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EA Financials Reveals Release List, Confirms Dead Space 2 PC and New Fight Night

by Rainier on May 11, 2010 @ 3:35 p.m. PDT

EA has released its latest financial results revealing that it did not manage to match last year's $4.2 billion in revenue, as this year fell short at $3.6 billion, and while last year it EA reported a $1.1 billion deficit, it managed to reduce its loss by nearly half to $677 million. In more interesting news, an updated release list confirms Dead Space 2 is coming to PC, while a new Fight Night title seems to be in development as well.

Fiscal Fourth Quarter Results (comparisons are to the quarter ended March 31, 2009)

GAAP net revenue for the fourth quarter was $979 million, up $119 million as compared with $860 million in the prior year. During the quarter, EA had a net benefit of $129 million related to the recoElectrognition of deferred net revenue for certain online-enabled packaged goods games and digital content.

Non-GAAP net revenue was $850 million, up $241 million as compared with $609 million for the prior year. Sales were driven by Battlefield: Bad Company 2, Mass Effect 2, Dante’s Inferno and digital businesses.

GAAP net income for the quarter was $30 million, as compared with a net loss of $42 million for the prior year. Diluted earnings per share were $0.09 as compared with diluted loss per share of ($0.13) for the prior year.

Non-GAAP net income was $23 million as compared with non-GAAP net loss of $120 million a year ago. Non-GAAP diluted earnings per share was $0.07 as compared with non-GAAP diluted loss per share of ($0.37) for the prior year.

“We had an excellent fourth quarter, driving record-breaking non-GAAP revenue in the fiscal year,” said John Riccitiello, Chief Executive Officer. “Battlefield: Bad Company 2 outperformed, which contributed to revenue at the high end of our guidance range, and we exceeded our expectations on the bottom line.”

“We are affirming our FY11 and Q1 non-GAAP guidance and expect to grow profitability in the year ahead,” said Eric Brown, Chief Financial Officer. “Our digital businesses are expected to grow approximately 30%.”

Full Fiscal Year Results (comparisons are to the fiscal year ended March 31, 2009)

GAAP net revenue for the fiscal year ended March 31, 2010 was $3.654 billion as compared with $4.212 billion for the prior year. The Company ended the year with $766 million in deferred net revenue from packaged goods and digital content – up $505 million from a year ago.

Non-GAAP net revenue was $4.159 billion, up two percent as compared with $4.086 billion for the prior year.

GAAP net loss for the year was $677 million as compared with a net loss of $1.088 billion for the prior year. Diluted loss per share was ($2.08) as compared with a diluted loss per share of ($3.40) for the prior year. Fiscal 2010 GAAP results include a $140 million restructuring charge associated with the fiscal 2009 and fiscal 2010 restructuring plans.

Non-GAAP net income was $145 million as compared with net loss of $96 million a year ago. Non-GAAP diluted earnings per share were $0.44 as compared with diluted loss per share of ($0.30) for the prior year.

Trailing-twelve-month operating cash flow was $152 million as compared with $12 million a year ago. The Company ended the year with cash and short-term investments of $1.7 billion.

Fiscal 2010 Highlights

  • EA leads the industry in quality with 20 titles earning a Metacritic rating of 80 or above.
  • EA is ranked #1 publisher with 19 percent segment share, up 1.7 points from the prior year, with four of the top 20 games in North America and four of the top 20 games in Europe.
  • EA is ranked #1 publisher on the PlayStation3, Xbox 360, PC, and PlayStation2. EA is the #1 third party publisher on the Wii and PSP platforms.
  • EA was named to the 2010 Fortune 500 company list in April 2010.
  • Five EA titles sold more than four million units in the fiscal year: FIFA 10, Madden NFL 10, The Sims 3, Battlefield: Bad Company 2, and Need for Speed Shift.
  • EA strengthenedits portfolio by launching new intellectual property – EA SPORTS Active, Dragon Age, and Dante’s Inferno.
  • EA’s non-GAAP digital revenue, which includes online and wireless, was $570 million, up 33 percent year-over-year.
  • EA Mobile, the world’s leading publisher of games for wireless, delivered non-GAAP revenue of $212 million for fiscal 2010 – up 12 percent year-over-year.
  • Battlefield 1943 sold over 1.5 million units to date and is the best-selling download-only game on PlayStation Network and Xbox LIVE Arcade.
  • EA has sold over eight million units worldwide of Hasbro branded family and kids video games to date.
  • The Sims franchise has sold over 125 million units worldwide to date.
  • FIFA 10 has sold over 10 million units since launch.

Business Outlook

The following forward-looking statements, as well as those made above, reflect expectations as of May 11, 2010. Results may be materially different and are affected by many factors, including: development delays on EA’s products; competition in the industry; the health of the economy in the U.S. and abroad and the related impact on discretionary consumer spending; changes in anticipated costs; expected savings and impact on EA’s operations of the Company’s cost reduction plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; changes in foreign exchange rates; the financial impact of potential future acquisitions by EA; the popular appeal of EA’s products; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

EA is affirming its full year FY11 and Q1 non-GAAP guidance.

First Quarter Fiscal Year 2011 Expectations – Ending June 30, 2010

  • GAAP net revenue is expected to be approximately $710 to $750 million.
  • Non-GAAP net revenue is expected to be approximately $460 to $500 million.
  • GAAP diluted earnings/(loss) per share is expected to be approximately a ($0.05) loss to a $0.05 profit.
  • Non-GAAP diluted loss per share is expected to be approximately ($0.35) to ($0.40).
  • For purposes of calculating first quarter fiscal year 2011 earnings/(loss) per share, the Company estimates a share count of 328 million for loss per share computations and 330 million for earnings per share computations.
  • Expected non-GAAP net income excludes the following items from expected GAAP net income:
    • Non-GAAP net revenue is expected to be approximately $250 million lower than GAAP net revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);
    • Approximately $50 million of estimated stock-based compensation;
    • Approximately $15-20 million of amortization of intangible assets;
    • Approximately $5 million of restructuring charges; and
    • $50 to $60 million in the difference between the Company’s GAAP and non-GAAP tax expenses.

Fiscal Year 2011 Expectations – Ending March 31, 2011

  • GAAP net revenue is expected to be approximately $3.35 to $3.60 billion, down from prior expectations of $3.45 to $3.70 billion due primarily to revisions to our release schedule. Non-GAAP net revenue is expected to be approximately $3.65 to $3.90 billion.
  • GAAP operating expense is expected to be approximately $2.3 billion and non-GAAP operating expense is expected to be approximately $2 billion.
  • Other income and expense is expected to be approximately $5 million.
  • GAAP diluted loss per share is expected to be approximately ($0.85) to ($1.15), down from prior expectations of ($0.60) to ($0.90), again due primarily to changes to our release schedule.
  • Non-GAAP diluted earnings per share are expected to be approximately $0.50 to $0.70.
  • For purposes of calculating fiscal year 2011 earnings/(loss) per share, the Company estimates a share count of 329 million for loss per share computations and 331 million for earnings per share computations.
  • Expected non-GAAP net income excludes the following items from expected GAAP net loss:
    • Non-GAAP net revenue is expected to be approximately $300 million higher than GAAP revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);
    • Approximately $200 million of estimated stock-based compensation;
    • Approximately $70 million of amortization of intangible assets;
    • $10 to $15 million of restructuring charges; and
    • ($44) to ($72) million in the difference between the Company’s GAAP and non-GAAP tax expenses.
  • The fiscal year 2011 launch schedule is expected to be more consistent with years prior to fiscal year 2010, with non-GAAP revenue to be allocated as follows during the fiscal year:
    • Q1: approximately 13%
    • Q2: approximately 21%
    • Q3: approximately 42%
    • Q4: approximately 24%

Key Titles – Fiscal Year 2011:

  Label Title Platforms
Q1          
  Games Skate 3 Console  
    Green Day: Rock Band(1) Console  
    All Points Bulletin(1)   PC
  Sports 2010 FIFA World Cup: South Africa Console Handheld/mobile 
    Tiger Woods PGA TOUR Online   PC
    Tiger Woods PGA TOUR 11 Console Handheld/mobile 
Q2          
  Games Need for Speed World   PC
  Sports NCAA Football 11 Console  
    EA SPORTS FIFA Online   PC
    Madden NFL 11 Console Handheld/mobile 
    FIFA 11 Console Handheld/mobile PC
    NHL 11 Console  
  Play MySims SkyHeroes Console Handheld/mobile 
Q3          
  Games Medal of Honor Console Handheld/mobile PC
    Crysis 2(2) Console  PC
    Need For Speed TBA Console Handheld/mobile PC
    EA Partners Game TBA(1) Console Handheld/mobile 
  Sports EA SPORTS MMA Console Handheld/mobile 
    FIFA Manager 11(2)   PC
    NBA Jam Console  
    NBA LIVE 11 Console Handheld/mobile 
    EA SPORTS Active Title TBA Console  
    EA SPORTS Active 2.0 Console Handheld/mobile 
  Play FAMILY GAME NIGHT 3 Console  
    LITTLEST PET SHOP 3 Biggest Stars  Handheld/mobile 
    MONOPOLY Streets Console Handheld/mobile 
    Harry Potter TBA Console Handheld/mobile PC
    EA Play Game TBA Console  PC
    The Sims 3 Console Handheld/mobile 
Q4          
  Games Dead Space 2 Console Handheld/mobile PC
    Dragon Age Title TBA Console Handheld/mobile PC
    Bulletstorm(2) Console  PC
    Need For Speed TBA Console  PC
  Sports Fighting Title TBA Console Handheld/mobile 
  Play New Sims Title TBA   PC
    Spore Title TBA   PC
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