01—Abstract
Summary
Summary of the 8-K filed February 4, 2025. Cited figures are marked; the original filing is the authoritative source.
Electronic Arts (EA) reported preliminary results for its fiscal third quarter ended December 31, 2024, with net revenue of $1.883 billiona, down 3% year-over-year from $1.945 billion, and GAAP net income of $293 million, up about 1% from $290 million.
Diluted EPS was $1.11b, up 4% from $1.07, and was $0.17 above the midpoint of management's guidance, which was driven mainly by a lower tax-adjusted share count and higher profitability than guided. Net bookings were $2.215 billion, below the $2.366 billion in the prior-year quarter, reflecting a $332 million increase in deferred net revenue versus $421 million a year earlier. Revenue missed the guidance midpoint of $1.950 billion by $67 million, largely because of the deferred revenue timing effect, and operating cash flow was $1.176 billion for the quarter.
Management highlighted engagement momentum in EA SPORTS FC 25, with a January gameplay update re-activating over two million Ultimate Team players, and noted that American Football is on pace to exceed $1 billionc in net bookings for fiscal 2025. Management also announced a $1 billion accelerated share repurchase, which would bring total repurchases to $2.5 billion within the first year of a $5 billion authorization. Management expects a return to growth in FY26 and beyond, and it lowered FY25 guidance, with full-year net revenue of $7.250-$7.400 billion and net bookings of $7.000-$7.150 billion, compared with the prior year's $7.222 billion.
For investors, the key takeaways are that the top line is soft and the fiscal 2025 outlook implies a slower second half, while the company is returning meaningful capital to shareholders. Cash, short-term investments, and balance sheet liquidity are solid at $3.155 billiond, though total stockholders' equity declined slightly to $7.412 billion from $7.513 billion as buybacks outpaced earnings. The filing also declared a quarterly dividend of $0.19 per share, payable March 19, 2025, to holders of record on February 26, 2025.
02—Key points
Key Highlights
- Q3 FY25 net revenue of $1.883B, down 3% YoY and $67M below the guidance midpoint; net bookings of $2.215B vs. $2.366B a year earlier
- GAAP diluted EPS rose 4% YoY to $1.11, beating the guidance midpoint of $0.94 by $0.17, supported by a lower share count and higher profitability
- GAAP operating income of $377M (20.0% margin) and non-GAAP operating margin of 30.1%, up from 28.4% a year earlier
- Announced a $1B accelerated share repurchase, bringing total buybacks to $2.5B within the first year of a $5B authorization
- FY25 guidance: net revenue of $7.250-$7.400B, net bookings of $7.000-$7.150B, diluted EPS of $3.90-$4.25, and operating cash flow of $1.8-$1.9B
- Quarterly dividend of $0.19 per share declared, payable March 19, 2025 to holders of record on February 26, 2025
- EA SPORTS FC 25 engagement is strong, and American Football is on pace to surpass $1B in FY25 net bookings; management expects a return to growth in FY26
03—Questions
Frequently Asked Questions
Why did EA's revenue decline while EPS grew?
Net revenue fell 3% to $1.883B, but the drop is mainly a timing effect in how revenue is recognized. Net bookings, which include the change in deferred revenue for online-enabled games, were $2.215B versus $2.366B a year earlier, and the deferred revenue build was smaller this year ($332M vs. $421M). EPS rose 4% to $1.11 because of a lower share count (265M diluted shares vs. 271M), slightly higher net income, and cost discipline. Cost of revenue fell 14% to $456M, which lifted gross margin to 76%.
What does the $1B accelerated share repurchase mean for shareholders?
An accelerated share repurchase lets EA buy a large block of shares up front, with the final settlement determined later. This reduces the diluted share count quickly and supports EPS. Management said it will bring total repurchases to $2.5B within the first year of a $5B authorization. Over the trailing twelve months, EA repurchased $1.45B of stock, so the new program is a significant step up in pace. Investors should watch whether buybacks continue to exceed free cash flow, which was $1.892B over the trailing twelve months, and how the cash balance of $3.155B is used.
Did EA change its full-year outlook?
The filing provides FY25 guidance but does not compare it with the prior guidance, so the change cannot be measured from this document alone. The current guidance projects net revenue of $7.250-$7.400B, which implies a fourth quarter of $1.682-$1.832B, and net bookings of $7.000-$7.150B. Q4 net bookings are guided to $1.444-$1.594B, which is below the prior-year Q4 level of roughly $1.73B (Q4 FY24 net revenue of $1.779B plus a $(113)M deferred revenue change). Management expects the Q4 deferred revenue change to be a $238M reduction, which weighs on reported revenue. The filing also states that management expects a return to growth in FY26 and beyond.
Is EA's balance sheet and cash generation healthy?
Liquidity is solid. Cash and cash equivalents plus short-term investments totaled $3.155B at December 31, 2024, and senior notes were $1.883B. Operating cash flow was $1.176B in the quarter, and trailing twelve-month operating cash flow was $2.110B, against capital expenditures of $218M. Stockholders' equity fell to $7.412B from $7.513B, mainly because repurchases and dividends exceeded net income. Full-year FY25 operating cash flow guidance of $1.8-$1.9B supports continued capital returns.
Are the preliminary results final?
No. The filing states that the results are preliminary estimates based on currently available information and could differ from the figures EA reports in its Form 10-Q for the quarter ended December 31, 2024. EA also said it does not intend to update these estimates before filing that 10-Q. Investors should treat the figures as provisional until the 10-Q is released.
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