Electronic Arts Reports Q3 FY13 Financial Results; 6 of the Top 20 Titles & Number 1 for iOS Games

Related: Gaming

Electronic Arts Inc. today announced preliminary financial results for its third fiscal quarter ended December 31, 2012.

"Despite a challenging quarter, we were able to deliver non-GAAP EPS at the high end of our guidance range," said Chief Executive Officer John Riccitiello. "We are investing for the future wave of growth that we foresee in digital and console."

"We delivered on non-GAAP EPS by driving high-margin digital revenue and through disciplined expense management," said Chief Financial Officer Blake Jorgensen.

"EA had six of the top twenty titles in Western markets in 2012, compared to four in 2011," said Chief Operating Officer Peter Moore. "EA was also the #1 publisher on iOS worldwide for the year."

Selected Operating Highlights and Metrics:
*On a non-GAAP basis

  • FIFA 13 sold through over 12 million units through the third quarter, a 23% increase versus FIFA 12 in the prior year.
  • FIFA 13 digital net revenue topped $100 million* in the quarter, a 98% increase versus FIFA 12 in the prior year.
  • Total FIFA digital net revenue generated over $230 million* in the first three quarters of fiscal 13, including EA SPORTS FIFA Online 2 and FIFA World Class Soccer that together contributed over $60 million*.
  • Battlefield 3 Premium generated over $108 million in sales through the third quarter, and has 2.9 million subscriptions to date.
  • EA had six of the top twenty titles in Western World retail markets in 2012, compared to four in 2011, and was the #1 global publisher in the iOS game market for 2012.
  • The Simpsons: Tapped Out was a top grossing iOS game for the quarter, generating over $23 million* in digital net revenue.
  • EA's games and services for mobile, including handhelds, have generated approximately $100 million* in the quarter, an 18%* year-over-year increase in digital net revenue.
  • EA's Origin platform for downloading digital games and services has registered over 39 million users, including 17 million mobile users. EA has signed agreements with 86 independent developers for Origin.
  • Trailing twelve-month non-GAAP digital net revenue was up 37% to a record $1.5 billion*.
  • Trailing twelve-month operating cash flow was $378 million, a $135 million improvement versus the prior year.
  • EA repurchased 12.2 million shares at a cost of $157 million in the third fiscal quarter, pursuant to a $500 million Share Repurchase Program announced on July 31, 2012, bringing the total shares repurchased under the current program to 20.6 million shares at a total cost of $265 million.
  • Dead Space 3 pre-sells are outpacing Dead Space 2, and Crysis 3 pre-orders are tracking 40% ahead of Crysis 2.

Q3 Financial Highlights:

For the quarter, non-GAAP net revenue of $1,182 million was below our guidance of $1,250 million to $1,350 million. Non-GAAP diluted earnings per share of $0.57 was above the midpoint of our guidance of $0.50 to $0.60.

(in millions of $, except per share amounts)

Quarter
Ended
12/31/12

Quarter
Ended
12/31/11

Digital Net Revenue $ 321 $ 274
Publishing Packaged Goods and Other Net Revenue 568 738
Distribution Packaged Goods Net Revenue 33 49
GAAP Total Net Revenue $ 922 $ 1,061
Non-GAAP Digital Net Revenue $ 407 $ 377
Non-GAAP Publishing Packaged Goods and Other Net Revenue 742 1,225
Non-GAAP Distribution Packaged Goods Net Revenue 33 49
Non-GAAP Total Net Revenue $ 1,182 $ 1,651
GAAP Net Loss $ (45 ) $ (205 )
Non-GAAP Net Income 176 334
GAAP Diluted Loss Per Share (0.15 ) (0.62 )
Non-GAAP Diluted Earnings Per Share 0.57 0.99
Cash Provided by Operations $ 363 $ 475

Trailing Twelve Month (TTM) Financial Highlights:

(in millions of $)

TTM
Ended
12/31/12

TTM
Ended
12/31/11

GAAP Net Revenue $ 3,956 $ 3,865
GAAP Net Income (Loss) 175 (173 )
Non-GAAP Net Revenue $ 3,730 $ 4,204
Non-GAAP Net Income 151 311
Cash Provided by Operations $ 378 $ 243

Q3 FY13 Digital Metrics:

(in millions)

Quarter
Ended
12/31/12

Quarter
Ended
12/31/11

GAAP Mobile Net Revenue

$

86

$

70

Non-GAAP Mobile Net Revenue

$

99

$

83

Business Outlook as of January 30, 2013

The following forward-looking statements, as well as those made above, reflect expectations as of January 30, 2013. Electronic Arts assumes no obligation to update these statements. Results may be materially different and are affected by many factors, including: product development delays; competition in the industry; the health of the economy in the U.S. and abroad and the related impact on discretionary consumer spending; changes in anticipated costs; the financial impact of acquisitions by EA; the popular appeal of EA's products; EA's effective tax rate; and other factors detailed in this release and in EA's annual and quarterly SEC filings.

Fourth Quarter Fiscal Year 2013 Expectations - Ending March 31, 2013

  • GAAP net revenue is expected to be approximately $1.115 to $1.215 billion.
  • Non-GAAP net revenue is expected to be approximately $1.025 to $1.125 billion.
  • GAAP diluted earnings per share is expected to be approximately $0.92 to $1.12.
  • Non-GAAP diluted earnings per share is expected to be approximately $0.57 to $0.72.
  • For purposes of calculating fourth quarter fiscal year 2013 diluted earnings per share, the Company estimates a share count of 305 million.
  • Expected non-GAAP net income excludes the following from expected GAAP net income (loss):
    • Non-GAAP net revenue is expected to be approximately $90 million lower than GAAP net revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);
    • Approximately $40 million of estimated stock-based compensation;
    • Approximately $25 million of gain on strategic investments;
    • Approximately $20 million of acquisition-related expenses;
    • Approximately $5 million of restructuring charges;
    • Approximately $5 million from the amortization of debt discount; and
    • Non-GAAP tax expense is expected to be $62 million to $79 million higher than GAAP tax expense.

Fiscal Year 2013 Expectations - Ending March 31, 2013

  • GAAP net revenue is expected to be approximately $3.703 to $3.803 billion.
  • Non-GAAP net revenue is expected to be approximately $3.778 to $3.878 billion.
  • GAAP diluted earnings per share is expected to be approximately $0.18 to $0.38.
  • Non-GAAP diluted earnings per share is expected to be approximately $0.86 to $1.00.
  • For purposes of calculating fiscal year 2013 diluted earnings per share, the Company estimates a share count of 313 million.
  • Expected non-GAAP net income excludes the following from expected GAAP net income (loss):
    • Non-GAAP net revenue is expected to be approximately $75 million higher than GAAP net revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);
    • Approximately $162 million of estimated stock-based compensation;
    • Approximately $39 million of gain on strategic investments;
    • Approximately $28 million of acquisition-related expenses;
    • Approximately $32 million of restructuring charges;
    • Approximately $20 million from the amortization of debt discount; and
    • Non-GAAP tax expense is expected to be approximately $65 million to $82 million higher than GAAP tax expense.




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