10-QPeriod: Q2 FY2022

ELECTRONIC ARTS INC. Quarterly Report for Q2 Ended Sep 30, 2021

Filed November 9, 2021For Securities:EA

Summary

Electronic Arts Inc. (EA) reported strong financial performance for the quarter ended September 30, 2021. Net revenue surged by 59% year-over-year to $1.826 billion, driven by a significant increase in both full game sales and live services revenue. Live services, in particular, demonstrated robust growth, up 39% year-over-year, highlighting the continued importance of ongoing player engagement and in-game content. Operating income saw a substantial increase of 128% year-over-year, reaching $340 million, with diluted earnings per share at $1.02. The company also provided an update on its significant acquisition activities, including the completion of the Codemasters, Glu Mobile, and Playdemic acquisitions. These acquisitions are expected to bolster EA's presence in racing games and accelerate its mobile growth strategy. Despite a notable increase in cash used in operating activities due to higher tax payments and marketing spend, EA maintained a healthy liquidity position with total cash, cash equivalents, and short-term investments of $1.972 billion.

Financial Highlights

50 data points
Beta

Revenue

$1.83B

72.9% Gross Margin

Net Income

$294.00M

16.1% Net Margin

EPS (Diluted)

$1.02

Total Assets

$13.02B

Cash & Equivalents

$5.26B

Free Cash Flow

$64.00M

Financial Statements
Beta
Revenue$1.83B
Cost of Revenue$494.00M
Gross Profit$1.33B
Operating Expenses$992.00M
Operating Income$340.00M
Interest Expense$15.00M
Net Income$294.00M
EPS (Basic)$1.03
EPS (Diluted)$1.02
Shares Outstanding (Basic)285.00M
Shares Outstanding (Diluted)287.00M

Key Highlights

  • 1Net revenue increased 59% year-over-year to $1.826 billion.
  • 2Live services and other revenue grew 39% year-over-year to $1.209 billion.
  • 3Operating income rose significantly by 128% year-over-year to $340 million.
  • 4Diluted earnings per share (EPS) was $1.02.
  • 5The company completed three significant acquisitions: Codemasters, Glu Mobile, and Playdemic.
  • 6Total cash, cash equivalents, and short-term investments stood at $1.972 billion.
  • 7EA repurchased 2.3 million shares of common stock for $325 million during the quarter.

Frequently Asked Questions

EA's revenue growth was primarily driven by the significant increase in net revenue from both full game downloads and packaged goods, along with strong performance in live services. The FIFA franchise, Apex Legends, and Madden NFL 22 were key contributors.

EA completed the acquisitions of Codemasters, Glu Mobile, and Playdemic during this period. While these acquisitions are expected to accelerate growth and expand EA's portfolio (particularly in racing and mobile gaming), they also contributed to an increase in cash used in investing activities and a significant increase in goodwill and acquisition-related intangibles on the balance sheet.

EA's live services business continues to be a critical component of its strategy, with revenue from this segment growing significantly. The company expects live services revenue, particularly from extra content like that offered in FIFA Ultimate Team and Apex Legends, to remain material and continue driving growth due to increased player engagement over longer periods.

EA ended the quarter with $1.972 billion in cash, cash equivalents, and short-term investments. While cash used in operating activities increased due to higher tax payments and marketing spend, the company's liquidity position remains strong. EA also actively engaged in share repurchases and paid dividends, returning capital to shareholders.