EA - Earnings call transcript Q4 2024

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Operator

Good afternoon. My name is Bovis, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Electronic Arts Fourth Quarter and Fiscal Year-End 2024 Earnings Conference Call. I would like to turn the conference over to Mr. Andrew Uerkwitz, Vice President, Investor Relations. ahead. go Please

Andrew Uerkwitz

SEC to Call. Welcome CEO; Quarter Fiscal that and Stuart are earnings Thank at available me EA's today Earnings ir.ea.com. our note Please With our our and are XXXX our Canfield, release you. CFO. Fourth filings Andrew and Wilson,

our we have accompany earnings slides detailed addition, remarks. In to posted prepared

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to Now Andrew the I'll Wilson. turn call over

Andrew Wilson

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Stuart Canfield

and everyone. Andrew, good afternoon, Thanks,

the a engagement to meet to meet on been investments, To have plan behaviors we needs changes and landscape, industry while business last journey our earlier, emerging needs, core fiscal interactive and to building players up to over develop transform our and portfolio into these spoke to deepen deliberate watch streamline align expand and evolving organization has engagement and the seen of strategic business our of foundational biggest these from prioritize categories which deliver the year our behind opportunities. connect. to the create, been changing Andrew entertainment growth our and an demands. us set the teams Overall, both we've accelerated As monetization new blocks

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Our both results FC franchises record sports results. were by largest our for across bookings franchises and EA highlighted football rebrand net Madden and delivering hugely SPORTS successful the growth with global

For largest fandom constant We release the across non-annual in by bookings down in X% year, of X% game expands or $X.XX constant strengthening 'XX, it of FY our in sports Survivor billion, fiscal X% one SPORTS constant Wars of brand the total as up our bookings $X.XX portfolio. bookings and net services the driven EA SPORTS X launched titles new billion, currency. Jedi: the year-over-year world. Live in delivered billion, X% of was down net was year-over-year further in platforms EA or net we currency. up up XX% XX% Full $X.XX Star year-over-year currency or

global Excluding Strength high-teens of live bookings in the flat Legends. service by and sunset year-over-year in Mobile, by football Mobile FC live fueled was impact in but Ultimate about growth driven Team FC was offset our Apex franchise, year-over-year. declines net services Apex the of was by

expenses gross $X.XX Cost X% improvement driven Moving X% margin resulting XXX royalties the to acquisition-related in revenue our for basis and lower XX.X% billion, was year-over-year, an GAAP year-over-year. results. year, billion, up $X.XX revenue a of We by down points. of delivered of net of lower

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of XX% footprint and growth Our and year-over-year. a restructuring share which significantly we our a year for up flow $X.XX as approximately $XX cash savings record of estate was expectations, $XXX cash year, guide million This charges, considerable related flow accelerated expenditures GAAP fiscal tax in rationalized investment includes million, below the our growing outpacing our per onetime original record free delivered of earnings real year-over-year. the $X.XX, year. million. were billion, $XXX XX% Capital million a of over billion, our resulted year included further improvement Operating $X.XX and year-over-year. original for $XXX cash This for

year, billion dividends. Over to we returned shareholders the $X.XX buybacks and through

Total quarter bookings million, constant results. and quarter was $X.XX slate XX% both net Moving for $XXX driven to actual by for $X.XX bookings net year-over-year the fourth was quarter timing, for was billion. billion, in game currency. Full the quarter the and live services down fourth

As bookings points to related timing. we net slate impacted a X reminder, expected QX to by be

trends SPORTS early In We to account quarter. a and Apex wider provided also difficult engagement we of the elevated Legends which for range dynamics Legends, saw Apex EA in periods. guidance comparable monetization the FC, and faced

prior remains sentiment norms prior FC in Mobile player by returned Online declined record As fueled while strong. they comparables to the tailwinds. year faced the and World progressed, Cup year-over-year engagement quarter and period monetization as

However, lapping gross cash of again royalties quarter FC was mix. which year-over-year down was the year-over-year. $X.XX a XX.X%, FY $XXX for $X.XX for to XXX $XXX basis delivered product of million GAAP of $XXX was points growth free grew net billion in XX% margin benefited we GAAP operating Ultimate X% up in and quarter $X.XX. year-over-year, expenses of lower and record related X% the the Team QX delivering a million, from of in We net delivered million. deferred revenue flow revenue single-digit 'XX, growth. We as operating down quarter Cost translated from billion, flow low charges. to restructuring-related cash lower EPS change year-over-year revenue

capital. to we results highly Now in let drive me on flow market, delivering cash fiscal 'XX, expect FY return growth, a turn to our enhanced and strong outlook. In year again dynamic

focused lighter execution and through services, by We expect against IP, and new favorite to in a fan iconic do despite slate initiatives. growth staying of this live disciplined releases our growth strategic core and continued our and

QX Our timing related year-over-year. to difficult we the QX trends lap and FY we of XXXX outlook 'XX as many reflects in saw atypical seasonality comps slate

difficult prior title quarter headwind versus SPORTS expect and Legends, and services, by content Apex periods. will to to timing XX We year impacted release including additional to related comparable Live to FC be a point launches. EA due the X face continue

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approximately revenue revenue $X.XXX to expect $X.XX. cost to of $X.XXX earnings to We net billion share and $X.XX of in billion, million, billion expenses $X.XXX $XXX of million to billion were to be resulting operating $X.XXX per $XXX

to moving for outlook our 'XX. Now FY

months. fewer business, of last with headwinds to down year by mid-single-digit our decisions to related fiscal over lighter billion mobile in the billion expect growth taken partially offset $X.X net business core year-over-year, portfolio X% X to and We bookings contributions up live services X% title optimization our catalog launches, $X.X from

expect mobile we be digit. sunset to single Excluding titles, our up low

to Turning GAAP.

revenue net $X.X billion to expect of billion. $X.X We

operating billion be and $X.XX largely to growth focused marketing up as expenses. $X.XX expenses spend is to X% drive billion, expect investment to flat acquisition-related year-over-year to by balanced We GAAP less

expect XX% We operating margin XX.X%. GAAP to to be

We expect XX.X% expected revenue in to to operating from margin non-GAAP XX.X%. impact points. be deferred basis to The approximately XXX to net XXX be change is

to expect $X.XX year We GAAP fiscal $X. of EPS

We operating strong to would noted operating cash this operating are quarter, expenditures billion a through confidence of of onetime framework $X.XX free the around flow billion generator in non-GAAP introducing the from continue expect flows. Please Moreover, $X.XX cash billion and $X.XX our deferred our an basis transparency we of in excluding operating financial ability we our information. which another expand change to of provides to be do We our and our basis 'XX, flow expect XXX further expand strategy and to GAAP reflects margin XXX about to margin revenue. business around the our expect growth, XXX FAQs expand margins net to when we pipeline impact million, upon capital and additional to tax deliver accelerating non-GAAP guidance cash expect points. believe slides any to year-over-year cash $X.XX to impact points, shareholders. for grow flat introduced FY of not $XXX with best our greater By FY benefit we to margin refer additional future earlier. Expanding cash roughly it 'XX. We XXX last long-term billion, for and

extend repurchase leads us. stock it to and an important Our us conviction margins growth priority and year. by program additional is expanding to our Returning in for accelerating shareholders capital an increase

the authorized has over Board next billion repurchase of program years. X a $X Our stock

on be to to with ahead share our I'm the billion drivers more releases business business insights across FY strategic 'XX. In with as and from core power Investor into to 'XX growth as of value community. scaling September look ongoing in our to $X.X we with creation harness in expect our key our framework the FY excited across Day, well our returned the development growth our as priorities 'XX We FY remainder our closing, and pipeline upcoming

it to I'll Andrew. over hand back Now

Andrew Wilson

including XX we our our Thank there dozens ago, creative competitive video of a major years an EA excellence our you, advantage with of massive were game our talent, network. production there incredible broad are the independent Stuart. Today, in portfolio space. of SPORTS strength, publishers and have handful, only and incredible the IP, player

strengths, and grow enviable share. are market we industry increase these to well our positioned the With

we As further differentiators. we it believe supercharge of leverage AI, the will these capabilities

we leadership, in led have multiple through transformations and experience of decades Through our industry.

our service and right to communities incredible Now taking place opportunity shareholders lead of one the now. through an players, we have in

questions. for and Stuart Now I here are your

Operator

line Morgan the Matthew from comes Stanley. Cost [Operator Instructions] Our of first question of

Chidi Dave Nwokonko

for on Dave is Matt. This

like in you're already what our us better providing guidance, quick It non-GAAP looks model. we're housekeeping new in doing a a question. bridge Just to the

now operating we add subtract or following can deferred. the So change for correctly, the if new take margin I'm in non-GAAP and

the margin disclosure. an I'm does XX.X% guess you just the bookings math if net to in So why more speak on of correctly, to doing bring as to XX.X%? if change quick us then follow-up, could I a that operating And

Stuart Canfield

for the question. It's thanks many Dave, Stuart.

Let the different and capitalizing now video costs. why companies approaches quickly me that regards and with just back game know step software about We to take change. why talk

better measure, in we in bringing we strategy 'XX we into about you see deferred Thus, capitalize on P&L. a importantly, and through to in think future. Based pipeline you'll continue years the as 'XX the bookings; market year in that tell of obviously and couple a you the demonstrate to outlined net at where the which those move OpEx increased in would investing it years. mix 'XX is the conjunction also again, future. conviction the this business as program, you start with moving particular, later of announced One don't into secondly, that revenue, helps forward would our the pipeline we in our by it your guide and and clearly the software and is, to metric, the the you to look the as we and direction 'XX the prepared suddenly driven correct. go ongoing to enable as business using the using for changes, still signal cost, in business for focus important us we obviously, this meaningful FY in forward, see As through another what that which the assessment metric as stock And remarks, and expense we framework core expansion, add and also the revenue expansion I'd and see yes, we around adjustment repurchase the discipline change and drive licensing driven the the we FY thought is know, bring was as you of by of really later then around and that, see as in is we 'XX, have I the and and going you way the by all that that pieces. return cost that conviction business us are understand 'XX for in around

Operator

question the UBS. next Our Schoell of Chris comes line of from

Christopher Schoell

appears 'XX? you're difficult your I appreciate us for some you've comps. last you flag the some in to larger and would been for very commentary. color your call similar expectations on relative facing can But you fiscal FC franchises, that guidance And next prior midpoint in to has anything year? it regard Apex of including is of your assuming the changed what earnings give growth to But

Andrew Wilson

Chris. Thanks,

last your of about shift think take I'll the framework outlined January. title QX we're important around driven through in no Obviously, and around it put year. the we how titles assumption, broader second I expectation that question Firstly, back material really from No, had challenging think see we first. To from which phasing question would extra be to is last we of thinking slate around out from comps the year, sort those before. and the you'll the headwinds the

of obviously As QX, year aggregated business, college and we see an through American and we around rest overall build football and we think how out of the look our business. obviously, addition we you the the football expect growth the to

in service that You would in to we both and outpacing to expect that our prepared live see sort growth. see remarks the market we of business, the in core mid-single-digit continue talked we growth that

FC 'XX. year we FC grew that the in grown And expect has You'd again, again us. for last

XX franchise through new We expect bring that innovations, that and continue next grow to year. FC we both

In retention terms great players and of Apex, QX. from in we saw engagement

and is, which bookings in for advancements our next drove in see low service to That the profile put to in couple franchise slate release would life but front believe the into growth through growth by expect franchise core single-digit in lighter a we over the the offset that behind invest to of us to to continue new back year innovations 'XX. continue We us growth brings seasons and business. seasons we've the again, out, FY overall start some of

Christopher Schoell

opportunities you capital buyback How had the think stock I can at just quick other in just program. regarding versus fit you the disposal? about allocation did more repurchase if one your one accelerating And

Stuart Canfield

Yes, great question.

just thing first I is dividend our I the remains think would say unchanged.

it. kind disclosure is in of is metric. part want of we terms stock of X with validations to from repurchase new the extended second through guidance framework we're the One length the program reinforce The of the out you around putting aligning gave program sort the the

us that to obviously a being basically authorization want than I $X.X Secondly, that our flexibility plan, current through and X the the stock years. approach a we bigger our to back in to billion as we billion of continue mind, which continued value, signal at emphasize obviously or repurchase scale want sending rising one gives next scale $X to obviously X shareholders to and the through

Operator

ROTH [Operator We Eric Handler Mr. our Instructions] next question will MKM. take from of

Eric Handler

big percentages? can say, wondering, -- yes, have of You break is and console down could casual, versus much sports, action shooter how like a if and I'm terms that bucket; and up it would you services mobile. PC how how But in break let's live between, decipher we would

Stuart Canfield

the service break We're Eric, directly to Stuart. this live cost going of not the is business. down the splits

we communities. a the portfolio business sort it's live only subscription by category the EA levers reminder, mobile, aggregated parts Play other inside the you massive of college strategy a X obviously, also encompasses and incorporates our of through think think have not we other those services, whether multiple and about our that components As through FC, as comprise parts and heavily Apex, of incorporates our across the our piece. sports, today. Obviously, business we of live carry from virtue accompanies service category largest online communities, of When We that look that's that this massive they're comprising service biggest that Madden we and football year; envelope. Sims that to obviously add online live come

mobile of -- in see business low inside year. as service and that live around we the growth be the to we single-digit see layer to strategic in we've our that we also that and portfolio agility service that through business see ultimately wraps on future of gives that naturally the the They're talked we rationalization, objectives. business and today convicted big the kind next number, of a flexibility makes We compositions that XX% that outside both up see pipeline and us

Andrew Wilson

actually one of our just breadth I is of services. might Yes. company add, the differentiators of our great live the

the year. look in and into the greater We that a 'XX even broader and content different brands growth greatest had when grew the demographic the had had of service growth if of be So come players. Cup of platform. target that are a into Sims, FC with. We one 'XX, rebranding we community our World you would user-generated shared it EA global our of the SPORTS FY which, multisport Madden, FY community media very 'XX The double-digit And very, We the EA world a FY of service we brands at year. evolution of very seeing of has look again, than certainly live at items, fandom again, and you most the that competes many reached this argue other center in as hundreds revenue. of live creation millions we on that incredible and may levels record as a that biggest at SPORTS was of lapped I launching

build to that a the across fiscal platforms, service. And live across team into opportunity. if you last create fans playing the spent of as FC tremendous about and use another remarks, we engage truly and models, geographies going the community talked I the whole our beyond content massive time I've magnitude what great across bounds building business year; as when collective in prepared just points the really the bunch and to as extends really is think online this at experiences really live about continue very is game entertain about across and the resilience and to Battlefield building, of also And of football a that fan sentiment, the center it service, Apex. live continue that and modalities, We be of blueprint and you they're again, to communities. over talk as a with And we expand branching service, grew strategy that traditional platform have the to we're XX primed grow

believe going of the as real so games, certainly these marketplace the think forward, consumption. for generations differentiates about us are in us emerging what And looking and this really the their we in video growth for entertainment marketplace positions we in entertainment from this context in against

Operator

question line of comes Andrew Raymond from Marok the James. next from Our

Andrew Marok

back Apex mode it it going players never with Maybe Since because I behavior. on was clamoring always a that their for to player didn't XXXX, could. of come time the in it solo kind been has view was if limited pretty by Respawn of to adamant one Apex back mode mesh just

So mode XX a back the changed? something a mode, that that with based you're in onboarding into for prepared on season limited coming referring part Is in what signals? or of player the for leaning time time to were guess you I long remarks that easier

Andrew Wilson

the what geographic deculturalization as expansion of steps. sum this total this to those when And global They're personality, well and community. very incredibly is millions of play at the modalities this what cornerstone is again, we're than what But game vocal in a over you the an Retention Respawn has work very in service think that shouldn't and -- that basis we with think of and we the think a closely that imagine look team with as team is steps player the believe community community other to be we of to is players. is those see Well, teams of do Respawn Respawn of I and team, Respawn we will high. both very on player think engaged deeply to many Again, open about personality, really And the that for serves will evolution works starting as to a way and new think a a Apex really both be the is our many attract Apex, community be about business Apex is for one hundreds doing better of very community. And done time, may transparent, I the more come. we how continue incredible many, this the communities. industry, live broadly. years

Operator

comes of from Colin question the line from Baird. RW next Sebastian Our

Colin Sebastian

the that market share different segment, a better I should fiscal that understand look guess, mobile broadly dynamics into EA's expectations first understand as on in 'XX that industry, underlying terms then and kind just 'XX, just for the step-up between pipeline next there. segment also about competitive but puts And bit year? trying outlook, you and around the key and any those if and how on changing that in 'XX growth to the what into the if we of think segment the landscape 'XX the years this, the 'XX out expectations of to the I of contemplates fiscal drivers but with missed little are takes Stuart, 'XX mobile apologies

Andrew Wilson

Yes, question. great

with kind me Let mobile start of the macro.

of shape platform As the been a driving the us. business is which in of the focusing and before, the traditional mobile to very our you've meaningful us We've in spent years really that hasn't heard mobile important industry. always from area profitability last the number business business, mobile on of

our growth overall, but mobile that it's over of look the mobile acquisition cost remains have mid-single-digit high in we expectation risk ramp kind to months fairly market significant probably the XX we opportunity next user market still new requires a -- or As low mobile the game. forward, so, to is a

mobile, of user a mobile native. that we and around to around limited market, in we you And of The X are so cycles gate be titles increasingly online mobile profitability. massive spend ] potential. Madden, to being when into very the acquisition development get Sims years at around years, once [ and in mobile believe our invest breakout communities our will leaning very we of feel capitalize its opportunities FC, business sometimes like market native position a a said, mobile in have that an easy to we what hear X X, And X time long given on. With number be We'll kind X, stories good in marketplace, also couple meaningful is be ramp isn't to longer we'll looking

Stuart Canfield

my Colin, see range growth platform prepared referenced 'XX, so through 'XX we referencing non-GAAP margin we expanding we framed the range made, points -- second operating that and period. We we the new disclosure basically on with just are XXX through put that regard the to remarks, entire your a to basis XXX 'XX up we expect it in through we question, of and to out.

ongoing second 'XX think on by know is answer retention. We growth the expand ], demonstrate later down live cost give both releases there we player continues expand And the margin a we pipeline, core call to the to acceleration the business. our growth as intent to services, we've So we all the how [ in see driven the acquisition, top IP on 'XX about new continue Andrew's that to in growth in growth the investment to to our structure, 'XX sort expansion through and and 'XX. talked -- both non-GAAP to of business engagement, from in operating to through that lever The and us relates from as leverage the growth years.

Operator

from comes next the Benchmark question from of Our Hickey line Company. Mike

Michael Hickey

interesting expansion talking pretty sort of comments with recently efficiency some conference and AI. had you about Andrew, at a

gave you like one think talking environments stadiums. building you're example I game about out where

that months process step-up. so X said incredible went from pretty to weeks X efficiency You

how curious processes, about other on like deploying further other Just games, mobile. AI development other you're thinking platforms

time. some And opportunity efficiencies the about the Maybe PC the there of AI just there. follow-up, franchises you mobile. as SPORTS, in there talked see like generative development You a on Sims, on then duration key curious and over are Battlefield,

Andrew Wilson

Yes. Great question.

or AI the AI is in evolution. at early the we're still evolution very least First generative

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Operator

Sheridan the comes final of Goldman line from Eric of question Our Sachs.

Eric Sheridan

take forward IP revenue landscape EA? be of I opportunity formats landscape. the Maybe into step examples media can might you continue get across I'd broader across if if to Andrew. themes insertion the your about landscape for opportunity to second, more market the we that going adaptation sit might your you From and to how love a standpoint, what market picture ad traditional current more to that and the different X on hear a a gaming take long games the X opportunity one, about parter big gaming fairly out term; and IP medium think successful dynamic What's back, we've of recently as thinking over AAA the for across that seen landscape: adaptation

Andrew Wilson

Let first part second I'll me into move question. part the then start the with of question, your your of

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Operator

may you Thank you concludes Thank disconnect. That and meeting. today's all for now joining, you.

Electronic Arts (EA) 7 May 242024 Q4 Earnings call transcript