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Electronic Arts Reports Q4 and FY22 Financial Results image

Electronic Arts Reports Q4 and FY22 Financial Results

Redwood, CA  – Electronic Arts announced preliminary financial results for its fourth quarter and fiscal year ended March 31, 2022.

“FY22 was a record year, with hundreds of millions of players around the world joining in our games to play, watch, and create with one another,” said Andrew Wilson, CEO of Electronic Arts. “With amazing games, built around powerful IP, made by incredibly talented teams, and outstanding engagement in our live services, FY23 is set to be a year of innovation and growth for Electronic Arts.”

“We finished the year with another strong quarter of revenue and profit growth, driven by our live services business which was 85% of our net bookings in Q4,” said CFO Chris Suh. “We have a strong foundation of deeply engaged players, rich IP and a resilient business model, which we will continue to invest in to deliver growth in FY23 and beyond.”

Selected Operating Highlights and Metrics

  • Net bookings1 for fiscal 2022 was $7.515 billion, up 21% year-over-year.
  • Live services and other net bookings were up 17% year-over-year and represent 71% of total net bookings in fiscal 2022.
  • The EA player network grew 16% year-over-year to more than 580 million unique active accounts.
  • During FY22, EA SPORTS™ FIFA had more than 150 million accounts.
  • FIFA Mobile just had the biggest quarter ever with new unique players surging nearly 80% year-over-year.
  • Apex Legends™ Season 12 set records for the highest engagement since launch.
  • It Takes Two won over 90 awards during FY22.

Selected Financial Highlights and Metrics

  • Net cash provided by operating activities was $444 million for the quarter and $1.899 billion for the fiscal year.
  • EA repurchased 2.5 million shares for $325 million during the quarter, bringing the total for the fiscal year to 9.5 million shares for $1.300 billion.
  • EA paid a cash dividend of $0.17 per share during the quarter, bringing the total for the fiscal year to $193 million.

Dividend

EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock, which represents a 12% increase from prior quarter. The dividend is payable on June 22, 2022 to shareholders of record as of the close of business on June 8, 2022.

Quarterly Financial Highlights
Three Months Ended
March 31,
2022   2021
(in $ millions, except per share amounts)
Full game 438 250
Live services and other 1,387 1,096
Total net revenue 1,825 1,346
Net income 225 76
Diluted earnings per share 0.80 0.26
Operating cash flow 444 371
Value of shares repurchased 325 325
Number of shares repurchased 2.5 2.4
Cash dividend paid 48 49

The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

Three Months Ended March 31, 2022
GAAP-Based Financial Data
(in $ millions) Statement of
Operations
Acquisition-
related
expenses
Change in
deferred net
revenue
(online-enabled games)
Stock-based
compensation
Total net revenue 1,825     (74 )  
Cost of revenue 419   (45 )   (2 )
Gross profit 1,406   45   (74 ) 2
Total operating expenses 1,041   (52 )   (123 )
Operating income 365   97   (74 ) 125  
Interest and other income (expense), net (9 )      
Income before provision for income taxes 356   97   (74 ) 125  
Number of shares used in computation:
Diluted 283  
Fiscal Year Financial Highlights
Twelve Months Ended
March 31,
2022   2021
(in $ millions)
Full game 1,993 1,613
Live services and other 4,998 4,016
Total net revenue 6,991 5,629
Net income 789 837
Diluted earnings per share 2.76 2.87
Operating cash flow 1,899 1,934
Value of shares repurchased 1,300 729
Number of shares repurchased 9.5 5.6
Cash dividend paid 193 98

The following GAAP-based financial data2 and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

Twelve Months Ended March 31, 2022
GAAP-Based Financial Data
(in $ millions) Statement of
Operations
Acquisition-
related
expenses
Change in
deferred net
revenue
(online-enabled games)
Stock-based
compensation
Total net revenue 6,991     524  
Cost of revenue 1,859   (133 ) (6 )
Gross profit 5,132   133   524 6  
Total operating expenses 4,003   (183 ) (522 )
Operating income 1,129   316   524 528  
Interest and other income (expense), net (48 )    
Income before provision for income taxes 1,081   316   524 528  
Number of shares used in computation:
Diluted 286  

Operating Metric

The following is a calculation of our total net bookings1 for the periods presented:

Three Months Ended   Twelve Months Ended
March 31,   March 31,
2022   2021   2022   2021
(in $ millions)
Total net revenue 1,825 1,346 6,991 5,629
Change in deferred net revenue (online-enabled games) (74) 144 524 561
Net bookings 1,751 1,490 7,515 6,190

Business Outlook as of May 10, 2022

Fiscal Year 2023 Expectations – Ending March 31, 2023

Financial metrics:

  • Net revenue is expected to be approximately $7.600 to $7.800 billion.
    • Change in deferred net revenue (online-enabled games) is expected to be approximately $300 million.
  • Net income is expected to be approximately $793 to $815 million.
  • Diluted earnings per share is expected to be approximately $2.79 to $2.87.
  • Operating cash flow is expected to be approximately $1.600 to $1.650 billion.
  • The Company estimates a share count of 284 million for purposes of calculating fiscal year 2023 diluted earnings per share.

Operational metric:

  • Net bookings1 is expected to be approximately $7.900 to $8.100 billion.

In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:

Twelve Months Ending March 31, 2023
GAAP-Based Financial Data*
GAAP Guidance
Range
  Acquisition-
related

expenses

Change in
deferred net
revenue

(online-enabled games)

  Stock-based
compensation
(in $ millions)
Total net revenue 7,600 7,800   300  
Cost of revenue 2,020 2,065 (110 ) (5 )
Operating expense 4,200 4,315 (140 ) (595 )
Income before provision for income taxes 1,321 1,358 250   300 600  
Net income 793 815
Number of shares used in computation:
Diluted shares 284
*The mid-point of the range has been used for purposes of presenting the reconciling items.

First Quarter Fiscal Year 2023 Expectations – Ending June 30, 2022

Financial metrics:

  • Net revenue is expected to be approximately $1.675 to $1.725 billion.
    • Change in deferred net revenue (online-enabled games) is expected to be approximately $(475) million.
  • Net income is expected to be approximately $216 to $240 million.
  • Diluted earnings per share is expected to be approximately $0.76 to $0.85.
  • The Company estimates a share count of 283 million for purposes of calculating first quarter fiscal 2023 diluted earnings per share.

Operational metric:

  • Net bookings1 is expected to be approximately $1.200 to $1.250 billion.

In addition, the following outlook for GAAP-based financial data2 and updated long-term tax rate of 19% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:

Three Months Ending June 30, 2022
GAAP-Based Financial Data*
GAAP Guidance
Range
  Acquisition-
related
expenses
  Change in
deferred net

revenue
(online-enabled games)

  Stock-based
compensation
(in $ millions)
Total net revenue 1,675 1,725   (475 )  
Cost of revenue 309 321 (30 )   (2 )
Operating expense 1,013 (40 )   (123 )
Income before provision for income taxes 337 375 70   (475 ) 125  
Net income 216 240
Number of shares used in computation:
Diluted shares 283
*The mid-point of the range has been used for purposes of presenting the reconciling items.

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on February 1, 2022 for the three months ended March 31, 2022 plus a comparison to the actuals for the three months ended March 31, 2021.

  Three Months Ended March 31,
  2022       2022   2021
  Guidance   Variance   Actuals   Actuals
Net revenue              
Net revenue 1,759     66     1,825     1,346  
GAAP-based financial data              
Change in deferred net revenue (online-enabled games)1 2     (76 )   (74 )   144  
Cost of revenue              
Cost of revenue 404     15     419     319  
GAAP-based financial data              
Acquisition-related expenses (42 )   (3 )   (45 )   (4 )
Stock-based compensation (1 )   (1 )   (2 )   (1 )
Operating expenses              
Operating expenses 1,086     (45 )   1,041     852  
GAAP-based financial data              
Acquisition-related expenses (49 )   (3 )   (52 )   (14 )
Stock-based compensation (126 )   3     (123 )   (108 )
Income before tax              
Income before tax 259     97     356     165  
GAAP-based financial data              
Acquisition-related expenses 91     6     97     18  
Change in deferred net revenue (online-enabled games)1 2     (76 )   (74 )   144  
Stock-based compensation 127     (2 )   125     109  
Tax rate used for management reporting 18 %       18 %   18 %
Earnings per share              
Basic 0.46     0.34     0.80     0.26  
Diluted 0.46     0.34     0.80     0.26  
Number of shares used in computation              
Basic 282     (1 )   281     288  
Diluted 284     (1 )   283     290  
1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in $ millions)
       
  March 31, 2022   March 31, 20212
ASSETS      
Current assets:      
Cash and cash equivalents 2,732   5,260  
Short-term investments 330   1,106  
Receivables, net 650   521  
Other current assets 439   326  
Total current assets 4,151   7,213  
Property and equipment, net 550   491  
Goodwill 5,387   2,868  
Acquisition-related intangibles, net 962   309  
Deferred income taxes, net 2,243   2,045  
Other assets 507   362  
TOTAL ASSETS 13,800   13,288  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable 101   96  
Accrued and other current liabilities 1,388   1,341  
Deferred net revenue (online-enabled games) 2,024   1,527  
Total current liabilities 3,513   2,964  
Senior notes, net 1,878   1,876  
Income tax obligations 386   315  
Deferred income taxes, net 1   43  
Other liabilities 397   250  
Total liabilities 6,175   5,448  
       
Stockholders’ equity:      
Common stock 3   3  
Retained earnings 7,607   7,887  
Accumulated other comprehensive income (loss) 15   (50 )
Total stockholders’ equity 7,625   7,840  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,800   13,288  
2Derived from audited consolidated financial statements.
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in $ millions)
               
  Three Months Ended
March 31,
  Twelve Months Ended
March 31,
  2022   2021   2022   2021
OPERATING ACTIVITIES              
Net income 225     76     789     837  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation, amortization, accretion and impairment 141     58     486     181  
Stock-based compensation 125     109     528     435  
Change in assets and liabilities              
Receivables, net 313     268     (77 )   (41 )
Other assets (82 )   (42 )   (157 )   (70 )
Accounts payable 2     (11 )   (7 )   18  
Accrued and other liabilities (14 )   (109 )   169     136  
Deferred income taxes, net (189 )   (125 )   (329 )   (143 )
Deferred net revenue (online-enabled games) (77 )   147     497     581  
Net cash provided by operating activities 444     371     1,899     1,934  
               
INVESTING ACTIVITIES              
Capital expenditures (53 )   (31 )   (188 )   (124 )
Proceeds from maturities and sales of short-term investments 136     1,598     1,329     3,686  
Purchase of short-term investments (116 )   (772 )   (554 )   (2,828 )
Acquisitions, net of cash acquired     (1,239 )   (3,391 )   (1,239 )
Net cash used in investing activities (33 )   (444 )   (2,804 )   (505 )
               
FINANCING ACTIVITIES              
Proceeds from issuance of senior notes, net of issuance costs     1,478         1,478  
Payment of senior notes     (600 )       (600 )
Proceeds from issuance of common stock 33     30     77     86  
Cash dividends paid (48 )   (49 )   (193 )   (98 )
Cash paid to taxing authorities for shares withheld from employees (11 )   (8 )   (204 )   (152 )
Repurchase and retirement of common stock (325 )   (325 )   (1,300 )   (729 )
Net cash provided by (used in) financing activities (351 )   526     (1,620 )   (15 )
               
Effect of foreign exchange on cash and cash equivalents 2     35     (3 )   78  
Change in cash and cash equivalents 62     488     (2,528 )   1,492  
Beginning cash and cash equivalents 2,670     4,772     5,260     3,768  
Ending cash and cash equivalents 2,732     5,260     2,732     5,260  
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
                       
  Q4   Q1   Q2   Q3   Q4   YOY %
  FY21   FY22   FY22   FY22   FY22   Change
Net revenue                      
Net revenue 1,346     1,551     1,826     1,789     1,825     36 %
GAAP-based financial data                      
Change in deferred net revenue (online-enabled games)1 144     (215 )   25     788     (74 )    
Gross profit                      
Gross profit 1,027     1,236     1,332     1,158     1,406     37 %
Gross profit (as a % of net revenue) 76 %   80 %   73 %   65 %   77 %    
GAAP-based financial data                      
Acquisition-related expenses 4     22     22     44     45      
Change in deferred net revenue (online-enabled games)1 144     (215 )   25     788     (74 )    
Stock-based compensation 1     1     2     1     2      
Operating income                      
Operating income 175     322     340     102     365     109 %
Operating income (as a % of net revenue) 13 %   21 %   19 %   6 %   20 %    
GAAP-based financial data                      
Acquisition-related expenses 18     62     52     105     97      
Change in deferred net revenue (online-enabled games)1 144     (215 )   25     788     (74 )    
Stock-based compensation 109     125     149     129     125      
Net income                      
Net income 76     204     294     66     225     196 %
Net income (as a % of net revenue) 6 %   13 %   16 %   4 %   12 %    
GAAP-based financial data                      
Acquisition-related expenses 18     62     52     105     97      
Change in deferred net revenue (online-enabled games)1 144     (215 )   25     788     (74 )    
Stock-based compensation 109     125     149     129     125      
Tax rate used for management reporting 18 %   18 %   18 %   18 %   18 %    
Diluted earnings per share 0.26     0.71     1.02     0.23     0.80     208 %
Number of shares used in computation                      
Basic 288     286     285     283     281      
Diluted 290     289     287     285     283      
1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
                         
    Q4   Q1   Q2   Q3   Q4   YOY %
    FY21   FY22   FY22   FY22   FY22   Change
QUARTERLY NET REVENUE PRESENTATIONS                        
Net revenue by composition                        
Full game downloads   185     233     337     400     312     69 %
Packaged goods   65     89     280     216     126     94 %
Full game   250     322     617     616     438     75 %
Live services and other   1,096     1,229     1,209     1,173     1,387     27 %
Total net revenue   1,346     1,551     1,826     1,789     1,825     36 %
Full game   19 %   21 %   34 %   34 %   24 %    
Live services and other   81 %   79 %   66 %   66 %   76 %    
Total net revenue %   100 %   100 %   100 %   100 %   100 %    
GAAP-based financial data            
Full game downloads   (19 )   (5 )   35     179     (103 )    
Packaged goods   (44 )   (35 )   44     105     (68 )    
Full game   (63 )   (40 )   79     284     (171 )    
Live services and other   207     (175 )   (54 )   504     97      
Total change in deferred net revenue (online-enabled games) by composition1   144     (215 )   25     788     (74 )    
                         
Net revenue by platform                        
Console   879     972     1,198     1,138     1,092     24 %
PC & Other   295     361     377     374     420     42 %
Mobile   172     218     251     277     313     82 %
Total net revenue   1,346     1,551     1,826     1,789     1,825     36 %
GAAP-based financial data            
Console   71     (278 )   (29 )   608     (86 )    
PC & Other   51     9     26     137     3      
Mobile   22     54     28     43     9      
Total change in deferred net revenue (online-enabled games) by platform1   144     (215 )   25     788     (74 )    
1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
                       
  Q4   Q1   Q2   Q3   Q4   YOY %
  FY21   FY22   FY22   FY22   FY22   Change
CASH FLOW DATA                      
Operating cash flow 371   (143 )   64   1,534   444   20 %
Operating cash flow – TTM 1,934   1,413     1,416   1,826   1,899   (2 %)
Capital expenditures 31   44     43   48   53   71 %
Capital expenditures – TTM 124   130     148   166   188   52 %
Repurchase and retirement of common stock 325   325     325   325   325    
Cash dividends paid 49   49     48   48   48   (2 %)
DEPRECIATION                      
Depreciation expense 38   40     39   41   42   11 %
BALANCE SHEET DATA                      
Cash and cash equivalents 5,260   2,838     1,630   2,670   2,732    
Short-term investments 1,106   881     342   346   330    
Cash and cash equivalents, and short-term investments 6,366   3,719     1,972   3,016   3,062   (52 %)
Receivables, net 521   557     1,031   965   650   25 %
STOCK-BASED COMPENSATION                      
Cost of revenue 1   1     2   1   2    
Research and development 71   85     101   86   84    
Marketing and sales 12   12     15   14   13    
General and administrative 25   27     31   28   26    
Total stock-based compensation 109   125     149   129   125    

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