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Exhibit 99.1

 

 

Electronic Arts Reports Q2 FY19

Financial Results

  LOGO

REDWOOD CITY, CA - October 30, 2018 - Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second fiscal quarter ended September 30, 2018.

News and ongoing updates regarding EA and its games are available on EA’s blog at www.ea.com/news.

“It was a strong second quarter, as we entertained players with four high-quality new EA SPORTS games, hundreds of content updates in our live services, and esports programs that reached record viewership,” said CEO Andrew Wilson. “We’re incredibly excited to bring innovative new games like Battlefield V and Command & Conquer: Rivals to our players this holiday season, and launch our breakthrough new IP Anthem in February. We’re set to deliver some amazing new ways to play and compete through the rest of this fiscal year and beyond.”

“We’re pleased with the performance of our business through the second quarter, and particularly with the strong digital net bookings,” said COO and CFO Blake Jorgensen. “We continue to deliver strong digital revenues across multiple platforms, business models and geographic territories.”

Selected Operating Highlights and Metrics

   

Digital net bookings* for the trailing twelve months was a record $3.608 billion, up 11% year-over-year and represents 69% of total net bookings.

 

   

FIFA Mobile daily active players grew 50% year-over-year.

 

   

The FIFA eWorld Cup Final was record setting, including a 4x increase in global viewership over last year, and more than 20 million players participating through the course of the FIFA 18 Global Series.

 

   

The SimsTM 4 community downloaded nearly 30 million expansion packs life-to-date and monthly average players continue to grow year-over-year.

 

   

FIFA 19 was critically-acclaimed as one of the best, most innovative FIFA games in the franchise and NHL 19 was the highest-rated NHL game on current generation consoles.

* 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 and, for periods after the fourth quarter of fiscal 2018, mobile platform fees.

Selected Financial Highlights and Metrics

All financial measures are presented on a GAAP basis.

   

Net cash from operating activities was $(126) million for the quarter and $1.458 billion for the trailing twelve months.

 

   

EA repurchased 2.3 million shares for $299 million during the quarter and 7.2 million shares for $897 million during the trailing twelve months.


Impact of Recently Adopted Accounting Standard

At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and earnings per share; however, it does not materially impact net bookings, EA’s operational metric. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

Quarterly Financial Highlights

 

     Three Months Ended
September 30,
 
     2018     2017  
(in $ millions, except per share amounts)             

Digital net revenue

     780       689  

Packaged goods and other net revenue

     506       270  
  

 

 

   

 

 

 

Total net revenue

     1,286       959  
  

 

 

   

 

 

 
    

Net income (loss)

     255       (22

Earnings (loss) per share

     0.83       (0.07
    

Operating cash flow

     (126     52  
    

Value of shares repurchased

     299       153  

Number of shares repurchased

     2.3       1.3  

While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and tax rate of 18% was used internally by company management to adjust its fiscal 2019 GAAP results in order to assess EA’s operating results:

 

    Three Months Ended September 30, 2018  
          GAAP-Based Financial Data  
(in $ millions)   Statement
of
Operations
    Acquisition-related
expenses
    Change in
deferred net
revenue

(online-
enabled
games)
    Mobile
platform
fees
    Stock-based
compensation
 

Total net revenue

    1,286             (20     (44      

Cost of revenue

    418       (1           (44     (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    868       1       (20           1  

Total operating expenses

    610       (8                 (65
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    258       9       (20           66  

Interest and other income, net

    18                          
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

    276       9       (20           66  

Number of shares used in computation:

         

Diluted

    307          

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended June 30, 2018.

 

2


TTM Financial Highlights

 

     Twelve Months Ended
September 30,
 
     2018      2017  
(in $ millions)              

Digital net revenue

     3,619        3,187  

Packaged goods and other net revenue

     1,546        1,897  
  

 

 

    

 

 

 

Total net revenue

     5,165        5,084  
  

 

 

    

 

 

 
     

Net income

     969*        1,187  
     

Operating cash flow

     1,458        1,802  
     

Value of shares repurchased

     897        555  

Number of shares repurchased

     7.2        5.7  

 

 

*During the twelve months ended September 30, 2018, EA recognized $235 million of incremental income tax expense due to the application of the Tax Cuts and Jobs Act.

While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and tax rate of 18% in fiscal year 2019 and 21% in fiscal year 2018 was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

 

    Twelve Months Ended September 30, 2018  
          GAAP-Based Financial Data  
(in $ millions)   Statement
of
Operations
    Acquisition-related
expenses
    Change in
deferred net
revenue

(online-
enabled
games)
    Mobile
platform
fees
    Stock-based
compensation
 

Total net revenue

    5,165             125       (93      

Cost of revenue

    1,367       (4           (93     (3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    3,798       4       125             3  

Total operating expenses

    2,508       (20                 (265
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    1,290       24       125             268  

Interest and other income, net

    43                          
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

    1,333       24       125             268  

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended June 30, 2018.

 

3


Operating Metric

The following is a calculation of our total net bookings for the periods presented:

 

     Three Months Ended
September 30,
     TTM Ended
September 30,
 
     2018     2017      2018     2017  
(in $ millions)                          

Total net revenue

     1,286       959        5,165       5,084  

Change in deferred net revenue (online-enabled games)

     (20     220        125       32  

Mobile platform fees

     (44            (93      
  

 

 

   

 

 

    

 

 

   

 

 

 

Net bookings

     1,222       1,179        5,197       5,116  
  

 

 

   

 

 

    

 

 

   

 

 

 

Business Outlook as of October 30, 2018

The following forward-looking statements reflect expectations as of October 30, 2018. 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 2019 Expectations - Ending March 31, 2019

Financial metrics:

   

Net revenue is expected to be approximately $5.150 billion.

     

Change in deferred net revenue (online-enabled games) is expected to be approximately $270 million.

     

Mobile platform fees are expected to be approximately $(220) million.

   

Net income is expected to be approximately $962 million.

   

Diluted earnings per share is expected to be approximately $3.11.

   

Operating cash flow is expected to be approximately $1.650 billion.

   

The Company estimates a share count of 309 million for purposes of calculating fiscal year 2019 diluted earnings per share.

Operational metric:

   

Net bookings is expected to be approximately $5.200 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:

 

4


     Twelve Months Ending March 31, 2019  
            GAAP-Based Financial Data  
     GAAP
Guidance
     Acquisition-
related
expenses
    Change in
deferred net
revenue
(online-
enabled
games)
     Mobile
platform
fees
    Stock-based
compensation
 
(in $ millions)                                 

Digital net revenue

     3,805              195        (220      

Packaged goods & other net revenue

     1,345              75               

 

 

Total net revenue

     5,150              270        (220      

 

 

Cost of revenue

     1,423        (5            (220     (2

Operating expense

     2,703        (35                  (298

Income before provision for income taxes

     1,086        40       270              300  

Net income

     962            

Number of shares used in computation:

            

Diluted shares

     309            

Third Quarter Fiscal Year 2019 Expectations - Ending December 31, 2018

Financial metrics:

   

Net revenue is expected to be approximately $1.375 billion.

     

Change in deferred net revenue (online-enabled games) is expected to be approximately $405 million.

     

Mobile platform fees are expected to be approximately $(55) million.

   

Net income is expected to be approximately $188 million.

   

Diluted earnings per share is expected to be approximately $0.61.

   

The Company estimates a share count of 306 million for purposes of calculating third quarter fiscal year 2019 diluted earnings per share.

Operational metric:

   

Net bookings is expected to be approximately $1.725 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:

 

     Three Months Ending December 31, 2018  
            GAAP-Based Financial Data  
     GAAP
Guidance
     Acquisition-
related
expenses
    Change in
deferred net
revenue
(online-
enabled
games)
     Mobile
platform
fees
    Stock-based
compensation
 
(in $ millions)                                 

 

 

Total net revenue

     1,375              405        (55      

 

 

Cost of revenue

     446        (1            (55      

Operating expense

     730        (10                  (80

Income before provision for income taxes

     212        11       405              80  

Net income

     188            

Number of shares used in computation:

            

Diluted shares

     306            

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended June 30, 2018.

 

5


Conference Call and Supporting Documents

Electronic Arts will host a conference call on October 30, 2018 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2018 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 844-215-4106 (domestic) or 918-534-8313 (international), using the password “EA” 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 and Investor Accounting FAQ 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 13, 2018 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 4867728. 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 2019 expectations under the heading “Business Outlook as of October 30, 2018,” and other information regarding EA’s fiscal 2019 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.

 

6


Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s titles; the Company’s ability to develop and support digital products and services, including managing online security and privacy; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; 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; 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, 2018.

These forward-looking statements are current as of October 30, 2018. 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, 2018. 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, 2018.

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. EA has more than 300 million registered players around the world.

In fiscal year 2018, EA posted GAAP net revenue of $5.15 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™, Need for Speed™, Dragon Age™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.

EA SPORTS, Battlefield, The Sims, Need for Speed, Dragon Age, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL 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

 

7


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in $ millions, except per share data)

 

     Three Months Ended
September 30,
     Six Months Ended
September 30,
 
     2018 1      2017      2018 1      2017  

Net revenue

           

Product

     623        454        825        1,282  

Service and other

     663        505        1,598        1,126  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net revenue

     1,286        959        2,423        2,408  

Cost of revenue

           

Product

     222        300        290        364  

Service and other

     196        89        343        179  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenue

     418        389        633        543  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     868        570        1,790        1,865  

Operating expenses:

           

Research and development

     339        331        701        656  

Marketing and sales

     146        160        286        281  

General and administrative

     117        118        231        223  

Acquisition-related contingent consideration

     2               2         

Amortization of intangibles

     6        2        12        3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     610        611        1,232        1,163  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income (loss)

     258        (41      558        702  

Interest and other income (expense), net

     18        3        37        9  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) before provision for (benefit from) income taxes

     276        (38      595        711  

Provision for (benefit from) income taxes

     21        (16      47        89  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income (loss)

     255        (22      548        622  
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings (loss) per share

           

Basic

     0.84        (0.07      1.80        2.01  

Diluted

     0.83        (0.07      1.77        1.99  

Number of shares used in computation

           

Basic

     305        309        305        309  

Diluted

     307        309        309        313  

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.


Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on July 26, 2018 for the three months ended September 30, 2018 plus a comparison to the actuals for the three months ended September 30, 2017.

 

     Three Months Ended September 30,  
     2018 1            2018 1     2017  
    

 

    Guidance    

   

 

    Variance    

    

 

    Actuals    

   

 

    Actuals    

 

Net revenue

         

Net revenue

     1,270       16        1,286       959  

GAAP-based financial data

         

Change in deferred net revenue (online-enabled games)

     (55     35        (20     220  

Mobile platform fees

     (55     11        (44      

Cost of revenue

         

Cost of revenue

     436       (18      418       389  

GAAP-based financial data

         

Acquisition-related expenses

     (1            (1      

Stock-based compensation

           (1      (1     (1

Mobile platform fees

     (55     11        (44      

Operating expenses

         

Operating expenses

     674       (64      610       611  

GAAP-based financial data

         

Acquisition-related expenses

     (9     1        (8     (2

Stock-based compensation

     (85     20        (65     (61

Income (loss) before tax

         

Income (loss) before tax

     168       108        276       (38

GAAP-based financial data

         

Acquisition-related expenses

     10       (1      9       2  

Change in deferred net revenue (online-enabled games)

     (55     35        (20     220  

Mobile platform fees

                         

Stock-based compensation

     85       (19      66       62  

Tax rate used for management reporting

     18        18     21

Earnings (loss) per share

         

Basic

     0.49       0.35        0.84       (0.07

Diluted

     0.48       0.35        0.83       (0.07

Number of shares

         

Basic

     306       (1      305       309  

Diluted

     312       (5      307       309  

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in $ millions)

 

             September 30, 20181                      March 31, 20182           

ASSETS

    

Current assets:

    

Cash and cash equivalents

     2,881       4,258  

Short-term investments

     1,664       1,073  

Receivables, net of allowances of $10 and $165, respectively

     966       385  

Other current assets

     292       288  
  

 

 

   

 

 

 

Total current assets

     5,803       6,004  

Property and equipment, net

     440       453  

Goodwill

     1,894       1,883  

Acquisition-related intangibles, net

     100       71  

Deferred income taxes, net

     112       84  

Other assets

     101       89  
  

 

 

   

 

 

 

TOTAL ASSETS

     8,450       8,584  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

     168       48  

Accrued and other current liabilities

     907       821  

Deferred net revenue (online-enabled games)

     574       1,622  
  

 

 

   

 

 

 

Total current liabilities

     1,649       2,491  

Senior notes, net

     993       992  

Income tax obligations

     273       250  

Deferred income taxes, net

     1       1  

Other liabilities

     217       255  
  

 

 

   

 

 

 

Total liabilities

     3,133       3,989  

Stockholders’ equity:

    

Common stock

     3       3  

Additional paid-in capital

     134       657  

Retained earnings

     5,199       4,062  

Accumulated other comprehensive loss

     (19     (127
  

 

 

   

 

 

 

Total stockholders’ equity

     5,317       4,595  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

     8,450       8,584  
  

 

 

   

 

 

 

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606) Revenue from Contracts with Customers. EA’s Q2 FY19 Unaudited Condensed Consolidated Balance Sheet reflects the effect of the adoption as of April 1, 2018, which had an impact on the following: receivables, net of allowances, accrued and other current liabilities, deferred net revenue (online-enabled games), deferred income taxes, net, retained earnings and accumulated other comprehensive loss. Financial data for periods prior to April 1, 2018 has not been restated.

2Derived from audited consolidated financial statements.


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in $ millions)

 

             Three Months Ended        
September 30,
            Six Months Ended        
September 30,
 
     2018     2017     2018     2017  

OPERATING ACTIVITIES

        

Net income (loss)

     255       (22     548       622  

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

        

Depreciation, amortization and accretion

     36       32       74       63  

Stock-based compensation

     66       62       136       110  

Change in assets and liabilities

        

Receivables, net

     (591     (589     (422     (454

Other assets

     (28     (14     20       66  

Accounts payable

     124       148       132       104  

Accrued and other liabilities

     60       216       (25     100  

Deferred income taxes, net

     (20     (15     (94     40  

Deferred net revenue (online-enabled games)

     (28     234       (375     (423
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (126     52       (6     228  
  

 

 

   

 

 

   

 

 

   

 

 

 

INVESTING ACTIVITIES

        

Capital expenditures

     (31     (30     (63     (63

Proceeds from maturities and sales of short-term investments

     239       612       446       1,050  

Purchase of short-term investments

     (801     (702     (1,029     (1,395

Acquisition, net of cash acquired

     (8           (58      
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (601     (120     (704     (408
  

 

 

   

 

 

   

 

 

   

 

 

 

FINANCING ACTIVITIES

        

Proceeds from issuance of common stock

     35       27       36       57  

Cash paid to taxing authorities for shares withheld from employees

     (7     (10     (96     (105

Repurchase and retirement of common stock

     (299     (153     (599     (303
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (271     (136     (659     (351
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of foreign exchange on cash and cash equivalents

     3       23       (8     33  
  

 

 

   

 

 

   

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (995     (181     (1,377     (498

Beginning cash and cash equivalents

     3,876       2,248       4,258       2,565  
  

 

 

   

 

 

   

 

 

   

 

 

 

Ending cash and cash equivalents

     2,881       2,067       2,881       2,067  
  

 

 

   

 

 

   

 

 

   

 

 

 


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions, except per share data)

 

     Q2     Q3     Q4     Q11     Q21     YOY
%
 
     FY18     FY18     FY18     FY19     FY19     Change  

Net revenue

            

Net revenue

     959       1,160       1,582       1,137       1,286       34

GAAP-based financial data

            

Change in deferred net revenue (online-enabled games)3

     220       811       (327     (339     (20  

Mobile platform fees

                       (49     (44  

Gross profit

            

Gross profit

     570       659       1,349       922       868       52

GAAP-based financial data

            

Acquisition-related expenses

           1       1       1       1    

Change in deferred net revenue (online-enabled games)3

     220       811       (327     (339     (20  

Mobile platform fees

                                

Stock-based compensation

     1             1       1       1    

Gross profit (as a % of net revenue)

     59     57     85     81     67  

Operating income (loss)

            

Operating income (loss)

     (41     (21     753       300       258       729

GAAP-based financial data

            

Acquisition-related expenses

     2       2       6       7       9    

Change in deferred net revenue (online-enabled games)3

     220       811       (327     (339     (20  

Stock-based compensation

     62       63       69       70       66    

Operating income (loss) (as a % of net revenue)

     (4 %)      (2 %)      48     26     20  

Net income (loss)

            

Net income (loss)

     (22     (186     607       293       255       1,259

GAAP-based financial data

            

Acquisition-related expenses

     2       2       6       7       9    

Change in deferred net revenue (online-enabled games)3

     220       811       (327     (339     (20  

Stock-based compensation

     62       63       69       70       66    

Tax rate used for management reporting

     21     21     21     18     18  

Net income (loss) (as a % of net revenue)

     (2 %)      (16 %)      38     26     20  

Diluted earnings (loss) per share

     (0.07     (0.60     1.95       0.95       0.83       1,286

Number of diluted shares used in computation

            

Basic

     309       308       307       306       305    

Diluted

     309       308       311       310       307    

Anti-dilutive shares excluded for loss position4

     3       3                      

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

3The 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.

4Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable through stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive.


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions)

 

     Q2     Q3     Q4     Q11     Q21     YOY
%
 
     FY18     FY18     FY18     FY19     FY19     Change  

QUARTERLY NET REVENUE PRESENTATIONS

            

Net revenue by composition

            

Full game downloads

     123       143       232       116       148       20

Live services

     408       476       698       610       412       1

Mobile

     158       161       172       231       220       39
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total digital

     689       780       1,102       957       780       13
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Packaged goods and other

     270       380       480       180       506       87
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total net revenue

     959       1,160       1,582       1,137       1,286       34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total digital

     72     67     70     84     61  

Packaged goods and other

     28     33     30     16     39  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total net revenue %

     100     100     100     100     100  

GAAP-based financial data

 

     

Full game downloads

     (4     117       (39     (20     9    

Live services

     (98     311       (19     (160     (84  

Mobile

     (8     22       4       (35     (24  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total digital

     (110     450       (54     (215     (99  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Packaged goods and other

     330       361       (273     (124     79    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total change in deferred net revenue (online-enabled games) by composition3

     220       811       (327     (339     (20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Mobile platform fees

                       (49     (44  

Net revenue by platform

            

Console

     595       810       1,196       705       917       54

PC/Browser

     196       181       210       197       149       (24 %) 

Mobile

     162       166       173       233       220       36

Other

     6       3       3       2             (100 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total net revenue

     959       1,160       1,582       1,137       1,286       34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

GAAP-based financial data

 

     

Console

     258       710       (313     (288     8    

PC/Browser

     (30     83       (20     (9     (4  

Mobile

     (7     21       5       (42     (24  

Other

     (1     (3     1                
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Total change in deferred net revenue (online-enabled games) by platform3

     220       811       (327     (339     (20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Mobile platform fees

                       (49     (44  

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

3The 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.


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions)

 

     Q2      Q3      Q4      Q1      Q2      YOY
%
 
     FY18      FY18      FY18      FY19      FY19      Change  

CASH FLOW DATA

                 

Operating cash flow

     52        849        615        120        (126      (342 %) 

Operating cash flow - TTM

     1,802        1,514        1,692        1,636        1,458        (19 %) 

Capital expenditures

     30        24        20        32        31        3

Capital expenditures - TTM

     117        116        107        106        107        (9 %) 

Repurchase and retirement of common stock

     153        150        148        300        299        95

DEPRECIATION

                 

Depreciation expense

     30        30        31        30        30         

BALANCE SHEET DATA

                 

Cash and cash equivalents

     2,067        2,566        4,258        3,876        2,881     

Short-term investments

     2,288        2,318        1,073        1,095        1,664     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Cash and cash equivalents, and short-term investments

     4,355        4,884        5,331        4,971        4,545        4

Receivables, net 1

     812        886        385        371        966        19

STOCK-BASED COMPENSATION

                 

Cost of revenue

     1               1        1        1     

Research and development

     36        38        44        47        39     

Marketing and sales

     9        8        8        7        9     

General and administrative

     16        17        16        15        17     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total stock-based compensation

     62        63        69        70        66     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606) Revenue from Contracts with Customers. EA’s Q1 and Q2 FY19 Unaudited Condensed Consolidated Balance Sheets reflect the effect of the adoption as of April 1, 2018, which had an impact on receivables, net of allowances. Financial data for periods prior to April 1, 2018 has not been restated.