~~Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.~~


•	Level 1. Quoted prices in active markets for identical assets or liabilities.

•

Level 2. Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.


•	Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of ~~December 31, 2017~~September 30, 2019 and March 31, ~~2017~~2019, our assets and liabilities that were measured and recorded at fair value on a recurring basis were as follows (in millions):



			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Financial Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
	As of September 30, 2019		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	50	$	50	$	—	$	—	Cash equivalents
Money market funds	938		938		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	746		—		746		—		Short-term investments
U.S. Treasury securities	520		520				—		Short-term investments and cash equivalents
U.S. agency securities	11		—		11		—		Short-term investments
Commercial paper	447		—		447		—		Short-term investments and cash equivalents
Foreign government securities	34		—		34		—		Short-term investments
Asset-backed securities	287		—		287		—		Short-term investments
Certificates of deposit	45		—		45		—		Short-term investments and cash equivalents
Foreign currency derivatives	55		—		55		—		Other current assets and other assets
Deferred compensation plan assets ^(a)	13		13		—		—		Other assets
Total assets at fair value	$	3,146	$	1,521	$	1,625	$	—
Liabilities
Contingent consideration ^(b)	$	69	$	—	$	—	$	69	Accrued and other current liabilities
Foreign currency derivatives	8		—		8		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities ^(a)	13		13		—		—		Other liabilities
Total liabilities at fair value	$	90	$	13	$	8	$	69

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Fair Value Measurements at Reporting Date Using

Quoted Prices in
Active Markets
for Identical
Financial
Instruments

Significant
Other
Observable
Inputs

Significant
Unobservable
Inputs

As of
December 31,
2017 (Level 1) (Level 2) (Level 3) Balance Sheet Classification
Assets
Bank and time deposits $ 299
$ 299
$ —
$ —
Cash equivalents
Money market funds 563
563
—
—
Cash equivalents
Available-for-sale securities:
Corporate bonds 1,258
—
1,258
—
Short-term investments and cash equivalents
U.S. Treasury securities 446
446
—
—
Short-term investments
U.S. agency securities 118
—
118
—
Short-term investments and cash equivalents
Commercial paper 341
—
341
—
Short-term investments and cash equivalents
Foreign government securities 100
—
100
—
Short-term investments and cash equivalents
Asset-backed securities 134
—
134
—
Short-term investments
Certificates of deposit 22
—
22
—
Short-term investments
Foreign currency derivatives 8
—
8
—
Other current assets and other assets
Deferred compensation plan assets ^(a)
10
10
—
—
Other assets
Total assets at fair value $ 3,299
$ 1,318
$ 1,981
$ —

Liabilities
Contingent consideration ^(b)
$ 122
$ —
$ —
$ 122
Other liabilities
Foreign currency derivatives 41
—
41
—
Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities ^(a)
11
11
—
—
Other liabilities
Total liabilities at fair value $ 174
$ 11
$ 41
$ 122



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
		Contingent Consideration
Balance as of March 31, 2019		$	136
Change in fair value ^(c)		3
Payment ^(d)		(70		)
Balance as of September 30, 2019		$	69

Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)

Contingent
Consideration

Balance as of March 31, 2017 $ —

Additions 122

Balance as of December 31, 2017 $ 122



			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Financial Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
	As of March 31, 2019		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Assets
Bank and time deposits	$	23	$	23	$	—	$	—	Cash equivalents
Money market funds	2,704		2,704		—		—		Cash equivalents
Available-for-sale securities:
Corporate bonds	327		—		327		—		Short-term investments and cash equivalents
U.S. Treasury securities	294		294		—		—		Short-term investments and cash equivalents
U.S. agency securities	57		—		57		—		Short-term investments and cash equivalents
Commercial paper	233		—		233		—		Short-term investments and cash equivalents
Foreign government securities	58		—		58		—		Short-term investments and cash equivalents
Asset-backed securities	55		—		55		—		Short-term investments and cash equivalents
Certificates of deposit	2		—		2		—		Short-term investments and cash equivalents
Foreign currency derivatives	33		—		33		—		Other current assets and other assets
Deferred compensation plan assets ^(a)	11		11		—		—		Other assets
Total assets at fair value	$	3,797	$	3,032	$	765	$	—
Liabilities
Contingent consideration ^(b)	$	136	$	—	$	—	$	136	Accrued and other current liabilities
Foreign currency derivatives	16		—		16		—		Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities ^(a)	12		12		—		—		Other liabilities
Total liabilities at fair value	$	164	$	12	$	16	$	136

Fair Value Measurements at Reporting Date Using

Quoted Prices in
Active Markets
for Identical
Financial
Instruments

Significant
Other
Observable
Inputs

Significant
Unobservable
Inputs

As of
March 31,
2017 (Level 1) (Level 2) (Level 3) Balance Sheet Classification
Assets
Bank and time deposits $ 233
$ 233
$ —
$ —
Cash equivalents
Money market funds 405
405
—
—
Cash equivalents
Available-for-sale securities:
Corporate bonds 963
—
963
—
Short-term investments and cash equivalents
U.S. Treasury securities 460
460
—
—
Short-term investments and cash equivalents
U.S. agency securities 172
—
172
—
Short-term investments and cash equivalents
Commercial paper 270
—
270
—
Short-term investments and cash equivalents
Foreign government securities 113
—
113
—
Short-term investments
Asset-backed securities 135
—
135
—
Short-term investments
Foreign currency derivatives 19
—
19
—
Other current assets and other assets
Deferred compensation plan assets ^(a)
8
8
—
—
Other assets
Total assets at fair value $ 2,778
$ 1,106
$ 1,672
$ —

Liabilities
Foreign currency derivatives $ 8
$ —
$ 8
$ —
Accrued and other current liabilities and other liabilities
Deferred compensation plan liabilities ^(a)
9
9
—
—
Other liabilities
Total liabilities at fair value $ 17
$ 9
$ 8
$ —


(a)	The Deferred Compensation Plan assets consist of various mutual funds. See Note 1315 in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017~~2019, for additional information regarding our Deferred Compensation Plan.

(b)

The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with our acquisition of Respawn Entertainment, LLC (“Respawn”) that is contingent upon the achievement of certain performance milestones. We estimated ~~the~~ fair value using a probability-weighted income approach combined with a real options methodology, and applied a discount rate that appropriately captures the risk associated with the obligation. ~~The~~At September 30, 2019, the discount rates used ranged from ~~2.7~~2.5 percent to ~~3.3~~2.6 percent. There were no material changes in the fair value of the contingent consideration during the six months ended September 30, 2019. At March 31, 2019, the discount rates used ranged from 2.9 percent to 3.1 percent. See Note 67 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, for additional information regarding the Respawn acquisition.

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(c)	The change in fair value is reported as acquisition-related contingent consideration in our Condensed Consolidated Statements of Operations.

(d) During the six months ended September 30, 2019, we paid $70 million for performance milestones achieved in connection with our acquisition of Respawn.

(3) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of ~~December 31, 2017~~September 30, 2019 and March 31, ~~2017,~~2019, our cash and cash equivalents were ~~$2,566~~$2,940 million and ~~$2,565~~$4,708 million, respectively. Cash equivalents were valued using quoted market prices or other readily available market information.

Short-Term Investments

Short-term investments consisted of the following as of ~~December 31, 2017~~September 30, 2019 and March 31, ~~2017~~2019 (in millions):



	As of September 30, 2019								As of March 31, 2019
	Cost or Amortized Cost		Gross Unrealized				Fair Value		Cost or Amortized Cost		Gross Unrealized					Fair Value
	Cost or Amortized Cost		Gains		Losses		Fair Value		Cost or Amortized Cost		Gains		Losses			Fair Value
Corporate bonds	$	744	$	2	$	—	$	746	$	325	$	—	$	(1	)	$	324
U.S. Treasury securities	468		—		—		468		153		—		—			153
U.S. agency securities	11		—		—		11		44		—		—			44
Commercial paper	355		—		—		355		112		—		—			112
Foreign government securities	34		—		—		34		50		—		—			50
Asset-backed securities	287		—		—		287		53		—		—			53
Certificates of deposit	42		—		—		42		1		—		—			1
Short-term investments	$	1,941	$	2	$	—	$	1,943	$	738	$	—	$	(1	)	$	737

As of December 31, 2017 As of March 31, 2017

Cost or
Amortized
Cost
Gross Unrealized
Fair
Value

Cost or
Amortized
Cost
Gross Unrealized
Fair
Value
Gains Losses Gains Losses
Corporate bonds $ 1,212
$ —
$ (3 ) $ 1,209
$ 944
$ —
$ (1 ) $ 943
U.S. Treasury securities 448
—
(2 ) 446
414
—
(1 ) 413
U.S. agency securities 117
—
(2 ) 115
152
—
(1 ) 151
Commercial paper 294
—
—
294
212
—
—
212
Foreign government securities

98
—
—
98
113
—
—
113
Asset-backed securities 135
—
(1 ) 134
135
—
—
135
Certificates of deposit 22
—
—
22
—
—
—
—
Short-term investments $ 2,326
$ —
$ (8 ) $ 2,318
$ 1,970
$ —
$ (3 ) $ 1,967

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of ~~December 31, 2017~~September 30, 2019 and March 31, ~~2017~~2019 (in millions):



	As of September 30, 2019				As of March 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments
Due within 1 year	$	1,464	$	1,465	$	449	$	448
Due 1 year through 5 years	457		458		287		287
Due after 5 years	20		20		2		2
Short-term investments	$	1,941	$	1,943	$	738	$	737

As of December 31, 2017 As of March 31, 2017

Amortized
Cost

Fair
Value

Amortized
Cost

Fair
Value
Short-term investments
Due within 1 year $ 1,598
$ 1,596
$ 1,237
$ 1,236
Due 1 year through 5 years 725
719
721
719
Due after 5 years 3
3
12
12
Short-term investments $ 2,326
$ 2,318
$ 1,970
$ 1,967

(4) DERIVATIVE FINANCIAL INSTRUMENTS

~~The assets~~Assets or liabilities associated with our derivative instruments and hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting.

We transact business in various foreign currencies and have significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency forward contracts, generally with maturities of 18 months or less, to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in certain foreign currencies. Our cash flow risks are primarily related to fluctuations in the Euro, British pound sterling, Canadian dollar, Swedish krona, Australian dollar, Chinese yuan, ~~and~~ South Korean ~~won.~~won and Polish zloty. In addition, we utilize foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign-currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. The foreign currency forward contracts not designated as hedging instruments generally have a contractual term of approximately three months or less and are transacted near month-end. We do not use foreign currency forward contracts for speculative trading purposes.

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Cash Flow Hedging Activities

Certain of our forward contracts are designated and qualify as cash flow hedges. The effectiveness of the cash flow hedge contracts, including time value, is assessed monthly using regression analysis, as well as other timing and probability criteria. To qualify for hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The ~~effective portion of~~ gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of accumulated other comprehensive income (loss) in stockholders’ equity. The gross amount ~~of the effective portion~~ of gains or losses resulting from changes in the fair value of these hedges is subsequently reclassified into net revenue or research and development expenses, as appropriate, in the period when the forecasted transaction is recognized in our Condensed Consolidated Statements of Operations. In the event that the gains or losses in accumulated other comprehensive income (loss) are deemed to be ineffective, the ineffective portion of gains or losses resulting from changes in fair value, if any, is reclassified to interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from accumulated other comprehensive income (loss) to ~~interest~~net revenue or research and ~~other income (expense), net,~~development expenses, in our Condensed Consolidated Statements of Operations.

Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting designation are as follows (in millions):



	As of September 30, 2019						As of March 31, 2019
	Notional Amount		Fair Value				Notional Amount		Fair Value
	Notional Amount		Asset		Liability		Notional Amount		Asset		Liability
Forward contracts to purchase	$	225	$	—	$	5	$	295	$	—	$	10
Forward contracts to sell	$	1,143	$	53	$	1	$	1,355	$	31	$	4

As of December 31, 2017 As of March 31, 2017
Notional Amount Fair Value Notional Amount Fair Value
Asset Liability Asset Liability
Forward contracts to purchase $ 209
$ 5
$ 1
$ 185
$ —
$ 5
Forward contracts to sell $ 985
$ 1
$ 33
$ 840
$ 19
$ 3

The ~~net impact~~effects of ~~the effective portion of gains and losses from our~~ cash flow ~~hedging activities~~hedge accounting in our Condensed Consolidated Statements of Operations ~~was a loss of $8 million~~ for the three and six months ended ~~December 31, 2017~~September 30, 2019 and ~~a gain of $8 million for the three months ended December 31, 2016.~~2018 are as follows (in millions):



	Amount of Gain (Loss) Recognized in the Statement of Operations
	Three Months Ended September 30,										Six Months Ended September 30,
	2019					2018					2019					2018
	Net revenue		Research and development			Net revenue		Research and development			Net revenue		Research and development			Net revenue			Research and development
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	1,348	$	387		$	1,286	$	339		$	2,557	$	768		$	2,423		$	701
Gains (losses) on foreign currency forward contracts designated as cash flow hedges	$	25	$	(1	)	$	2	$	(3	)	$	41	$	(7	)	$	(12	)	$	(4	)

The net impact of the effective portion of gains and losses from our cash flow hedging activities in our Condensed Consolidated Statements of Operations was a gain of $14 million for the nine months ended December 31, 2017 and a gain of $18 million for the nine months ended December 31, 2016.

~~The amount~~amounts excluded from the assessment of hedge effectiveness were gains of $7 million and $14 million during the three and six months ended ~~December 31, 2017 and 2016~~September 30, 2018, respectively, and recognized in interest and other income (expense), ~~net, was immaterial.~~

~~The amount excluded from the assessment of hedge effectiveness was a gain of $7 million for the nine months ended December 31, 2017 and recognized in interest and other income (expense),~~ net. ~~The amount excluded from the assessment of hedge effectiveness was immaterial for the nine months ended December 31, 2016.~~

Balance Sheet Hedging Activities

Our foreign currency forward contracts that are not designated as hedging instruments are accounted for as derivatives whereby the fair value of the contracts are reported as other current assets or accrued and other current liabilities on our Condensed Consolidated Balance Sheets, and gains and losses resulting from changes in the fair value are reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign-currency-denominated monetary assets and liabilities, which are also reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations.

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Total gross notional amounts and fair values for currency derivatives that are not designated as hedging instruments are accounted for as follows (in millions):



	As of September 30, 2019						As of March 31, 2019
	Notional Amount		Fair Value				Notional Amount		Fair Value
	Notional Amount		Asset		Liability		Notional Amount		Asset		Liability
Forward contracts to purchase	$	273	$	—	$	1	$	449	$	—	$	2
Forward contracts to sell	$	625	$	2	$	1	$	394	$	2	$	—

As of December 31, 2017 As of March 31, 2017
Notional Amount Fair Value Notional Amount Fair Value
Asset Liability Asset Liability
Forward contracts to purchase $ 354
$ 1
$ —
$ 87
$ —
$ —
Forward contracts to sell $ 785
$ 1
$ 7
$ 166
$ —
$ —

The effect of foreign currency forward contracts not designated as hedging instruments in our Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~December 31, 2017~~September 30, 2019 and ~~2016,~~2018 was as follows (in millions):



	Amount of Gain (Loss) Recognized in the Statement of Operations
	Three Months Ended September 30,					Six Months Ended September 30,
	2019		2018			2019			2018
	Interest and other income (expense), net
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of balance sheet hedges are recorded	$	16	$	18		$	37		$	37
Gain (losses) on foreign currency forward contracts not designated as hedging instruments	$	1	$	(5	)	$	(3	)	$	4

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Statement of Operations Classification Amount of Gain (Loss) Recognized in the Statement of Operations
Three Months Ended
December 31, Nine Months Ended
December 31,
2017 2016 2017 2016
Foreign currency forward contracts not designated as hedging instruments Interest and other income (expense), net $ (4 ) $ 49
$ (13 ) $ 50

(5) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended ~~December 31, 2017~~September 30, 2019 and ~~2016~~2018 are as follows (in millions):


	Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total			Unrealized Net Gains (Losses) on Available-for-Sale Securities			Unrealized Net Gains (Losses) on Derivative Instruments			Foreign Currency Translation Adjustments			Total
Balances as of September 30, 2017	$	(3	)	$	(58	)	$	(12	)	$	(73	)
Balances as of June 30, 2019													$	2		$	31		$	(50	)	$	(17	)
Other comprehensive income (loss) before reclassifications	(4		)	(14		)	(12		)	(30		)	1			40			(9		)	32
Amounts reclassified from accumulated other comprehensive income (loss)	—			8			—			8			(1		)	(24		)	—			(25		)
Total other comprehensive income (loss), net of tax	(4		)	(6		)	(12		)	(22		)	—			16			(9		)	7
Balance as of December 31, 2017	$	(7	)	$	(64	)	$	(24	)	$	(95	)
Balances as of September 30, 2019													$	2		$	47		$	(59	)	$	(10	)



Delaware		94-2838567
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

209 Redwood Shores Parkway		94065
Redwood City ~~California~~	~~94065~~California
(Address of principal executive offices)		(Zip Code)



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	EA	NASDAQ Global Select Market



Large accelerated filer	þ☑	Accelerated filer	¨☐
Non-accelerated filer	¨☐	Smaller reporting company	¨☐
Emerging growth company	¨ ☐	~~(Do not check if a smaller reporting company)~~	¨ ☐



		Page
Part I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of ~~December 31, 2017~~September 30, 2019 and March 31, ~~2017~~2019	3
	Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2019 and ~~2016~~2018	4
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and ~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2019 and ~~2016~~2018	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2019 and 2018	6
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2019 and ~~2016~~	6
	~~Notes to Condensed Consolidated Financial Statements~~2018	7
	Notes to Condensed Consolidated Financial Statements	8
	Report of Independent Registered Public Accounting Firm	2931
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3032
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	51

Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6163
Item 3.	Defaults Upon Senior Securities	6163
Item 4.	Mine Safety Disclosures	6163
Item 6.	Exhibits	6163
Exhibit Index		6264
Signature		6265


(Unaudited) (In millions, except par value data)	December 31, 2017			March 31, 2017 ^(a)			September 30, 2019			March 31, 2019 ^(a)
ASSETS
Current assets:
Cash and cash equivalents	$	2,566		$	2,565		$	2,940		$	4,708
Short-term investments	2,318			1,967			1,943			737
Receivables, net of allowances of $231 and $145, respectively	886			359
Receivables, net							856			623
Other current assets	196			308			301			313
Total current assets	5,966			5,199			6,040			6,381
Property and equipment, net	447			434			442			448
Goodwill	1,879			1,707			1,890			1,892
Acquisition-related intangibles, net	81			8			72			87
Deferred income taxes, net	159			286			1,835			35
Other assets	110			84			314			114
TOTAL ASSETS	$	8,642		$	7,718		$	10,593		$	8,957

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	91		$	87		$	148		$	113
Accrued and other current liabilities	1,070			789			1,024			1,052
Deferred net revenue (online-enabled games)	1,946			1,539			646			1,100
Total current liabilities	3,107			2,415			1,818			2,265
Senior notes, net	992			990			995			994
Income tax obligations	194			104			361			233
Deferred income taxes, net	2			1			2			2
Other liabilities	261			148			259			132
Total liabilities	4,556			3,658			3,435			3,626
Commitments and contingencies (See Note 12)
Commitments and contingencies (See Note 12)
Stockholders’ equity:
Common stock, $0.01 par value. 1,000 shares authorized; 307 and 308 shares issued and outstanding, respectively	3			3
Common stock, $0.01 par value. 1,000 shares authorized; 293 and 298 shares issued and outstanding, respectively							3			3
Additional paid-in capital	723			1,049			—			—
Retained earnings	3,455			3,027			7,165			5,358
Accumulated other comprehensive loss	(95		)	(19		)	(10		)	(30		)
Total stockholders’ equity	4,086			4,060			7,158			5,331
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	8,642		$	7,718		$	10,593		$	8,957



þ☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(Unaudited)	Three Months Ended December 31,						Nine Months Ended December 31,					Three Months Ended September 30,					Six Months Ended September 30,
(In millions, except per share data)	2017			2016			2017		2016			2019			2018		2019			2018
Net revenue:
Product	$	547		$	649		$	1,829	$	1,753		$	568		$	623	$	734		$	825
Service and other	613			500			1,739		1,565			780			663		1,823			1,598
Total net revenue	1,160			1,149			3,568		3,318			1,348			1,286		2,557			2,423
Cost of revenue:
Product	352			389			716		796			193			222		228			290
Service and other	149			127			328		300			212			196		364			343
Total cost of revenue	501			516			1,044		1,096			405			418		592			633
Gross profit	659			633			2,524		2,222			943			868		1,965			1,790
Operating expenses:
Research and development	329			285			985		870			387			339		768			701
Marketing and sales	230			240			511		511			152			146		262			286
General and administrative	120			110			343		329			128			117		238			231
Acquisition-related contingent consideration												2			2		3			2
Amortization of intangibles	1			2			4		5			6			6		11			12
Total operating expenses	680			637			1,843		1,715			675			610		1,282			1,232
Operating income (loss)	(21		)	(4		)	681		507
Operating income												268			258		683			558
Interest and other income (expense), net	5			(2		)	14		(13		)	16			18		37			37
Income (loss) before provision for (benefit from) income taxes	(16		)	(6		)	695		494
Income before provision for (benefit from) income taxes												284			276		720			595
Provision for (benefit from) income taxes	170			(5		)	259		93			(570		)	21		(1,555		)	47
Net income (loss)	$	(186	)	$	(1	)	$	436	$	401
Earnings (loss) per share:
Net income												$	854		$	255	$	2,275		$	548
Earnings per share:
Basic	$	(0.60	)	$ (	0.00)		$	1.41	$	1.33		$	2.89		$	0.84	$	7.69		$	1.80
Diluted	$	(0.60	)	$ (	0.00)		$	1.40	$	1.28		$	2.89		$	0.83	$	7.66		$	1.77
Number of shares used in computation:
Basic	308			303			309		302			295			305		296			305
Diluted	308			303			312		314			296			307		297			309



(Unaudited)	Nine Months Ended December 31,
(In millions)	2017			2016
OPERATING ACTIVITIES
Net income	$	436		$	401
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	97			140
Stock-based compensation	173			144
Change in assets and liabilities:
Receivables, net	(527		)	(367		)
Other assets	79			40
Accounts payable	16			(6		)
Accrued and other liabilities	265			276
Deferred income taxes, net	130			—
Deferred net revenue (online-enabled games)	408			513
Net cash provided by operating activities	1,077			1,141
INVESTING ACTIVITIES
Capital expenditures	(87		)	(94		)
Proceeds from maturities and sales of short-term investments	1,656			968
Purchase of short-term investments	(2,012		)	(1,372		)
Acquisition, net of cash acquired	(150		)	—
Net cash used in investing activities	(593		)	(498		)
FINANCING ACTIVITIES
Payment of convertible notes	—			(163		)
Proceeds from issuance of common stock	57			33
Cash paid to taxing authorities for shares withheld from employees	(112		)	(112		)
Repurchase and retirement of common stock	(453		)	(383		)
Net cash used in financing activities	(508		)	(625		)
Effect of foreign exchange on cash and cash equivalents	25			(28		)
Increase (decrease) in cash and cash equivalents	1			(10		)
Beginning cash and cash equivalents	2,565			2,493
Ending cash and cash equivalents	$	2,566		$	2,483
Supplemental cash flow information:
Cash paid during the period for income taxes, net	$	46		$	51
Cash paid during the period for interest	21			23
Non-cash investing activities:
Change in accrued capital expenditures	$	(13	)	$	(16	)



(Unaudited)	Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (loss)			Total Stockholders’ Equity
(In millions, except per share data)	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (loss)			Total Stockholders’ Equity
Balances as of March 31, 2019	298,107		$	3	$	—		$	5,358		$	(30	)	$	5,331
Total comprehensive income	—		—		—			1,421			13			1,434
Stock-based compensation	—		—		73			—			—			73
Issuance of common stock	985		—		(48		)	—			—			(48		)
Repurchase and retirement of common stock	(3,205	)	—		(25		)	(280		)	—			(305		)
Balances as of June 30, 2019	295,887		3		—			6,499			(17		)	6,485
Total comprehensive income	—		—		—			854			7			861
Stock-based compensation	—		—		92			—			—			92
Issuance of common stock	584		—		26			—			—			26
Repurchase and retirement of common stock	(3,253	)	—		(118		)	(188		)	—			(306		)
Balances as of September 30, 2019	293,218		$	3	$	—		$	7,165		$	(10	)	$	7,158


(Unaudited)	Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (loss)			Total Stockholders’ Equity
(In millions, except per share data)	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (loss)			Total Stockholders’ Equity
Balances as of March 31, 2018	306,370		$	3	$	657		$	4,062		$	(127	)	$	4,595
Cumulative-effect adjustment from the adoption of ASC 606	—		—		—			590			22			612
Cumulative-effect adjustment from the adoption of ASU 2018-02	—		—		—			(1		)	1			—
Total comprehensive income	—		—		—			293			78			371
Stock-based compensation	—		—		70			—			—			70
Issuance of common stock	1,280		—		(88		)	—			—			(88		)
Repurchase and retirement of common stock	(2,264	)	—		(300		)	—			—			(300		)
Balances as of June 30, 2018	305,386		3		339			4,944			(26		)	5,260
Total comprehensive income	—		—		—			255			7			262
Stock-based compensation	—		—		66			—			—			66
Issuance of common stock	618		—		28			—			—			28
Repurchase and retirement of common stock	(2,334	)	—		(299		)	—			—			(299		)
Balances as of September 30, 2018	303,670		$	3	$	134		$	5,199		$	(19	)	$	5,317



	Nine months ended December 31,
(In millions):	2017		2016
Excess tax benefits from stock-based compensation	$	40	$	53
Cash paid to taxing authorities for shares withheld from employees	112		112
Increase to net cash provided by operating activities and net cash used in financing activities	$	152	$	165



BALANCE SHEETS (In millions)	Balance at March 31, 2019		Adjustments due to New Lease Standard Adoption			Balance at April 1, 2019
Assets
Other current assets	$	313	$	(6	)	$	307
Other assets	114		215			329

Liabilities
Accrued and other current liabilities	$	1,052	$	47		$	1,099
Other liabilities	132		162			294



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
		Contingent Consideration
Balance as of March 31, 2017		$	—
Additions		122
Balance as of December 31, 2017		$	122



	As of December 31, 2017									As of March 31, 2017
	Cost or Amortized Cost		Gross Unrealized					Fair Value		Cost or Amortized Cost		Gross Unrealized					Fair Value
	Cost or Amortized Cost		Gains		Losses			Fair Value		Cost or Amortized Cost		Gains		Losses			Fair Value
Corporate bonds	$	1,212	$	—	$	(3	)	$	1,209	$	944	$	—	$	(1	)	$	943
U.S. Treasury securities	448		—		(2		)	446		414		—		(1		)	413
U.S. agency securities	117		—		(2		)	115		152		—		(1		)	151
Commercial paper	294		—		—			294		212		—		—			212
Foreign government securities	98		—		—			98		113		—		—			113
Asset-backed securities	135		—		(1		)	134		135		—		—			135
Certificates of deposit	22		—		—			22		—		—		—			—
Short-term investments	$	2,326	$	—	$	(8	)	$	2,318	$	1,970	$	—	$	(3	)	$	1,967



	Statement of Operations Classification	Amount of Gain (Loss) Recognized in the Statement of Operations
		Three Months Ended December 31,					Nine Months Ended December 31,
		2017			2016		2017			2016
Foreign currency forward contracts not designated as hedging instruments	Interest and other income (expense), net	$	(4	)	$	49	$	(13	)	$	50



	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended September 30, 2019			Six Months Ended September 30, 2019
(Gains) losses on foreign currency forward contracts designated as cash flow hedges
Net revenue	$	(25	)	$	(41	)
Research and development	1			7
Total, net of tax	$	(24	)	$	(34	)



	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2017			Nine Months Ended December 31, 2017
(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	9		$	(13	)
Research and development	(1		)	(1		)
Total, net of tax	$	8		$	(14	)

(Gains) losses on foreign currency translation
Interest and other income (expense), net	$	—		$	(10	)
Total, net of tax	$	—		$	(10	)

Total net (gain) loss reclassified, net of tax	$	8		$	(24	)



	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended September 30, 2018			Six Months Ended September 30, 2018
(Gains) losses on foreign currency forward contracts designated as cash flow hedges
Net revenue	$	(2	)	$	12
Research and development	3			4
Total net (gain) loss reclassified, net of tax	$	1		$	16



	Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Statement of Operations Classification	Three Months Ended December 31, 2016			Nine Months Ended December 31, 2016
(Gains) losses on available-for-sale securities
Interest and other income (expense), net	$	—		$	(1	)
Total, net of tax	$	—		$	(1	)

(Gains) losses on cash flow hedges from forward contracts
Net revenue	$	(9	)	$	(18	)
Research and development	1			—
Total, net of tax	$	(8	)	$	(18	)

Total net (gain) loss reclassified, net of tax	$	(8	)	$	(19	)



	As of March 31, 2019			Activity		Effects of Foreign Currency Translation			As of September 30, 2019
Goodwill	$	2,260		$	—	$	(2	)	$	2,258
Accumulated impairment	(368		)	—		—			(368		)
Total	$	1,892		$	—	$	(2	)	$	1,890



	As of March 31, 2017			Activity		Effects of Foreign Currency Translation		As of December 31, 2017
Goodwill	$	2,075		$	167	$	5	$	2,247
Accumulated impairment	(368		)	—		—		(368		)
Total	$	1,707		$	167	$	5	$	1,879



	As of September 30, 2019							As of March 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net		Gross Carrying Amount		Accumulated Amortization			Acquisition- Related Intangibles, Net
Developed and core technology	$	469	$	(437	)	$	32	$	469	$	(427	)	$	42
Trade names and trademarks	161		(126		)	35		161		(121		)	40
Registered user base and other intangibles	5		(5		)	—		5		(5		)	—
Carrier contracts and related	85		(85		)	—		85		(85		)	—
In-process research and development	5		—			5		5		—			5
Total	$	725	$	(653	)	$	72	$	725	$	(638	)	$	87



Fiscal Year Ending March 31,
2020 (remaining six months)	$	15
2021	22
2022	22
2023	8
2024 and thereafter	—
Total	$	67



Fiscal Year Ending March 31,
2018 (remaining three months)	$	5
2019	13
2020	6
2021	6
2022	6
2023	6
Thereafter	15
Total	$	57



	As of September 30, 2019		As of March 31, 2019
Accrued royalties	$	141	$	144
Other liabilities	39		51
Royalty-related liabilities	$	180	$	195



	As of September 30, 2019			As of March 31, 2019
Computer, equipment and software	$	734		$	710
Buildings	346			343
Leasehold improvements	157			139
Equipment, furniture and fixtures, and other	83			80
Land	66			66
Construction in progress	9			21
	1,395			1,359
Less: accumulated depreciation	(953		)	(911		)
Property and equipment, net	$	442		$	448



	As of September 30, 2019		As of March 31, 2019
Other accrued expenses	$	300	$	290
Accrued compensation and benefits	198		238
Accrued royalties	141		144
Sales return and price protection reserves	87		150
Contingent consideration	69		136
Deferred net revenue (other)	154		94
Operating lease liabilities (See Note 11)	75		—
Accrued and other current liabilities	$	1,024	$	1,052



	As of September 30, 2019			As of March 31, 2019
Senior Notes:
3.70% Senior Notes due 2021	$	600		$	600
4.80% Senior Notes due 2026	400			400
Total principal amount	$	1,000		$	1,000
Unaccreted discount	(1		)	(1		)
Unamortized debt issuance costs	(4		)	(5		)
Net carrying value of Senior Notes	$	995		$	994

Fair value of Senior Notes (Level 2)	$	1,064		$	1,039



	Three Months Ended September 30, 2019		Six Months Ended September 30, 2019
Operating lease costs	$	19	$	34
Variable lease costs	11		20
Short-term lease costs	2		9
Total lease expense	$	32	$	63



	Six Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liability	$	28
ROU assets obtained in exchange for new lease obligations	$	47



	Balance at April 1, 2019		Balance as of September 30, 2019		Balance Sheet Classification
Operating lease ROU assets	$	215	$	219	Other assets

Operating lease liabilities	$	50	$	75	Accrued and other current liabilities
Noncurrent operating lease liabilities	197		181		Other liabilities
Total operating lease liabilities	$	247	$	256



Fiscal Years Ending March 31,
2020 (remaining six months)	$	34
2021	65
2022	62
2023	45
2024	25
2025	19
Thereafter	26
Total future lease payments	276
Less imputed interest	(20		)
Total operating lease liabilities	$	256



			Fiscal Years Ending March 31,
			2020
			(Remaining
	Total		six mos.)		2021		2022		2023		2024		2025		Thereafter
Unrecognized commitments
Developer/licensor commitments	$	854	$	62	$	297	$	260	$	94	$	76	$	61	$	4
Marketing commitments	320		29		98		86		41		39		27		—
Senior Notes interest	155		17		41		20		20		19		19		19
Operating lease imputed interest	20		3		6		4		3		2		1		1
Other purchase obligations	90		20		34		25		7		2		2		—
Total unrecognized commitments	1,439		131		476		395		165		138		110		24

Recognized commitments
Senior Notes principal and interest	1,003		3		600		—		—		—		—		400
Operating leases	256		31		59		58		42		23		18		25
Transition and other taxes	74		6		23		24		3		5		5		8
Licensing commitments	66		13		26		27		—		—		—		—
Total recognized commitments	1,399		53		708		109		45		28		23		433

Total commitments	$	2,838	$	184	$	1,184	$	504	$	210	$	166	$	133	$	457


•	Restricted Stock Units and Performance-Based Restricted Stock Units. The fair value of restricted stock units and performance-based restricted stock units (other than market-based restricted stock units) is determined based on the quoted market price of our common stock on the date of grant.



	ESPP Purchase Rights
	Three Months Ended September 30,
	2019		2018
Risk-free interest rate	1.7 - 1.9%		2.2 - 2.5%
Expected volatility	34 - 37%		29	%
Weighted-average volatility	36	%	29	%
Expected term	6 - 12 months		6 - 12 months
Expected dividends	None		None