8-K
Electronic Arts Inc. (EA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported) November 4, 2020
ELECTRONIC ARTS INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 0-17948 | 94-2838567 | |||||
|---|---|---|---|---|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | 209 Redwood Shores Parkway, | Redwood City, | California | 94065-1175 | |
| --- | --- | --- | --- | ||||
| (Address of Principal Executive Offices) | (Zip Code) | (650) | 628-1500 | ||||
| --- | --- | --- | |||||
| (Registrant’s Telephone Number, Including Area Code) | (Former Name or Former Address, if Changed Since Last Report) | ||||||
| --- | Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | ||||||
| --- | --- | --- | --- | ||||
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). | |||||||
| Emerging growth company | ☐ | ||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | Securities registered pursuant to Section 12(b) of the Act: | |||||
| --- | --- | --- | |||||
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | |||||
| Common Stock, $0.01 par value | EA | NASDAQ Global Select Market |
Item 2.02 Result of Operations and Financial Condition.
On November 5, 2020, Electronic Arts Inc. ("Electronic Arts" or “EA”) issued a press release announcing its financial results for the second fiscal quarter ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1.
Neither the information in this Form 8-K nor the information in the press release attached hereto as Exhibit 99.1 shall be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 8.01 Other Events.
On November 4, 2020, the Electronic Arts Board of Directors authorized a new program to repurchase up to $2.6 billion of Electronic Arts’ common stock. This new stock repurchase program expires on November 4, 2022. Under this program, Electronic Arts 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. Electronic Arts is not obligated to repurchase any specific number of shares under this program and it may be modified, suspended or discontinued at any time.
On November 4, 2020, the Electronic Arts Board of Directors initiated a quarterly cash dividend and declared a cash dividend of $0.17 per share of Electronic Arts’ common stock. The dividend is payable on December 23, 2020 to stockholders of record as of the close of business on December 2, 2020.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated November 5, 2020, relating to Electronic Arts Inc.’s financial results for the second fiscal quarter ended September 30, 2020. |
INDEX TO EXHIBITS
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated November 5, 2020, relating to Electronic Arts Inc.’s financial results for the second fiscal quarter ended September 30, 2020. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ELECTRONIC ARTS INC. | |||
|---|---|---|---|
| Dated: | November 5, 2020 | By: | /s/ Blake Jorgensen |
| Blake Jorgensen | |||
| Chief Operating Officer and Chief Financial Officer |
Document
Exhibit 99.1
| Electronic Arts Reports Strong 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
| 2019 | |
| (in millions, except per share amounts) | |
| Full game | 580 |
| Live services and other | 768 |
| Total net revenue | 1,348 |
| Net income | 854* |
| Diluted earnings per share | 2.89* |
| Operating cash flow | 37 |
| Value of shares repurchased | 306 |
| Number of shares repurchased | 3.3 |
All values are in US Dollars.
____________________________
*Includes the impact of one-time tax benefits recognized during the fiscal quarter.
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:
| Three Months Ended September 30, 2020 | ||||
|---|---|---|---|---|
| GAAP-Based Financial Data | ||||
| (in $ millions) | Statement of Operations | Acquisition-related expenses | Change in deferred net revenue (online-enabled games) | Stock-based compensation |
| Total net revenue | 1,151 | — | (241) | — |
| Cost of revenue | 286 | — | — | (2) |
| Gross profit | 865 | — | (241) | 2 |
| Total operating expenses | 716 | (6) | — | (111) |
| Operating income | 149 | 6 | (241) | 113 |
| Interest and other income, net | (10) | — | — | — |
| Income before provision for income taxes | 139 | 6 | (241) | 113 |
| Number of shares used in computation: | ||||
| Diluted | 293 |
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
| 2019 | |
| (in millions) | |
| Full game | 1,726 |
| Live services and other | 3,358 |
| Total net revenue | 5,084 |
| Net income | 2,746* |
| Operating cash flow | 1,748 |
| Value of shares repurchased | 1,204 |
| Number of shares repurchased | 12.9 |
All values are in US Dollars.
*Includes the impact of one-time tax benefits recognized during the period.
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:
| Twelve Months Ended September 30, 2020 | ||||
|---|---|---|---|---|
| GAAP-Based Financial Data | ||||
| (in $ millions) | Statement of Operations | Acquisition-related expenses | Change in deferred net revenue (online-enabled games) | Stock-based compensation |
| Total net revenue | 5,590 | — | (13) | — |
| Cost of revenue | 1,351 | (8) | — | (5) |
| Gross profit | 4,239 | 8 | (13) | 5 |
| Total operating expenses | 2,857 | (24) | — | (392) |
| Operating income | 1,382 | 32 | (13) | 397 |
| Interest and other income, net | 13 | — | — | — |
| Income before provision for income taxes | 1,395 | 32 | (13) | 397 |
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:
| Twelve Months Ended<br>September 30, | |||
|---|---|---|---|
| 2019* | 2020* | 2019* | |
| (in millions) | |||
| Total net revenue | 1,348 | 5,590 | 5,084 |
| Change in deferred net revenue (online-enabled games) | (35) | (13) | 79 |
| Net bookings | 1,313 | 5,577 | 5,163 |
All values are in US Dollars.
*At the beginning of FY21, EA changed the way in which it presents net bookings. Periods prior to the first quarter of FY21 have been recast for comparability to align with these changes. For more information, please see the Financial Reporting FAQ on our IR website.
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:
| GAAP-Based Financial Data | |||
| Acquisition-related expenses | Change in deferred net revenue (online-enabled games) | Stock-based compensation | |
| (in millions) | |||
| Total net revenue | — | 325 | — |
| Cost of revenue | — | — | (3) |
| Operating expense | (20) | — | (442) |
| Income before provision for income taxes | 20 | 325 | 445 |
| Net income | |||
| Number of shares used in computation: | |||
| Diluted shares |
All values are in US Dollars.
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:
| GAAP-Based Financial Data | |||
| Acquisition-related expenses | Change in deferred net revenue (online-enabled games) | Stock-based compensation | |
| (in millions) | |||
| Total net revenue | — | 675 | — |
| Cost of revenue | — | — | — |
| Operating expense | (5) | — | (115) |
| Income before provision for income taxes | 5 | 675 | 115 |
| Net income | |||
| Number of shares used in computation: | |||
| Diluted shares |
All values are in US Dollars.
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 | John Reseburg | ||
|---|---|---|---|
| Vice President, Investor Relations | Vice President, Corporate Communications | ||
| 650-628-0255 | 650-628-3601 | ||
| cevenden@ea.com | jreseburg@ea.com | ||
| ELECTRONIC ARTS INC. AND SUBSIDIARIES | |||
| --- | --- | --- | --- |
| Unaudited Condensed Consolidated Statements of Operations | |||
| (in millions, except per share data) | |||
| Six Months Ended | |||
| September 30, | |||
| 2019 | 2020 | 2019 | |
| Net revenue | 1,348 | 2,610 | 2,557 |
| Cost of revenue | 405 | 574 | 592 |
| Gross profit | 943 | 2,036 | 1,965 |
| Operating expenses: | |||
| Research and development | 387 | 859 | 768 |
| Marketing and sales | 152 | 277 | 262 |
| General and administrative | 128 | 269 | 238 |
| Acquisition-related contingent consideration | 2 | — | 3 |
| Amortization of intangibles | 6 | 11 | 11 |
| Total operating expenses | 675 | 1,416 | 1,282 |
| Operating income | 268 | 620 | 683 |
| Interest and other income (expense), net | 16 | (13) | 37 |
| Income before provision for (benefit from) income taxes | 284 | 607 | 720 |
| Provision for (benefit from) income taxes | (570) | 57 | (1,555) |
| Net income | 854 | 550 | 2,275 |
| Earnings per share | |||
| Basic | 2.89 | 1.90 | 7.69 |
| Diluted | 2.89 | 1.88 | 7.66 |
| Number of shares used in computation | |||
| Basic | 295 | 289 | 296 |
| Diluted | 296 | 292 | 297 |
All values are in US Dollars.
Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus our guidance provided on July 30, 2020 for the three months ended September 30, 2020 plus a comparison to the actuals for the three months ended September 30, 2019.
| Three Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|
| 2020 | 2020 | 2019 | |||||
| Guidance | Variance | Actuals | Actuals | ||||
| Net revenue | |||||||
| Net revenue | 1,125 | 26 | 1,151 | 1,348 | |||
| GAAP-based financial data | |||||||
| Change in deferred net revenue (online-enabled games)1 | (250) | 9 | (241) | (35) | |||
| Cost of revenue | |||||||
| Cost of revenue | 280 | 6 | 286 | 405 | |||
| GAAP-based financial data | |||||||
| Acquisition-related expenses | — | — | — | (2) | |||
| Stock-based compensation | — | (2) | (2) | (1) | |||
| Operating expenses | |||||||
| Operating expenses | 755 | (39) | 716 | 675 | |||
| GAAP-based financial data | |||||||
| Acquisition-related expenses | (5) | (1) | (6) | (8) | |||
| Stock-based compensation | (110) | (1) | (111) | (91) | |||
| Income before tax | |||||||
| Income before tax | 83 | 56 | 139 | 284 | |||
| GAAP-based financial data | |||||||
| Acquisition-related expenses | 5 | 1 | 6 | 10 | |||
| Change in deferred net revenue (online-enabled games)1 | (250) | 9 | (241) | (35) | |||
| Stock-based compensation | 110 | 3 | 113 | 92 | |||
| Tax rate used for management reporting | 18 | % | 18 | % | 18 | % | |
| Earnings per share | |||||||
| Basic | 0.21 | 0.43 | 0.64 | 2.89 | |||
| Diluted | 0.21 | 0.42 | 0.63 | 2.89 | |||
| Number of shares | |||||||
| Basic | 289 | — | 289 | 295 | |||
| Diluted | 293 | — | 293 | 296 |
1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
In fiscal 2021, EA changed the way in which it presents net revenue. Periods prior to the first quarter of fiscal 2021 have been recast for comparability to align with these changes. For more information please see the Financial Reporting FAQ on our Investor Relations Website.
| ELECTRONIC ARTS INC. AND SUBSIDIARIES | |
|---|---|
| Unaudited Condensed Consolidated Balance Sheets | |
| (in millions) | |
| March 31, 20202 | |
| ASSETS | |
| Current assets: | |
| Cash and cash equivalents | 3,768 |
| Short-term investments | 1,967 |
| Receivables, net | 461 |
| Other current assets | 321 |
| Total current assets | 6,517 |
| Property and equipment, net | 449 |
| Goodwill | 1,885 |
| Acquisition-related intangibles, net | 53 |
| Deferred income taxes, net | 1,903 |
| Other assets | 305 |
| TOTAL ASSETS | 11,112 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| Current liabilities: | |
| Accounts payable | 68 |
| Accrued and other current liabilities | 1,052 |
| Deferred net revenue (online-enabled games) | 945 |
| Senior notes, current, net | 599 |
| Total current liabilities | 2,664 |
| Senior notes, net | 397 |
| Income tax obligations | 373 |
| Deferred income taxes, net | 1 |
| Other liabilities | 216 |
| Total liabilities | 3,651 |
| Stockholders’ equity: | |
| Common stock | 3 |
| Additional paid-in capital | — |
| Retained earnings | 7,508 |
| Accumulated other comprehensive loss | (50) |
| Total stockholders’ equity | 7,461 |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 11,112 |
All values are in US Dollars.
2Derived from audited consolidated financial statements.
| ELECTRONIC ARTS INC. AND SUBSIDIARIES | |||
|---|---|---|---|
| Unaudited Condensed Consolidated Statements of Cash Flows | |||
| (in millions) | |||
| Six Months Ended September 30, | |||
| 2019 | 2020 | 2019 | |
| OPERATING ACTIVITIES | |||
| Net income | 854 | 550 | 2,275 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation, amortization and accretion | 35 | 77 | 72 |
| Stock-based compensation | 92 | 215 | 165 |
| Change in assets and liabilities | |||
| Receivables, net | (529) | 39 | (235) |
| Other assets | 9 | (113) | 33 |
| Accounts payable | 91 | 106 | 51 |
| Accrued and other liabilities | 144 | (96) | 88 |
| Deferred income taxes, net | (626) | (32) | (1,800) |
| Deferred net revenue (online-enabled games) | (33) | (307) | (454) |
| Net cash provided by operating activities | 37 | 439 | 195 |
| INVESTING ACTIVITIES | |||
| Capital expenditures | (27) | (63) | (72) |
| Proceeds from maturities and sales of short-term investments | 435 | 1,418 | 793 |
| Purchase of short-term investments | (721) | (1,416) | (1,984) |
| Net cash used in investing activities | (313) | (61) | (1,263) |
| FINANCING ACTIVITIES | |||
| Proceeds from issuance of common stock | 30 | 43 | 33 |
| Cash paid to taxing authorities for shares withheld from employees | (4) | (77) | (55) |
| Repurchase and retirement of common stock | (306) | (78) | (611) |
| Payment of contingent consideration | (32) | — | (64) |
| Net cash provided by (used in) financing activities | (312) | (112) | (697) |
| Effect of foreign exchange on cash and cash equivalents | (5) | 25 | (3) |
| Change in cash and cash equivalents | (593) | 291 | (1,768) |
| Beginning cash and cash equivalents | 3,533 | 3,768 | 4,708 |
| Ending cash and cash equivalents | 2,940 | 4,059 | 2,940 |
All values are in US Dollars.
| ELECTRONIC ARTS INC. AND SUBSIDIARIES | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Unaudited Supplemental Financial Information and Business Metrics | |||||||||||
| (in millions, except per share data) | |||||||||||
| Q3 | Q4 | Q1 | Q2 | YOY % | |||||||
| FY20 | FY20 | FY21 | FY21 | Change | |||||||
| Net revenue | |||||||||||
| Net revenue | 1,593 | 1,387 | 1,459 | 1,151 | (15 | %) | |||||
| GAAP-based financial data | |||||||||||
| Change in deferred net revenue (online-enabled games)1 | 428 | (131) | (69) | (241) | |||||||
| Gross profit | |||||||||||
| Gross profit | 1,085 | 1,118 | 1,171 | 865 | (8 | %) | |||||
| Gross profit (as a % of net revenue) | % | 68 | % | 81 | % | 80 | % | 75 | % | ||
| GAAP-based financial data | |||||||||||
| Acquisition-related expenses | 5 | 3 | — | — | |||||||
| Change in deferred net revenue (online-enabled games)1 | 428 | (131) | (69) | (241) | |||||||
| Stock-based compensation | 1 | 1 | 1 | 2 | |||||||
| Operating income | |||||||||||
| Operating income | 361 | 401 | 471 | 149 | (44 | %) | |||||
| Operating income (as a % of net revenue) | % | 23 | % | 29 | % | 32 | % | 13 | % | ||
| GAAP-based financial data | |||||||||||
| Acquisition-related expenses | 12 | 9 | 5 | 6 | |||||||
| Change in deferred net revenue (online-enabled games)1 | 428 | (131) | (69) | (241) | |||||||
| Stock-based compensation | 91 | 91 | 102 | 113 | |||||||
| Net income | |||||||||||
| Net income | 346 | 418 | 365 | 185 | (78 | %) | |||||
| Net income (as a % of net revenue) | % | 22 | % | 30 | % | 25 | % | 16 | % | ||
| GAAP-based financial data | |||||||||||
| Acquisition-related expenses | 12 | 9 | 5 | 6 | |||||||
| Change in deferred net revenue (online-enabled games)1 | 428 | (131) | (69) | (241) | |||||||
| Stock-based compensation | 91 | 91 | 102 | 113 | |||||||
| Tax rate used for management reporting | % | 18 | % | 18 | % | 18 | % | 18 | % | ||
| Diluted earnings per share | 1.18 | 1.43 | 1.25 | 0.63 | (78 | %) | |||||
| Number of diluted shares used in computation | |||||||||||
| Basic | 292 | 290 | 288 | 289 | |||||||
| Diluted | 294 | 292 | 292 | 293 |
All values are in US Dollars.
1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
In fiscal 2021, EA changed the way in which it presents net revenue. Periods prior to the first quarter of fiscal 2021 have been recast for comparability to align with these changes. For more information please see the Financial Reporting FAQ on our Investor Relations Website.
| ELECTRONIC ARTS INC. AND SUBSIDIARIES | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Unaudited Supplemental Financial Information and Business Metrics | |||||||||||
| (in millions) | |||||||||||
| Q3 | Q4 | Q1 | Q2 | YOY % | |||||||
| FY20 | FY20 | FY21 | FY21 | Change | |||||||
| QUARTERLY NET REVENUE PRESENTATIONS | |||||||||||
| Net revenue by composition | |||||||||||
| Full game downloads | 286 | 211 | 223 | 163 | (10 | %) | |||||
| Packaged goods | 403 | 145 | 136 | 119 | (70 | %) | |||||
| Full game | 689 | 356 | 359 | 282 | (51 | %) | |||||
| Live services and other | 904 | 1,031 | 1,100 | 869 | 13 | % | |||||
| Total net revenue | 1,593 | 1,387 | 1,459 | 1,151 | (15 | %) | |||||
| Full game | % | 43 | % | 26 | % | 25 | % | 25 | % | ||
| Live services and other | % | 57 | % | 74 | % | 75 | % | 75 | % | ||
| Total net revenue % | % | 100 | % | 100 | % | 100 | % | 100 | % | ||
| GAAP-based financial data | |||||||||||
| Full game downloads | 31 | (21) | (5) | (2) | |||||||
| Packaged goods | 60 | (67) | (67) | (14) | |||||||
| Full game | 91 | (88) | (72) | (16) | |||||||
| Live services and other | 337 | (43) | 3 | (225) | |||||||
| Total change in deferred net revenue (online-enabled games) by composition1 | 428 | (131) | (69) | (241) | |||||||
| Net revenue by platform | |||||||||||
| Console | 1,163 | 928 | 932 | 714 | (23 | %) | |||||
| PC & Other | 261 | 274 | 325 | 249 | — | ||||||
| Mobile | 169 | 185 | 202 | 188 | 6 | % | |||||
| Total net revenue | 1,593 | 1,387 | 1,459 | 1,151 | (15 | %) | |||||
| GAAP-based financial data | |||||||||||
| Console | 388 | (143) | (108) | (201) | |||||||
| PC & Other | 24 | 7 | 15 | (24) | |||||||
| Mobile | 16 | 5 | 24 | (16) | |||||||
| Total change in deferred net revenue (online-enabled games) by platform1 | 428 | (131) | (69) | (241) |
All values are in US Dollars.
1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
In fiscal 2021, EA changed the way in which it presents net revenue. Periods prior to the first quarter of fiscal 2021 have been recast for comparability to align with these changes. For more information please see the Financial Reporting FAQ on our Investor Relations Website.
| ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| Unaudited Supplemental Financial Information and Business Metrics | ||||||
| (in millions) | ||||||
| Q3 | Q4 | Q1 | Q2 | YOY % | ||
| FY20 | FY20 | FY21 | FY21 | Change | ||
| CASH FLOW DATA | ||||||
| Operating cash flow | 1,104 | 498 | 378 | 61 | 65 | % |
| Operating cash flow - TTM | 1,898 | 1,797 | 2,017 | 2,041 | 17 | % |
| Capital expenditures | 28 | 40 | 38 | 25 | (7 | %) |
| Capital expenditures - TTM | 135 | 140 | 133 | 131 | 2 | % |
| Repurchase and retirement of common stock | 305 | 291 | 78 | — | (100 | %) |
| DEPRECIATION | ||||||
| Depreciation expense | 29 | 31 | 31 | 32 | 7 | % |
| BALANCE SHEET DATA | ||||||
| Cash and cash equivalents | 3,603 | 3,768 | 4,013 | 4,059 | ||
| Short-term investments | 1,999 | 1,967 | 1,947 | 1,972 | ||
| Cash and cash equivalents, and short-term investments | 5,602 | 5,735 | 5,960 | 6,031 | 24 | % |
| Receivables, net | 798 | 461 | 507 | 423 | (51 | %) |
| STOCK-BASED COMPENSATION | ||||||
| Cost of revenue | 1 | 1 | 1 | 2 | ||
| Research and development | 60 | 59 | 66 | 74 | ||
| Marketing and sales | 10 | 10 | 11 | 12 | ||
| General and administrative | 20 | 21 | 24 | 25 | ||
| Total stock-based compensation | 91 | 91 | 102 | 113 |
All values are in US Dollars.