Summary

  • Electronic Arts is a global leader in digital interactive entertainment.
  • The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.
  • Major brands are EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and F1®.

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Electronic Arts (NASDAQ: EA, LSE:0IFX) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.

In fiscal year 2022, EA posted GAAP net revenue of approximately $7 billion. Headquartered in Redwood City, California, EA has a portfolio of high-quality brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and F1®.

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Recent Developments

Max Verstappen Signs With EA Sports™1

February 3, 2023; Electronic Arts Inc. announced that EA SPORTS™, a leader in interactive sports entertainment, has signed a partnership with back-to-back Formula 1® World Champion Max Verstappen. The agreement will see the Oracle Red Bull Racing driver collaborate with the brand to create content across the EA SPORTS portfolio. The deal also includes sponsorship with Verstappen for the 2023 season, with EA SPORTS branding featuring on the chin of his race helmet.

Over the past two seasons, Max Verstappen has become one of the biggest names in the sport. Having won his first FIA Formula One World Championship™ on the final race of the 2021 season, Max dominated last year, taking the title at the FORMULA 1 HONDA JAPANESE GRAND PRIX 2022 with four races to spare.

EA and Marvel Entertainment Announce a Multi-Title Collaboration to Make Action Adventure Games2

October 31, 2022; Electronic Arts Inc. announced it is collaborating with Marvel on a long-term deal to develop at least three new action adventure games that will be available for consoles and PC. Each of these games will be their own original story set in the Marvel universe with the first title in-development being a single player, third person, action-adventure Iron Man game coming out of Motive Studios.

Developed in collaboration with Marvel, the Iron Man game will feature an original narrative that taps into the rich history of the character, channeling the complexity, charisma, and creative genius of Tony Stark, and enabling players to feel what it’s like to truly play as Iron Man. The team is being led by Olivier Proulx, who brings experience working on past Marvel titles like Marvel’s Guardians of the Galaxy, and is joined by a dedicated team of passionate industry veterans including Ian Frazier, Maëlenn Lumineau, and JF Poirier at the studio.

Financial Highlights

Q3 FY23 Results3

January 31, 2023; Electronic Arts Inc. announced preliminary financial results for its third fiscal quarter ended December 31, 2022.

  • Net bookings for the trailing twelve months was $7.146 billion, down 1% year-over-year.
  • Live services and other net bookings for the trailing twelve months were up 4% year-over-year and represent 75% of total net bookings.
  • The EA player network grew to more than 650 million at quarter end.
  • EA SPORTS FIFA 23 is pacing to be the biggest title in franchise history and delivered record engagement in Q3.
  • The company's teams delivered two AAA titles, NHL 23 and Need for Speed Unbound, at quality, and provided 128 content updates across 36 titles.
  • The Sims welcomed over 10 million new players into the community during the quarter, with daily active users, weekly active users and monthly active users all up double digits year-over-year.
  • Net cash provided by operating activities was $1.123 billion for the quarter and $1.377 billion for the trailing twelve months.
  • EA repurchased 2.6 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.2 million shares for $1.295 billion.
  • EA paid a cash dividend of $0.19 per share during the quarter, for a total of $52 million.

Fiscal Year 2022 Results

Net revenue for fiscal year 2022 ended March 31 was $6,991 million, primarily driven by sales related to its FIFA and Madden franchises, Apex Legends, and The Sims 4. Net revenue for fiscal year 2022 increased $1,362 million, as compared to fiscal year 2021. This increase was driven by a $1,839 million increase in net revenue primarily driven by increased year-over-year sales for the FIFA franchise and Apex Legends, new games added to its portfolio through acquisitions activity, including F1 2021 and several mobile titles, and Battlefield 2042. This increase was partially offset by a $477 million decrease in net revenue primarily from the Star Wars, The Sims, Need for Speed and UFC franchises.4

Full game net revenue for fiscal year 2022 was $1,993 million, primarily driven by sales related to its FIFA franchise, Madden NFL 22, Battlefield 2042, and It Takes Two. Full game net revenue for fiscal year 2022 increased $380 million, or 24 percent, as compared to fiscal year 2021. This increase was primarily driven by a $364 million increase in full game downloads net revenue primarily driven by year-over-year growth in the FIFA franchise, Battlefield 2042, It Takes Two, and Mass Effect Trilogy Remaster, partially offset by the Star Wars franchise.

Live services and other net revenue for fiscal year 2022 was $4,998 million, primarily driven by sales of extra content for FIFA Ultimate Team, Apex Legends, The Sims 4, Madden Ultimate Team, and Star Wars: Galaxy of Heroes. Live services and other net revenue for fiscal year 2022 increased $982 million, or 24 percent, as compared to fiscal year 2021.

Cost of revenue increased by $365 million, or 24 percent during fiscal year 2022, as compared to fiscal year 2021. This increase was primarily due to an increase in platform and hosting fees due to new games added to its mobile portfolio through acquisitions activity and higher engagement with Apex Legends, an increase in acquisition-related intangible amortization, and an increase in royalty costs driven by It Takes Two and the growth in the FIFA franchise.

Research and development expenses increased by $408 million, or 23 percent, in fiscal year 2022, as compared to fiscal year 2021. This increase was primarily due to a $229 million increase in personnel-related costs primarily resulting from headcount due to acquisitions and continued investment in its studios, a $71 million increase in stock-based compensation, a $60 million increase in studio-related contracted services, and a $31 million increase in facility-related costs.

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Industry Overview

Since the initial outbreak, EA has focused on actions to support its people, its players, and communities around the world that have been affected by the COVID-19 pandemic. The well-being of its people is its top priority as conditions continue to fluctuate around the world. EA is re-opening its office locations and resuming business travel as it is appropriate to do so, consistent with the health and safety of its employees and in compliance with any local legal restrictions or requirements. During the pandemic, longer-term trends that benefit its business accelerated. Live services and other net revenue has increased and EA has also experienced a significant increase in the percentage of its games purchased digitally over the past two fiscal years.

In its industry, players increasingly purchase games digitally as opposed to purchasing physical discs. While this trend, as applied to its business, may not be linear because of product mix during a fiscal year, consumer buying patterns and other factors, over time the company expect players to purchase an increasingly higher proportion of its games digitally; therefore the company expect net revenue attributable to digital full game downloads to increase over time and net revenue attributable to sales of packaged goods to decrease.

Increases in consumer adoption of digital purchase of games combined with increases in its live services revenue generally results in expansion of its gross margin, as costs associated with selling a game digitally is generally less than selling the same game through traditional retail and distribution channels.

Company Overview

Electronic Arts is a global leader in digital interactive entertainment. The company develop, market, publish and deliver games, content and services that can be experienced on game consoles, PCs, mobile phones and tablets.

Recent Acquisitions

Acquisition of Glu Mobile. On April 29, 2021, the company completed the acquisition of 100% of the equity interests of Glu Mobile Inc., a leading global developer and publisher of mobile games for a total purchase price of $2.0 billion, net of cash acquired of $332 million. The acquisition of Glu is expected to accelerate its mobile growth by creating a combined organization with ongoing live services across multiple games and genres. The company also believe that the acquisition will create value by adding Glu’s expertise in casual sports and lifestyle genres to new titles based on its intellectual property. Glu was integrated into the Company for financial reporting purposes during the first fiscal quarter of fiscal year 2022.

Acquisition of Playdemic. On September 20, 2021, the company completed the acquisition of 100% of the equity interests of Playdemic Limited, a private limited company incorporated in England and Wales for a total purchase price of $1.4 billion, net of cash acquired. The acquisition of Playdemic is intended to be another step in its strategy of continued leadership in sports and mobile expansion. Playdemic was integrated into the Company for financial reporting purposes during the second quarter of fiscal year 2022.

Brands

The company's portfolio includes brands that the company either wholly own (such as Apex Legends, Battlefield, and The Sims) or license from others (such as Madden, Star Wars, and the 300+ licenses within its global football ecosystem).

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EA Studios

EA Studios is made up of over 20 studios and more than 6,000 creators globally. EA is responsible for some of the world’s most beloved game franchises, including EA SPORTS FIFA™, Battlefield™, Apex Legends™, The Sims™, Madden NFL™, Need for Speed™, Titanfall™, and Plants vs. Zombies™ as well as many others.

Locations

Electronic Arts Locations5

The AmericasEuropeAsia-PacificThe Middle East
Austin, TexasBirmingham, EnglandHyderabad, IndiaCaesarea, Israel
Baton Rouge, LouisianaBucharest, RomaniaKuala Lumpur, Malaysia 
Chatsworth (Los Angeles), CaliforniaCologne, GermanyMelbourne, Australia 
Edmonton, AlbertaGalway, IrelandSeoul, South Korea 
Foster City, CaliforniaGeneva, SwitzerlandShanghai, China 
Kitchener, OntarioGothenburg, SwedenSingapore, Singapore 
Marina del Rey (Los Angeles), CaliforniaGuildford, EnglandSydney, Australia 
Montreal, QuebecHelsinki, Finland  
Orlando, FloridaLyon, France  
Pasadena (Los Angeles), CaliforniaMadrid, Spain  
Redwood City, CaliforniaManchester, England  
Sacramento, CaliforniaRuncorn (Cheshire), England  
Seattle, WashingtonSoutham, England  
San Francisco, CaliforniaStockholm, Sweden  
Toronto, Ontario   
Victoria, British Columbia   
Vancouver, British Columbia   

References

  1. ^ https://ir.ea.com/press-releases/press-release-details/2023/Max-Verstappen-Signs-With-EA-Sports/default.aspx
  2. ^ https://ir.ea.com/press-releases/press-release-details/2022/EA-and-Marvel-Entertainment-Announce-a-Multi-Title-Collaboration-to-Make-Action-Adventure-Games/default.aspx
  3. ^ https://ir.ea.com/press-releases/press-release-details/2023/Electronic-Arts-Reports-Q3-FY23-Financial-Results/default.aspx
  4. ^ https://fintel.io/doc/sec-electronic-arts-inc-712515-10k-2022-may-25-19137-2254
  5. ^ https://www.ea.com/careers/locations
Tags: US:EA GB:0IFX USA
Created by Asif Farooqui on 2023/02/15 10:01
     
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