10-QPeriod: Q3 FY2023

ELECTRONIC ARTS INC. Quarterly Report for Q3 Ended Dec 31, 2022

Filed February 7, 2023For Securities:EA

Summary

Electronic Arts Inc. (EA) reported solid financial results for the third quarter of fiscal year 2023, ending December 31, 2022. Net revenue saw a 5% increase year-over-year to $1.88 billion, driven by strong performance in live services and other revenue streams, which grew 7% to $1.26 billion. This growth was primarily fueled by the continued success of titles like FIFA Ultimate Team and Apex Legends, highlighting the company's effective monetization strategies for in-game content. The company demonstrated improved operational efficiency, with operating expenses decreasing 3% year-over-year. This, combined with the revenue growth, led to a substantial 183% increase in operating income, reaching $289 million. Diluted earnings per share also saw significant improvement, coming in at $0.73 compared to $0.23 in the prior year. EA also continues to return capital to shareholders, repurchasing $325 million of its common stock during the quarter and paying $52 million in dividends.

Financial Highlights

49 data points
Beta

Revenue

$1.88B

69.8% Gross Margin

Net Income

$204.00M

10.8% Net Margin

EPS (Diluted)

$0.73

Total Assets

$13.47B

Cash & Equivalents

$2.20B

Free Cash Flow

$1.12B

Financial Statements
Beta
Revenue$1.88B
Cost of Revenue$568.00M
Gross Profit$1.31B
Operating Expenses$1.02B
Operating Income$289.00M
Interest Expense$14.00M
Net Income$204.00M
EPS (Basic)$0.74
EPS (Diluted)$0.73
Shares Outstanding (Basic)276.00M
Shares Outstanding (Diluted)278.00M

Key Highlights

  • 1Net revenue increased 5% year-over-year to $1.88 billion for the third quarter.
  • 2Live services and other revenue, a key growth driver, increased 7% year-over-year to $1.26 billion.
  • 3Operating income saw a substantial increase of 183% year-over-year to $289 million.
  • 4Diluted earnings per share improved significantly to $0.73 from $0.23 in the prior year's quarter.
  • 5The company continues to repurchase shares, with $325 million spent on stock repurchases in the quarter.
  • 6Gross margin improved to 69.8%, up 5 percentage points year-over-year, indicating enhanced profitability per dollar of revenue.

Frequently Asked Questions

EA reported net revenue of $1.881 billion for the three months ended December 31, 2022, an increase of 5% compared to $1.789 billion in the same period last year. On a constant currency basis, net revenue would have increased by 9%.

Profitability improved significantly. Operating income rose by 183% to $289 million, and net income increased to $204 million from $66 million in the prior year's quarter. Diluted earnings per share improved to $0.73 from $0.23.

The primary drivers of revenue growth are EA's 'Live Services and Other' segment, which includes extra content, subscriptions, and other in-game purchases, and strong performance from key franchises like FIFA, Madden, and Apex Legends. Live services and other revenue increased by 7% year-over-year.

As of December 31, 2022, EA had cash and cash equivalents of $2.202 billion and short-term investments of $351 million, totaling $2.553 billion. During the quarter, the company repurchased 2.6 million shares for $325 million and paid $52 million in cash dividends.