Summary
Electronic Arts Inc. (EA) reported its financial results for the third quarter and the first nine months of fiscal year 2014, ending December 31, 2013. The company experienced a net loss of $308 million for the quarter, a significant increase compared to the $45 million loss in the prior year's quarter. This widening loss was primarily attributed to a $202 million decrease in gross profit, influenced by accounting for physical game sales over a longer period and a higher proportion of deferred revenue. Additionally, a favorable $45 million reversal of acquisition-related contingent consideration in the prior year's quarter did not recur. Revenue-wise, total net revenue for the quarter decreased by 12% to $808 million, impacted by accounting deferrals. However, excluding these deferrals, net revenue would have shown a substantial increase of 33%. Key drivers for the quarter's revenue included strong performances from FIFA 2014, Battlefield 4, and Madden NFL 25. The company also noted the significant industry shift towards next-generation consoles, with adoption being faster than anticipated but not yet fully offsetting the decline in current-generation console game sales.
Financial Highlights
49 data points| Revenue | $808.00M |
| Cost of Revenue | $517.00M |
| Gross Profit | $291.00M |
| Operating Expenses | $583.00M |
| Operating Income | -$292.00M |
| Interest Expense | -$8.00M |
| Net Income | -$308.00M |
| EPS (Basic) | $-1.00 |
| EPS (Diluted) | $-1.00 |
| Shares Outstanding (Basic) | 309.00M |
| Shares Outstanding (Diluted) | 309.00M |
Key Highlights
- 1Net loss widened to $308 million for the three months ended December 31, 2013, compared to $45 million in the prior year period.
- 2Total net revenue decreased 12% to $808 million for the quarter, with a significant portion of revenue being deferred under accounting rules.
- 3Excluding revenue deferrals, net revenue would have increased by 33% year-over-year for the quarter.
- 4Key revenue drivers for the quarter included FIFA 2014, Battlefield 4, and Madden NFL 25.
- 5The company's cash and cash equivalents increased significantly to $1.746 billion, up from $1.292 billion at the end of the previous fiscal year.
- 6EA is investing in next-generation consoles (Xbox One and PlayStation 4) and observed faster adoption than expected, though it hasn't fully offset declines in current-generation console sales.
- 7Service and other revenue increased by 47% year-over-year for the quarter, indicating growth in digital content and services.