Q3 Net Revenue and EPS Results Exceed Guidance
Fiscal Year 2015 Net Revenue and EPS Guidance Raised
Achieved Record Cash Flow for a Calendar Year Period
REDWOOD CITY, Calif.–(BUSINESS WIRE)– Electronic Arts Inc. (NASDAQ:EA) today announced preliminary financial results for its third fiscal quarter ended December 31, 2014.
“Electronic Arts delivered amazing experiences to our players in Q3, from the award-winning Dragon Age: Inquisition to SimCity BuildIt to our live services for FIFA, Madden NFL and more,” said Chief Executive Officer Andrew Wilson. “Great execution with our leading IP, new mobile hits and continued strength in our catalogue of top games and services were the foundation for an excellent performance in Q3.”
“EA has driven another quarter of record-breaking financials,” said Chief Financial Officer Blake Jorgensen. “Our ongoing digital transformation, including live services like EA SPORTS Ultimate Team, coupled with ongoing cost discipline, enables us to deliver consistent cash flow and earnings growth.”
Selected Operating Highlights and Metrics:
- Calendar year 2014 EA was the #1 publisher on PlayStation®4 and Xbox One consoles in the world, driven by the success of Dragon Age™: Inquisition, FIFA 15, NHL®15,Madden NFL 15, EA SPORTSTM UFC®, TitanfallTM, Battlefield 4TM, and FIFA 14.
- SimCity™ BuildIt just launched in December and has already achieved 22 million downloads to date and has reached the top 5 iOS game downloads in more than 100 countries.
- Dragon Age: Inquisition captivated fans and critics worldwide and it quickly became the most successful launch in BioWare™ history in addition to being named to more than 200 “Game of the Year” lists. The single player campaign alone has been enjoyed for more than 113 million hours.
- Monthly active users for EA’s mobile titles averaged more than 160 million in Q3.
- EA’s mobile sports games continue to engage players, with Madden NFL Mobile and FIFA 15 Ultimate Team™ together averaging 45% more monthly active players through Q3 compared to our previous iterations in the same period last year.
Selected Financial Highlights:
*On a non-GAAP basis
- For the quarter, net revenue* of $1.428 billion was above our guidance of $1.275 billion. Diluted earnings per share* of $1.22 was above our guidance of $0.90.
- On a trailing twelve month basis, EA had net revenue* of $4.337 billion of which a record $2.178 billion was digital* (more than half for the first time ever), net income* of $833 million and operating cash flow of $1.150 billion (a record for a calendar year).
- EA raised fiscal 2015 net revenue* guidance from $4.175 billion to $4.253 billion and diluted EPS* guidance from $2.05 to $2.35 per share.
- Net revenue* for EA’s FIFA, Madden NFL and Hockey Ultimate Team services continued to grow, collectively up 82% year-over-year.
- EA repurchased 2.5 million shares in Q3 for $97 million, pursuant to the $750 million share repurchase program initiated in May 2014.
| (in millions of $, except per share amounts) | Quarter Ended 12/31/14 |
Quarter Ended 12/31/13 |
||
| GAAP Digital Net Revenue | $541 | $410 | ||
| GAAP Packaged Goods and Other Net Revenue | 585 | 398 | ||
| GAAP Total Net Revenue | $1,126 | $808 | ||
| Non-GAAP Digital Net Revenue | $693 | $517 | ||
| Non-GAAP Packaged Goods and Other Net Revenue | 735 | 1,055 | ||
| Non-GAAP Total Net Revenue | $1,428 | $1,572 | ||
| GAAP Net Income (Loss) | $142 | $(308) | ||
| Non-GAAP Net Income | 388 | 398 | ||
| GAAP Diluted Earnings/(Loss) Per Share | 0.44 | (1.00) | ||
| Non-GAAP Diluted Earnings Per Share | 1.22 | 1.26 | ||
| Operating Cash Flow | $682 | $685 | ||
| Trailing Twelve Month (TTM) Financial Highlights: | ||||
| (in millions of $) | TTM Ended 12/31/14 |
TTM Ended 12/31/13 |
||
| GAAP Net Revenue | $4,453 | $3,661 | ||
| GAAP Net Income (Loss) | 847 | (36) | ||
| Non-GAAP Net Revenue | 4,337 | 4,147 | ||
| Non-GAAP Net Income | 833 | 551 | ||
| Operating Cash Flow | $1,150 | $664 | ||
Business Outlook as of January 27, 2015
The following forward-looking statements, as well as those made above, reflect expectations as of January 27, 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 2015 Expectations – Ending March 31, 2015`
- GAAP net revenue is expected to be approximately $4.485 billion.
- Non-GAAP net revenue is expected to be approximately $4.253 billion.
- GAAP diluted earnings per share is expected to be approximately $2.57.
- Non-GAAP diluted earnings per share is expected to be approximately $2.35.
- The Company estimates a share count of 324 million for purposes of calculating fiscal year 2015 GAAP diluted earnings per share and 320 million for purposes of calculating fiscal year 2015 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:
| Change in deferred net revenue (online-enabled games) | $ (232 | ) | |
| Income tax adjustments | (198 | ) | |
| College football settlement expenses | (5 | ) | |
| Amortization of debt discount | 22 | ||
| Acquisition-related expenses | 63 | ||
| Loss on licensed intellectual property commitment | 122 | ||
| Stock-based compensation | 148 | ||
| Expected Impact on Non-GAAP Net Income (net) | $ (80 | ) | |
Fourth Quarter Fiscal Year 2015 Expectations – Ending March 31, 2015
- GAAP net revenue is expected to be approximately $1.155 billion.
- Non-GAAP net revenue is expected to be approximately $830 million.
- GAAP earnings per share is expected to be approximately $1.07.
- Non-GAAP diluted earnings per share is expected to be approximately $0.22.
- The Company estimates a share count of 329 million for purposes of calculating fourth quarter fiscal year 2015 GAAP diluted earnings per share, and 322 million for 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:
| Change in deferred net revenue (online-enabled games) | $ (325 | ) | |
| Income tax adjustments | (19 | ) | |
| Amortization of debt discount | 6 | ||
| Acquisition-related expenses | 16 | ||
| Stock-based compensation | 40 | ||
| Expected Impact on Non-GAAP Net Income (net) | $ (282 | ) | |
Related: NBA LIVE 15 Roster Update Details
Source: Press Release
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