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Electronic Arts 8-K Report, Financial Results (Jan 30, 2024)

Reports
Earnings & Results·Other Events·Exhibits & Filings
Filing Date
Filed January 30, 2024
Period End
January 26, 2024
Security
EA
In the record · 2016–202610-K1210-Q328-K135

EA filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 135 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · May ’19May ’19
  2. Deal closed8-K · Apr ’21Apr ’21
  3. Restructuring8-K · Mar ’23Mar ’23
  4. Change in control8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 8-K filed January 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Electronic Arts (NASDAQ: EA) reported preliminary results for its fiscal third quarter ended December 31, 2023, with net bookings of $2.366 billiona, up 1% year-over-year (2% in constant currency), and net revenue of $1.945 billion, up 3%.

The standout was live services and other net bookings, which reached a record $1.712 billionb, up 3% (5% in constant currency). Live services represented 73% of the business on a trailing twelve-month basis. EA SPORTS FC grew net bookings 7% against a prior-year comparison that included the FIFA World Cup, and EA SPORTS Madden NFL grew 5%.

GAAP net income rose 42% to $290 million, and diluted EPS rose to $1.07c from $0.73, with operating cash flow up 13% to $1.264 billion. Trailing twelve-month operating cash flow reached a record $2.352 billion. Capital return remained steady.

EA repurchased 2.5 million shares for $325 milliond in the quarter and 10.4 million shares for $1.300 billion over the trailing twelve months, and declared a quarterly dividend of $0.19 per share payable March 20, 2024. Cash and short-term investments rose to $3.104 billion, up 22% year-over-year, with no debt change of note (senior notes of about $1.88 billion). The outlook for the fourth quarter of fiscal 2024 (ending March 31, 2024) calls for net bookings of $1.625 billion to $1.925 billion and GAAP net revenue in the same range, with net income of $54 million to $183 million and diluted EPS of $0.20 to $0.68.

Management also flagged an impairment of approximately $70 million in acquisition-related intangibles to be recorded in Q4. Full-year FY24 guidance projects net bookings of $7.389 billion to $7.689 billion and diluted EPS of $4.21 to $4.68. Investors should note that the figures are preliminary and subject to change in the Form 10-Q, and that the Q4 range is wide.

02—Key points

Key Highlights

  1. Q3 FY24 net bookings of $2.366B, up 1% YoY (2% constant currency); net revenue of $1.945B, up 3% YoY.
  2. Record Q3 live services and other net bookings of $1.712B, up 3% YoY (5% constant currency); live services at 73% of business on a TTM basis.
  3. EA SPORTS FC net bookings grew 7% YoY despite a prior-year World Cup comparison; EA SPORTS Madden NFL grew 5%.
  4. GAAP net income of $290M (up 42% YoY) and diluted EPS of $1.07 (vs. $0.73), with operating cash flow up 13% to $1.264B and a record TTM operating cash flow of $2.352B.
  5. Shareholder returns: $325M of buybacks in Q3 (2.5M shares), $1.300B TTM, and a $0.19 quarterly dividend payable March 20, 2024.
  6. Q4 FY24 guidance: net bookings of $1.625B to $1.925B and diluted EPS of $0.20 to $0.68; a ~$70M acquisition-related intangible impairment will be recorded in Q4.
  7. FY24 guidance: net bookings of $7.389B to $7.689B and diluted EPS of $4.21 to $4.68; results are preliminary and may change in the Form 10-Q.

03—Questions

Frequently Asked Questions

  1. How did EA perform in the third quarter of fiscal 2024?

    EA reported net bookings of $2.366 billion, up 1% year-over-year (2% in constant currency), and net revenue of $1.945 billion, up 3%. Live services and other net bookings hit a record $1.712 billion, and GAAP net income rose 42% to $290 million, with diluted EPS of $1.07 versus $0.73 a year earlier.

  2. What is driving EA's growth?

    Growth is led by live services, which made up 73% of the business on a trailing twelve-month basis. EA SPORTS FC net bookings rose 7% despite a prior-year World Cup comparison, and EA SPORTS Madden NFL grew 5%. Management cited deep player engagement across the portfolio.

  3. What is the outlook for the fourth quarter and full fiscal year?

    For Q4 FY24 (ending March 31, 2024), EA guided to net bookings and net revenue of $1.625 billion to $1.925 billion, net income of $54 million to $183 million, and diluted EPS of $0.20 to $0.68. For full-year FY24, net bookings are expected at $7.389 billion to $7.689 billion and diluted EPS at $4.21 to $4.68. Q4 includes an expected ~$70 million impairment of acquisition-related intangible assets.

  4. How is EA returning capital to shareholders?

    EA repurchased 2.5 million shares for $325 million in Q3 and 10.4 million shares for $1.300 billion over the trailing twelve months. It also declared a quarterly cash dividend of $0.19 per share, payable March 20, 2024, to holders of record as of February 28, 2024.

  5. How strong is EA's balance sheet and cash generation?

    Cash and short-term investments were $3.104 billion at December 31, 2023, up 22% year-over-year. Trailing twelve-month operating cash flow was a record $2.352 billion, and capital expenditures remained modest at about $195 million over the same period. Senior notes were about $1.88 billion.

04—Continue

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