01—Abstract
Summary
Summary of the 10-Q filed November 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Electronic Arts Inc. (EA) reported its financial results for the fiscal quarter ending September 29, 2024.
The company demonstrated a year-over-year increase in net revenue, reaching $2,025 milliona, up 6% from the prior year. This growth was primarily driven by strong performance in full game downloads and a slight increase in live services revenue. Despite a 10% rise in operating expenses, the company managed to increase its operating income by 2% to $384 million, and net income stood at $294 million, with diluted earnings per share of $1.11.
Cash flow from operations saw a significant improvement, more than doubling year-over-year to $234 millionb. EA continued its commitment to returning capital to shareholders through a robust share repurchase program, having bought back 2.6 million shares for $375 million in the quarter.
The company maintains a solid liquidity position with $2,563 millionc in cash, cash equivalents, and short-term investments, indicating financial stability. Management highlighted strategic priorities focused on growing online communities, deepening engagement, and expanding recurring revenue streams from live services and key franchises.
02—Key points
Key Highlights
- Net revenue increased 6% year-over-year to $2,025 million, driven by full game downloads and live services.
- Diluted Earnings Per Share (EPS) was $1.11, compared to $1.47 in the prior year's comparable quarter.
- Net cash provided by operating activities significantly improved, increasing 109% year-over-year to $234 million for the quarter.
- The company repurchased 2.6 million shares for $375 million during the quarter under its new $5.0 billion stock repurchase program.
- Total cash, cash equivalents, and short-term investments remained strong at $2,563 million.
- Operating expenses increased by 10% year-over-year, impacting net income despite revenue growth.
- The company continues to focus on growing live services revenue, which forms a substantial part of its business model.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Electronic Arts kept $0.15.
- Revenue$2.02B100.0%
- Cost of revenue−$456.0M22.5%
- Gross profit$1.57B77.5%
- Operating costs−$1.19B58.5%
- Operating income$384.0M19.0%
- Interest, other & tax−$90.0M4.4%
- Net income$294.0M14.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed November 1, 2024Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $2.02B$1.91B | +5.8% |
| Cost of Revenue | $456.00M$456.00M | 0.0% |
| Gross Profit | $1.57B$1.46B | +7.6% |
| Operating Expenses | $1.19B$1.08B | +9.6% |
| Operating Income | $384.00M$377.00M | +1.9% |
| Interest Expense | $14.00M$14.00M | 0.0% |
| Net Income | $294.00M$399.00M | −26.3% |
| EPS (Basic) | $1.11$1.47 | −24.5% |
| EPS (Diluted) | $1.11$1.47 | −24.5% |
| Shares Outstanding (Basic) | 264.00M271.00M | −2.6% |
| Shares Outstanding (Diluted) | 266.00M272.00M | −2.2% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Electronic Arts' revenue growth in this quarter?
Electronic Arts' net revenue increased by 6% year-over-year to $2,025 million. This growth was primarily driven by a 37% increase in full game downloads, which benefited from new releases such as EA SPORTS College Football 25, EA SPORTS FC 25, and EA SPORTS Madden NFL 25. Live services and other revenue saw a modest 1% increase, driven by extra content sales from key franchises like the global football and American football titles, partially offset by decreased sales for Apex Legends.
How did the company's profitability change compared to the previous year?
While net revenue increased, profitability saw a mixed performance. Operating income increased by 2% to $384 million. However, net income decreased to $294 million ($1.11 diluted EPS) from $399 million ($1.47 diluted EPS) in the comparable prior-year quarter. This was largely due to a 10% increase in operating expenses, which included higher research and development and general and administrative costs.
What is the company's current cash position and how is it managing its capital?
Electronic Arts maintains a strong liquidity position with $2,563 million in cash, cash equivalents, and short-term investments as of September 30, 2024. The company generated $234 million in cash from operating activities, a substantial increase from the prior year. EA also actively returned capital to shareholders by repurchasing 2.6 million shares for $375 million under its new $5.0 billion stock repurchase program and paid $51 million in cash dividends during the quarter.
Are there any significant restructuring costs impacting the financials?
Yes, Electronic Arts has been implementing a restructuring plan approved in February 2024, aimed at aligning its portfolio and resources. The company incurred $51 million in restructuring charges during the three months ended September 30, 2024, as detailed in Note 7 of the filing, primarily related to office space reductions and employee severance costs.
06—Continue