July 30, 2015

Electronic Arts Reports Q1 FY16 Financial Results

Q1 Net Revenue, Margins and EPS Exceed Guidance; Raises Full Year Guidance

Record Trailing Twelve Month Q1 Operating Cash Flow of $992 Million

REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its first fiscal quarter ended June 30, 2015.

"Q1 was a great start to fiscal year 2016 for Electronic Arts as we continue our journey to put our players first and deliver amazing entertainment experiences," said Chief Executive Officer Andrew Wilson. "We have players engaging for longer periods in our live services, ongoing strength across our digital business and growing anticipation for our upcoming titles."

"EA delivered first quarter revenue, margins and EPS above guidance through strength in catalog sales and outperformance in digital live services offerings," said Chief Financial Officer Blake Jorgensen. "We are raising our full-year guidance today to reflect the momentum across our portfolio."

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

Selected Operating Highlights and Metrics:

  • At E3, EA titles earned 132 awards including four of the 2015 E3 Game Critic Awards: Star Wars™ Battlefront™ for Best Action Game and Best Online Multiplayer, Need for Speed™ for Best Racing Game and EA SPORTS™ FIFA 16 for Best Sports Game.
  • Trailers, gameplay and livestreams of EA's games were viewed over 53 million times throughout the week of E3.
  • Players in Battlefield 4™ and Battlefield™ Hardline logged more than 170 million online gameplay hours combined in Q1.
  • Monthly active users for EA's mobile titles averaged more than 150 million in Q1.
  • More than 16 million matches of FIFA 15 were played on average per day in Q1.

Selected Financial Highlights:

  • For the quarter, non-GAAP net revenue of $693 million was above our guidance of $640 million. Diluted non-GAAP EPS of $0.15 was above our guidance of $0.00.
  • EA increased fiscal 2016 non-GAAP net revenue guidance by $50 million to $4.450 billion and diluted non-GAAP EPS guidance by $0.10 to $2.85 per share.
  • Operating cash flow of $992 million was a record high for any trailing twelve month Q1 period.
  • EA repurchased 2.2 million shares in Q1 for $132 million.
           
(in millions of $, except per share amounts) Quarter Ended 6/30/15 Quarter Ended 6/30/14
GAAP Digital Net Revenue $ 623 $ 536
GAAP Packaged Goods and Other Net Revenue   580     678
GAAP Total Net Revenue $ 1,203   $ 1,214
 
Non-GAAP Digital Net Revenue $ 532 $ 482
Non-GAAP Packaged Goods and Other Net Revenue   161     293
Non-GAAP Total Net Revenue $ 693   $ 775
 
GAAP Net Income $ 442 $ 335
Non-GAAP Net Income 49 61
GAAP Diluted Earnings Per Share 1.32 1.04
Non-GAAP Diluted Earnings Per Share 0.15 0.19
 
Operating Cash Flow ($71 ) $ 4
 
                                                     

TTM Financial Highlights:

(in millions of $) TTM Ended

6/30/15

TTM Ended

6/30/14

GAAP Net Revenue $ 4,504 $ 3,840
GAAP Net Income 982 121
Non-GAAP Net Revenue 4,237 4,301
Non-GAAP Net Income 794 716
 
Operating Cash Flow $ 992 $ 964
 

Business Outlook as of July 30, 2015

The following forward-looking statements, as well as those made above, reflect expectations as of July 30, 2015. 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 2016 Expectations - Ending March 31, 2016

  • GAAP net revenue is expected to be approximately $4.300 billion.
  • Non-GAAP net revenue is expected to be approximately $4.450 billion.
  • GAAP diluted earnings per share is expected to be approximately $1.98.
  • Non-GAAP diluted earnings per share is expected to be approximately $2.85.
  • The Company estimates a share count of 339 million for purposes of calculating fiscal year 2016 GAAP diluted earnings per share and 329 million for purposes of calculating fiscal year 2016 non-GAAP diluted earnings per share. Non-GAAP shares used for computing diluted earnings per share differs from GAAP due to the inclusion of the anti-dilutive effect of the Convertible Bond Hedge.
  • Expected non-GAAP net income excludes the impact of the following items (estimate in millions) from expected GAAP net income:
                     
Acquisition-related expenses $ 56
Amortization of debt discount 25
Change in deferred net revenue (online-enabled games) 150
Stock-based compensation 180
Income tax adjustments   (145)
Expected Impact on Non-GAAP Net Income (net) $ 266
 

Second Quarter Fiscal Year 2016 Expectations - Ending September 30, 2015

  • GAAP net revenue is expected to be approximately $815 million.
  • Non-GAAP net revenue is expected to be approximately $1.075 billion.
  • GAAP diluted loss per share is expected to be approximately $0.58.
  • Non-GAAP diluted earnings per share is expected to be approximately $0.40.
  • The Company estimates a share count of 313 million for purposes of calculating second quarter fiscal year 2016 GAAP diluted loss per share, and 328 million for non-GAAP diluted earnings per share. Non-GAAP shares used for computing diluted earnings per share includes potentially dilutive equity instruments and the anti-dilutive effect of the Convertible Bond Hedge.
  • Expected non-GAAP net income excludes the impact of the following items (estimate in millions) from expected GAAP net income:
                       
Acquisition-related expenses $ 14
Amortization of debt discount 10
Change in deferred net revenue (online-enabled games) 260
Stock-based compensation 45
Income tax adjustments   (17 )
Expected Impact on Non-GAAP Net Income (net) $ 312
 

Conference Call and Supporting Documents

Electronic Arts will host a conference call on July 30, 2015 at 2:00 pm PT (5:00 pm ET) to review its results for the first quarter ended June 30, 2015 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: 888-469-0955 (domestic) or 312-470-7475 (international), using the password "EA" or via webcast at http://ir.ea.com.

EA will also post a slide presentation that accompanies the call at http://ir.ea.com.

A dial-in replay of the conference call will be available until August 13, 2015 at 888-277-9387 (domestic) or 402-998-0511 (international). An audio webcast replay of the conference call will be available for one year at http://ir.ea.com.

Non-GAAP Financial Measures

To supplement the Company's unaudited condensed consolidated financial statements presented in accordance with GAAP, Electronic Arts uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by Electronic Arts include: non-GAAP net revenue, non-GAAP gross profit, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP diluted earnings (loss) per share and non-GAAP diluted shares. These non-GAAP financial measures exclude the following items (other than Shares from Convertible Bond Hedge, which are included), as applicable in a given reporting period, from the Company's unaudited condensed consolidated statements of operations:

  • Acquisition-related expenses
  • Amortization of debt discount
  • Change in deferred net revenue (online-enabled games)
  • College football settlement expenses
  • Income tax adjustments
  • Loss on licensed intellectual property commitment (COGS)
  • Restructuring and other
  • Shares from Convertible Bond Hedge
  • Stock-based compensation

Electronic Arts may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.

Electronic Arts believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the Company's performance by excluding certain items that may not be indicative of the Company's core business, operating results or future outlook. Electronic Arts' management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing the Company's operating results both as a consolidated entity and at the business unit level, as well as when planning, forecasting and analyzing future periods. The Company's management team is evaluated on the basis of non-GAAP financial measures and these measures also facilitate comparisons of the Company's performance to prior periods.

In addition to the reasons stated above, which are generally applicable to each of the items Electronic Arts excludes from its non-GAAP financial measures, the Company believes it is appropriate to exclude certain items for the following reasons:

Acquisition-Related Expenses. GAAP requires expenses to be recognized for various types of events associated with a business acquisition. These events include expensing acquired intangible assets, including acquired in-process technology, post-closing adjustments associated with changes in the estimated amount of contingent consideration to be paid in an acquisition, and the impairment of accounting goodwill created as a result of an acquisition when future events indicate there has been a decline in its value. When analyzing the operating performance of an acquired entity, Electronic Arts' management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid including the final amounts paid for contingent consideration) without taking into consideration any allocations made for accounting purposes. When analyzing the operating performance of an acquisition in subsequent periods, the Company's management excludes the GAAP impact of any adjustments to the fair value of these acquisition-related balances to its financial results.

Amortization of Debt Discount on the Convertible Senior Notes. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. Accordingly, for GAAP purposes, we are required to amortize as a debt discount an amount equal to the fair value of the conversion option as interest expense on the Company's $632.5 million of 0.75% convertible senior notes that were issued in a private placement in July 2011 over the term of the notes. Electronic Arts' management excludes the effect of this amortization in its non-GAAP financial measures.

Change in Deferred Net Revenue (Online-enabled Games). The majority of our software games can be connected to the Internet whereby a consumer may be able to download unspecified content or updates on a when-and-if-available basis ("unspecified updates") for use with the original game software. In addition, we may also offer an online matchmaking service that permits consumers to play against each other via the Internet. GAAP requires us to account for the consumer's right to receive unspecified updates or the matchmaking service for no additional fee as a "bundled" sale, or multiple-element arrangement. Electronic Arts is not able to objectively determine the fair value of these unspecified updates or online service included in certain of its online-enabled games. As a result, the Company recognizes the revenue from the sale of these online-enabled games on a straight-line basis over the estimated offering period. Electronic Arts' management excludes the impact of the change in deferred net revenue related to online-enabled games in its non-GAAP financial measures for the reasons stated above and also to facilitate an understanding of our operations because all related costs of revenue are expensed as incurred instead of deferred and recognized ratably.

College Football Settlement Expenses. During fiscal 2014, Electronic Arts recognized a $48 million charge for expected litigation settlement and license expenses related to our college football business. This expense is excluded from our non-GAAP financial measures.

Income Tax Adjustments. The Company uses a fixed, long-term projected tax rate internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team. Accordingly, the Company applies the same tax rate to its non-GAAP financial results. During fiscal year 2016 the Company is applying a tax rate of 22 percent to its non-GAAP financial results. For fiscal years 2014 and 2015, a 25 percent tax rate was applied, and through fiscal year 2013 the Company applied a 28 percent tax rate.

Loss on Licensed Intellectual Property Commitment (COGS). During the first quarter of fiscal 2015, Electronic Arts terminated its right to utilize certain intellectual property that the Company had previously licensed and we incurred a loss of $122 million on the corresponding license commitment. This expense is excluded from our non-GAAP financial measures.

Restructuring and Other. Although Electronic Arts has engaged in various restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. Each of these restructurings has been unlike its predecessors in terms of its operational implementation, business impact and scope. As such, the Company believes it is appropriate to exclude restructuring charges from its non-GAAP financial measures.

Shares from Convertible Bond Hedge. In July 2011, the Company issued convertible senior notes that mature in July 2016 (the "Notes") with an initial conversion price of approximately $31.74 per share. When the quarterly average trading price of EA's common stock is above $31.74 per share, the potential conversion of the Notes has a dilutive impact on the Company's earnings per share. At the time the Notes were issued, the Company entered into convertible note hedge transactions (the "Convertible Bond Hedge") to offset the dilutive effect of the Notes. The Company includes the anti-dilutive effect of the Convertible Bond Hedge in determining its non-GAAP dilutive shares.

Stock-Based Compensation. When evaluating the performance of its individual business units, the Company does not consider stock-based compensation charges. Likewise, the Company's management teams exclude stock-based compensation expense from their short and long-term operating plans. In contrast, the Company's management teams are held accountable for cash-based compensation and such amounts are included in their operating plans. Further, when considering the impact of equity award grants, Electronic Arts places a greater emphasis on overall shareholder dilution rather than the accounting charges associated with such grants.

In the financial tables below, Electronic Arts has provided a reconciliation of the most comparable GAAP financial measures to non-GAAP financial measures used in this press release.

Forward-Looking Statements

Some statements set forth in this release, including the information relating to EA's fiscal 2016 guidance information under the heading "Business Outlook," 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 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 service and support digital product offerings, including managing online security; general economic conditions; and other factors described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2015.

These forward-looking statements are current as of July 30, 2015. 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 June 30, 2015. 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 June 30, 2015.

About Electronic Arts

Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company delivers games, content and online services for Internet-connected consoles, personal computers, mobile phones and tablets. EA has more than 300 million registered players around the world.

In fiscal year 2015, EA posted GAAP net revenue of $4.5 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality blockbuster brands such as The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™, Dragon Age™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.

EA SPORTS, Battlefield 4, Battlefield, The Sims, Dragon Age, Need for Speed and Plants vs. Zombies are trademarks of Electronic Arts Inc. and its subsidiaries. STAR WARS © & TM 2015 Lucasfilm Ltd. John Madden, NFL, and FIFA are the property of their respective owners and used with permission. For additional information, please contact:

 
 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Operations
(in millions, except share per data)
                         

Three Months Ended
June 30,

2015 2014
Net revenue
Product $ 743 $ 757
Service and other 460   457  
Total net revenue 1,203 1,214
Cost of revenue
Product 94 252
Service and other 79   115  
Total cost of revenue 173   367  
Gross profit 1,030 847
Operating expenses:
Research and development 296 265
Marketing and sales 123 130
General and administrative 98 88
Acquisition-related contingent consideration (1 )
Amortization of intangibles 1   3  
Total operating expenses 518   485  
Operating income 512 362
Interest and other income (expense), net (3 ) (8 )
Income before provision for income taxes 509 354
Provision for income taxes 67   19  
Net income $ 442   $ 335  
Earnings per share
Basic $ 1.42 $ 1.07
Diluted $ 1.32 $ 1.04
Number of shares used in computation
Basic 311 313
Diluted 335 322
 
 

Non-GAAP Results (in millions, except per share data)

The following tables reconcile the Company's net revenue, gross profit, operating income, net income and number of diluted shares as presented in its Unaudited Condensed Consolidated Statements of Operations and prepared in accordance with Generally Accepted Accounting Principles ("GAAP") to its non-GAAP net revenue, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and number of non-GAAP diluted shares.

 
            Three Months Ended
June 30,
2015         2014
Net revenue
GAAP net revenue $ 1,203 $ 1,214
Change in deferred net revenue (online-enabled games) (510 ) (439 )
Non-GAAP net revenue $ 693   $ 775  
Gross profit
GAAP gross profit $ 1,030 $ 847
Acquisition-related expenses 12 14
Change in deferred net revenue (online-enabled games) (510 ) (439 )
Loss on licensed intellectual property commitment (COGS)   122  
Non-GAAP gross profit $ 532   $ 544  
Operating income
GAAP operating income $ 512 $ 362
Acquisition-related expenses 13 16
Change in deferred net revenue (online-enabled games) (510 ) (439 )
Loss on licensed intellectual property commitment (COGS) 122
College football settlement expenses (5 )
Stock-based compensation 45   29  
Non-GAAP operating income $ 60   $ 85  
Net Income
GAAP net income $ 442 $ 335
Acquisition-related expenses 13 16
Amortization of debt discount 6 5
Change in deferred net revenue (online-enabled games) (510 ) (439 )
Loss on licensed intellectual property commitment (COGS) 122
College football settlement expenses (5 )
Stock-based compensation 45 29
Income tax adjustments 53   (2 )
Non-GAAP net income $ 49 $ 61
Non-GAAP earnings per share
Basic $ 0.16 $ 0.19
Diluted $ 0.15 $ 0.19
Number of shares
GAAP & Non-GAAP Basic 311 313
GAAP Diluted 335 322
Shares from convertible bond hedge (10 ) (1 )
Non-GAAP Diluted 325 321
 
 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in millions)
                   
June 30,
2015
March 31,
2015 1
ASSETS
Current assets:
Cash and cash equivalents $ 1,810 $ 2,068
Short-term investments 1,069 953
Receivables, net of allowances of $134 and $140, respectively 144 362
Inventories 34 36
Deferred income taxes, net 53 54
Other current assets 216   247
Total current assets 3,326 3,720
Property and equipment, net 444 459
Goodwill 1,713 1,713
Acquisition-related intangibles, net 98 111
Deferred income taxes, net 14 13
Other assets 126   131
TOTAL ASSETS $ 5,721   $ 6,147
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43 $ 68
Accrued and other current liabilities 603 794
Deferred net revenue (online-enabled games) 775 1,283
0.75% convertible senior notes due 2016, net 608   602
Total current liabilities 2,029 2,747
Income tax obligations 71 70
Deferred income taxes, net 80 80
Other liabilities 180   183
Total liabilities 2,360 3,080
0.75% convertible senior notes due 2016, net 25 31
 
Common stock 3 3
Paid-in capital 2,001 2,127
Retained earnings 1,346 904
Accumulated other comprehensive income (loss) (14 ) 2
Total stockholders' equity 3,336   3,036
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,721   $ 6,147
 
 

1 Derived from audited consolidated financial statements.

 
 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
                     
Three Months Ended
June 30, 2015
2015 2014
OPERATING ACTIVITIES
Net income $ 442 $ 335
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion 49 56
Stock-based compensation 45 29
Acquisition-related contingent consideration (1 )
Change in assets and liabilities:
Receivables, net 219 110
Inventories 3 19
Other assets 26 21
Accounts payable (16 ) (43 )
Accrued and other liabilities (331 ) (84 )
Deferred income taxes, net 1
Deferred net revenue (online-enabled games) (508 ) (439 )
Net cash provided by (used in) operating activities (71 ) 4  
INVESTING ACTIVITIES
Capital expenditures (24 ) (27 )
Proceeds from maturities and sales of short-term investments 249 155
Purchase of short-term investments (365 ) (335 )
Net cash used in investing activities (140 ) (207 )
FINANCING ACTIVITIES
Proceeds from issuance of common stock 45 5
Excess tax benefit from stock-based compensation 40 12
Repurchase and retirement of common stock (132 ) (50 )

Net cash used in financing activities

(47 ) (33 )
Effect of foreign exchange on cash and cash equivalents   8  

Decrease in cash and cash equivalents

(258 ) (228 )
Beginning cash and cash equivalents 2,068   1,782  
Ending cash and cash equivalents $ 1,810   $ 1,554  
 
 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data)
                                 
Q1 Q2 Q3 Q4 Q1 YOY %
FY15 FY15 FY15 FY15 FY16 Change
QUARTERLY RECONCILIATION OF RESULTS
Net revenue
GAAP net revenue 1,214 990 1,126 1,185 1,203 (1 %)
Change in deferred net revenue (online-enabled games) (439 ) 230   302   (289 ) (510 )
Non-GAAP net revenue 775   1,220   1,428   896   693   (11 %)
Gross profit
GAAP gross profit 847 563 725 951 1,030 22 %
Acquisition-related expenses 14 12 12 14 12
Change in deferred net revenue (online-enabled games) (439 ) 230 302 (289 ) (510 )
Loss on licensed intellectual property commitment (COGS) 122
Stock-based compensation   1   1      
Non-GAAP gross profit 544   806   1,040   676   532   (2 %)
GAAP gross profit % (as a % of GAAP net revenue) 70 % 57 % 64 % 80 % 86 %
Non-GAAP gross profit % (as a % of non-GAAP net revenue) 70 % 66 % 73 % 75 % 77 %
Operating income
GAAP operating income 362 24 162 400 512 41 %
Acquisition-related expenses 16 15 16 16 13
Change in deferred net revenue (online-enabled games) (439 ) 230 302 (289 ) (510 )
Loss on licensed intellectual property commitment (COGS) 122
College football settlement expenses (5 )
Stock-based compensation 29   40   39   36   45  
Non-GAAP operating income 85   309   519   163   60   (29 %)
GAAP operating income % (as a % of GAAP net revenue) 30 % 2 % 14 % 34 % 43 %
Non-GAAP operating income % (as a % of non-GAAP net revenue) 11 % 25 % 36 % 18 % 9 %
Net income
GAAP net income 335 3 142 395 442 32 %
Acquisition-related expenses 16 15 16 16 13
Amortization of debt discount 5 6 5 6 6
Change in deferred net revenue (online-enabled games) (439 ) 230 302 (289 ) (510 )
Loss on licensed intellectual property commitment (COGS) 122
College football settlement expenses (5 )
Stock-based compensation 29 40 39 36 45
Income tax adjustments (2 ) (62 ) (116 ) (39 ) 53  
Non-GAAP net income 61   232   388   125   49   (20 %)
GAAP net income % (as a % of GAAP net revenue) 28 % 13 % 33 % 37 %
Non-GAAP net income % (as a % of non-GAAP net revenue) 8 % 19 % 27 % 14 % 7 %
Diluted earnings per share
GAAP earnings per share 1.04 0.01 0.44 1.19 1.32 27 %
Non-GAAP earnings per share 0.19 0.73 1.22 0.39 0.15 (21 %)
Number of diluted shares used in computation
GAAP 322 322 323 332 335
Non-GAAP 321 319 319 324 325
 
 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data)
                                           
Q1 Q2 Q3 Q4 Q1 YOY %
FY15 FY15 FY15 FY15 FY16 Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP
Geography net revenue
North America 522 433 473 528 506 (3 %)
International 692   557   653   657   697   1 %
Total GAAP net revenue 1,214   990   1,126   1,185   1,203   (1 %)
North America (201 ) 51 152 (125 ) (215 )
International (238 ) 179   150   (164 ) (295 )
Change in deferred net revenue (online-enabled games) (439 ) 230   302   (289 ) (510 )
North America 321 484 625 403 291 (9 %)
International 454   736   803   493   402   (11 %)
Total Non-GAAP net revenue 775   1,220   1,428   896   693   (11 %)
North America 43 % 44 % 42 % 45 % 42 %
International 57 % 56 % 58 % 55 % 58 %
Total GAAP net revenue % 100 % 100 % 100 % 100 % 100 %
North America 41 % 40 % 44 % 45 % 42 %
International 59 % 60 % 56 % 55 % 58 %
Total Non-GAAP net revenue % 100 % 100 % 100 % 100 % 100 %
 
Net revenue composition
Packaged goods and other 678 482 585 571 580 (14 %)
Full game downloads 107 83 108 122 119
Extra content 225 212 210 265 291
Subscriptions, advertising and other 81 91 102 92 71
Mobile 123   122   121   135   142  
Total Digital 536   508   541   614   623   16 %
Total GAAP net revenue 1,214   990   1,126   1,185   1,203   (1 %)
Packaged goods and other (385 ) 285 150 (277 ) (419 )
Full game downloads (36 ) 11 32 (8 ) (35 )
Extra content (14 ) (59 ) 104 (18 ) (36 )
Subscriptions, advertising and other (1 ) (2 ) (1 )
Mobile (3 ) (7 ) 18   15   (20 )
Total Digital (54 ) (55 ) 152   (12 ) (91 )
Change in deferred net revenue (online-enabled games) (439 ) 230   302   (289 ) (510 )
Packaged goods and other 293 767 735 294 161 (45 %)
Full game downloads 71 94 140 114 84
Extra content 211 153 314 247 255
Subscriptions, advertising and other 80 91 100 91 71
Mobile 120   115   139   150   122  
Total Digital 482   453   693   602   532   10 %
Total Non-GAAP net revenue 775   1,220   1,428   896   693   (11 %)
Packaged goods and other 56 % 49 % 52 % 48 % 48 %
Full game downloads 9 % 8 % 9 % 10 % 10 %
Extra content 19 % 21 % 19 % 22 % 24 %
Subscriptions, advertising and other 7 % 9 % 9 % 8 % 6 %
Mobile 9 % 13 % 11 % 12 % 12 %
Total Digital 44 % 51 % 48 % 52 % 52 %
Total GAAP net revenue % 100 % 100 % 100 % 100 % 100 %
Packaged goods and other 38 % 63 % 51 % 33 % 23 %
Full game downloads 9 % 8 % 10 % 13 % 12 %
Extra content 27 % 13 % 22 % 27 % 37 %
Subscriptions, advertising and other 10 % 7 % 7 % 10 % 10 %
Mobile 16 % 9 % 10 % 17 % 18 %
Total Digital 62 % 37 % 49 % 67 % 77 %
Total Non-GAAP net revenue % 100 % 100 % 100 % 100 % 100 %
 
 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data)
                               
Q1 Q2 Q3 Q4 Q1 YOY %
FY15 FY15 FY15 FY15 FY16 Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP
Platform net revenue
Xbox One, PLAYSTATION 4 293 317 427 468 487 66 %
Xbox 360, PLAYSTATION 3 543 308 306 328 293 (46 %)
Other consoles 3   6   9   3   2   (33 %)
Total consoles 839 631 742 799 782 (7 %)
PC / Browser 231 208 218 221 253 10 %
Mobile 123 123 122 136 145 18 %
Other 21   28   44   29   23   10 %
Total GAAP net revenue 1,214   990   1,126   1,185   1,203   (1 %)
Xbox One, PLAYSTATION 4 (95 ) 117 166 (92 ) (253 )
Xbox 360, PLAYSTATION 3 (268 ) 63 106 (164 ) (204 )
Other consoles   (1 )   (1 )  
Total consoles (363 ) 179 272 (257 ) (457 )
PC / Browser (67 ) 56 13 (49 ) (33 )
Mobile (3 ) (6 ) 17 16 (19 )
Other (6 ) 1     1   (1 )
Change in deferred net revenue (online-enabled games) (439 ) 230   302   (289 ) (510 )
Xbox One, PLAYSTATION 4 198 434 593 376 234 18 %
Xbox 360, PLAYSTATION 3 275 371 412 164 89 (68 %)
Other consoles 3   5   9   2   2   (33 %)
Total consoles 476 810 1,014 542 325 (32 %)
PC / Browser 164 264 231 172 220 34 %
Mobile 120 117 139 152 126 5 %
Other 15   29   44   30   22   47 %
Total Non-GAAP net revenue 775   1,220   1,428   896   693   (11 %)
Xbox One, PLAYSTATION 4 24 % 32 % 38 % 39 % 41 %
Xbox 360, PLAYSTATION 3 45 % 31 % 27 % 28 % 24 %
Other consoles   1 % 1 %    
Total consoles 69 % 64 % 66 % 67 % 65 %
PC / Browser 19 % 21 % 19 % 19 % 21 %
Mobile 10 % 12 % 11 % 12 % 12 %
Other 2 % 3 % 4 % 2 % 2 %
Total GAAP net revenue % 100 % 100 % 100 % 100 % 100 %
Xbox One, PLAYSTATION 4 26 % 36 % 41 % 42 % 34 %
Xbox 360, PLAYSTATION 3 35 % 30 % 29 % 18 % 13 %
Other consoles     1 %    
Total consoles 61 % 66 % 71 % 60 % 47 %
PC / Browser 21 % 22 % 16 % 19 % 32 %
Mobile 15 % 10 % 10 % 17 % 18 %
Other 3 % 2 % 3 % 4 % 3 %
Total Non-GAAP net revenue % 100 % 100 % 100 % 100 % 100 %
 
 

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data)
                                 
Q1 Q2 Q3 Q4 Q1 YOY %
FY15 FY15 FY15 FY15 FY16 Change
CASH FLOW DATA
Operating cash flow 4 183 682 198 (71 ) (1,875 %)
Operating cash flow - TTM 964 1,153 1,150 1,067 992 3 %
Capital expenditures 27 21 15 32 24 (11 %)
Capital expenditures - TTM 95 92 79 95 92 (3 %)
Repurchase and retirement of common stock 50 95 97 95 132 164 %
BALANCE SHEET DATA
Cash and cash equivalents 1,554 1,624 2,166 2,068 1,810 16 %
Short-term investments 762   764 774 953   1,069   40 %
Cash and cash equivalents, and short-term investments 2,316 2,388 2,940 3,021 2,879 24 %
Receivables, net 219 829 488 362 144 (34 %)
Deferred net revenue (online-enabled games)
End of the quarter 1,051 1,281 1,583 1,283 775 (26 %)
Less: Beginning of the quarter 1,490   1,051 1,281 1,583   1,283  
Change in deferred net revenue (online-enabled games)2 (439 ) 230 302 (300 ) (508 )
STOCK-BASED COMPENSATION
Cost of revenue 1 1
Research and development 16 23 22 21 26
Marketing and sales 4 6 6 5 5
General and administrative 9   10 10 10   14  
Total stock-based compensation 29   40 39 36   45  
         
 

2 The difference between the balances of deferred net revenue (online-enabled games) does not always equal the change in deferred net revenue (online-enabled games) in the GAAP to Non-GAAP consolidated statement of operations reconciliation due to the impact of unrecognized gains/losses on cash flow hedges.

Electronic Arts Inc.
Chris Evenden, 650-628-0255
Vice President, Investor Relations
cevenden@ea.com
or
John Reseburg, 650-628-3601
Vice President, Corporate Communications
jreseburg@ea.com

Source: Electronic Arts Inc.

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