Electronic Arts Reports Q4 and FY22 Financial Results
Electronic Arts Inc. (NASDAQ: EA) today 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 game438
250
Live services and other1,387
1,096
Total net revenue
1,825
1,346
Net income225
76
Diluted earnings per share0.80
0.26
Operating cash flow444
371
Value of shares repurchased325
325
Number of shares repurchased2.5
2.4
Cash dividend paid48
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 ofOperations 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 profit1,406
45
(74
)
2
Total operating expenses1,041
(52
)
-
(123
)
Operating income365
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 game1,993
1,613
Live services and other4,998
4,016
Total net revenue6,991
5,629
Net income789
837
Diluted earnings per share2.76
2.87
Operating cash flow1,899
1,934
Value of shares repurchased1,300
729
Number of shares repurchased9.5
5.6
Cash dividend paid193
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 ofOperations 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 profit5,132
133
524
6
Total operating expenses
4,003
(183
)
-
(522
)
Operating income1,129
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 revenue1,825
1,346
6,991
5,629
Change in deferred net revenue (online-enabled games)(74)
144
524
561
Net bookings1,751
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
7,600
–
7,800
-
300
-
Cost of revenue
2,020
–
2,065
(110
)
-
(5
)
Operating expense4,200
–
4,315
(140
)
-
(595
)
Income before provision for income taxes1,321
–
1,358
250
300
600
Net income
793
–
815
Number of shares used in computation: Diluted shares284
*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
1,675
–
1,725
-
(475
)
-
Cost of revenue
309
–
321
(30
)
-
(2
)
Operating expense1,013
(40
)
-
(123
)
Income before provision for income taxes337
–
375
70
(475
)
125
Net income
216
–
240
Number of shares used in computation: Diluted shares283
*The mid-point of the range has been used for purposes of presenting the reconciling items.Conference Call and Supporting Documents
Electronic Arts will host a conference call on May 10, 2022 at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal quarter and year ended March 31, 2022 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 (866) 324-3683 (domestic) or (509) 844-0959 (international), using the conference code 8277667 or via webcast at EA’s IR Website at http://ir.ea.com.
EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website.
A dial-in replay of the conference call will be available until May 24, 2022 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 8277667. An audio webcast replay of the conference call will be available for one year on EA’s IR Website.
Forward-Looking Statements
Some statements set forth in this release, including the information relating to EA’s expectations under the heading “Business Outlook as of May 10, 2022” and other information regarding EA's fiscal 2023 expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed 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 products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of, and integrate, 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 develop and implement new technology; foreign currency exchange rate fluctuations; economic and geopolitical conditions; changes in our tax rates or tax laws; and other factors described in Part II, Item 1A of Electronic Arts’ latest Quarterly Report on Form 10-Q under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
These forward-looking statements are current as of May 10, 2022. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. 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 Annual Report on Form 10-K for the fiscal year ended March 31, 2022. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-K for the fiscal year ended March 31, 2022.
About Electronic Arts
Electronic Arts (NASDAQ: EA) 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 is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™ FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and F1®. More information about EA is available at www.ea.com/news.
EA SPORTS, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall and Plants vs. Zombies are trademarks of Electronic Arts Inc. STAR WARS © & TM 2015 Lucasfilm Ltd. All rights reserved. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission.
1 Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.
2 For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2021.
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in $ millions, except per share data)
Three Months Ended
March 31,
Twelve Months Ended
March 31,
2022
2021
2022
2021
Net revenue
1,825
1,346
6,991
5,629
Cost of revenue
419
319
1,859
1,494
Gross profit
1,406
1,027
5,132
4,135
Operating expenses:
Research and development
579
468
2,186
1,778
Marketing and sales
245
196
961
689
General and administrative
165
174
673
592
Amortization and impairment of intangibles
52
14
183
30
Total operating expenses
1,041
852
4,003
3,089
Operating income
365
175
1,129
1,046
Interest and other income (expense), net
(9
)
(10
)
(48
)
(29
)
Income before provision for income taxes
356
165
1,081
1,017
Provision for income taxes
131
89
292
180
Net income
225
76
789
837
Earnings per share
Basic
0.80
0.26
2.78
2.90
Diluted
0.80
0.26
2.76
2.87
Number of shares used in computation
Basic
281
288
284
289
Diluted
283
290
286
292
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
View source version on businesswire.com: https://www.businesswire.com/news/home/20220509006274/en/