Electronic Arts Reports Strong Q2 FY24 Results

Company exceeds expectations on the strength of EA SPORTS portfolio; Successfully launches EA SPORTS FC 24

Electronic Arts Inc. (NASDAQ:EA) today announced preliminary financial results for its second quarter ended September 30, 2023.

"We delivered a strong Q2 and successfully launched EA SPORTS FC, transforming one of the largest franchises in the world into a powerful, interactive platform for the future of football fandom," said Andrew Wilson, CEO of EA. "Looking ahead, our incredible teams will continue to innovate and expand across our world-class IP, building experiences that entertain our massive online communities, celebrate fandom, and increase connection for our growing global player base."

"EA SPORTS strength, driven by new releases and ongoing live services, delivered Q2 results ahead of expectations," said Stuart Canfield, CFO of EA. "We remain focused on delivering for our growing player communities and building upon the momentum across our portfolio, while prioritizing investments that execute against our largest opportunities to drive long term growth."

Selected Operating Highlights and Metrics¹

• Net bookings² for Q2 was $1.820 billion, up 4% year-over-year (up 5% in constant currency).
• Live services and other net bookings for Q2 was $1.129 billion, up 1% year-over-year (up 2% in constant currency). On a trailing twelve-month basis, live services were 73% of our business.
• EA SPORTS Madden NFL franchise outperformed Q2 expectations, delivering net bookings growth of 6% year-over-year.
• EA SPORTS global football franchise outperformed Q2 expectations driven by the continued strength of EA SPORTS FIFA 23 and demand for the release of EA SPORTS FC 24.
• EA SPORTS FC 24, within the first four weeks of global launch, had over 14.5 million active accounts.

Selected Financial Highlights and Metrics

• Net revenue was $1.914 billion for the quarter.
• Net cash provided by operating activities was $112 million for the quarter and $2.211 billion for the trailing twelve months.
• EA repurchased 2.6 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.5 million shares for $1.300 billion.

Dividend

EA has declared a quarterly cash dividend of $0.19 per share of the Company's common stock. The dividend is payable on December 20, 2023 to shareholders of record as of the close of business on November 29, 2023.

Quarterly Financial Highlights

The following GAAP-based financial data³ and tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA's operating results:

Trailing Twelve Months Financial Highlights

The following GAAP-based financial data³ and a tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA's operating results.

Operating Metric

The following is a calculation of our total net bookings² for the periods presented:

Business Outlook as of November 1, 2023

Fiscal Year 2024 Expectations – Ending March 31, 2024

Financial outlook metrics:

• Net revenue is expected to be approximately $7.300 billion to $7.700 billion.
  • No change in deferred net revenue (online-enabled games) is expected.
• Net income is expected to be approximately $1.118 billion to $1.273 billion.
• Diluted earnings per share is expected to be approximately $4.10 to $4.66.
• Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion.
• The Company estimates a share count of 273 million for purposes of calculating fiscal year 2024 diluted earnings per share.

Operational outlook metric:

• Net bookings² is expected to be approximately $7.300 billion to $7.700 billion.

In addition, the following outlook for GAAP-based financial data³ and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA's operating results and plan for future periods:

Third Quarter Fiscal Year 2024 Expectations – Ending December 31, 2023

Financial outlook metrics:

• Net revenue is expected to be approximately $1.825 billion to $2.025 billion.
  • Change in deferred net revenue (online-enabled games) is expected to be approximately $425 million.
• Net income is expected to be approximately $203 million to $275 million.
• Diluted earnings per share is expected to be approximately $0.75 to $1.01.
• The Company estimates a share count of 272 million for purposes of calculating third quarter fiscal 2024 diluted earnings per share.

Operational outlook metric:

• Net bookings² is expected to be approximately $2.250 billion to $2.450 billion.

In addition, the following outlook for GAAP-based financial data³ and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA's operating results and plan for future periods:

Conference Call and Supporting Documents

Electronic Arts will host a conference call on November 1, 2023 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2023 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 (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA's IR Website at http://ir.ea.com.

EA has posted a slide presentation with a financial model of EA's historical results and guidance on EA's IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA's IR Website.

A dial-in replay of the conference call will be available until November 15, 2023 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using pin code 5939891. 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 expectations under the heading "Business Outlook as of November 1, 2023" and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as "anticipate," "believe," "expect," "intend," "estimate," "plan," "predict," "seek," "goal," "will," "may," "likely," "should," "could" (and the negative of any of these terms), "future" and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management's current expectations. Our actual results could differ materially from those discussed in the forward-looking statements.

Some of the factors which could cause the Company's results to differ materially from its expectations include the following: sales of the Company's products and services; the Company's ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company's ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company's sales and marketing programs; timely development and release of the Company's products and services; the Company's ability to realize the anticipated benefits of, and integrate, 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; economic and geopolitical conditions; changes in our tax rates or tax laws; and other factors described in Part II, Item 1A of Electronic Arts' latest Quarterly Report on Form 10-Q under the heading "Risk Factors", as well as in other documents we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

These forward-looking statements are current as of November 1, 2023. 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, 2023. 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, 2023.

About Electronic Arts

Electronic Arts (NASDAQ:EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.

In fiscal year 2023, EA posted GAAP net revenue of approximately $7.4 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The Sims™, EA SPORTS Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and EA SPORTS F1®. More information about EA is available at www.ea.com/news.

EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission.

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on August 1, 2023 for the three months ended September 30, 2023 plus a comparison to the actuals for the three months ended September 30, 2022.

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