Electronic Arts (EA) 30 Jan 242024 Q3 Earnings call transcript

Good afternoon. My name is Briana, and I will be your conference operator today. At this time, I would like to welcome everyone to the Electronic Arts Third Quarter Fiscal Year 2024 Earnings Conference Call. I would now like to turn the conference over to Ms. Katy Burke, Director Investor Relations. ahead. go Please

SEC to Call. Welcome CEO; Quarter Year that Fiscal Stuart are earnings Thank at available me EA's today Earnings ir.ea.com. our note Please With our our and are XXXX our Canfield, release you. CFO. Third filings Andrew and Wilson,

our we have accompany earnings slides detailed addition, remarks. In to posted prepared

our year after call, we With an earnings this of replay a scheduled the May will transcript. remarks, for fiscal Lastly, X. call to regards Fourth call is calendar, our audio XXXX post our quarter and Tuesday, prepared

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of makes January statements as any today, update Arts Electronic disclaims XX, XXXX, duty to these and them.

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to call turn I'll over the Now Andrew.

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over hand additional I'll details to our business. to the Stuart call on Now provide

good Andrew, Thanks, afternoon, and everyone.

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billion billion, quarter. expect $XX certain $X.XXX $X.XXX including acquisition-related assets. fourth charge We $X.XX This to $X.XX impairment results per of GAAP of expenses a share intangible the operating earnings of million to for in

Before EA to entertainment to perspective the of is tailwinds like strategy. a take interactive the multiyear objectives. in I'd shifts growth with future to further lead structural industry, amplifying and handing advantaged an some on our our position within moment to secular share back Andrew, ongoing early

by upon creating cash accelerating and founded framework for value Our shareholders growth, delivering is leverage increasing forward our long-term flow. operating financial

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year. late impact bookings to results our we net growth, single-digit in we continued excluding low lighter from businesses growth from FX, expect Assuming minimal mid- execution single-digit profitability. expect to impact in And a reflecting repurchases, core future in share underlying high any release our

fuels franchises, bookings growth FY beyond net 'XX bolstered our core our accelerate, sports over next new releases engaging and Looking new couple of and across the iconic growth content in like by our growth years, and and provide communities within portfolio that our other titles the of point Sims Battlefield, IP, experiences underlying profitability. to compounding development online industry-leading bookings massive we inflection net expect increases

objectives, to conversion, and our flow industry-leading increased And global leverage incredible and and to to expect growth and support drive our we meaningful summary, communities our we sharing discipline strategic to I we confident growing our with coming invest in to to continue continue around our cash focus to our continue commitments quarters. and of long-term on for strategic our operating fans even and In technology, and look IP for forward are players talent, our the more shareholders. deliver deliver ability over as value drive objectives.

back Now Andrew. to I'll hand it

inspired by we continue to I'm ahead execute long-term our Stuart. Thanks, as the opportunities strategy.

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for your are I, and Stuart Now questions. here

first Briana, we're question. you. our ready Thank for

from of comes line question the first with Your Instructions] Andrew Jefferies. Uerkwitz [Operator

long one tactical, term. One

On ranges are year fourth wide, to it do. one, you the looks and guidance relative normally tactical the like pretty what full quarter

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Andrew, I'll this is take that. Yes. Joe.

as and more on dynamic that case and the in First quarter opportunity will of range in for One, strength Live us, referenced see. continue the a we all, forward, two both to we Services, for quarter in look reasons. as broader it's the be reflects this part you our core range

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timing we of remarks as of in The have on the second from as flag is reminder released headwind part well also year. the I'd content points X a that prior prepared

based have hence, the that is spread the we top biggest particularly around dynamic between quarter, So the bottom FC and and the service the in Apex.

on appreciate years. you've Got I it. the the given That's color helpful. then And forward

from from just the naturally you primary or just the capitalize a bit give through like on operating guys don't eventually? On us Or that could Skate Is leverage, Services operating fact costs. Sims maybe there? more additional leverage you that or games color little walk drivers us Live is the

Just dynamic it. little kind I a of appreciate that help understand us better. bit

Yes.

start with me Let this.

the on different a Just is growth overarching out the increasing our look term. three bottom flow. kind of Accelerating We're looking over through and grounded on couple the top pieces: lenses. at take at business cash We're framework line, in leverage sort the longer of laying that of a expanding

to to and expect Plus, and franchises. one across development, drive pipeline of is will So release has to player core our by from compounding be do those retention. both been growth we continue our expanded we expect bolstered engagement acquisition,

of the know, up our business X/X you which thus of nature compounded those business, As Live and franchises drive make the ability on to highlights growth evergreen almost through future. the Services that our model

that of nonlinearity timing long around really and second They us later the the depending for multiyear lever on on pipeline. terms that create flagging through are releases journey. part, New an years in they're And we're growth the that term growth accelerate important journey. through how some will we in

we Additional get more greater continuing really through scale through to Service also that to far OpEx Live drive see our continue in leverage digital, structure be context and mix. around of getting and growth. would drive We're terms we be and that cost we of focused accretion to as

that we think four core drives long accretion for So scale. the costs over ongoing will nature leverage to Services, digital us. and across that ultimately that come Add investing a around to pipeline those the of releases core for growth business future and about and term the the current provide our ensure more through that we're Live compounding management pieces: new

question, next Briana please.

Matthew Cost Our Morgan Stanley. next from with question comes

changes and of one. I That's Can the the any be as bit Europe? one. College is closer guess there, to Question on Mobile your get you Because at learnings to I Europe in reflection on point interested little you would game customer see what the business, know publishers. what that on for a that for from think could for existing we've Madden might opt-in be store option any seen come scale it's specifically. margins Question incremental just everyone app in an beyond anything some game One you to early do sort two, sing Apple fees versus upside opportunity that we Is through help an release. recent possibility base? Football in? would just gross least for

on reviewing gross a any those updates quickly all I'll you're to of to perspective. that first. still business working We're touch the Apple actively Yes, one sort as may and update to App aware the the fees. to flow intentions European of through our tied and from margin understand changes their potential implications of Store

to gain impact no sort a and quarter that gross we of point. or able at might more insight of how reflection terms us update As next for of be margin, more in through a understanding, but update that we'll provide this map our

And on will College be Football, it our expectation is additive.

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comes with Our Chris Schull from next question UBS.

You prioritizing which growth. that investment mentioned beyond? appreciate And opportunity most incremental to out subscription as announcements the just you do fiscal gaming on also parties? the about you in the the new see you're 'XX gaming. you're do across how particular, into portfolio, then drive but And you're looking we've for and largest franchises, multiyear subscription I release press in opportunities platform content look business Can in developments growth thinking you your with from of the and your you seeing balance some how making third peers to play? seen EA role what remind maybe us traction versus your and around you're available

Yes. Thank Great question. you.

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live evolve And with annual cadence existing plus these on that month-by-month releases services. evolve or a are franchises either

this first year in growth think about of about was base closely in with as years. the of the branding. Madden and broader that is foundation believe go ever coming about core What NFL also in FC. partnering the It past building football more investing us expanding FC down territory ultimately, it's we more next we than as we FC so and those had is but quarters and and through some leagues Battlefield growth Sims having Apex before. college And we've think we business, spoken the gives in our Again, and for the in brand few the around opportunities of the we

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question, you, next Thank Brian, Chris. please?

ROTH next question the from Handler comes Our Eric with MKM. line of

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can best say is So watch this space. I

what a you as of an quick if state you're could seeing. of of mobile give little of wonder industry, just just about update I the bit And follow-up. sort the a sort

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question from comes with Markets. Brian Our BMO Capital next Pitz

reports in we've valuable sports one obviously, that Andrew, the likes the NFL seen leagues has in considering EA of stakes of sports. like ownership the and most ESPN, audiences NBA

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Yes. Again, great questions.

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Andrew James. question the of with from next comes Our line Marok Raymond

month dig Fantasy. with I of wanted things the last Apex recent into couple a Final this event, on to

the really complete, affect events, sounded of some more But commentary expensive dynamics? expensive in are that versus what to dynamic that few it event prior items how first that good prepared collection remarks. for for does the was out coming So key with the And learnings but less maybe the player you of guys?

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You kind to next of what question. be the of led my into going was part

of But kind room the about? hinted the partnerships, of is much did events intent come within and of kind there in you partnership for of Apex? for specifically do the smaller the Final intent the Apex So we've seen in increasing cross some out with of crossovers Fantasy substantial And media how rest crossover states, these as how a these more lot past. more

Yes.

to gameplay, and who incredible law that's think Respawn tremendously play. look I from underneath hundreds what Apex where for, those thinking is through characters what we're is That core retention and has these is core, about people in are, attracted that is which an come world. that characters characters team deep tremendous its interact the like. known of still learning in these incredible also Remember, and how and millions of now the game might is

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last our please. you. Thank Operator, question,

Our last with Mike of the Company. question comes from Hickey Benchmark line

we challenge, been seems we horsepower. a from itself because be of kind to, Andrew, platform better going the of First it's have evidence to it like And question switch to fair it what know, year. something bigger lend that would obviously from a come announced hasn't is is amount a It this more display, that a that Nintendo out should your game.

as sort that's announced. can So you in as not an about of beneficially talk opportunity much

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Ironman, I a still properties Panther, those all think seem shooter maybe [indiscernible] from mean well. Black fiscal user-generated content, of play as respawn you're to by licensed like I 'XX. developing feasible

So the years just do curious, you your I position X on near be? focused you're leverage, think of of sort here how growth about longer-term but sort your given know a talked in top of substantial of accelerate in sort line in next kind term, your you appears opportunity to pipeline to growth you just

What more those happened, FC, would memory, business. platforms and in improved do deliver been the it that things that resolution, not are there, years lot and where particularly GPU, offered company I comment announced like on franchises like might like we're not to of but have though, players, extent A our or has Battlefield, at think I very Madden, can typically the quiet around or come doing what benefit and like there Yes. is, to Nintendo beginning, biggest to comment you're been battery our that yet I out some our and that announced, extent Apex for console, was a extent suggesting not the things our was I say, the been a acknowledge I'm that think to way. little that new the you're absolutely screen portfolio? immersion has anything the able asking has to on have XX over for life, course any good last able rumors Again, CPU, our that

to players' well Our games at us. experience very for typically ability has level highest really out the our worked

And Switch, so just on without anything say. I commenting Nintendo around would the or at all

portfolio for battery that screen improved them. platforms for offer good are platforms of and New CPU, plays particular plus games typically resolution new is that the a life, community our us, GPU, where memory,

just Mike, of your second question. to kind tackle

longer-term build second, on it first, and 'XX as before, I'll gave a into the answer well. back prepared I remarks we take Let's and

So first on 'XX.

So I key here core have release slate, next Sports talked expect We're consistent to College Live and business. we've summer the our the growth Service obviously in year Game plus Full in XX% a is think in XXXX. we coming

outlook, Wars a our released titles I'll is also year. And continue sports to question saw Battlefield And release your to 'XX X a in we have where and that point do out an slate, just Star Third, investment more we Second, launch a lighter you obviously which around sort comps not called to we leverage. expansive we've FY of like this year. drive

range You bigger but can last see expense obviously virtue getting are resource of sort just continue the and profitability by one, our some we also the opportunities. we of by a to growth reallocate The costs. underlying still against to business, and reminder, is in of that efficiencies leverage scale continue

acceleration of to had highly that think operating be that will 'XX, some into build beneficial into to continue we earlier. leverage the So we questions flows FY term we've that the longer beyond of

put of kind you that So together.

titles and obviously ongoing to the 'XX, the the following laid the slate we earlier. terms core all our of growth cash about and FY do core out in that from incremental accelerates business a we details QX for expense scale to believe in expect an to that years see call, our from releases, core new accretion long-term in through growth we and more ongoing we do those plus get talk comments leverage We flow continue itself We'll as we obviously, lighter go and So business investment business growth. perspective.

passion, global you be through in our all forward to deliver here, extend for I good local operating against congratulate for Bay luck Las didn't I'd close, would value And and increased Area good off, commitment cash your it May to you in growth, of fiscal their Go we delivering quarter sign of their to Super our my our the look forward for We results Okay. on Bowl work ability hard Thank questions Niners. the great X. interactive today. deepest and And term. confident for before and accelerated thank on teams communities. really Vegas, want the on growing questions, hell we're Chiefs the being our XXers remiss flow over game entertainment me our to longer updating team, to year if next a I Sunday, say, incredible our leverage to appreciation in making you

That all concludes meeting. Thank today's for joining. you

may now disconnect. You