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Electronic Arts Reports Q2 FY19 Financial Results

Category:

Tuesday, October 30, 2018 1:01 pm PDT

Dateline:

REDWOOD CITY, Calif.

Public Company Information:

NASDAQ:
EA
US2855121099
"We continue to deliver strong digital revenues across multiple platforms, business models and geographic territories."

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its second fiscal quarter ended September 30, 2018.

News and ongoing updates regarding EA and its games are available on EA’s blog at www.ea.com/news.

“It was a strong second quarter, as we entertained players with four high-quality new EA SPORTS games, hundreds of content updates in our live services, and esports programs that reached record viewership,” said CEO Andrew Wilson. “We’re incredibly excited to bring innovative new games like Battlefield V and Command & Conquer: Rivals to our players this holiday season, and launch our breakthrough new IP Anthem in February. We’re set to deliver some amazing new ways to play and compete through the rest of this fiscal year and beyond.”

“We’re pleased with the performance of our business through the second quarter, and particularly with the strong digital net bookings,” said COO and CFO Blake Jorgensen. “We continue to deliver strong digital revenues across multiple platforms, business models and geographic territories.”

Selected Operating Highlights and Metrics

  • Digital net bookings* for the trailing twelve months was a record $3.608 billion, up 11% year-over-year and represents 69% of total net bookings.
  • FIFA Mobile daily active players grew 50% year-over-year.
  • The FIFA eWorld Cup Final was record setting, including a 4x increase in global viewership over last year, and more than 20 million players participating through the course of the FIFA 18 Global Series.
  • The Sims™ 4 community downloaded nearly 30 million expansion packs life-to-date and monthly average players continue to grow year-over-year.
  • FIFA 19 was critically-acclaimed as one of the best, most innovative FIFA games in the franchise, and NHL 19 was the highest-rated NHL game on current generation consoles.

* Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games and, for periods after the fourth quarter of fiscal 2018, mobile platform fees.

Selected Financial Highlights and Metrics

All financial measures are presented on a GAAP basis.

  • Net cash from operating activities was $(126) million for the quarter and $1.458 billion for the trailing twelve months.
  • EA repurchased 2.3 million shares for $299 million during the quarter and 7.2 million shares for $897 million during the trailing twelve months.

Impact of Recently Adopted Accounting Standard

At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and earnings per share; however, it does not materially impact net bookings, EA’s operational metric. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

Quarterly Financial Highlights

  Three Months Ended
September 30,
2018   2017
(in $ millions, except per share amounts)
Digital net revenue 780 689
Packaged goods and other net revenue 506   270  
Total net revenue 1,286   959  
 
Net income (loss) 255 (22 )
Earnings (loss) per share 0.83 (0.07 )
 
Operating cash flow (126 ) 52
 
Value of shares repurchased 299 153
Number of shares repurchased 2.3 1.3
 

While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and tax rate of 18% was used internally by company management to adjust its fiscal 2019 GAAP results in order to assess EA’s operating results:

  Three Months Ended September 30, 2018
  GAAP-Based Financial Data
(in $ millions)

Statement
of
Operations

 

Acquisition-
related
expenses

 

Change in
deferred net
revenue
(online-
enabled
games)

 

Mobile
platform
fees

 

Stock-based
compensation

Total net revenue

1,286

 

-   (20 )   (44 )   -
Cost of revenue 418   (1 ) -   (44 ) (1 )
Gross profit 868 1 (20 ) - 1
Total operating expenses 610   (8 ) -   -   (65 )
Operating income 258 9 (20 ) - 66
Interest and other income, net 18   -   -   -   -  
Income before provision for income taxes 276 9 (20 ) - 66
Number of shares used in computation:
Diluted 307
 

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended June 30, 2018.

TTM Financial Highlights

  Twelve Months Ended
September 30,
2018   2017
(in $ millions)
Digital net revenue 3,619 3,187
Packaged goods and other net revenue 1,546 1,897
Total net revenue 5,165 5,084
 
Net income 969 * 1,187
 
Operating cash flow 1,458 1,802
 
Value of shares repurchased 897 555
Number of shares repurchased 7.2 5.7
 
*During the twelve months ended September 30, 2018, EA recognized $235 million of incremental income tax expense due to the application of the Tax Cuts and Jobs Act.

While EA no longer reports certain non-GAAP financial measures, the following GAAP-based financial data and tax rate of 18% in fiscal year 2019 and 21% in fiscal year 2018 was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

  Twelve Months Ended September 30, 2018
  GAAP-Based Financial Data
(in $ millions)

Statement
of
Operations

 

Acquisition-
related
expenses

 

Change in
deferred net
revenue
(online-
enabled
games)

 

Mobile
platform
fees

 

Stock-based
compensation

Total net revenue 5,165 -   125   (93)   -
Cost of revenue 1,367 (4) - (93) (3)
Gross profit 3,798 4 125 - 3
Total operating expenses 2,508 (20) - - (265)
Operating income 1,290 24 125 - 268
Interest and other income, net 43 - - - -
Income before provision for income taxes 1,333 24 125 - 268
 

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended June 30, 2018.

Operating Metric

The following is a calculation of our total net bookings for the periods presented:

  Three Months Ended   TTM Ended
September 30, September 30,
2018   2017 2018   2017
(in $ millions)
Total net revenue 1,286

959

 

5,165

5,084

 

Change in deferred net revenue (online-enabled games) (20 ) 220 125 32
Mobile platform fees (44 ) -   (93 ) -  
Net bookings 1,222   1,179   5,197   5,116  
 

Business Outlook as of October 30, 2018

The following forward-looking statements reflect expectations as of October 30, 2018. Electronic Arts assumes no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this release and in EA’s annual and quarterly SEC filings.

Fiscal Year 2019 Expectations – Ending March 31, 2019

Financial metrics:

  • Net revenue is expected to be approximately $5.150 billion.
    • Change in deferred net revenue (online-enabled games) is expected to be approximately $270 million.
    • Mobile platform fees are expected to be approximately $(220) million.
  • Net income is expected to be approximately $962 million.
  • Diluted earnings per share is expected to be approximately $3.11.
  • Operating cash flow is expected to be approximately $1.650 billion.
  • The Company estimates a share count of 309 million for purposes of calculating fiscal year 2019 diluted earnings per share.

Operational metric:

  • Net bookings is expected to be approximately $5.200 billion.

In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:

  Twelve Months Ending March 31, 2019
  GAAP-Based Financial Data

(in $ millions)

GAAP
Guidance

 

Acquisition-
related
expenses

 

Change in
deferred net
revenue
(online-
enabled
games)

 

Mobile
platform fees

 

Stock-based
compensation

Digital net revenue

3,805

 

-  

195

 

  (220 )   -
Packaged goods & other net revenue   1,345     -     75     -     -  
Total net revenue   5,150     -     270     (220 )   -  
Cost of revenue 1,423 (5 ) - (220 ) (2 )
Operating expense 2,703 (35 ) - - (298 )
Income before provision for income taxes 1,086 40 270 - 300
Net income 962
Number of shares used in computation:
Diluted shares 309
 

Third Quarter Fiscal Year 2019 Expectations – Ending December 31, 2018

Financial metrics:

  • Net revenue is expected to be approximately $1.375 billion.
    • Change in deferred net revenue (online-enabled games) is expected to be approximately $405 million.
    • Mobile platform fees are expected to be approximately $(55) million.
  • Net income is expected to be approximately $188 million.
  • Diluted earnings per share is expected to be approximately $0.61.
  • The Company estimates a share count of 306 million for purposes of calculating third quarter fiscal year 2019 diluted earnings per share.

Operational metric:

  • Net bookings is expected to be approximately $1.725 billion.

In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:

  Three Months Ending December 31, 2018
  GAAP-Based Financial Data

GAAP
Guidance

Acquisition-
related
expenses

 

Change in
deferred net
revenue (online-
enabled games)

 

Mobile
platform
fees

 

Stock-based
compensation

(in $ millions)                  
Total net revenue  

1,375

 

  -    

405

 

  (55 ) -  
Cost of revenue 446 (1 ) - (55 ) -
Operating expense 730 (10 ) - - (80 )
Income before provision for income taxes 212 11 405 - 80
Net income 188
Number of shares used in computation:
Diluted shares 306
 

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-Q for the fiscal quarter ended June 30, 2018.

Conference Call and Supporting Documents

Electronic Arts will host a conference call on October 30, 2018 at 2:00 pm PT (5:00 pm ET) to review its results for the second quarter ended September 30, 2018 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number 844-215-4106 (domestic) or 918-534-8313 (international), using the password “EA” or via webcast at EA’s IR Website at http://ir.ea.com.

EA has posted a slide presentation with a financial model of EA’s historical results and guidance and Investor Accounting FAQ on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website.

A dial-in replay of the conference call will be available until November 13, 2018 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 4867728. An audio webcast replay of the conference call will be available for one year on EA’s IR Website.

Forward-Looking Statements

Some statements set forth in this release, including the information relating to EA’s fiscal 2019 expectations under the heading “Business Outlook as of October 30, 2018,” and other information regarding EA's fiscal 2019 expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate”, “plan”, “predict”, “seek”, “goal”, “will”, “may”, “likely”, “should”, “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements.

Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s titles; the Company’s ability to develop and support digital products and services, including managing online security and privacy; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; the Company’s ability to realize the anticipated benefits of acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic conditions; and other factors described in Part II, Item 1A of Electronic Arts’ latest Quarterly Report on Form 10-Q under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2018.

These forward-looking statements are current as of October 30, 2018. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts.

While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended September 30, 2018.

About Electronic Arts

Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers. EA has more than 300 million registered players around the world.

In fiscal year 2018, EA posted GAAP net revenue of $5.15 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™, Need for Speed™, Dragon Age™ and Plants vs. Zombies™. More information about EA is available at www.ea.com/news.

EA SPORTS, Battlefield, The Sims, Need for Speed, Dragon Age, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL and FIFA are the property of their respective owners and used with permission.

 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in $ millions, except per share data)
       

Three Months Ended
September 30,

Six Months Ended
September 30,

2018 1

2017

2018 1

2017
Net revenue
Product 623 454 825 1,282
Service and other 663   505   1,598   1,126
Total net revenue 1,286 959 2,423 2,408
Cost of revenue
Product 222 300 290 364
Service and other 196   89   343   179
Total cost of revenue 418   389   633   543
Gross profit 868 570 1,790 1,865
Operating expenses:
Research and development 339 331 701 656
Marketing and sales 146 160 286 281
General and administrative 117 118 231 223
Acquisition-related contingent consideration 2 2
Amortization of intangibles 6   2   12   3
Total operating expenses 610   611   1,232   1,163
Operating income (loss) 258 (41 ) 558 702
Interest and other income (expense), net 18   3   37   9
Income (loss) before provision for (benefit from) income taxes 276 (38 ) 595 711
Provision for (benefit from) income taxes 21   (16 ) 47   89
Net income (loss) 255   (22 ) 548   622
Earnings (loss) per share
Basic 0.84 (0.07 ) 1.80 2.01
Diluted 0.83 (0.07 ) 1.77 1.99
Number of shares used in computation
Basic 305 309 305 309
Diluted 307 309 309 313
 

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on July 26, 2018 for the three months ended September 30, 2018 plus a comparison to the actuals for the three months ended September 30, 2017.

 
  Three Months Ended September 30,
2018 1     2018 1   2017
Guidance Variance Actuals Actuals
Net revenue
Net revenue 1,270 16 1,286 959
GAAP-based financial data
Change in deferred net revenue (online-enabled games) (55 ) 35 (20 ) 220
Mobile platform fees (55 ) 11 (44 )
Cost of revenue
Cost of revenue 436 (18 ) 418 389
GAAP-based financial data
Acquisition-related expenses (1 ) (1 )
Stock-based compensation (1 ) (1 ) (1 )
Mobile platform fees (55 ) 11 (44 )
Operating expenses
Operating expenses 674 (64 ) 610 611
GAAP-based financial data
Acquisition-related expenses (9 ) 1 (8 ) (2 )
Stock-based compensation (85 ) 20 (65 ) (61 )
Income (loss) before tax
Income (loss) before tax 168 108 276 (38 )
GAAP-based financial data
Acquisition-related expenses 10 (1 ) 9 2
Change in deferred net revenue (online-enabled games) (55 ) 35 (20 ) 220
Mobile platform fees
Stock-based compensation 85 (19 ) 66 62
Tax rate used for management reporting 18 % 18 % 21 %
Earnings (loss) per share
Basic 0.49 0.35 0.84 (0.07 )
Diluted 0.48 0.35 0.83 (0.07 )
Number of shares
Basic 306 (1 ) 305 309
Diluted 312 (5 ) 307 309
 

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in $ millions)
   
September 30, 2018 1 March 31, 2018 2
ASSETS
Current assets:
Cash and cash equivalents 2,881 4,258
Short-term investments 1,664 1,073
Receivables, net of allowances of $10 and $165, respectively 966 385
Other current assets 292   288  
Total current assets 5,803 6,004
Property and equipment, net 440 453
Goodwill 1,894 1,883
Acquisition-related intangibles, net 100 71
Deferred income taxes, net 112 84
Other assets 101   89  
TOTAL ASSETS 8,450   8,584  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable 168 48
Accrued and other current liabilities 907 821
Deferred net revenue (online-enabled games) 574   1,622  
Total current liabilities 1,649 2,491
Senior notes, net 993 992
Income tax obligations 273 250
Deferred income taxes, net 1 1
Other liabilities 217   255  
Total liabilities 3,133 3,989
 
Stockholders’ equity:
Common stock 3 3
Additional paid-in capital 134 657
Retained earnings 5,199 4,062
Accumulated other comprehensive loss (19 ) (127 )
Total stockholders’ equity 5,317   4,595  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 8,450   8,584  
 

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606) Revenue from Contracts with Customers. EA’s Q2 FY19 Unaudited Condensed Consolidated Balance Sheet reflects the effect of the adoption as of April 1, 2018, which had an impact on the following: receivables, net of allowances, accrued and other current liabilities, deferred net revenue (online-enabled games), deferred income taxes, net, retained earnings and accumulated other comprehensive loss. Financial data for periods prior to April 1, 2018 has not been restated.

2Derived from audited consolidated financial statements.

 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in $ millions)
       
Three Months Ended
September 30,
  Six Months Ended
September 30,
2018 2017 2018 2017
OPERATING ACTIVITIES
Net income (loss) 255 (22 ) 548 622
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion 36 32 74 63
Stock-based compensation 66 62 136 110
Change in assets and liabilities
Receivables, net (591 ) (589 ) (422 ) (454 )
Other assets (28 ) (14 ) 20 66
Accounts payable 124 148 132 104
Accrued and other liabilities 60 216 (25 ) 100
Deferred income taxes, net (20 ) (15 ) (94 ) 40
Deferred net revenue (online-enabled games) (28 ) 234   (375 ) (423 )
Net cash provided by (used in) operating activities (126 ) 52   (6 ) 228  
INVESTING ACTIVITIES
Capital expenditures (31 ) (30 ) (63 ) (63 )
Proceeds from maturities and sales of short-term investments 239 612 446 1,050
Purchase of short-term investments (801 ) (702 ) (1,029 ) (1,395 )
Acquisition, net of cash acquired (8 )   (58 )  
Net cash used in investing activities (601 ) (120 ) (704 ) (408 )
FINANCING ACTIVITIES
Proceeds from issuance of common stock 35 27 36 57
Cash paid to taxing authorities for shares withheld from employees (7 ) (10 ) (96 ) (105 )
Repurchase and retirement of common stock (299 ) (153 ) (599 ) (303 )
Net cash used in financing activities (271 ) (136 ) (659 ) (351 )
Effect of foreign exchange on cash and cash equivalents 3   23   (8 ) 33  
Decrease in cash and cash equivalents (995 ) (181 ) (1,377 ) (498 )
Beginning cash and cash equivalents 3,876   2,248   4,258   2,565  
Ending cash and cash equivalents 2,881   2,067   2,881   2,067  
 
 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions, except per share data)
           
Q2 Q3 Q4 Q1 1 Q2 1 YOY %
FY18 FY18 FY18 FY19 FY19 Change
Net revenue
Net revenue 959 1,160 1,582 1,137 1,286 34 %
GAAP-based financial data
Change in deferred net revenue (online-enabled games)3 220 811 (327 ) (339 ) (20 )
Mobile platform fees (49 ) (44 )
Gross profit
Gross profit 570 659 1,349 922 868 52 %
GAAP-based financial data
Acquisition-related expenses 1 1 1 1
Change in deferred net revenue (online-enabled games)3 220 811 (327 ) (339 ) (20 )
Mobile platform fees
Stock-based compensation 1 1 1 1
Gross profit (as a % of net revenue) 59 % 57 % 85 % 81 % 67 %
Operating income (loss)
Operating income (loss) (41 ) (21 ) 753 300 258 729 %
GAAP-based financial data
Acquisition-related expenses 2 2 6 7 9
Change in deferred net revenue (online-enabled games)3 220 811 (327 ) (339 ) (20 )
Stock-based compensation 62 63 69 70 66
Operating income (loss) (as a % of net revenue) (4 %) (2 %) 48 % 26 % 20 %
Net income (loss)
Net income (loss) (22 ) (186 ) 607 293 255 1,259 %
GAAP-based financial data
Acquisition-related expenses 2 2 6 7 9
Change in deferred net revenue (online-enabled games)3 220 811 (327 ) (339 ) (20 )
Stock-based compensation 62 63 69 70 66
Tax rate used for management reporting 21 % 21 % 21 % 18 % 18 %
Net income (loss) (as a % of net revenue) (2 %) (16 %) 38 % 26 % 20 %
Diluted earnings (loss) per share (0.07 ) (0.60 ) 1.95 0.95 0.83 1,286 %
Number of diluted shares used in computation
Basic 309 308 307 306 305
Diluted 309 308 311 310 307
Anti-dilutive shares excluded for loss position4 3 3
 

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

3The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

4Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable through stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive.

 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
           
Q2 Q3 Q4 Q1 1 Q2 1 YOY %
FY18 FY18 FY18 FY19 FY19 Change
QUARTERLY NET REVENUE PRESENTATIONS
Net revenue by composition
Full game downloads 123 143 232 116 148 20 %
Live services 408 476 698 610 412 1 %
Mobile 158   161   172   231   220   39 %
Total digital 689   780   1,102   957   780   13 %
Packaged goods and other 270   380   480   180   506   87 %
Total net revenue 959   1,160   1,582   1,137   1,286   34 %
Total digital 72 % 67 % 70 % 84 % 61 %
Packaged goods and other 28 % 33 % 30 % 16 % 39 %
Total net revenue % 100 % 100 % 100 % 100 % 100 %
GAAP-based financial data
Full game downloads (4 ) 117 (39 ) (20 ) 9
Live services (98 ) 311 (19 ) (160 ) (84 )
Mobile (8 ) 22   4   (35 ) (24 )
Total digital (110 ) 450   (54 ) (215 ) (99 )
Packaged goods and other 330   361   (273 ) (124 ) 79  
Total change in deferred net revenue (online-enabled games) by composition3 220   811   (327 ) (339 ) (20 )
Mobile platform fees (49 ) (44 )
 
Net revenue by platform
Console 595 810 1,196 705 917 54 %
PC/Browser 196 181 210 197 149 (24 %)
Mobile 162 166 173 233 220 36 %
Other 6   3   3   2     (100 %)
Total net revenue 959   1,160   1,582   1,137   1,286   34 %
GAAP-based financial data
Console 258 710 (313 ) (288 ) 8
PC/Browser (30 ) 83 (20 ) (9 ) (4 )
Mobile (7 ) 21 5 (42 ) (24 )
Other (1 ) (3 ) 1      
Total change in deferred net revenue (online-enabled games) by platform3 220   811   (327 ) (339 ) (20 )
Mobile platform fees (49 ) (44 )
 

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606), Revenue from Contracts with Customers. Topic 606 significantly changes how EA recognizes and reports revenue and diluted earnings per share. For more information about the adoption of Topic 606, including information with respect to mobile platform fees, please refer to the Investor Accounting FAQ on our IR website. Financial data for periods prior to April 1, 2018 has not been restated.

3The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

 
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in $ millions)
           
Q2 Q3 Q4 Q1 Q2 YOY %
FY18 FY18 FY18 FY19 FY19 Change
CASH FLOW DATA
Operating cash flow 52 849 615 120 (126 ) (342 %)
Operating cash flow - TTM 1,802 1,514 1,692 1,636 1,458 (19 %)
Capital expenditures 30 24 20 32 31 3 %
Capital expenditures - TTM 117 116 107 106 107 (9 %)
Repurchase and retirement of common stock 153 150 148 300 299 95 %
DEPRECIATION
Depreciation expense 30 30 31 30 30
BALANCE SHEET DATA
Cash and cash equivalents 2,067 2,566 4,258 3,876 2,881
Short-term investments 2,288   2,318   1,073   1,095   1,664  
Cash and cash equivalents, and short-term investments 4,355 4,884 5,331 4,971 4,545 4 %
Receivables, net 1 812 886 385 371 966 19 %
STOCK-BASED COMPENSATION
Cost of revenue 1 1 1 1
Research and development 36 38 44 47 39
Marketing and sales 9 8 8 7 9
General and administrative 16   17   16   15   17  
Total stock-based compensation 62   63   69   70   66  
 

1At the beginning of fiscal year 2019, April 1, 2018, EA adopted FASB ASU 2014-09 (Topic 606) Revenue from Contracts with Customers. EA’s Q1 and Q2 FY19 Unaudited Condensed Consolidated Balance Sheets reflect the effect of the adoption as of April 1, 2018, which had an impact on receivables, net of allowances. Financial data for periods prior to April 1, 2018 has not been restated.

Contact:

Electronic Arts Inc.
Chris Evenden, 650-628-0255
Vice President, Investor Relations
cevenden@ea.com
or
John Reseburg, 650-628-3601
Vice President, Corporate Communications
jreseburg@ea.com