| [October 31, 2017] |
 |
Electronic Arts Reports Q2 FY18 Financial Results
Electronic
Arts Inc. (NASDAQ: EA) today announced preliminary financial results
for its second fiscal quarter ended September 30, 2017.
"It was a strong second quarter for Electronic Arts, with players around
the world captivated by our new EA SPORTS titles, top-performing mobile
games, and expanding esports competitions," said Chief Executive Officer
Andrew Wilson. "The digital transformation is accelerating across our
industry, and we are well-positioned for continued growth with more
stunning new titles, thriving event-driven live services including
competitive gaming, and continuing innovation for our players on all
platforms."
"We saw a notable shift to digital in our sports titles and remarkable
growth in Ultimate Team," said Chief Financial Officer Blake Jorgensen.
"Our sports titles have once again shown their value in delivering a
stable and dependable performance. This quarter demonstrates how they
can drive our business and offers a window into how our games will
evolve over the months and years to come."
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
-
Digital net bookings* for the trailing twelve months was $3.240
billion, up 26% year-over-year, and now represents 63% of total net
bookings for the same period.
-
More than 50% of Madden NFL 18 players engaged in the "Longshot" story
mode through Q2 and Madden Ultimate Team™ players are up 25%
year-over-year.
-
FIFA Mobile unique player base grew to more than 113 million.
-
The BattlefieldTM 1 community grew to more than 23.5
million players worldwide.
-
Monthly active players for The SimsTM 4 on PC increased
more than 40% year-over-year.
* Net bookings, previously referred to as net sales, 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
All financial measures are presented on a GAAP basis.
-
Net cash provided by operating activities was $52 million.
-
Net cash provided by operating activities for the trailing twelve
months was $1.802 billion, a record measured at the end of the second
quarter.
-
In Q2, EA repurchased 1.3 million shares for $153 million.
Quarterly Financial Highlights
|
|
|
Three Months Ended September 30,
|
|
|
|
2017
|
|
2016
|
|
(in $ millions, except per share amounts)
|
|
|
|
|
|
|
Digital net revenue
|
|
689
|
|
|
566
|
|
|
Packaged goods and other net revenue
|
|
270
|
|
|
332
|
|
|
Total net revenue
|
|
959
|
|
|
898
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(22
|
)
|
|
(38
|
)
|
|
Loss per share
|
|
(0.07
|
)
|
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
Operating cash flow
|
|
52
|
|
|
122
|
*
|
|
|
|
|
|
|
|
|
Value of shares repurchased
|
|
153
|
|
|
127
|
|
|
Number of shares repurchased
|
|
1.3
|
|
|
1.6
|
|
|
*At the beginning of fiscal 2018, EA adopted FASB ASU 2016-09,
related to stock-based compensation. Operating cash flow for the
three months ended September 30, 2016 has been recast to reflect the
impact of this standard.
|
|
|
While EA no longer reports certain non-GAAP financial measures, the
following GAAP-based financial data and a long-term tax rate of 21% are
used internally by company management to adjust its GAAP results in
order to assess EA's operating results:
|
|
|
Three Months Ended September 30, 2017
|
|
|
|
|
|
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
|
|
959
|
|
|
-
|
|
|
220
|
|
-
|
|
|
Cost of revenue
|
|
389
|
|
|
-
|
|
|
-
|
|
(1
|
)
|
|
Gross profit
|
|
570
|
|
|
-
|
|
|
220
|
|
1
|
|
|
Total operating expenses
|
|
611
|
|
|
(2
|
)
|
|
-
|
|
(61
|
)
|
|
Operating income (loss)
|
|
(41
|
)
|
|
2
|
|
|
220
|
|
62
|
|
|
Interest and other income, net
|
|
3
|
|
|
-
|
|
|
-
|
|
-
|
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
(38
|
)
|
|
2
|
|
|
220
|
|
62
|
|
|
Number of shares used in computation:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EA's GAAP loss per share for the three months ended September 30, 2017
was calculated using the basic share count of 309 million. Had EA
reported a profit, the diluted share count would have been 312 million
shares.
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,
2017.
TTM Financial Highlights
|
|
|
TTM Ended September 30,
|
|
|
|
2017
|
|
2016
|
|
(in $ millions)
|
|
|
|
|
|
Digital net revenue
|
|
3,187
|
|
2,539
|
|
Packaged goods and other net revenue
|
|
1,897
|
|
2,008
|
|
Total net revenue
|
|
5,084
|
|
4,547
|
|
|
|
|
|
|
|
Net income
|
|
1,187
|
|
1,256
|
|
|
|
|
|
|
|
Operating cash flow*
|
|
1,802
|
|
1,323
|
|
|
|
|
|
|
|
Value of shares repurchased
|
|
555
|
|
1,016
|
|
Number of shares repurchased
|
|
5.7
|
|
15.2
|
|
*At the beginning of fiscal 2018, EA adopted FASB ASU 2016-09,
related to stock-based compensation. Operating cash flow has been
recast to reflect the impact of this standard.
|
|
|
While EA no longer reports certain non-GAAP financial measures, the
following GAAP-based financial data and a long-term tax rate of 21% are
used internally by company management to adjust its GAAP results in
order to assess EA's operating results:
|
|
|
TTM Ended September 30, 2017
|
|
|
|
|
|
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
|
|
5,084
|
|
-
|
|
|
32
|
|
-
|
|
|
Cost of revenue
|
|
1,261
|
|
(18
|
)
|
|
-
|
|
(3
|
)
|
|
Gross profit
|
|
3,823
|
|
18
|
|
|
32
|
|
3
|
|
|
Total operating expenses
|
|
2,408
|
|
(6
|
)
|
|
-
|
|
(207
|
)
|
|
Operating income
|
|
1,415
|
|
24
|
|
|
32
|
|
210
|
|
|
Interest and other income, net
|
|
6
|
|
-
|
|
|
-
|
|
-
|
|
|
Income before provision for income taxes
|
|
1,421
|
|
24
|
|
|
32
|
|
210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
2017.
Operating Metric
EA has renamed the operating metric "net sales" to "net bookings". The
following is a calculation of our total net bookings for the periods
presented:
|
|
|
Three Months Ended
September 30,
|
|
TTM Ended
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(in $ millions)
|
|
|
|
|
|
|
|
|
|
Total net revenue
|
|
959
|
|
898
|
|
5,084
|
|
4,547
|
|
|
Change in deferred net revenue (online-enabled games)
|
|
220
|
|
200
|
|
32
|
|
(40
|
)
|
|
Net bookings
|
|
1,179
|
|
1,098
|
|
5,116
|
|
4,507
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Outlook as of October 31, 2017
The following forward-looking statements reflect expectations as of
October 31, 2017. 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 2018 Expectations - Ending March 31, 2018
Financial metrics:
-
Net revenue is expected to be approximately $5.075 billion.
-
Change in deferred net revenue (online-enabled games) is expected
to be approximately $75 million.
-
Net income is expected to be approximately $1.136 billion.
-
Diluted earnings per share is expected to be approximately $3.63.
-
Operating cash flow, reflecting the recently adopted accounting
standard related to stock-based compensation discussed below, is
expected to be approximately $1.600 billion.
-
The Company estimates a share count of 313 million for purposes of
calculating fiscal year 2018 diluted earnings per share.
Operational metric:
-
Net bookings is expected to be approximately $5.150 billion.
In addition, the following outlook for GAAP-based financial data and a
long-term tax rate of 21% are used internally by EA to adjust our GAAP
expectations to assess EA's operating results and plan for future
periods:
|
|
|
Twelve Months Ending March 31, 2018
|
|
|
|
|
|
GAAP-Based Financial Data
|
|
|
|
GAAP
Guidance
|
|
Acquisition-
related
expenses
|
|
Change in
deferred net
revenue
(online-
enabled
games)
|
|
Stock-based
compensation
|
|
(in $ millions)
|
|
|
|
|
|
|
|
|
|
Digital net revenue
|
|
3,295
|
|
-
|
|
|
115
|
|
|
-
|
|
|
Packaged goods & other net revenue
|
|
1,780
|
|
-
|
|
|
(40
|
)
|
|
-
|
|
|
Total net revenue
|
|
5,075
|
|
-
|
|
|
75
|
|
|
-
|
|
|
Cost of revenue
|
|
1,290
|
|
-
|
|
|
-
|
|
|
(3
|
)
|
|
Operating expense
|
|
2,443
|
|
(6
|
)
|
|
-
|
|
|
(237
|
)
|
|
Income before provision for income taxes
|
|
1,344
|
|
6
|
|
|
75
|
|
|
240
|
|
|
Net income
|
|
1,136
|
|
|
|
|
|
|
|
Number of shares used in computation:
|
|
|
|
|
|
|
|
|
|
Diluted shares
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Fiscal Year 2018 Expectations - Ending December 31, 2017
Financial metrics:
-
Net revenue is expected to be approximately $1.135 billion.
-
Change in deferred net revenue (online-enabled games) is expected
to be approximately $865 million.
-
Net loss is expected to be approximately ($64) million.
-
Loss per share is expected to be approximately ($0.21).
-
The Company estimates a GAAP basic and diluted share count of 309
million shares due to a forecasted net loss. If the Company reports
net income instead of a net loss, diluted share count for calculating
diluted earnings per share would be 313 million shares.
Operational metric:
-
Net bookings is expected to be approximately $2.000 billion.
In addition, the following outlook for GAAP-based financial data and a
long-term tax rate of 21% 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, 2017
|
|
|
|
|
|
GAAP-Based Financial Data
|
|
|
|
GAAP
Guidance
|
|
Acquisition-
related
expenses
|
|
Change in
deferred net
revenue
(online-
enabled
games)
|
|
Stock-based
compensation
|
|
(in $ millions)
|
|
|
|
|
|
|
|
|
|
Total net revenue
|
|
1,135
|
|
|
-
|
|
|
865
|
|
-
|
|
|
Cost of revenue
|
|
521
|
|
|
-
|
|
|
-
|
|
(1
|
)
|
|
Operating expense
|
|
690
|
|
|
(1
|
)
|
|
-
|
|
(64
|
)
|
|
Income/(loss) before provision for (benefit from) income taxes
|
|
(79
|
)
|
|
1
|
|
|
865
|
|
65
|
|
|
Net loss
|
|
(64
|
)
|
|
|
|
|
|
|
|
Number of shares used in computation:
|
|
|
|
|
|
|
|
|
|
Basic shares
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of Recently Adopted Accounting Standard
At the beginning of fiscal 2018, EA adopted FASB ASU 2016-09, related to
stock-based compensation. This pronouncement required EA to change how
it reports the cash effects of stock-based compensation in the
Consolidated Statement of Cash Flow. It does not impact total cash and
cash flow, but it does increase operating cash flow and decrease cash
flow from financing activities. The following table reflects the impact
of this standard on operating cash flow for the periods presented:
|
|
|
Three Months Ended September 30,
|
|
(in $ millions)
|
|
2017
|
|
2016
|
|
Operating cash flow under historical GAAP
|
|
39
|
|
109
|
|
|
|
|
|
|
|
Operating cash flow under ASU 2016-09
|
|
52
|
|
122
|
|
Impact of ASU 2016-09 on operating cash flow
|
|
13
|
|
13
|
|
|
|
|
|
|
Conference Call and Supporting Documents
Electronic Arts will host a conference call on October 31, 2017 at 2:00
pm PT (5:00 pm ET) to review its results for the second fiscal quarter
ended September 30, 2017 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 and 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
14, 2017 at 855-859-2056 (domestic) or 404-537-3406 (international)
using pin code 90760245. 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 2018 expectations under the heading "Business
Outlook as of October 31, 2017," contain forward-looking statements that
are subject to change. Statements including words such as "anticipate,"
"believe," "estimate" or "expect" and statements in the future tense are
forward-looking statements. These forward-looking statements are
preliminary estimates and expectations based on current information and
are subject to business and economic risks and uncertainties that could
cause actual events or actual future results to differ materially from
the expectations set forth 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: 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 the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017.
These forward-looking statements are current as of October 31, 2017.
Electronic Arts assumes no obligation and does not intend to update
these forward-looking statements. 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, 2017. 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, 2017.
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 2017, EA posted GAAP net revenue of $4.8 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.
Ultimate Team, EA SPORTS, Battlefield, Battlefield 1, 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.
|
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited
Condensed Consolidated Statement of Operations
(in $
millions, except share per data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Six Months Ended
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net revenue
|
|
|
|
|
|
|
|
|
|
Product
|
|
454
|
|
|
420
|
|
|
1,282
|
|
|
1,104
|
|
|
Service and other
|
|
505
|
|
|
478
|
|
|
1,126
|
|
|
1,065
|
|
|
Total net revenue
|
|
959
|
|
|
898
|
|
|
2,408
|
|
|
2,169
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
Product
|
|
300
|
|
|
317
|
|
|
364
|
|
|
407
|
|
|
Service and other
|
|
89
|
|
|
84
|
|
|
179
|
|
|
173
|
|
|
Total cost of revenue
|
|
389
|
|
|
401
|
|
|
543
|
|
|
580
|
|
|
Gross profit
|
|
570
|
|
|
497
|
|
|
1,865
|
|
|
1,589
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
331
|
|
|
291
|
|
|
656
|
|
|
585
|
|
|
Marketing and sales
|
|
160
|
|
|
143
|
|
|
281
|
|
|
271
|
|
|
General and administrative
|
|
118
|
|
|
111
|
|
|
223
|
|
|
219
|
|
|
Amortization of intangibles
|
|
2
|
|
|
1
|
|
|
3
|
|
|
3
|
|
|
Total operating expenses
|
|
611
|
|
|
546
|
|
|
1,163
|
|
|
1,078
|
|
|
Operating income (loss)
|
|
(41
|
)
|
|
(49
|
)
|
|
702
|
|
|
511
|
|
|
Interest and other income (expense), net
|
|
3
|
|
|
(3
|
)
|
|
9
|
|
|
(11
|
)
|
|
Income (loss) before provision for (benefit from) income taxes
|
|
(38
|
)
|
|
(52
|
)
|
|
711
|
|
|
500
|
|
|
Provision for (benefit from) income taxes
|
|
(16
|
)
|
|
(14
|
)
|
|
89
|
|
|
98
|
|
|
Net income (loss)
|
|
(22
|
)
|
|
(38
|
)
|
|
622
|
|
|
402
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
(0.07
|
)
|
|
(0.13
|
)
|
|
2.01
|
|
|
1.34
|
|
|
Diluted
|
|
(0.07
|
)
|
|
(0.13
|
)
|
|
1.99
|
|
|
1.28
|
|
|
Number of shares used in computation
|
|
|
|
|
|
|
|
|
|
Basic
|
|
309
|
|
|
301
|
|
|
309
|
|
|
301
|
|
|
Diluted
|
|
309
|
|
|
301
|
|
|
313
|
|
|
315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results (in $ millions, except per share data)
The following table reports the variance of the actuals versus our
guidance for the three months ended September 30, 2017 plus a comparison
to the actuals for the three months ended September 30, 2016.
|
|
|
Three Months Ended September 30,
|
|
|
|
2017
Guidance
|
|
Variance
|
|
2017
Actuals
|
|
2016
Actuals
|
|
Net revenue
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
955
|
|
|
4
|
|
|
959
|
|
|
898
|
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
Change in deferred net revenue (online-enabled games)
|
|
205
|
|
|
15
|
|
|
220
|
|
|
200
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
389
|
|
|
-
|
|
|
389
|
|
|
401
|
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
Stock-based compensation
|
|
-
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
638
|
|
|
(27
|
)
|
|
611
|
|
|
546
|
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses
|
|
(2
|
)
|
|
-
|
|
|
(2
|
)
|
|
(1
|
)
|
|
Stock-based compensation
|
|
(61
|
)
|
|
-
|
|
|
(61
|
)
|
|
(47
|
)
|
|
Loss before tax
|
|
|
|
|
|
|
|
|
|
Loss before tax
|
|
(69
|
)
|
|
31
|
|
|
(38
|
)
|
|
(52
|
)
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses
|
|
2
|
|
|
-
|
|
|
2
|
|
|
13
|
|
|
Change in deferred net revenue (online-enabled games)
|
|
205
|
|
|
15
|
|
|
220
|
|
|
200
|
|
|
Stock-based compensation
|
|
61
|
|
|
1
|
|
|
62
|
|
|
48
|
|
|
Tax rate used for management reporting
|
|
21
|
%
|
|
|
|
21
|
%
|
|
21
|
%
|
|
Loss per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
(0.18
|
)
|
|
0.11
|
|
|
(0.07
|
)
|
|
(0.13
|
)
|
|
Diluted
|
|
(0.18
|
)
|
|
0.11
|
|
|
(0.07
|
)
|
|
(0.13
|
)
|
|
Number of shares
|
|
|
|
|
|
|
|
|
|
Basic
|
|
310
|
|
|
(1
|
)
|
|
309
|
|
|
301
|
|
|
Diluted
|
|
310
|
|
|
(1
|
)
|
|
309
|
|
|
301
|
|
|
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited
Condensed Consolidated Balance Sheets
(in $ millions)
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
March 31, 20171
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
2,067
|
|
|
2,565
|
|
|
Short-term investments
|
|
2,288
|
|
|
1,967
|
|
|
Receivables, net of allowances of $116 and $145, respectively
|
|
812
|
|
|
359
|
|
|
Other current assets
|
|
248
|
|
|
308
|
|
|
Total current assets
|
|
5,415
|
|
|
5,199
|
|
|
Property and equipment, net
|
|
444
|
|
|
434
|
|
|
Goodwill
|
|
1,711
|
|
|
1,707
|
|
|
Acquisition-related intangibles, net
|
|
5
|
|
|
8
|
|
|
Deferred income taxes, net
|
|
248
|
|
|
286
|
|
|
Other assets
|
|
99
|
|
|
84
|
|
|
TOTAL ASSETS
|
|
7,922
|
|
|
7,718
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
187
|
|
|
87
|
|
|
Accrued and other current liabilities
|
|
969
|
|
|
789
|
|
|
Deferred net revenue (online-enabled games)
|
|
1,116
|
|
|
1,539
|
|
|
Total current liabilities
|
|
2,272
|
|
|
2,415
|
|
|
Senior notes, net
|
|
991
|
|
|
990
|
|
|
Income tax obligations
|
|
122
|
|
|
104
|
|
|
Deferred income taxes, net
|
|
1
|
|
|
1
|
|
|
Other liabilities
|
|
148
|
|
|
148
|
|
|
Total liabilities
|
|
3,534
|
|
|
3,658
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
3
|
|
|
3
|
|
|
Additional paid-in capital
|
|
817
|
|
|
1,049
|
|
|
Retained earnings
|
|
3,641
|
|
|
3,027
|
|
|
Accumulated other comprehensive loss
|
|
(73
|
)
|
|
(19
|
)
|
|
Total stockholders' equity
|
|
4,388
|
|
|
4,060
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
7,922
|
|
|
7,718
|
|
|
|
|
|
|
|
|
|
|
1Derived 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,
|
|
|
2017
|
|
2016 2
|
|
2017
|
|
2016 2
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income (loss)
|
(22
|
)
|
|
(38
|
)
|
|
622
|
|
|
402
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation, amortization and accretion
|
32
|
|
|
45
|
|
|
63
|
|
|
91
|
|
|
Stock-based compensation
|
62
|
|
|
48
|
|
|
110
|
|
|
96
|
|
|
Change in assets and liabilities
|
|
|
|
|
|
|
|
|
Receivables, net
|
(589
|
)
|
|
(481
|
)
|
|
(454
|
)
|
|
(493
|
)
|
|
Other assets
|
(14
|
)
|
|
31
|
|
|
66
|
|
|
37
|
|
|
Accounts payable
|
148
|
|
|
165
|
|
|
104
|
|
|
133
|
|
|
Accrued and other liabilities
|
216
|
|
|
181
|
|
|
100
|
|
|
109
|
|
|
Deferred income taxes, net
|
(15
|
)
|
|
(23
|
)
|
|
40
|
|
|
20
|
|
|
Deferred net revenue (online-enabled games)
|
234
|
|
|
194
|
|
|
(423
|
)
|
|
(391
|
)
|
|
Net cash provided by operating activities
|
52
|
|
|
122
|
|
|
228
|
|
|
4
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(30
|
)
|
|
(29
|
)
|
|
(63
|
)
|
|
(69
|
)
|
|
Proceeds from maturities and sales of short-term investments
|
612
|
|
|
368
|
|
|
1,050
|
|
|
644
|
|
|
Purchase of short-term investments
|
(702
|
)
|
|
(507
|
)
|
|
(1,395
|
)
|
|
(824
|
)
|
|
Net cash used in investing activities
|
(120
|
)
|
|
(168
|
)
|
|
(408
|
)
|
|
(249
|
)
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Payment of convertible notes
|
-
|
|
|
(136
|
)
|
|
-
|
|
|
(163
|
)
|
|
Proceeds from issuance of common stock
|
27
|
|
|
27
|
|
|
57
|
|
|
31
|
|
|
Cash paid to taxing authorities for shares withheld from employees
|
(10
|
)
|
|
(9
|
)
|
|
(105
|
)
|
|
(106
|
)
|
|
Repurchase and retirement of common stock
|
(153
|
)
|
|
(127
|
)
|
|
(303
|
)
|
|
(256
|
)
|
|
Net cash used in financing activities
|
(136
|
)
|
|
(245
|
)
|
|
(351
|
)
|
|
(494
|
)
|
|
Effect of foreign exchange on cash and cash equivalents
|
23
|
|
|
(5
|
)
|
|
33
|
|
|
(8
|
)
|
|
Decrease in cash and cash equivalents
|
(181
|
)
|
|
(296
|
)
|
|
(498
|
)
|
|
(747
|
)
|
|
Beginning cash and cash equivalents
|
2,248
|
|
|
2,042
|
|
|
2,565
|
|
|
2,493
|
|
|
Ending cash and cash equivalents
|
2,067
|
|
|
1,746
|
|
|
2,067
|
|
|
1,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2Operating and financing cash flow figures for the
three and six months ended September 30, 2016 have been recast to
reflect the impact of ASU 2016-09 which EA adopted at the
beginning of FY18.
|
|
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited
Supplemental Financial Information and Business Metrics
(in
$ millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
FY17
|
|
Q3
FY17
|
|
Q4
FY17
|
|
Q1
FY18
|
|
Q2
FY18
|
|
YOY %
Change
|
|
Net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
898
|
|
|
1,149
|
|
|
1,527
|
|
|
1,449
|
|
|
959
|
|
|
7
|
%
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred net revenue (online-enabled games)3
|
|
200
|
|
|
921
|
|
|
(435
|
)
|
|
(674
|
)
|
|
220
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
497
|
|
|
633
|
|
|
1,325
|
|
|
1,295
|
|
|
570
|
|
|
15
|
%
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses
|
|
12
|
|
|
18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
Change in deferred net revenue (online-enabled games)3
|
|
200
|
|
|
921
|
|
|
(435
|
)
|
|
(674
|
)
|
|
220
|
|
|
|
|
Stock-based compensation
|
|
1
|
|
|
-
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
|
Gross profit (as a % of net revenue)
|
|
55
|
%
|
|
55
|
%
|
|
87
|
%
|
|
89
|
%
|
|
59
|
%
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
(49
|
)
|
|
(4
|
)
|
|
717
|
|
|
743
|
|
|
(41
|
)
|
|
16
|
%
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses
|
|
13
|
|
|
20
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
|
|
Change in deferred net revenue (online-enabled games)3
|
|
200
|
|
|
921
|
|
|
(435
|
)
|
|
(674
|
)
|
|
220
|
|
|
|
|
Stock-based compensation
|
|
48
|
|
|
48
|
|
|
52
|
|
|
48
|
|
|
62
|
|
|
|
|
Operating income (loss) (as a % of net revenue)
|
|
(5
|
%)
|
|
-
|
|
|
47
|
%
|
|
51
|
%
|
|
(4
|
%)
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
(38
|
)
|
|
(1
|
)
|
|
566
|
|
|
644
|
|
|
(22
|
)
|
|
42
|
%
|
|
GAAP-based financial data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses
|
|
13
|
|
|
20
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
|
|
Change in deferred net revenue (online-enabled games)3
|
|
200
|
|
|
921
|
|
|
(435
|
)
|
|
(674
|
)
|
|
220
|
|
|
|
|
Stock-based compensation
|
|
48
|
|
|
48
|
|
|
52
|
|
|
48
|
|
|
62
|
|
|
|
|
Tax rate used for management reporting
|
|
21
|
%
|
|
21
|
%
|
|
21
|
%
|
|
21
|
%
|
|
21
|
%
|
|
|
|
Net income (loss) (as a % of net revenue)
|
|
(4
|
%)
|
|
-
|
|
|
37
|
%
|
|
44
|
%
|
|
(2
|
%)
|
|
|
|
Diluted earnings (loss) per share
|
|
(0.13
|
)
|
|
(0.00
|
)
|
|
1.81
|
|
|
2.06
|
|
|
(0.07
|
)
|
|
46
|
%
|
|
Number of diluted shares used in computation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
301
|
|
|
303
|
|
|
308
|
|
|
309
|
|
|
309
|
|
|
|
|
Diluted
|
|
301
|
|
|
303
|
|
|
312
|
|
|
313
|
|
|
309
|
|
|
|
|
Anti-dilutive shares excluded for loss position4
|
|
13
|
|
|
10
|
|
|
-
|
|
|
-
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3The difference between the balances of deferred net
revenue (online-enabled games) in the unaudited condensed
consolidated balance sheets does not necessarily equal the change
in deferred net revenue (online-enabled games) in the unaudited
condensed consolidated statements of cash flows 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
FY17
|
|
Q3
FY17
|
|
Q4
FY17
|
|
Q1
FY18
|
|
Q2
FY18
|
|
YOY
%
Change
|
|
QUARTERLY NET REVENUE PRESENTATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
389
|
|
|
561
|
|
|
644
|
|
|
611
|
|
|
427
|
|
|
10
|
%
|
|
International
|
|
509
|
|
|
588
|
|
|
883
|
|
|
838
|
|
|
532
|
|
|
5
|
%
|
|
Total net revenue
|
|
898
|
|
|
1,149
|
|
|
1,527
|
|
|
1,449
|
|
|
959
|
|
|
7
|
%
|
|
North America
|
|
58
|
|
|
370
|
|
|
(198
|
)
|
|
(287
|
)
|
|
59
|
|
|
|
|
International
|
|
142
|
|
|
551
|
|
|
(237
|
)
|
|
(387
|
)
|
|
161
|
|
|
|
|
Change in deferred net revenue (online-enabled games)3
|
|
200
|
|
|
921
|
|
|
(435
|
)
|
|
(674
|
)
|
|
220
|
|
|
|
|
North America
|
|
43
|
%
|
|
49
|
%
|
|
42
|
%
|
|
42
|
%
|
|
45
|
%
|
|
|
|
International
|
|
57
|
%
|
|
51
|
%
|
|
58
|
%
|
|
58
|
%
|
|
55
|
%
|
|
|
|
Total net revenue %
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue by composition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full game downloads
|
|
94
|
|
|
169
|
|
|
259
|
|
|
209
|
|
|
123
|
|
|
31
|
%
|
|
Live services5
|
|
323
|
|
|
369
|
|
|
510
|
|
|
501
|
|
|
408
|
|
|
26
|
%
|
|
Mobile
|
|
149
|
|
|
147
|
|
|
165
|
|
|
169
|
|
|
158
|
|
|
6
|
%
|
|
Total digital
|
|
566
|
|
|
685
|
|
|
934
|
|
|
879
|
|
|
689
|
|
|
22
|
%
|
|
Packaged goods and other
|
|
332
|
|
|
464
|
|
|
593
|
|
|
570
|
|
|
270
|
|
|
(19
|
%)
|
|
Total net revenue
|
|
898
|
|
|
1,149
|
|
|
1,527
|
|
|
1,449
|
|
|
959
|
|
|
7
|
%
|
|
Full game downloads
|
|
(1
|
)
|
|
186
|
|
|
(67
|
)
|
|
(98
|
)
|
|
(4
|
)
|
|
|
|
Live services5
|
|
(68
|
)
|
|
197
|
|
|
8
|
|
|
(81
|
)
|
|
(98
|
)
|
|
|
|
Mobile
|
|
(11
|
)
|
|
27
|
|
|
10
|
|
|
(19
|
)
|
|
(8
|
)
|
|
|
|
Total digital
|
|
(80
|
)
|
|
410
|
|
|
(49
|
)
|
|
(198
|
)
|
|
(110
|
)
|
|
|
|
Packaged goods and other
|
|
280
|
|
|
511
|
|
|
(386
|
)
|
|
(476
|
)
|
|
330
|
|
|
|
|
Change in deferred net revenue (online-enabled games)3
|
|
200
|
|
|
921
|
|
|
(435
|
)
|
|
(674
|
)
|
|
220
|
|
|
|
|
Full game downloads
|
|
10
|
%
|
|
15
|
%
|
|
17
|
%
|
|
14
|
%
|
|
13
|
%
|
|
|
|
Live services5
|
|
36
|
%
|
|
32
|
%
|
|
33
|
%
|
|
35
|
%
|
|
43
|
%
|
|
|
|
Mobile
|
|
17
|
%
|
|
13
|
%
|
|
11
|
%
|
|
12
|
%
|
|
16
|
%
|
|
|
|
Total digital
|
|
63
|
%
|
|
60
|
%
|
|
61
|
%
|
|
61
|
%
|
|
72
|
%
|
|
|
|
Packaged goods and other
|
|
37
|
%
|
|
40
|
%
|
|
39
|
%
|
|
39
|
%
|
|
28
|
%
|
|
|
|
Total net revenue %
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3The difference between the balances of deferred net
revenue (online-enabled games) in the unaudited condensed
consolidated balance sheets does not necessarily equal the change
in deferred net revenue (online-enabled games) in the unaudited
condensed consolidated statements of cash flows due to the impact
of unrecognized gains/losses on cash flow hedges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5Live services includes net revenue previously
presented as "Extra Content" and "Subscriptions, Advertising and
Other" through Q4 FY17.
|
|
|
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited
Supplemental Financial Information and Business Metrics
(in
$ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
FY17
|
|
Q3
FY17
|
|
Q4
FY17
|
|
Q1
FY18
|
|
Q2
FY18
|
|
YOY
%
Change
|
|
QUARTERLY NET REVENUE PRESENTATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue by platform
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xbox One, PLAYSTATION 4, Switch
|
|
513
|
|
|
728
|
|
|
1,039
|
|
|
974
|
|
|
569
|
|
|
11
|
%
|
|
Other consoles
|
|
65
|
|
|
65
|
|
|
70
|
|
|
60
|
|
|
26
|
|
|
(60
|
%)
|
|
Total consoles
|
|
578
|
|
|
793
|
|
|
1,109
|
|
|
1,034
|
|
|
595
|
|
|
3
|
%
|
|
PC / Browser
|
|
158
|
|
|
190
|
|
|
246
|
|
|
240
|
|
|
196
|
|
|
24
|
%
|
|
Mobile
|
|
149
|
|
|
148
|
|
|
165
|
|
|
171
|
|
|
162
|
|
|
9
|
%
|
|
Other
|
|
13
|
|
|
18
|
|
|
7
|
|
|
4
|
|
|
6
|
|
|
(54
|
%)
|
|
Total net revenue
|
|
898
|
|
|
1,149
|
|
|
1,527
|
|
|
1,449
|
|
|
959
|
|
|
7
|
%
|
|
Xbox One, PLAYSTATION 4, Switch
|
|
177
|
|
|
762
|
|
|
(375
|
)
|
|
(548
|
)
|
|
244
|
|
|
|
|
Other consoles
|
|
43
|
|
|
3
|
|
|
(40
|
)
|
|
(42
|
)
|
|
14
|
|
|
|
|
Total consoles
|
|
220
|
|
|
765
|
|
|
(415
|
)
|
|
(590
|
)
|
|
258
|
|
|
|
|
PC / Browser
|
|
(9
|
)
|
|
127
|
|
|
(30
|
)
|
|
(61
|
)
|
|
(30
|
)
|
|
|
|
Mobile
|
|
(11
|
)
|
|
27
|
|
|
9
|
|
|
(20
|
)
|
|
(7
|
)
|
|
|
|
Other
|
|
-
|
|
|
2
|
|
|
1
|
|
|
(3
|
)
|
|
(1
|
)
|
|
|
|
Change in deferred net revenue (online-enabled games)3
|
|
200
|
|
|
921
|
|
|
(435
|
)
|
|
(674
|
)
|
|
220
|
|
|
|
|
Xbox One, PLAYSTATION 4, Switch
|
|
57
|
%
|
|
63
|
%
|
|
68
|
%
|
|
67
|
%
|
|
59
|
%
|
|
|
|
Other consoles
|
|
7
|
%
|
|
6
|
%
|
|
5
|
%
|
|
4
|
%
|
|
3
|
%
|
|
|
|
Total consoles
|
|
64
|
%
|
|
69
|
%
|
|
73
|
%
|
|
71
|
%
|
|
62
|
%
|
|
|
|
PC / Browser
|
|
18
|
%
|
|
17
|
%
|
|
16
|
%
|
|
17
|
%
|
|
20
|
%
|
|
|
|
Mobile
|
|
17
|
%
|
|
13
|
%
|
|
11
|
%
|
|
12
|
%
|
|
17
|
%
|
|
|
|
Other
|
|
1
|
%
|
|
1
|
%
|
|
-
|
|
|
-
|
|
|
1
|
%
|
|
|
|
Total net revenue %
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3The difference between the balances of deferred net
revenue (online-enabled games) in the unaudited condensed
consolidated balance sheets does not necessarily equal the change
in deferred net revenue (online-enabled games) in the unaudited
condensed consolidated statements of cash flows 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
FY17
|
|
Q3
FY17
|
|
Q4
FY17
|
|
Q1
FY18
|
|
Q2
FY18
|
|
YOY %
Change
|
|
CASH FLOW DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flow6
|
|
122
|
|
1,137
|
|
437
|
|
176
|
|
52
|
|
(57
|
%)
|
|
Operating cash flow6 - TTM
|
|
1,323
|
|
1,555
|
|
1,578
|
|
1,872
|
|
1,802
|
|
36
|
%
|
|
Capital expenditures
|
|
29
|
|
25
|
|
29
|
|
33
|
|
30
|
|
3
|
%
|
|
Capital expenditures - TTM
|
|
120
|
|
124
|
|
123
|
|
116
|
|
117
|
|
(3
|
%)
|
|
Repurchase and retirement of common stock
|
|
127
|
|
127
|
|
125
|
|
150
|
|
153
|
|
20
|
%
|
|
DEPRECIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
28
|
|
29
|
|
29
|
|
29
|
|
30
|
|
7
|
%
|
|
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
1,746
|
|
2,483
|
|
2,565
|
|
2,248
|
|
2,067
|
|
|
|
Short-term investments
|
|
1,520
|
|
1,736
|
|
1,967
|
|
2,222
|
|
2,288
|
|
|
|
Cash and cash equivalents, and short-term investments
|
|
3,266
|
|
4,219
|
|
4,532
|
|
4,470
|
|
4,355
|
|
33
|
%
|
|
Receivables, net
|
|
723
|
|
587
|
|
359
|
|
222
|
|
812
|
|
12
|
%
|
|
STOCK-BASED COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
1
|
|
-
|
|
1
|
|
1
|
|
1
|
|
|
|
Research and development
|
|
27
|
|
27
|
|
28
|
|
28
|
|
36
|
|
|
|
Marketing and sales
|
|
8
|
|
8
|
|
8
|
|
7
|
|
9
|
|
|
|
General and administrative
|
|
12
|
|
13
|
|
15
|
|
12
|
|
16
|
|
|
|
Total stock-based compensation
|
|
48
|
|
48
|
|
52
|
|
48
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6Operating cash flow has been recast to reflect the
impact of ASU 2016-09 which EA adopted at the beginning of FY18.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171031006421/en/
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