Earnings Call Transcript
ELECTRONIC ARTS INC. (EA)
Earnings Call Transcript - EA Q1 2021
Operator, Operator
In addition to the ongoing challenges of the pandemic, these last few months have prompted significant cultural discussions about racial and social injustice, harassment, and misconduct. At Electronic Arts, we prioritize equality, inclusion, and diversity, and we have made our stance clear through our actions, demonstrating a long-term commitment to making a positive impact in the world. Our focus remains on our key growth drivers: creating exceptional games and content, providing live services that enhance the experience, and connecting more players across various platforms. In the first quarter of FY21, we saw strong engagement across our portfolio. We launched new games, achieved remarkable growth in our live services, and welcomed millions of new players since early April. This resulted in the biggest first quarter in EA history, setting new records for net bookings and operating cash flow. As a result, we are raising our full-year FY21 net revenue and net bookings guidance today. We have witnessed significant growth over the last four months in our business and the wider industry. EA is positioned at the intersection of two major trends: the shift from physical to digital social interactions and the transition from linear to interactive consumption of sports and entertainment. These trends have accelerated during the COVID period, bringing tens of millions of new players into our games, as well as many returning players to our franchises. Along with increased engagement from existing players, these new and returning players are actively engaging with our live services, establishing new play patterns and forming friendships in our games. Although there are unpredictable aspects during this unprecedented time, we anticipate these trends to persist during and after the pandemic. We remain dedicated to innovating in this space, ensuring EA continues to lead in providing social interaction and interactive entertainment to a global audience. We launched two new games in Q1: Command & Conquer Remastered, which received excellent reviews and became a top-selling title on Origin and Steam, and Burnout Paradise Remastered for the Nintendo Switch. Our teams also provided over 30 new content updates for our console and PC titles, including two major expansions, along with more than 50 updates for our mobile games. All of this work was accomplished while our teams were operating from home. Apex Legends remains a standout live service, maintaining its strong performance and attracting more players. Q1 recorded the most game sessions and highest revenue since Apex's launch, with engagement in Season 5 reaching peak levels. Creative in-game events continue to attract our Apex community, with the latest event, Lost Treasures, accounting for over 96 million hours played in the initial two weeks. We are excited to bring Apex to Switch and Steam, and introduce cross-play later this year to enhance player engagement. With real-world sports disrupted, EA SPORTS has become a vital link for sports enthusiasts, enabling millions of new, returning, and existing players to immerse themselves in their own sports narratives through our games. Player acquisition for FIFA increased by over 100% year-over-year in Q1, with more than 7 million new players joining. This group is among our most engaged, showcasing loyalty in our FIFA live service. FIFA Online 4 has seen considerable growth in Asia with nearly 30 million players engaged to date. Madden NFL 20 also performed exceptionally well in Q1, marking it as the biggest year for the franchise. Player acquisition in Madden grew close to 140% year-over-year in Q1, with engagement metrics for Madden Ultimate Team also doubling since last year. The Sims continues to resonate with players globally, with The Sims 4 reaching over 30 million players to date, achieving record highs in daily, weekly, and monthly active players for a first quarter. Our mobile versions of The Sims also performed very well in Q1. The creative and inclusive nature of The Sims across all platforms is unique and helps foster community and self-expression during challenging times. In Q1, we launched nearly 30 titles on the Steam platform, significantly expanding our PC audience. Our Origin business grew by 75% year-over-year, and the integration of Steam and Origin allows players to engage more fully with the PC gaming community. Bringing our games to Steam is also central to our upcoming EA subscription service, set to launch on the platform this summer. Additionally, we saw an increase in players subscribing to our services on Origin, Xbox One, and PS4, as more users join to experience our exceptional games. Looking ahead, we anticipate strong engagement in Q2. While it is challenging to forecast ongoing growth levels, we have expanded our player base and added value to our network during this period. Our EA SPORTS live services are functioning as social networks for sports fans globally, and these connections will strengthen as real sports seasons resume. Communities around The Sims, Apex, Star Wars, and more are forging relationships through our games, and we expect these players to stay engaged with us long-term. We have exciting new titles and content coming in Q2 and beyond, including Rocket Arena, which we launched with Final Strike Games. Many of these experiences were showcased in our EA Play Live broadcast in June, which saw significant audience growth year-over-year, and the trailers debuted have been viewed over 31 million times. Our EA SPORTS game launches begin in August, offering unparalleled interactive experiences for sports fans. UFC 4 will launch on August 14, providing fight fans with a rich roster of fighters, extensive customization, new environments, and improved gameplay, making it our most authentic MMA game yet. Madden NFL 21 is set for August 28, featuring major gameplay innovations, a new campaign mode, and enhanced Superstar X-Factor abilities. FIFA 21 launches on October 9, expanding the world's leading football experience with new ways to play with friends like VOLTA SQUADS and FUT Co-Op, alongside our most comprehensive Career Mode update to date. NHL 21 will launch on October 16, showcasing the excellent work from our NHL team this year, which we will detail soon. During the holiday season, EA SPORTS will lead the way on the new PlayStation 5 and Xbox Series X, with next-generation versions of FIFA 21 and Madden NFL 21 delivering cutting-edge sports experiences. In the esports arena, our cloud-based broadcasting platform is operating on a global scale, providing 85% more esports content in the last four months compared to all of 2019. Demand for our FIFA, Apex Legends, and Madden esports content on major networks is at an all-time high, and the engaging content we provide is drawing more players and viewers into new experiences with our games. We are significantly expanding and diversifying our content for the rest of the year, with plans to triple the number of broadcast events in FY21 compared to last year, including more athlete, celebrity, and fan competitions, as well as global esports ecosystems for Apex Legends, FIFA, and Madden. We also launched The Sims Spark’d on TBS and Buzzfeed, our first reality competition TV show that combines entertaining player narratives and gameplay with weekly challenges for Sims 4 players, representing a unique approach to competition in the esports sphere. We are enthusiastic about Fan feedback regarding our upcoming Star Wars: Squadrons game, set to launch on October 2. This game fulfills the dreams of players wanting to pilot a Star Wars starfighter, featuring deep immersion crafted through collaboration with Disney and Lucasfilm. We are thrilled to add this new experience to our portfolio of outstanding Star Wars titles, particularly one that includes full VR support and cross-play capabilities. Our business remains robust, marking an extraordinary start to the year. Despite the challenges presented by the pandemic, we appreciate our teams' efforts to continually innovate and deliver for our players while redefining interactive entertainment from home. We are also grateful to our players for their support and for using our games and network to connect with friends and family during this time. There is much more to come from Electronic Arts in FY21. Now I will pass the call to Blake.
Blake Jorgensen, CFO
Thanks, Andrew. We saw extraordinary levels of player engagement through the first quarter, far higher even than the unprecedented levels we had forecast in May. And it proved more resilient than we had expected. Engagement was broad-based, with net bookings for live services at extraordinary levels for FIFA, Madden, Apex Legends, The Sims and our mobile titles. With increased sales of our games across the breadth of our entire catalog, we connected more people to the games they want and to each other. All this was reflected in our results, with record Q1 highs in net revenue, net bookings, live services and cash flow. I’ll report the specifics of our results on a GAAP basis, and then use our operational measure of net bookings to discuss the dynamics of our business. Before I get to the numbers, let me remind everyone of the three reporting changes we implemented this quarter and discussed in our last quarter call. First, we now present GAAP net revenue in the income statement as one item, rather than as product and service. Second, we report mobile bookings gross of platform fees, instead of net. And finally, we updated the presentation of net bookings by composition to focus on full game and live services sales. Our historical results have been recast for comparability. EA’s net revenue was $1.46 billion, compared to $1.21 billion a year ago and above our guidance by $239 million. Operating expenses were $700 million, compared to $607 million a year ago. This was above our expectations, driven by variable compensation due to our strong performance in the quarter, as well as COVID-related costs and lower attrition. Operating income was $471 million, compared to $415 million a year ago and above our expectations. Diluted earnings per share were $1.25 and were well above our expectations of $0.93, driven by the top line beat. Operating cash flow for the quarter was $378 million, up $220 million from last year. Capital expenditures for the quarter were $38 million, resulting in a free cash flow of $340 million. Operating cash flow for the last twelve months was $2.02 billion, a new record. See our earnings slides for further cash flow information. Our cash and short-term investments at the end of the quarter were $5.96 billion, up 15% year-on-year. Now, I’d like to turn to the key drivers of our business this quarter. Net bookings for the quarter were $1.39 billion, up $608 million from the prior year, and $390 million above our guidance, driven by strength across the board, with strong performance from our core franchises and live services. The currency headwind net of hedges was $42 million year-on-year. Live services & other net bookings were $1.103 billion, up $416 million from the prior year. This extraordinary result is a consequence of the years of work we’ve invested in building teams, processes and content for our titles, which delivered strength across our portfolio. FIFA, Madden, Apex Legends, and The Sims all grew very strongly. Ultimate Team was up 70% on a like-for-like basis, adjusting for the timing of Ultimate Team events, for the extra week in the quarter, and for currency. With Lost Treasures, Apex Legends presented players its most engaging event ever, and delivered its biggest season since launch. And, as Andrew mentioned, The Sims 4 exceeded 30 million users, life to date, and Q1 net bookings more than doubled year-on-year. Mobile was up 32%, with success across our portfolio led by Star Wars Galaxy of Heroes, which had its best quarter since 2018. The game has now generated over $1 billion in lifetime bookings. FIFA Mobile, SimCity, The Sims Free Play and more all showed growth of a similar magnitude. Full game net bookings were $287 million, up $192 million from the prior year. 52% of our unit sales are now digital rather than physical, measured on Xbox One and PlayStation 4 over the last twelve months. Net bookings for packaged goods and for full-game digital download both almost tripled. This was primarily driven by our deep catalog. A brief note on financial reporting before going on to guidance. People are playing our games for longer as a result of the amazing content provided by our live services teams and the social connections they make within our games. So for GAAP reporting, we’re increasing the period of time over which we recognize a portion of our net revenue. This begins in second quarter, only affects GAAP revenue, and only affects the timing of recognition, not total net revenue. We estimate that it will move the recognition of approximately $300 million in GAAP net revenue from fiscal 2021 into fiscal 2022. It does not affect net bookings or operating cash flow. Now, turning to guidance: due to the significant outperformance during the quarter, we are increasing both our net revenue and net bookings guidance for the full year. In doing so, we had to balance the significant boost we saw in Q1 and the confidence we have in our games and live services against the unknowable macroeconomic environment for the rest of the fiscal year. We are taking a cautious view that assumes that we continue to see a modest tailwind to engagement, driven in part by continued shelter-in-place orders. This is offset by a weaker economy and by the slightly later sports launches. There are reasons for optimism - for example, we’ve added tens of millions of players to the EA Player Network since the beginning of April. FIFA alone attracted 7 million new on console during the last quarter, and more people are playing FIFA now than at this time than in any previous cycle. This is significant, in that people that have played the game recently are more likely to buy the new one. New players are building networks of friends in our games as they play. Engagement in FIFA and Madden continue to be massively above where we would normally expect them to be. Nevertheless, we haven’t launched a major title since the pandemic struck, so it’s too early to draw general conclusions. Our business is strong and our games are on track. Hopefully, our base case around the uncertain economy will prove to be too cautious. Thus, our expectation for full-year GAAP revenue is now $5.625 billion, cost of revenue to be $1.483 billion, and earnings per share of $2.97. We are raising our operating cash flow guidance by $275 million to $1.85 billion. We continue to anticipate capital expenditures of around $125 million, which would deliver free cash flow of about $1.725 billion. A note on OpEx before moving onto the business drivers. The increase from our prior guidance is mainly driven by variable compensation plus higher-than-expected headcount, due to lower turnover during this difficult period. We’re continuing to invest in our growth drivers, and, in particular, we are increasing the number of mobile titles in development. We now expect net bookings for the year to be $5.950 billion, $400 million above our prior guidance. Versus last year, this factors in an FX headwind of about $100 million. And, as you build your model, note that we are also forecasting a fall in interest income of about $80 million compared to last year. For the second quarter, we now expect GAAP net revenue of $1.125 billion, cost of revenue to be $280 million, and operating expenses of $755 million. This results in earnings per share of $0.21 for the second quarter. We anticipate net bookings for the second quarter to be $875 million. The significant year-on-year variance is driven by the move of FIFA 21 from Q2 to Q3, and by the later launch of Madden NFL in Q2 which we've previously announced. The change in mix for Q2 weighs on gross margin for the quarter. Madden stays in Q2, but has less live services opportunity than in prior years by virtue of starting later, and FIFA moves to the beginning of Q3. With regards to live services, remember also that we focus on engagement ahead of new product launches, so expect lower bookings at that point of the cycle. See the phasing we provide in our quarterly presentation on our IR website. You’ll see that the smaller Q2 is more than offset by a much larger Q3, and a slightly larger Q4. As we approach six months working from home, we are finding ways to continue to deliver great games and services. We’re excited to showcase the incredible efforts of our Madden and FIFA teams through the upcoming launches, and by the work of all of our live services teams. The shelter-in-place orders have so far been a strong tailwind for the business, as players look for safe and social entertainment in these difficult times. A macroeconomic headwind in the second half seems very likely. Nevertheless, our ability to deliver high quality AAA and indie titles for our players, combined with the incredible success of our ongoing live services and increasing reach across platforms and geographies enables us to continue to deliver for players and investors. Now, I’ll turn the call back to Andrew.
Andrew Wilson, CEO
Thanks, Blake. These past few months have been unlike anything we’ve ever experienced. It was an extraordinary quarter for games and for Electronic Arts. Our business is strong. We’ve just had the largest first quarter in the history of the company, with tremendous engagement from existing, new and returning players. We are well positioned to build on that strength. We will continue to deliver more amazing games and content, including new EA SPORTS titles, more groundbreaking and fun esports content, Star Wars: Squadrons launching in October, and more. We’ll continue to extend and enhance the experiences in our live services on all platforms, from console to PC to mobile. And our focus on connecting more players across more platforms will continue, as we bring our subscription to Steam, integrate our games with Stadia, expand support for cross-play, and reach more platforms with our games – including the next-gen consoles coming later this year. It’s also increasingly apparent that COVID-19 could be with us for some time. Keeping all of our teams safe is our first priority. They are the true strength of Electronic Arts, and their commitment and courage during the challenges of recent months has been deeply inspiring. Not only have they continued to develop and launch games from home. Our employees have supported nearly 1,000 different charities in the last three months, including tens of thousands of hours of volunteer time. Their contributions to COVID relief efforts and racial justice organizations, along with matching funds and additional contributions from EA, have totaled more than $3 million to date. In this environment, supporting our teams, building our culture, and striving to amplify the positive impacts of play in our communities around the world has never been more important. We look forward to sharing more updates with you in the quarters ahead. Be well and stay healthy, everyone. Now Blake and I are here for your questions.
Operator, Operator
Your first question comes from the line of Mario Lu with Barclays.
Mario Lu, Analyst
Great. Thanks for taking the question. One on FIFA and then one at Star Wars. So the first one on FIFA with it releasing now in fiscal 3Q, although it was previously announced this shift does drive fiscal 2Q guidance to come in below the street. So can you help quantify how much of the shift this caused in terms of bookings? Any other dynamics to keep in mind going forward and should we expect FIFA-22 to now be back in the normal fiscal two release quarter?
Blake Jorgensen, CFO
Yes, that's a good question and I appreciate you asking. The entire change is due to FIFA; nothing else is impacting it. We've tried to make that clear. I don’t think people have necessarily picked up on that, but that's the sole reason. We also haven’t lowered our guidance for the second half of the year, so you should assume we plan to recover anything we might have missed during this quarter or the next two quarters. I want to remind everyone that all event-driven ultimate teams mean there may be events rolling into next year that could strengthen both this year and next. We made a straightforward decision to give both the FIFA and Madden teams a bit more time to finalize what has been the toughest situation we've faced, which is developing games from home. We're very impressed with their ability to innovate within this context. We hope that most investors are looking at the full year rather than quarterly results. We just raised our guidance by $400 million, and I want to remind people that in all the time Andrew and I have been running the company, we have only raised guidance in the first quarter once. You all know we take a conservative approach. We also acknowledged today that if anyone thinks there are no economic risks in the second half of the year, I would like to hear that perspective because we all recognize there's economic uncertainty. Therefore, I consider our decision to raise guidance and not to lower it for the second half of the year, even after moving FIFA and Madden, to be a positive signal. Andrew and I also mentioned during the call that we continue to see engagement and monetization levels higher than we usually observe at this stage in the second quarter. I'm not suggesting that this will definitely change the second quarter, or we would have adjusted our guidance, because we simply don’t know yet. But keep in mind that the unusually high monetization we experienced in Q1 won’t fall off abruptly; it will gradually decline as we all return to our normal lives. That could take six months, nine months, or even two years. Importantly, as people come back or join the social network around the game, they tend to stick around, which should ultimately benefit our business in the long run. The challenge for us is that we’ve never encountered this situation before, nor have any of you. So, we don’t have a clear path to predict what it will look like. We're aiming to be transparent, straightforward, and optimistic—while being realistic about the economic pressures around the world that could affect our business or anyone else's. I apologize for going on about this question, but I want to ensure it's clear that both FIFA and Madden, including FIFA ultimate team, are what’s moving. Other than that, we’re not signaling anything beyond the decision we made some time ago to give the teams more time to ensure an exceptional product at launch. We’re confident that it will be. Now, regarding your second question, I apologize for taking too long on the first one and forgot your second question.
Mario Lu, Analyst
That's great. I haven't asked the second one yet. That's very helpful, Blake. So the second one is on Star Wars. Can you provide some color behind the decision process regarding pricing squadrons at $40 with no additional MTX? So I do think all games are not created equal, so overall I'm surprised how the standard has been for $60 video games in the last years 15. So why go $40 all in and not free-to-play or just in general what are your thoughts on potentially pricing next-gen titles at a higher price point of $70 instead of $60?
Blake Jorgensen, CFO
Yes, I'll have Andrew help us with this because it's important for both of us. We always focus on the top games and aim to provide the greatest value for our players. Different games have varying scales, and many of our current games have large scale. We designed this game to emphasize what we heard from consumers, specifically their desire to fly an X-wing fighter and engage in dog fights. While it may not have the breadth of some of our other games, it is still a fantastic game, which is why we chose to price it slightly lower to make it accessible to as many people as possible who have that Star Wars fantasy. I'll let Andrew share our long-term views on pricing. Over the years, we've differentiated pricing for many games. For instance, we adjusted the pricing for games like Plants versus Zombies, knowing they appeal more to younger audiences or might lack the depth of an ultimate title like FIFA or Madden. Andrew, would you like to add anything?
Andrew Wilson, CEO
Yes. I would start with what are the player motivations we're trying to fulfill. And what are the expectations of those player groups in fulfillment of those motivations. And I think that we start there long before we ever get to price point. And as you've seen from us we have games across the spectrum of pricing whether that's free to play or at $60 or $60 with an additional live service or as part of our subscription offerings. And at the end of the day as we think about it we start with a player, we start with the motivations and expectations they have and we build out the game. In this case, this is a very deep and immersive game and that $40 felt like the right price point given the breadth of the game, very proud of what we are doing. We wanted it to be a wholly self-contained experience that was deeply immersive in that fantasy. As we think about pricing more broadly, I would come back to that position which is we start with what are the player motivations we're trying to fulfill? What are the expectations that players have around depth and breadth and live service in any given experience? And we build from there as we think about this year you’ve seen what we’ve done is we’ve announced that we will offer the ability for players to transition free of charge from existing generation of console titles to the next generation of console titles for FIFA and Madden. We did that and we set out to build this the best PlayStation Xbox one experience as we could, as well as the most innovative and creative experiences for Xbox Series X and PlayStation 5. What we wanted for our players this year because what they asked for was the smoothest possible transition that meant that they could jump into the game when it launched on existing platforms and then move into the next platform as it made sense for them later on in the year. And that has been our focus this year. And we will continue to kind of look at this over time.
Operator, Operator
Your next question comes from the line of Todd Juenger with Sanford Bernstein.
Todd Juenger, Analyst
Thank you so much. And glad to hear everybody is relatively well. Can I ask if you don't mind just thinking through the changes and release dates on the sports titles, I know that was probably a production driven decision but when we're looking at the real live physical sports leagues around the world especially in the states obviously there's a lot of uncertainty about the timing and shape of their seasons this year and next. And just wondering how that maps to the release of your games and the events and the live services and how much it matters. For instance, if there was no NFL season in the fall or if it had to be stopped it in halfway through, how does that matter to your games? How should we think about that? I know it's a sort of a broad hypothetical but there's so much uncertainty there. So I guess the underlying question is how much does whatever happens those live sports affect. How we should think about and expect people to engage with and spend money in your games. And I have a follow-up. Thanks.
Blake Jorgensen, CFO
Go ahead Andrew.
Andrew Wilson, CEO
I would like to start with two points. First, I believe we will continue to see some form of sports in the real world over time. Second, regardless of the situation, sports fans have an unquenchable thirst for sports every day, week, and month. As mentioned in our prepared remarks and reflected in Q1, we have successfully catered to that relentless desire for sports through our games. When considering our sports games, we focus on two aspects: the emotional connection to the real world of sports, including players, teams, and leagues that you are passionate about, and offering a toolkit that highlights those players, teams, and leagues, allowing you to share your personal sports stories. In the past quarter, we really embraced this approach and even enhanced it. We created opportunities for you to tell your own personal sports stories with friends and rivals while also introducing additional esports content, celebrity content, and various competitions. We have demonstrated our ability to meet the needs of sports fans and keep them connected to their beloved sports. I believe we can continue to do this indefinitely. If traditional sports return, we see that as a significant boost to our business.
Blake Jorgensen, CFO
Yes and what I said in the remarks was Ultimate Team in the quarter was up 70%. I don't think we've ever seen a growth like that and as part of that we know for example Madden Ultimate Team was up over 300% and there was no sports, live sports going on at any point in time during that quarter. I think Andrew made the point and I would just stress this as when people are sports fans, remember their sports fans connected to a social network. No one plays a fantasy sport game alone. No one plays Ultimate Team alone. They play with each other and that means that it builds off of the social network more than anything else. In the absence of sports, people double down and are excited. We always want live sports to go on because it helps feed the engagement and excitement around the business. But we also know sports fans are not going to stop being sports fans, if the underlying sport stops. I think the first quarter proves that better than anything we've ever seen. So we hope sports is back because we all love sports and we want to engage in it.
Todd Juenger, Analyst
Thank you both for that. If you don't mind just one follow-up, somebody's got to ask the M&A question maybe I'll go this quarter and just it seems more ripe than ever given your cash balance and the cash generation and the price the value of your currency. There's at least one big asset we know of that is believed to be in the market, just wondering your disposition toward the thought and the appeal of acquisition. How you are thinking through that decision given where the industry sits right now and anything you share in that thanks?
Blake Jorgensen, CFO
What I would say there is it is very rare that we don't get a chance to look at anything that's up for sale. You can imagine people call us and say we're thinking about selling a business or we're thinking about selling ourselves. I mean we are a place that a lot of people want to come as a long-term home if they decide to sell the business. So we get to look at almost everything. I can't comment on any specific acquisition other than what I will tell you as we said you've seen in the past where we've done the best is where we have long-term relationships with people. We're really trying to buy great talent versus games. I think Respawn is a classic example of that we were able to bring them into the fold, give them incredible support and it was all driven by the fact that they had incredible talent. It wasn't about Titanfall and that's no offense to Titanfall, it's an amazing game and we'll maybe see a Titanfall at some point sometime down the road, but it was really about the team and it starts at the top with Vince but it goes all the way through the whole organization. We're always looking at that. We'll always continue to look at that. We would hope we can find more. Our hope was that some of the challenges in our broad world economy would actually make people think and understand that being sub-scale is difficult, but at the same time as you've seen from our results. I think everybody's going to do well in the next couple of quarters in our industry. It might take some time, but trust that we are more interested than ever because we see talent and building great new franchises is critical to the long-term growth for business.
Operator, Operator
The next question comes from the line of Ryan Gee with Bank of America.
Ryan Gee, Analyst
Good afternoon. Thanks for taking the questions. So I believe I heard you guys said Ultimate Team was up 70% year-over-year. I believe that's revenue. Can you remind us what that growth rate looked like going into shelter in place and here we are end of July? How it looks kind of quarter-to-date? And then I have a follow up.
Blake Jorgensen, CFO
Yes, I don't recall the exact figures offhand, but I think we were seeing growth rates in the high single to low double digits, maybe reaching around 15% to 20%. We had a strong quarter for Ultimate Team. In the fourth quarter, you can refer back to the transcript for specifics. This situation is notably different and exceptional, especially for games like Madden, where we typically have a drop-off post-Super Bowl. Normally, engagement is driven by events like the draft and the combine, and since many of those events weren't held in person this year, there was concern it might impact Ultimate Team. However, the team had been working on enhancing the game and introducing new modes over the past few years, and those efforts paid off. We saw impressive growth in both the Madden base game and Ultimate Team going into the quarter. The team also innovated by creating new events suitable for a stay-at-home environment and really capitalized on social engagement, providing excitement to sports fans who were craving it. Our esports initiatives also saw a significant boost, even though we had to adapt to virtual broadcasting. Personally, I was thrilled to see my wife, a huge sports fan, getting excited about a Madden esports tournament, which indicates we’re resonating with our audience. Overall, we noticed peak engagement in April and May, which gradually declined as some people returned to work, but it remains significantly higher than usual for this time of year, which is typically slow as we transition between sports seasons. I can't predict how things will unfold for the remainder of the quarter or the year, but we’ve brought many new players into the game, and we believe their engagement with Ultimate Team and our sports franchises won’t just disappear overnight. We hope this paves the way for long-term growth. However, any guidance we provide should not be interpreted as a reflection on the games themselves, but rather on the broader economic context. The recent GDP numbers create uncertainty, and we're cautious about projecting a strong economy over the next 6 to 12 months. That uncertainty weighs heavily on us. Nonetheless, engagement levels in our games are unprecedented, with The Sims seeing a 110% year-over-year increase, thanks to both new and returning players. The Sims has consistently grown for the last six years, indicating that new players tend to stick around and continue engaging with the new content we produce, which excites us. I apologize for the lengthy response, but I want to emphasize that while we are prudent and conservative, we remain extremely optimistic about the business, even as we navigate these challenging global circumstances.
Ryan Gee, Analyst
No. That saves me from asking several questions and then getting a hard time for asking too many. So maybe I'll just finish with one question on FIFA. So the 7 million players that you guys added sequentially coming into FIFA can you shed some light on who these players are? Are they kind of casual fringe players just looking for something to fill time not spending not converting? Or are they the ones that you've seen payer conversion, ARPU in line with your legacy hardcore players that have been in there basically since FY11 playing FIFA Ultimate Team? Anything you can say about the new players you're reactivated.
Blake Jorgensen, CFO
Yes. It's hard to say and Andrew you can add to this. It's just early right. So you want to see a pattern over time but Andrew go ahead and jump in.
Andrew Wilson, CEO
Yes. I would say and you heard a little bit of my prepared remarks, but it is early so this 7 million is made up of lots of players, players haven't been with it for a few years, and some completely new players. What I would tell you is while it is early and it is a little bit difficult to predict future behavior on these cohorts at this juncture. They are performing like some of our strongest and most engaged groups in the game. I think that's testament to the fact that this game does facilitate this connection to friends in connection with the sport and the live service that sits within that game is now so intrinsic to the experience. A big part of the joy that players get. What the teams have done through this last quarter is spectacular in terms of their ability to entertain existing players, lapsed returning players and the new players. We’re seeing those groups come together and perform in the same way that our traditionally very highly engaged strong player groups have. So we’re at to Blake's point, it's early. It's not easy to predict but the early signs are very strong. We’re very optimistic about what this means for the FIFA community long term.
Operator, Operator
The next question is from Mr. Michael Ng.
Michael Ng, Analyst
Hey. Thank you very much for the question. I just have two. The first is I was wondering if you could just expand on your capital allocation plans which you put on pause at least with the buyback last quarter. Do you have plans to authorize a new buyback? And then the second question is could you talk a little bit about how the 7 million additional players that you added sequentially on FIFA informs your expectation for FIFA -21 unit sales this year? Is it clear that should be up year-over-year from a unit's perspective because of the enlarged player base? Thank you.
Blake Jorgensen, CFO
Yes, we believe that bringing in new players can likely expand our player base and future purchases. Currently, we haven't lowered our guidance for the latter half of the year; we only moved FIFA by two weeks, which is just a quarterly adjustment. This shouldn't be interpreted as a change in our forecast. It's still too early to determine how this will affect us. By the time we reach our second quarter earnings, we'll have a clearer idea if our guidance might increase or decrease based on the performance of FIFA, Madden, and NHL. We're very optimistic about those titles. Regarding capital allocation, we paused our program because we felt it wasn't the right time to communicate that we were starting a new one as we were nearing the end of our previous program. After navigating through the pandemic, we have a better outlook on the future. While I can't say when we would restart a program, we are committed to having one. The timing is primarily influenced by the COVID situation, which is consistent across many companies. Only a few have initiated new programs in the last quarter. Our perspective remains unchanged, and we want to continue returning capital to shareholders. As you noticed, we achieved the highest cash flow we've ever had in the past year, and we recognize the importance of returning some of that to our shareholders. Expect to hear more from us about this in the future, though I can't forecast specifics at this moment.
Operator, Operator
And your last question comes from the line of Brian Nowak with Morgan Stanley.
Unidentified Analyst, Analyst
Hi, guys. It's Matt on for Brian. Thanks for taking the question. So can you talk a little bit about the difference in behavior, if any that you're seeing between your users in the US and Europe? I know we spent a lot of time in the Q&A talking about potential phasing and how it's kind of obviously really hard to tell the sort of retention and behavior you're going to see on players at this stage. But to some extent some many European countries are a little bit ahead of North America in terms of where they are in reopening post COVID. So are you seeing a marked difference in the behavior of those users? Are they dropping off more? And one of your competitors talked last week about seeing weakness in Europe relative to the US. And is that something that is consistent with what you're seeing. And then I have a follow-up. Thanks.
Blake Jorgensen, CFO
Yes, I believe it's important to be cautious about trends observed over just a week, as they may not reflect longer-term patterns. The European economies are experiencing varied fluctuations, and Spain is currently facing another surge in COVID cases, which adds to the uncertainty. Moreover, trends in FIFA may not correlate with those of competitors or other games. I'll now turn it over to Andrew, as he has some thoughts to share.
Andrew Wilson, CEO
No. I would just say I would echo Blake's comment. I would also point to the performance of FIFA through our last quarter. We saw tremendous engagement through the quarter. What Blake spoke to is kind of a peak and that we’ve seen some change in that, but the engagement through FIFA and our other games has been very, very strong throughout the entire quarter and continues even now to be much, much stronger than it would be typically at this time of the year. To Blake's point, I think it’s too early to tell but we've seen continued strong engagement even in Europe as some of those markets have gone back online.
Unidentified Analyst, Analyst
Great. Thank you and then just on the topic of working from home, obviously, we’re much farther in now to the process of everyone getting up the curve of learning how to operate in this environment. Have you learned anything new? Are there any changes in the way that you guys are thinking about having your workforce working from home any new challenges? I know there were some public comments from some people that respond that maybe there were some challenges that they hadn't anticipated with Apex. Just any thoughts you have there. Thank you.
Andrew Wilson, CEO
Yes, everyone on this call is currently working from home, and there are numerous benefits to this arrangement. We've significantly reduced our commute times and travel, allowing us to spend more time with our families. In many cases, our productivity has improved as well. However, we also recognize that working from home presents its own set of challenges, such as the difficulties of homeschooling and the impact on mental and emotional well-being from being in one place for too long. Our organization is dedicated to supporting our employees by providing financial assistance, mental, physical, and emotional support. We are offering flexible work hours and caregiver leave to assist those managing homeschooling or caring for loved ones. We've learned a lot during this time, and I don't believe we'll return to our previous work style. However, I also don't envision a future where our entire workforce is remote. There is a dynamic energy that arises from having creative individuals collaborate in person at least some of the time. We're still in the early months of this situation. As mentioned earlier, most of us will continue working from home for the remainder of the year, at which point we will reassess our approach. We are maintaining open communication with our employees about their needs and any potential long-term adjustments we may consider. While I can't share many specifics about long-term changes right now, it is likely that there will be some, but it will not mean that everyone will work from home permanently.
Blake Jorgensen, CFO
Yes. I just want to remind everyone to look at our net bookings. Our live services reached $1.103 billion, which is an increase of $416 million from last year. The majority of our quarterly revenue came from live services, which require daily engagement. We are hosting weekly events, introducing new characters, and creating new content. We're also focused on security and monetization, which are as challenging as game development. The growth we demonstrated in live services this quarter showcases the exceptional talent we have. Andrew and I recognize how fortunate we are to have such a dedicated team that can navigate running live services from home, something that has never been done before. It highlights the strength and commitment of our organization. For those concerned about moving FIFA from the second to the third quarter, I encourage you to reflect on the impressive $1.1 billion in live services this quarter. It's remarkable. While we don't appreciate that we reached this point due to the COVID virus, we've shown that we can make something truly special out of it. I’ll conclude the call here and look forward to hopefully seeing everyone in person someday. Thank you for your attention and questions today. We appreciate your time. We’ll speak again next quarter.
Andrew Wilson, CEO
Thank you. Be well.
Operator, Operator
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and now disconnect.