01—Abstract
Summary
Summary of the 10-Q filed February 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Electronic Arts Inc. (EA) reported its third-quarter results for the period ending December 30, 2023, showcasing a 3% year-over-year increase in net revenue to $1.945 billiona.
This growth was primarily fueled by a 5% rise in live services and other net revenue, reaching $1.327 billionb. The company demonstrated improved profitability with a 3-percentage point increase in gross margin to 72.8% and a significant 26% year-over-year increase in operating income, reaching $365 million. Diluted earnings per share were $1.07.
The company maintained a strong liquidity position with $3.104 billionc in cash, cash equivalents, and short-term investments, and generated $1.735 billion in net cash from operating activities year-to-date. Key drivers for the quarter included strong performance from EA SPORTS FC 24, EA SPORTS Madden NFL 24, Apex Legends, and The Sims 4. The company also highlighted the continued importance of its live services, particularly extra content within the Ultimate Team mode and Apex Legends, which are significant contributors to revenue.
EA is strategically focusing on growing online communities around its key franchises, expanding reach through storytelling, and building recurring revenue from its sports titles and live services. The company also continued its capital return program, repurchasing $325 milliond of its common stock during the quarter.
02—Key points
Key Highlights
- Net revenue increased by 3% year-over-year to $1.945 billion for the third quarter.
- Live services and other net revenue grew by 5% year-over-year to $1.327 billion.
- Operating income saw a substantial 26% year-over-year increase to $365 million.
- Diluted earnings per share stood at $1.07.
- The company generated $1.735 billion in net cash from operating activities for the nine months ended December 31, 2023.
- EA repurchased $325 million of its common stock in the third quarter.
- Cash, cash equivalents, and short-term investments totaled $3.104 billion as of December 31, 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Electronic Arts kept $0.15.
- Revenue$1.95B100.0%
- Cost of revenue−$529.0M27.2%
- Gross profit$1.42B72.8%
- Operating costs−$1.05B54.0%
- Operating income$365.0M18.8%
- Interest, other & tax−$75.0M3.9%
- Net income$290.0M14.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed February 6, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.95B$1.88B | +3.4% |
| Cost of Revenue | $529.00M$568.00M | −6.9% |
| Gross Profit | $1.42B$1.31B | +7.8% |
| Operating Expenses | $1.05B$1.02B | +2.6% |
| Operating Income | $365.00M$289.00M | +26.3% |
| Interest Expense | $15.00M$14.00M | +7.1% |
| Net Income | $290.00M$204.00M | +42.2% |
| EPS (Basic) | $1.08$0.74 | +45.9% |
| EPS (Diluted) | $1.07$0.73 | +46.6% |
| Shares Outstanding (Basic) | 269.00M276.00M | −2.5% |
| Shares Outstanding (Diluted) | 271.00M278.00M | −2.5% |
05—Questions
Frequently Asked Questions
What was Electronic Arts' revenue performance in the third quarter of fiscal year 2024?
Electronic Arts Inc. reported net revenue of $1.945 billion for the third quarter ended December 30, 2023, representing a 3% increase compared to the same period last year. This growth was primarily driven by a 5% increase in live services and other net revenue, which reached $1.327 billion.
How did profitability change for Electronic Arts in this quarter?
Profitability showed significant improvement. Gross margin increased by 3 percentage points year-over-year to 72.8%. Operating income surged by 26% year-over-year to $365 million. Diluted earnings per share were $1.07.
What is the company's current cash position and how is it managing its capital?
As of December 31, 2023, Electronic Arts had $3.104 billion in cash, cash equivalents, and short-term investments. The company demonstrated strong operational cash flow, generating $1.735 billion in net cash from operating activities for the nine months ended December 31, 2023. During the third quarter, EA repurchased $325 million of its common stock and paid $51 million in cash dividends.
What are the key revenue drivers for Electronic Arts?
The primary revenue drivers for Electronic Arts are its live services, which include extra content, subscriptions, and other in-game purchases. Key franchises contributing to revenue include EA SPORTS FC, EA SPORTS Madden NFL, Apex Legends, and The Sims 4. The company is emphasizing recurring revenue streams and digital delivery of games.
06—Continue