EA's Strong Q3 Performance and Future Franchise Plans
2024-02-02
Electronic Arts (EA) recently held its earnings call for the fourth quarter of fiscal year 2024, with CEO Andrew Wilson and CFO Stuart Canfield in attendance. The call provided insights into the company's financial performance, future outlook, and key franchises.
During the call, EA discussed its strong portfolio of franchises and solid financial performance. While not identified as one of the 10 best stocks to buy now by the Stock Advisor analyst team, EA's performance and franchises have garnered attention.
The presentation and comments during the call included forward-looking statements regarding future events and the company's financial performance, all presented on a GAAP basis.
EA's Q3 results showcased strong engagement and record live services, particularly with the successful launches of EA Sports FC '24 and EA Sports Madden NFL. The Ultimate Team franchise experienced double-digit net bookings growth, and Madden NFL was the best-selling sports game in North America in calendar 2023. Madden NFL 24 engaged more players year over year through innovative gameplay features and compelling live services.
The FC platform, which revolves around football/soccer, exceeded expectations by driving strong engagement across its multi-experience ecosystem. Additionally, the Ultimate Team franchise saw significant growth, with a double-digit increase in daily active users on the mobile platform and a 20% increase in new players on the FC Online platform.
Other franchises, such as The Sims 4 and Battlefield 2042, also demonstrated positive performance. The Sims 4 saw a nearly 30% increase in player engagement, with players spending a total of 1.8 billion hours in the game in calendar 2023. Battlefield 2042 experienced community growth and received positive feedback.
EA is committed to expanding its online communities through deeper investments in its franchises, including advancements in gameplay and enhanced fan immersion. The company plans to bring back EA SPORTS College Football after a decade and aims to deliver bigger, broader games and live services through blockbuster storytelling and new story modes featuring deep, rich characters.
Looking ahead, EA anticipates accelerated growth driven by aligning priorities and investments with the greatest opportunities. The company's net bookings for the third quarter were $2.37 billion, representing a 1% year-over-year increase or 2% in constant currency. Live Services, particularly EA SPORTS FC Ultimate Team, contributed to this growth.
Operating expenses increased by 3% year over year, while GAAP earnings per share for the quarter rose by 47% to $1.07. The operating cash flow for the quarter reached $1.26 billion, a 13% year-over-year increase. Over the trailing 12 months, EA generated a record free cash flow of $2.16 billion. Shareholders also benefited, with $376 million returned through dividends and the ongoing share repurchase program.
For the fourth quarter, EA expects net bookings in the range of $1.625 billion to $1.925 billion, representing a year-over-year decline of 16% to 1%. EA SPORTS FC net bookings are projected to grow mid- to high single digits for the full year, excluding foreign exchange impacts. The expected GAAP earnings per share for the quarter are $0.20 to $0.30.
In summary, EA's recent earnings call provided valuable insights into the company's financial performance, future outlook, and key franchises. The strong performance in Q3, particularly in live services and popular franchises like Madden NFL and FC, solidifies EA's position as a leading player in the gaming industry. With a focus on expanding online communities and delivering engaging experiences, EA is well-positioned for continued growth in the future.