10-QPeriod: Q3 FY2024

ELECTRONIC ARTS INC. Quarterly Report for Q3 Ended Dec 31, 2023

Filed February 6, 2024For Securities:EA

Summary

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 billion. This growth was primarily fueled by a 5% rise in live services and other net revenue, reaching $1.327 billion. 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 billion 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 million of its common stock during the quarter.

Financial Highlights

49 data points
Beta

Revenue

$1.95B

72.8% Gross Margin

Net Income

$290.00M

14.9% Net Margin

EPS (Diluted)

$1.07

Total Assets

$13.62B

Cash & Equivalents

$2.74B

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$1.95B
Cost of Revenue$529.00M
Gross Profit$1.42B
Operating Expenses$1.05B
Operating Income$365.00M
Interest Expense$15.00M
Net Income$290.00M
EPS (Basic)$1.08
EPS (Diluted)$1.07
Shares Outstanding (Basic)269.00M
Shares Outstanding (Diluted)271.00M

Key Highlights

  • 1Net revenue increased by 3% year-over-year to $1.945 billion for the third quarter.
  • 2Live services and other net revenue grew by 5% year-over-year to $1.327 billion.
  • 3Operating income saw a substantial 26% year-over-year increase to $365 million.
  • 4Diluted earnings per share stood at $1.07.
  • 5The company generated $1.735 billion in net cash from operating activities for the nine months ended December 31, 2023.
  • 6EA repurchased $325 million of its common stock in the third quarter.
  • 7Cash, cash equivalents, and short-term investments totaled $3.104 billion as of December 31, 2023.

Frequently Asked Questions

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.

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.

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.

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.