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EA - Electronic Arts, Inc.
$126.80
1.40(1.12%)8:00:00 PM 5/26/2023
Electronic Arts Inc. is an American video game company headquartered in Redwood City, California. It is the second-largest gaming company in the Americas and Europe by revenue and market capitalization after Activision Blizzard and ahead of Take-Two Interactive, CD Projekt, and Ubisoft as of May 2020. Founded and incorporated on May 27, 1982, by Apple employee Trip Hawkins, the company was a pioneer of the early home computer game industry and promoted the designers and programmers responsible for its games as "software artists". EA published numerous games and some productivity software for personal computers, all of which were developed by external individuals or groups until 1987's Skate or Die!. The company shifted toward internal game studios, often through acquisitions, such as Distinctive Software becoming EA Canada in 1991.

Financials

Quarterly financials
(USD)Mar 2023Q/Q
Revenue1.9B-0%
Gross Profit1.4B+9%
Cost Of Revenue448MM-21%
Operating Income175MM-39%
Operating Expenses1.3B+22%
Net Income-12MM-106%
G&A224MM+38%
Marketing255MM-0%
Amortization26MM-48%
Interest Expense15MM+7%

Revenue Breakdowns

The revenue breakdowns above are extracted from this specific SEC Edgar 10-Q filling, with report date as 2022-12-31 and filed on 2023-02-07. The process is fully automated and without human validation. Although we make every effort getting the relevant information, please be advised that We make no representation or warranties of any kind about completeness, accuracy, reliability, suitability or availability of the information exacted from Edgar 10-K/10-Q filings.

Highlights of Management Discussion and Risk Factors in 10-K/10-Q filling

Positive
1.
Our vision for the future of interactive football with EA SPORTS FC is to create the largest football club in the world, and we believe this is the right opportunity for us so that we can continue delivering innovation and growing to connect more fans on a global scale for years to come.
2.
The global adoption of mobile devices and a business model for those devices that allows consumers to try new games with no up-front cost, and that are monetized through a live service associated with the game, particularly extra content sales, has led to significant sales growth historically in the mobile gaming industry.
3.
Likewise, the consumer acceptance of free-to-play, live service-based, online PC and console games has broadened our consumer base and has begun to expand into the console market.
4.
Through our live services offerings, we offer our players high-quality experiences designed to provide value to players, and extend and enhance gameplay.
5.
We have been able to forecast revenue from these areas of our business with greater relative confidence than for new games, services and business models.
6.
We offer our players high-quality experiences designed to provide value to players and to extend and enhance gameplay.
7.
On a constant currency basis, we estimate that total net revenue would have been $1,957 million, up 9 percent year-over-year.•Live services and other net revenue was $1,259 million, up 7 percent year-over-year.•Gross margin was 69.8 percent, up 5 percentage points year-over-year.
8.
Extra content net revenue has increased as more players engage with our games and services, and purchase additional content designed to provide value to players and extend and enhance gameplay.
9.
During the pandemic, longer-term trends that benefit our business accelerated.
10.
We believe that we can add value to our network by making it easier for players to connect to a world of play by offering choice of business model, distribution channel and device.28Table of ContentsFinancial ResultsOur key financial results for our fiscal quarter ended December 31, 2022 were as follows:•Total net revenue was $1,881 million, up 5 percent year-over-year.
11.
In particular, we have historically derived a significant portion of our net revenue from our global football franchise, the annualized version of which is consistently one of the best-selling games in the marketplace.
12.
This increase was driven by a $238 million increase in net revenue primarily driven by year-over-year growth in both the FIFA franchise and Apex Legends, and the release of Need for Speed Unbound, partially offset by a $146 million decrease in net revenue primarily due to the prior year release of Battlefield 2042 and softness in our mobile portfolio.
13.
We expect them to continue to pursue and strengthen these businesses.
14.
Live services and other net revenue has increased and we have also experienced a significant increase in the percentage of our games purchased digitally over the past two fiscal years.
15.
This increase was driven by a $759 million increase in net revenue primarily driven by sales of extra content for Apex Legends, year-over-year growth in the FIFA franchise, Battlefield 2042, and the addition of Golf Clash, partially offset by a $373 million decrease in net revenue primarily due to the prior year release of Mass Effect Trilogy Remaster and the Star Wars and The Sims franchises.
16.
At our core is a portfolio of intellectual property from which we create innovative games and content that enable us to build on-going and meaningful relationships with a community of players, creators and viewers.
17.
In addition, the gaming, technology/internet, and entertainment industries have converged in recent years and larger, well-funded technology companies have strengthened their interactive entertainment capabilities resulting in more direct competition with us.
18.
As we continue to incorporate new business models and modalities of play into our games, our goal is to continue to look for opportunities to expand the re-occurring portion of our business.
19.
Live services and other net revenue for the nine months ended December 31, 2022 increased $376 million, or 10 percent, as compared to the nine months ended December 31, 2021.
20.
Net revenue for the nine months ended December 31, 2022 increased $386 million as compared to the nine months ended December 31, 2021.
21.
Net revenue for the three months ended December 31, 2022 increased $92 million as compared to the three months ended December 31, 2021.
22.
Live services and other net revenue for the three months ended December 31, 2022 increased $86 million, or 7 percent, as compared to the three months ended December 31, 2021.
23.
Increases in consumer adoption of digital purchase of games combined with increases in our live services revenue generally results in expansion of our gross margin, as costs associated with selling a game digitally is generally less than selling the same game through traditional retail and distribution channels.29Table of ContentsIncreased Competition.
24.
Full game net revenue for the three months ended December 31, 2022 increased $6 million, or 1 percent, as compared to the three months ended December 31, 2021.
25.
Full game net revenue for the nine months ended December 31, 2022 increased $10 million, or 1 percent, as compared to the nine months ended December 31, 2021.
26.
The well-being of our people is our top priority as conditions continue to fluctuate around the world.
Negative
1.
The global macroeconomic environment remains challenging and these trends may not be indicative of results for future periods, particularly if the trend towards digital adoption decelerates and consumer engagement fluctuates, either as a result of global macroeconomic effects related or unrelated to the COVID-19 pandemic.
2.
Live services and other net bookings were $1,655 million for the three months ended December 31, 2022, and decreased $22 million, or 1 percent, as compared to the three months ended December 31, 2021.
3.
In addition, our leading position within the interactive entertainment industry makes us a prime target for recruiting our executives, as well as key creative and technical talent, resulting in retention challenges and increased cost to retain and incentivize our key people.
4.
Net bookings decreased $235 million, or 9 percent, as compared to the three months ended December 31, 2021, primarily due to the prior year release of Battlefield 2042, and a $97 million impact related to fluctuations in foreign exchange rates, net of hedging activities, partially offset by strength in our FIFA franchise.
5.
•Operating expenses were $1,024 million, down 3 percent year-over-year.
6.
Our net revenue attributable to digital full game downloads was $1,282 million, $918 million and $811 million during fiscal years 2022, 2021 and 2020, respectively; while our net revenue attributable to packaged goods sales decreased from $1,076 million in fiscal year 2020 to $695 million in fiscal year 2021 and $711 million in fiscal year 2022.
7.
Concentration of Sales Among the Most Popular Games.
8.
The decrease in live services and other net bookings was primarily due to fluctuations in foreign exchange rates, net of hedging activities and decreased sales of extra content related to Apex Legends, partially offset by strength in our FIFA franchise.
The management discussion contents above are extracted from this specific SEC Edgar 10-Q filling, with report date as 2022-12-31 and filed on 2023-02-07. The process is fully automated and without human validation. Although we make every effort getting the relevant information, please be advised that We make no representation or warranties of any kind about completeness, accuracy, reliability, suitability or availability of the information exacted from Edgar 10-K/10-Q filings.
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