Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Electronic Arts Inc (EA, Financial) beat its net bookings guidance for Q1 2025, indicating strong financial performance.
- The company saw greater than anticipated engagement and monetization in its core live services.
- EA SPORTS college football 25 had a record week one engagement for sports franchises in North America.
- The company initiated a stock repurchase program projected to return $5 billion over the next three years.
- EA's focus on expanding its American football community through new titles like Madden NFL 25 and EA SPORTS college football 25 is showing promising early signs.
Negative Points
- Year-over-year declines in net revenue, down 14% compared to the prior year.
- Apex Legends experienced year-over-year declines, although these were in line with expectations.
- The company is facing potential risks from industry-wide issues such as the actors' strike, although no immediate impact is expected.
- GAAP operating expenses increased by 2% year-over-year, driven by investments in growth initiatives.
- The company is being cautious with its full-year outlook despite strong Q1 and Q2 performance, indicating potential uncertainties ahead.
Q & A Highlights
Q: Can you talk about how you plan on building momentum with the Madden franchise globally over the next 12 to 18 months?
A: Andrew Wilson, Chairman & CEO: We are focusing on geographic, demographic, and platform growth. The NFL is expanding its international presence, and we are introducing new modes to attract younger players. Madden Mobile continues to evolve, and we expect the combination of Madden and college football to grow our football community. We are also exploring new business models to expand our audience.
Q: What are some key learnings from the EA SPORTS FC rebranding exercise?
A: Andrew Wilson, Chairman & CEO: The rebranding allowed us to expand gameplay, commercial relationships, and move faster in development. We are introducing new modalities of play, working with new commercial partners, and expanding beyond traditional gameplay. The rebrand has enabled us to move quickly and align with cultural evolution, benefiting our players globally.
Q: Is there potential for cannibalization between Madden Ultimate Team and the new college football game?
A: Andrew Wilson, Chairman & CEO: We believe the two products are complementary. College football is bringing in new players and re-engaging those who haven't played Madden in years. The MVP bundle of Madden and college football has performed well, indicating complementary nature. We are designing experiences that provide value across both games.
Q: Why didn't the strong Q1 and Q2 guidance flow through to the full-year outlook?
A: Stuart Canfield, Executive VP & CFO: We are building momentum and delivering on our long-term financial framework. We are being prudent with our full-year guidance, considering the upcoming releases of Madden, FC, and Dragon Age. We will reassess and provide updates in our next earnings call.
Q: How do you frame the potential risk of disruption from the video game industry strike?
A: Andrew Wilson, Chairman & CEO: The strike is limited to games commencing production after September 2023. We do not expect any near-term disruption to our current games or live services. We are committed to bargaining in good faith and hope for a resolution at the bargaining table.
Q: What factors go into the decision to release games on previous-gen and current-gen consoles?
A: Andrew Wilson, Chairman & CEO: It depends on where we expect the player base to show up at scale. Supporting each generation has costs, and we focus on platforms with the greatest engagement. For college football, we decided to develop for future-gen platforms to deliver a high level of gameplay and visual fidelity.
Q: How has player reception to the Apex Battle Pass changes been?
A: Andrew Wilson, Chairman & CEO: The team iterates to improve the Battle Pass experience. While some changes were not well-received, the team quickly adjusted based on community feedback. This does not reflect broader monetization trends. We expect positive reception for upcoming seasons with rich content.
Q: What are the dynamics affecting industry growth, and how do you see the Sims franchise evolving?
A: Andrew Wilson, Chairman & CEO: The industry is transitioning towards massive online communities and expanded definitions of play. We are investing in these areas. For the Sims, we are committed to evolving Sims 4 with updates and expanding the universe with new social interactions and platform expansions.
Q: How has your thinking evolved on free-to-play as a monetization strategy?
A: Andrew Wilson, Chairman & CEO: Free-to-play has not diluted industry pricing power. It has grown the industry, especially with mobile. We support all business models to reach a global player base. Our biggest franchises, like FC, Madden, and Apex, utilize free-to-play to expand reach and offer diverse monetization opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
