Electronic Arts Inc. Q3 FY2025 earnings call

• Thanked teams for their creativity and dedication in Q3, but noted Q3 wasn't the desired financial performance.
• Discussed Dragon Age: The Veilguard underperforming due to evolving market dynamics and EA Sports FC 25's initial strong start then softening, with factors like soft top-of-funnel acquisition and engagement churn contributing.
• Outlined actions taken for EA Sports FC, including gameplay updates and positive response to the Team of the Year event.
• Highlighted investments such as acquiring TRACAB technologies for better sports tracking and analysis, and progress on Battlefield Labs, The Sims updates, and SCAPE launch.
• Emphasized technology alignment with unifying central technology functions under a single CTO.

In Q3, net bookings were $2.2 billion, down 6% year-over-year. Full game net bookings were $633 million, down 3% year-over-year, and live services and other were $1.58 billion, down 8% year-over-year. Dragon Age: The Veilguard underperformed due to competitive dynamics in the single-player RPG market. EA Sports FC 25 started strong but softened through the holiday period; FC Mobile saw double-digit growth in new players, engagement, and monetization year-over-year, while FC Online was up slightly. The American football community had weekly active users and total unique spenders up double-digit year-over-year. Apex Legends net bookings were down year-over-year but in line with expectations. The Sims franchise had year-over-year net bookings growth with new updates and experiences.

• Updated FY '25 guidance, with American football business on track to surpass $1 billion in net bookings. Lower contributions from Dragon Age: The Veilguard. Global Football net bookings expected a low double-digit decline in Q4. FY '25 net bookings expected $7 billion to $7.15 billion, down 6% to 4% year-over-year. GAAP net revenue guidance lowered to $7.25 billion to $7.4 billion, operating expenses $4.38 billion to $4.39 billion, GAAP operating margin 19.2% to 20.5%, non-GAAP operating margin 30.5% to 31.6%, earnings per share $3.90 to $4.25. Q4 net bookings expected $1.444 billion to $1.594 billion, down 13% to 4% year-over-year, net revenue $1.682 billion to $1.832 billion.

• Soft top-of-funnel acquisition and lapsed engagement in EA Sports FC 25 as contributing factors to performance downside.
• Competitive market dynamics that can impact game performance.
• Potential FX impact on financials, though minimal as noted.

Q: What are the drivers behind the slower uptake of EA Sports FC 2025?

A: Factors include players being satisfied with prior versions, need to better bring players across to the new version, and faster-than-expected engagement churn in a competitive cohort. The team has seen progress with gameplay updates and events.

Q: How has the community reception to Battlefield Labs been?

A: Response has been overwhelmingly positive and beyond expectations, driven by fan love for the franchise and the team's approach to working closely with the community.

Q: What's the progress update on Apex Legends?

A: Q3 was largely in line with expectations, with some sequential improvement in player conversion and monetization, and ongoing work on content enhancements and a potential major update post Battlefield launch.

Q: How does the industry pipeline influence EA's willingness to launch titles?

A: EA considers competition and will adjust launch timing based on market dynamics, with a multiyear framework to account for potential growth rates depending on timing.

Q: Thoughts on the new Switch console and its opportunity for EA's IP?

A: New consoles provide access to new players, and EA's IPs have performed well on Nintendo platforms, with opportunities to expand collaboration and reach new communities.

Q: Context around Rush mode in EA Sports FC and server issues?

A: Rush is a net positive to the franchise. Server issues are low in overall player impact and part of normal course of business, with efforts to address them.