Form 8-K - Current report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported) October 28, 2024    

 ELECTRONIC ARTS INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

0-17948

94-2838567

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(IRS Employer Identification No.)

209 Redwood Shores Parkway,

Redwood City,

California

94065-1175

(Address of Principal Executive Offices)

(Zip Code)

(650)

628-1500

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
			☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
			☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
			☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
			☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

EA

NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company									☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.									☐

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Item 2.02    Result of Operations and Financial Condition.

On October 29, 2024, Electronic Arts Inc. ("Electronic Arts" or “EA”) issued a press release announcing its financial results for the second fiscal quarter ended September 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1.

Neither the information in this Form 8-K nor the information in the press release attached hereto as Exhibit 99.1 shall be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01    Other Events.

On October 28, 2024, the Audit Committee of EA, on behalf of EA’s full Board of Directors declared a cash dividend of $0.19 per share of EA's common stock. The dividend is payable on December 18, 2024 to stockholders of record as of the close of business on November 27, 2024.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.						Description
99.1						Press release dated October 29, 2024, relating to Electronic Arts Inc.’s financial results for its second fiscal quarter ended September 30, 2024.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

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INDEX TO EXHIBITS

Exhibit No.						Description
99.1						Press release dated October 29, 2024, relating to Electronic Arts Inc.’s financial results for its second fiscal quarter ended September 30, 2024.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

            

ELECTRONIC ARTS INC.

Dated:

October 29, 2024

By:

/s/ Stuart Canfield

Stuart Canfield

Chief Financial Officer

Exhibit 99.1

Electronic Arts Reports Strong Q2 FY25 Results

Record Q2 net bookings driven by performance across EA SPORTS™ portfolio resulting in a

raised full-year outlook

REDWOOD CITY, CA – October 29, 2024 – (NASDAQ: EA) today announced preliminary financial results for its second quarter ended September 30, 2024.

“EA delivered another strong quarter with record Q2 net bookings, driven by our incredible teams, broad portfolio and technology leadership,” said Andrew Wilson, CEO of EA. “The momentum in our business reinforces our strategic vision to deliver innovative experiences and interactive entertainment that deepens and expands engagement across our global communities.”

“Q2 was another successful quarter for EA, exceeding the high end of our guidance range. As a result, we are also raising our FY25 outlook,” said Stuart Canfield, CFO of EA. “We remain confident in our ability to drive long-term value creation through increased scale, driving top-line growth, improved margins, and greater cash flow as shared at our Investor Day.”

Selected Operating Highlights and Metrics

•Net bookings1 for the quarter totaled $2.079 billion, setting a Q2 record and exceeding the high end of guidance range of $2.050 billion.

•American Football is on track to exceed $1 billion in net bookings for FY25, with total hours played in Q2 up over 140% year over year, and we also saw new players in the community more than double year over year.

•Through September, College Football 25 was the best-selling HD title in North America and gives EA three of the top ten HD bestsellers in North America.

•Global Football saw live service growth across all platforms in Q2, and total franchise net bookings in FY25 are on track to grow over a record FY24.

•The Sims™ 4 continues to expand, with more than 15 million players joining the game over the past year. Increased engagement led to higher-than-expected net bookings for the franchise in Q2.

Selected Financial Highlights and Metrics

•Net revenue was $2.025 billion for the quarter.

•Net cash provided by operating activities was $234 million for the quarter and $2.198 billion for the trailing twelve months.

•EA repurchased 2.6 million shares for $375 million during the quarter under the stock repurchase program, bringing the total for the trailing twelve months to 10.2 million shares for $1.400 billion.

Dividend

EA has declared a quarterly cash dividend of $0.19 per share of the Company’s common stock. The dividend is payable on December 18, 2024 to stockholders of record as of the close of business on November 27, 2024.

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Quarterly Financial Highlights

			Three Months Ended
			September 30,
(in $ millions, except per share amounts)			2024						2023
Full game			716						621
Live services and other			1,309						1,293
Total net revenue			2,025						1,914
Net income			294						399
Diluted earnings per share			1.11						1.47*
Operating cash flow			234						112
Value of shares repurchased			375						325
Number of shares repurchased			2.6						2.6
Cash dividend paid			51						51

* Diluted earnings per share includes $0.34 from a one-time non-cash tax benefit in second quarter ended September 30, 2023.

Trailing Twelve Months Financial Highlights

			Twelve Months Ended
			September 30,
(in $ millions)			2024						2023
Full game			1,917						2,058
Live services and other			5,492						5,535
Total net revenue			7,409						7,593
Net income			1,046						993
Operating cash flow			2,198						2,211
Value of shares repurchased			1,400						1,300
Number of shares repurchased			10.2						10.5

Operating Metric

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

			Three Months Ended September 30,												Twelve Months Ended September 30,
(in $ millions)			2024						2023						2024						2023
Total net revenue			2,025						1,914						7,409						7,593
Change in deferred net revenue (online-enabled games)			54						(94)						(36)						93
Total net bookings			2,079						1,820						7,373						7,686

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Business Outlook as of October 29, 2024

Fiscal Year 2025 Expectations – Ending March 31, 2025

Financial outlook metrics:

•Net revenue is expected to be approximately $7.400 billion to $7.700 billion.

◦Change in deferred net revenue (online-enabled games) is expected to be approximately $100 million.

•Net income is expected to be approximately $1.019 billion to $1.156 billion.

•Diluted earnings per share is expected to be approximately $3.82 to $4.33.

•Operating cash flow is expected to be approximately $2.075 billion to $2.275 billion.

•The Company estimates a share count of 267 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

•Net bookings1 is expected to be approximately $7.500 billion to $7.800 billion.

Third Quarter Fiscal Year 2025 Expectations – Ending December 31, 2024

Financial outlook metrics:

•Net revenue is expected to be approximately $1.875 billion to $2.025 billion.

◦Change in deferred net revenue (online-enabled games) is expected to be approximately $525 million.

•Net income is expected to be approximately $226 million to $270 million.

•Diluted earnings per share is expected to be approximately $0.85 to $1.02.

•The Company estimates a share count of 266 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

•Net bookings1 is expected to be approximately $2.400 billion to $2.550 billion.

Conference Call and Supporting Documents

Electronic Arts will host a conference call on October 29, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the second fiscal quarter ended September 30, 2024 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 [phone] (domestic) or [phone] (international), using the conference code 5939891 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 November 5, 2024 at [phone] (domestic) or [phone] (international) using conference code 5939891. An audio webcast replay of the conference call will be available for one year on EA’s IR Website.

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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 October 29, 2024” and other information regarding EA's 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 and trends; 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, 2024.

These forward-looking statements are current as of October 29, 2024. 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 Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024. 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 September 30, 2024.

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 2024, EA posted GAAP net revenue of approximately $7.6 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The Sims™, EA SPORTS™ Madden NFL, EA SPORTS™ College Football, Need for Speed™, Dragon Age™, Titanfall™, Plants vs. Zombies™ and EA SPORTS F1®. More information about EA is available at www.ea.com/news.

EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Dragon Age, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission.

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For additional information, please contact:

Andrew Uerkwitz			Justin Higgs
Vice President, Investor Relations			Vice President, Corporate Communications
650-674-7191			925-502-9253
[e-mail]			[e-mail]

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.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in $ millions, except per share data)
			Three Months Ended September 30,												Six Months Ended September 30,
			2024						2023						2024						2023
Net revenue			2,025						1,914						3,685						3,838
Cost of revenue			456						456						719						824
Gross profit			1,569						1,458						2,966						3,014
Operating expenses:
Research and development			648						602						1,277						1,198
Marketing and sales			272						280						477						509
General and administrative			197						173						377						336
Amortization of intangibles			17						24						34						49
Restructuring			51						2						53						3
Total operating expenses			1,185						1,081						2,218						2,095
Operating income			384						377						748						919
Interest and other income (expense), net			15						14						45						28
Income before provision for (benefit from) income taxes			399						391						793						947
Provision for (benefit from) income taxes			105						(8)						219						146
Net income			294						399						574						801
Earnings per share
Basic			1.11						1.47						2.17						2.94
Diluted			1.11						1.47						2.15						2.93
Number of shares used in computation
Basic			264						271						265						272
Diluted			266						272						267						273

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on July 30, 2024 for the three months ended September 30, 2024 plus a comparison to the actuals for the three months ended September 30, 2023.

			Three Months Ended September 30,
			2024 Guidance (Mid-Point)												2024 Actuals						2023 Actuals
									Variance
Net revenue
Net revenue			1,950						75						2,025						1,914
GAAP-based financial data
Change in deferred net revenue (online-enabled games)1			50						4						54						(94)
Cost of revenue
Cost of revenue			435						21						456						456
GAAP-based financial data
Acquisition-related expenses			(10)						—						(10)						(15)
Stock-based compensation			(5)						1						(4)						(2)
Operating expenses
Operating expenses			1,195						(10)						1,185						1,081
GAAP-based financial data
Acquisition-related expenses			(20)						3						(17)						(24)
Restructuring and related charges			(65)						13						(52)						—
Stock-based compensation			(160)						(10)						(170)						(153)
Income before tax
Income before tax			333						66						399						391
GAAP-based financial data
Acquisition-related expenses			30						(3)						27						39
Change in deferred net revenue (online-enabled games)1			50						4						54						(94)
Restructuring and related charges			65						(13)						52						—
Stock-based compensation			165						9						174						155
Tax rate used for management reporting			19		%										19		%				19		%
Earnings per share
Basic			0.86						0.25						1.11						1.47
Diluted			0.85						0.26						1.11						1.47
Number of shares used in computation
Basic			265						(1)						264						271
Diluted			267						(1)						266						272

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.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in $ millions)
			September 30, 2024						March 31, 20242
ASSETS
Current assets:
Cash and cash equivalents			2,197						2,900
Short-term investments			366						362
Receivables, net			1,012						565
Other current assets			397						420
Total current assets			3,972						4,247
Property and equipment, net			578						578
Goodwill			5,381						5,379
Acquisition-related intangibles, net			346						400
Deferred income taxes, net			2,431						2,380
Other assets			428						436
TOTAL ASSETS			13,136						13,420
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued, and other current liabilities			1,312						1,276
Deferred net revenue (online-enabled games)			1,475						1,814
Total current liabilities			2,787						3,090
Senior notes, net			1,883						1,882
Income tax obligations			552						497
Other liabilities			506						438
Total liabilities			5,728						5,907
Stockholders’ equity:
Common stock			3						3
Retained earnings			7,520						7,582
Accumulated other comprehensive loss			(115)						(72)
Total stockholders’ equity			7,408						7,513
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			13,136						13,420

2Derived from audited consolidated financial statements.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in $ millions)
			Three Months Ended September 30,												Six Months Ended September 30,
			2024						2023						2024						2023
OPERATING ACTIVITIES
Net income			294						399						574						801
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, accretion and impairment			122						85						202						173
Stock-based compensation			174						155						317						285
Change in assets and liabilities
Receivables, net			(579)						(534)						(447)						(367)
Other assets			(78)						(22)						(20)						74
Accounts payable, accrued, and other liabilities			275						(90)						117						(200)
Deferred income taxes, net			(37)						201						(50)						108
Deferred net revenue (online-enabled games)			63						(82)						(339)						(403)
Net cash provided by operating activities			234						112						354						471
INVESTING ACTIVITIES
Capital expenditures			(50)						(51)						(117)						(96)
Proceeds from maturities and sales of short-term investments			111						151						239						302
Purchase of short-term investments			(107)						(163)						(237)						(313)
Net cash used in investing activities			(46)						(63)						(115)						(107)
FINANCING ACTIVITIES
Proceeds from issuance of common stock			42						40						42						40
Cash dividends paid			(51)						(51)						(101)						(103)
Cash paid to taxing authorities for shares withheld from employees			(18)						(15)						(139)						(120)
Common stock repurchases			(375)						(325)						(750)						(650)
Net cash used in financing activities			(402)						(351)						(948)						(833)
Effect of foreign exchange on cash and cash equivalents			11						(11)						6						(9)
Change in cash and cash equivalents			(203)						(313)						(703)						(478)
Beginning cash and cash equivalents			2,400						2,259						2,900						2,424
Ending cash and cash equivalents			2,197						1,946						2,197						1,946

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
			Q2						Q3						Q4						Q1						Q2						YOY %
			FY24						FY24						FY24						FY25						FY25						Change
Net revenue
Net revenue			1,914						1,945						1,779						1,660						2,025						6		%
GAAP-based financial data
Change in deferred net revenue (online-enabled games)1			(94)						421						(113)						(398)						54
Gross profit
Gross profit			1,458						1,416						1,422						1,397						1,569						8		%
Gross profit (as a % of net revenue)			76		%				73		%				80		%				84		%				78		%
GAAP-based financial data
Acquisition-related expenses			15						16						29						10						10
Change in deferred net revenue (online-enabled games)1			(94)						421						(113)						(398)						54
Stock-based compensation			2						2						2						4						4
Operating income
Operating income			377						365						234						364						384						2		%
Operating income (as a % of net revenue)			20		%				19		%				13		%				22		%				19		%
GAAP-based financial data
Acquisition-related expenses			39						37						101						27						27
Change in deferred net revenue (online-enabled games)1			(94)						421						(113)						(398)						54
Restructuring and related charges			—						—						61						6						52
Stock-based compensation			155						151						148						143						174
Net income
Net income			399						290						182						280						294						(26		%)
Net income (as a % of net revenue)			21		%				15		%				10		%				17		%				15		%
GAAP-based financial data
Acquisition-related expenses			39						37						101						27						27
Change in deferred net revenue (online-enabled games)1			(94)						421						(113)						(398)						54
Restructuring and related charges			—						—						61						6						52
Stock-based compensation			155						151						148						143						174
Tax rate used for management reporting			19		%				19		%				19		%				19		%				19		%
Diluted earnings per share			1.47						1.07						0.67						1.04						1.11						(24		%)
Number of shares used in computation
Basic			271						269						267						266						264
Diluted			272						271						270						268						266

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.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
						Q2						Q3						Q4						Q1						Q2						YOY %
						FY24						FY24						FY24						FY25						FY25						Change
QUARTERLY NET REVENUE PRESENTATIONS
Net revenue by composition
Full game downloads						346						431						265						190						475						37		%
Packaged goods						275						187						68						60						241						(12		%)
Full game						621						618						333						250						716						15		%
Live services and other						1,293						1,327						1,446						1,410						1,309						1		%
Total net revenue						1,914						1,945						1,779						1,660						2,025						6		%
Full game						32		%				32		%				19		%				15		%				35		%
Live services and other						68		%				68		%				81		%				85		%				65		%
Total net revenue %						100		%				100		%				100		%				100		%				100		%
GAAP-based financial data
Full game downloads						24						32						(37)						(47)						70
Packaged goods						46						4						(37)						(35)						46
Full game						70						36						(74)						(82)						116
Live services and other						(164)						385						(39)						(316)						(62)
Total change in deferred net revenue (online-enabled games) by composition1						(94)						421						(113)						(398)						54
Net revenue by platform
Console						1,187						1,229						1,049						1,005						1,374						16		%
PC & Other						423						420						423						365						364						(14		%)
Mobile						304						296						307						290						287						(6		%)
Total net revenue						1,914						1,945						1,779						1,660						2,025						6		%
GAAP-based financial data
Console						(35)						377						(94)						(328)						108
PC & Other						(34)						33						(10)						(70)						(37)
Mobile						(25)						11						(9)						—						(17)
Total change in deferred net revenue (online-enabled games) by platform1						(94)						421						(113)						(398)						54

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.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
			Q2						Q3						Q4						Q1						Q2						YOY %
			FY24						FY24						FY24						FY25						FY25						Change
CASH FLOW DATA
Investing cash flow			(63)						(51)						(49)						(69)						(46)
Investing cash flow - TTM			(205)						(195)						(207)						(232)						(215)						(5		%)
Financing cash flow			(351)						(431)						(360)						(546)						(402)
Financing cash flow - TTM			(1,609)						(1,622)						(1,624)						(1,688)						(1,739)						(8		%)
Operating cash flow			112						1,264						580						120						234
Operating cash flow - TTM			2,211						2,352						2,315						2,076						2,198						(1		%)
Capital expenditures			51						52						51						67						50
Capital expenditures - TTM			191						195						199						221						220						15		%
Free cash flow3			61						1,212						529						53						184
Free cash flow3 - TTM			2,020						2,157						2,116						1,855						1,978						(2		%)
Common stock repurchases			325						325						325						375						375						15		%
Cash dividends paid			51						51						51						50						51						—
DEPRECIATION
Depreciation expense			49						48						50						51						51						4		%
BALANCE SHEET DATA
Cash and cash equivalents			1,946						2,742						2,900						2,400						2,197
Short-term investments			359						362						362						366						366
Cash and cash equivalents, and short-term investments			2,305						3,104						3,262						2,766						2,563						11		%
Receivables, net			1,047						867						565						433						1,012						(3		%)
STOCK-BASED COMPENSATION
Cost of revenue			2						2						2						4						4
Research and development			113						108						104						101						122
Marketing and sales			13						14						14						12						16
General and administrative			27						27						28						26						32
Total stock-based compensation			155						151						148						143						174
RESTRUCTURING AND RELATED CHARGES
Restructuring			2						—						59						2						51
Office space reductions			(2)						—						2						4						1
Total restructuring and related charges			—						—						61						6						52

3Free cash flow is defined as Operating cash flow less Capital expenditures.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(in $ millions)
The following table provides a reconciliation of non-GAAP operating income and margin to their most directly comparable GAAP financial measure for the three months ended September 30, 2024 plus a comparison to the actuals for the three months ended September 30, 2023.
			Three Months Ended
			September 30,
			2024						2023						YOY % Change
Net revenue			2,025						1,914						6%
GAAP operating income			384						377						2%
Acquisition-related expenses			27						39
Restructuring and related charges			52						—
Stock-based compensation			174						155
Non-GAAP operating income			637						571						12%
GAAP operating margin			19.0%						19.7%
Non-GAAP operating margin			31.5%						29.8%
Impact from change in deferred net revenue (online-enabled games)			170 bps						(360) bps

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
GAAP Guidance to Non-GAAP Guidance
(in $ millions)
The following table provides GAAP to Non-GAAP reconciliation of the Company’s FY25 guidance.
			Twelve Months Ending March 31, 2025
			GAAP-Based Financial Data																																										GAAP-Based Financial Data
						A									B						C						D
			GAAP Guidance Range												Acquisition-related expenses5						Restructuring and related charges5						Stock-based compensation5						Non-GAAP Guidance Range = A + B +C + D												Change in deferred net revenue (online-enabled games)5
Net revenue			7,400			to			7,700						—						—						—						7,400			to			7,700						100
Cost of revenue			1,530			to			1,560						(40)						—						(15)						1,475			to			1,505						—
Operating expense			4,445			to			4,515						(70)						(80)						(640)						3,655			to			3,725						—
Operating margin			19.3%			to			21.1%						150 bps						110 bps						870 bps						30.7%			to			32.1%						90 bps to 80 bps
Income before provision for income taxes			1,477			to			1,676						110						80						655						2,322			to			2,521						100
Net income4			1,019			to			1,156
Number of shares used in computation:
Diluted			267

4 The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.

5 The mid-point of the range has been used for purposes of presenting reconciling items to operating margin.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES
GAAP-Based Financial Data for Guidance
(in $ millions)
The following table provides supplemental information to the Company’s Q3 FY25 guidance.
			Three Months Ending December 31, 2024
			GAAP-Based Financial Data
			GAAP Guidance Range												Acquisition-related expenses						Restructuring and related charges						Stock-based compensation												Change in deferred net revenue (online-enabled games)
Net revenue			1,875			to			2,025						—						—						—																		525
Cost of revenue			450			to			480						(10)						—						(5)																		—
Operating expense			1,100			to			1,150						(20)						(5)						(165)																		—
Income before provision for income taxes			338			to			403						30						5						170																		525
Net income4			226			to			270
Number of shares used in computation:
Diluted			266

4 The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan and analyze future periods.

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Non-GAAP Financial Measures

As a supplement to the Company’s financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company presents certain non-GAAP measures of financial performance, including non-GAAP operating margin and free cash flow. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the Company’s results of operations as determined in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting and differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.

The non-GAAP financial measures exclude acquisition-related expenses, stock-based compensation, restructuring and related charges, and capital expenditures, as applicable in any given reporting period and our outlook. The Company may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures. Management believes that these non-GAAP financial measures provide investors with additional useful information to better understand and evaluate the Company’s operating results and future prospects because they exclude certain items that may not be indicative of the Company’s core business, operating results, or future outlook. These non-GAAP financial measures, with further adjustments are used by management to understand ongoing financial and business performance.

The Company uses a tax rate of 19% internally to evaluate its operating performance and to forecast, plan, and analyze future periods. Accordingly, the Company applies the same tax rate to its management reporting financial results.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure.

Cover Page	Oct. 28, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Oct. 28, 2024
Entity Registrant Name	ELECTRONIC ARTS INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	0-17948
Entity Tax Identification Number	94-2838567
Entity Address, Address Line One	209 Redwood Shores Parkway,
Entity Address, City or Town	Redwood City,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94065-1175
City Area Code	(650)
Local Phone Number	628-1500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	EA
Security Exchange Name	NASDAQ
Entity Central Index Key	0000712515
Amendment Flag	false

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