Electronic Arts Inc. Q1 FY2025 earnings call

• EA started FY '25 strongly, surpassing net bookings guidance and executing across the business. Progress was made in three strategic priorities: entertaining/engaging large online communities, telling compelling stories, and leveraging community power in games.
• EA SPORTS experiences are advancing sports culture, with titles like EA SPORTS FC '24, F1 '24, and Madden NFL 24 performing well. The successful debut of EA SPORTS College Football 25, and the promising outlooks for Madden NFL 25 and FC 25, along with the announcement of Dragon Age: The Veilguard for fall, were highlighted.
• Stuart Canfield noted the strong Q1 results that exceeded expectations, emphasizing focused investment in teams and early signs of momentum such as the positive reception of EA SPORTS College Football 25.

In the first quarter, total net bookings amounted to $1.26 billion. Full game net bookings stood at $168 million, while live services and other net bookings were $1.09 billion. On a GAAP basis, net revenue for Q1 was $1.66 billion. Apex Legends' year-over-year declines improved sequentially and aligned with expectations. The EA SPORTS FC franchise had results better than expected but saw a quarter-over-quarter decline, whereas EA SPORTS FC Mobile achieved a record Q1 net bookings result. In terms of revenue contribution, live services and other net bookings made up a larger percentage at $1.09 billion compared to the $168 million from full game net bookings.

For Q2, net bookings are expected to be in the range of $1.95 billion to $2.05 billion, representing a year-over-year increase of 7% to 13% (or 8% to 13% in constant currency). GAAP net revenue is projected to be between $1.9 billion and $2 billion, with cost of revenue ranging from $420 million to $450 million and GAAP operating expenses between $1.19 billion and $1.2 billion. The full-year net bookings guidance was reaffirmed at $7.3 billion to $7.7 billion, a year-over-year change of down 2% to up 4%.

There were no specific risks detailed in the transcript beyond the general disclaimers regarding forward-looking statements and actual results potentially differing from expectations.

Q: How to build on Madden's global momentum and key learnings from EA SPORTS FC rebranding?

A: For Madden, growth involves expanding geographically, demographically, on platforms, and through business models. For EA SPORTS FC, learnings include expanding gameplay, commercial relationships, going beyond traditional play, and accelerating development.

Q: Potential cannibalization of Madden Ultimate Team by College football's Ultimate Team and AI efficiencies in College football development?

A: College and Madden are complementary, bringing in new players and those returning. AI and ML played a role in College football development by speeding up the process of incorporating 11,000 player likenesses into the game.

Q: Why the full-year outlook didn't show more from Q1 and the size of Copa and EURO uplift?

A: It reflects momentum building, the phasing of releases, and prudence regarding Apex. Copa and EURO provided an uplift but are not expected to repeat fully.

Q: Potential disruption from the video game strike and impact on the release schedule?

A: No immediate disruption is expected as the strike is limited to games starting production after September 2023.

Q: Factors in releasing games on previous and current gen consoles and player reception to Apex battle pass changes?

A: Factors include geographic dispersion, community dispersion, and gameplay. The Apex team listens to community feedback on battle pass and is working on improvements.

Q: Industry dynamics and growth catalyst for the Sims franchise?

A: The industry is seeing a secular shift towards major franchises with expanded play, creation, watching, and connection. The Sims 4 has updates and plans for more social interaction and platform expansion.

Q: Thoughts on free to play as a monetization strategy versus multi-modal monetization?

A: Free to play is a way to reach more players across platforms and business models, contributing to growth for the company and the industry.