revenue.
- 2Net loss for the quarter improved to $273 million ($0.89 per share) from $381 million ($1.21 per share) in the prior year, attributed to lower operating expenses, including marketing and sales, and reduced acquisition-related contingent consideration.
- 3The company is strategically focusing on fewer, higher-quality titles, with a planned release of 11 major titles in fiscal year 2014, down from 13 in fiscal year 2013.
- 4Service and other revenue, which includes digital content and online services, increased by 50% year-over-year for the quarter, indicating a successful shift towards these revenue streams.
- 5EA recorded a $30 million accrual for an anticipated settlement related to college athlete likeness litigation, impacting general and administrative expenses.
- 6Cash and cash equivalents decreased by $202 million to $1,090 million as of September 29, 2013, compared to March 31, 2013, reflecting cash used in operating activities.
- 7The company is preparing for the launch of next-generation consoles (Xbox One and PlayStation 4) while continuing to support current-generation platforms.