Electronic Arts Reports
Q2 FY21 Financial Results
REDWOOD CITY, CA – November 5, 2020 – Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second fiscal quarter ended September 30, 2020.
“Thanks to the incredible work of our teams and everything they continue to do for players while working from home, we’re delivering more fan-favorite games, growing our leading live services, and engaging more players across more platforms than ever before,” said CEO Andrew Wilson. “Our business has grown significantly this year, and we are projecting continued expansion into FY22 and beyond.”
“We delivered a quarter well above our guidance, driven by our live services, particularly Madden and FIFA. This resulted in a new record trailing twelve-month cash flow of $2.04 billion. We are pleased to announce a new share repurchase program and also to initiate a dividend for the first time in EA history,” said COO and CFO Blake Jorgensen. “We are on track to deliver strong growth this year and expect continued growth in fiscal 2022 and in the years to come. Apex Legends is on track to become our latest billion-dollar franchise by the end of the fiscal year. All of our studios continue to execute amazingly well and have enabled us to launch an industry-leading eight games since the beginning of the fiscal year, while continuing to deliver live services content and expand onto new platforms.”
EA has posted a refreshed slide presentation and a financial model of EA’s historical results and guidance on EA’s IR website at www.ir.ea.com. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR website. News and ongoing updates regarding EA and its games are available on EA’s blog at www.ea.com/news.
Selected Operating Highlights and Metrics
- Net bookings* for the trailing twelve months was $5.577 billion, up 8% year-over-year.
- Launched EA SPORTSTM UFC® 4, Madden NFL 21, Rocket Arena, and Star WarsTM: Squadrons during the quarter.
- Madden NFL 21 has nearly 30% more players year-over-year.
- Life to date, FIFA 20 has reached nearly 35 million players on console and PC.
- EA Play now has more than 6.5 million paid subscribers.
- During the fiscal year, EA launched more than 125 games and content packs on the Steam platform.
* Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.
Selected Financial Highlights and Metrics
- Net cash provided by operating activities was $61 million for the quarter and a record $2.041 billion for the trailing twelve months.
- EA announced a new $2.6 billion, two-year stock repurchase program and declared a quarterly cash dividend of $0.17 per share.
Quarterly Financial Highlights
The following GAAP-based financial data and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:
For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2020.
Financial Highlights for the Trailing Twelve Months
The following GAAP-based financial data and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:
For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2020.
Operating Metric
The following is a calculation of our total net bookings for the periods presented:
Stock Repurchase Program and Dividend
EA’s Board of Directors has approved a new two-year program to repurchase up to $2.6 billion of EA's common stock.
Under the program, EA may purchase stock in the open market or through privately negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. EA is not obligated to repurchase any specific number of shares under the program and the repurchase program may be modified, suspended or discontinued at any time.
In addition, EA’s Board of Directors initiated a quarterly dividend and declared a cash dividend of $0.17 per share of EA’s common stock. The dividend is payable on December 23, 2020 to stockholders of record as of the close of business on December 2, 2020.
Business Outlook as of November 5, 2020
The following forward-looking statements reflect expectations as of November 5, 2020. Electronic Arts assumes no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this release and in EA’s annual and quarterly SEC filings.
Fiscal Year 2021 Expectations – Ending March 31, 2021
Financial metrics:
- Net revenue is expected to be approximately $5.625 billion.
- Change in deferred net revenue (online-enabled games) is expected to be approximately $325 million.
- Net income is expected to be approximately $924 million.
- Diluted earnings per share is expected to be approximately $3.15.
- Operating cash flow is expected to be approximately $1.850 billion.
- The Company estimates a share count of 293 million for purposes of calculating fiscal year 2021 diluted earnings per share.
Operational metric:
- Net bookings is expected to be approximately $5.950 billion.
In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:
Third Quarter Fiscal Year 2021 Expectations – Ending December 31, 2020
Financial metrics:
- Net revenue is expected to be approximately $1.675 billion.
- Change in deferred net revenue (online-enabled games) is expected to be approximately $675 million.
- Net income is expected to be approximately $180 million.
- Diluted earnings per share is expected to be approximately $0.61.
- The Company estimates a share count of 294 million for purposes of calculating third quarter fiscal year 2021 diluted earnings per share.
Operational metric:
- Net bookings is expected to be approximately $2.350 billion.
In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:
For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2020.
Conference Call and Supporting Documents
Electronic Arts will host a conference call on November 5, 2020 at 2:00 pm PT (5:00 pm ET) to review its results for the second fiscal quarter ended September 30, 2020 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (866) 324-3683 (domestic) or (509) 844-0959 (international), using the conference code 6481848 or via webcast at EA’s IR Website at http://ir.ea.com.
EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website.
A dial-in replay of the conference call will be available until November 19, 2020 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 6481848. An audio webcast replay of the conference call will be available for one year on EA’s IR Website.
Forward-Looking Statements
Some statements set forth in this release, including the information relating to EA’s fiscal 2021 expectations under the heading “Business Outlook as of November 5, 2020,” and other information regarding EA's fiscal 2021 and fiscal 2022 expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements.
Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: the impact of the COVID-19 pandemic, sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic conditions; changes in our tax rates or tax laws; and other factors described in Part II, Item 1A of Electronic Arts’ latest Quarterly Report on Form 10-Q under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2020.
These forward-looking statements are current as of November 5, 2020. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts.
While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2020.
About Electronic Arts
Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.
In fiscal year 2020, EA posted GAAP net revenue of $5.5 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.
EA SPORTS, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall and Plants vs. Zombies are trademarks of Electronic Arts Inc. STAR WARS © & TM 2020 Lucasfilm Ltd. All rights reserved. John Madden, NFL, UFC and FIFA are the property of their respective owners and used with permission.
For additional information, please contact:
Chris Evenden
Vice President, Investor Relations
650-628-0255
cevenden@ea.com
John Reseburg
Vice President, Corporate Communications
650-628-3601
jreseburg@ea.com
