Sign in

You're signed outSign in or to get full access.

EA

ELECTRONIC ARTS INC. (EA)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 FY22 delivered strong top- and bottom-line growth: net revenue $1.825B (+36% YoY), diluted EPS $0.80, operating income $0.365B, driven by live services (76% of Q4 revenue) and net bookings of $1.751B .
  • Management issued FY23 guidance of $7.6–$7.8B GAAP revenue, $7.9–$8.1B net bookings, EPS $2.79–$2.87, and operating cash flow $1.60–$1.65B; Q1 FY23 guidance set at GAAP revenue $1.675–$1.725B, EPS $0.76–$0.85, net bookings $1.20–$1.25B .
  • CFO flagged FX (~3pt headwind) and Russia/Belarus sales stoppage (−1pt bookings, −2pt underlying profit) yet still guided to constant-currency net bookings growth of 8–10%; management tax rate raised to 19% .
  • Dividend increased 12% to $0.19/share (from $0.17), reinforcing cash return program; live services momentum (Apex, FIFA, mobile) and EA SPORTS FC transition are likely stock reaction catalysts .

What Went Well and What Went Wrong

What Went Well

  • “FY22 was a record year… outstanding engagement in our live services,” with Q4 revenue and profit growth; live services were 85% of net bookings in Q4 .
  • Q4 revenue $1.825B was ahead of internal expectations; operating expenses came in lower than expected due to timing of marketing, supporting EPS $0.80 .
  • Apex Legends Season 12 set engagement records; FIFA 22 delivered its most successful launch to date; FIFA Mobile had its biggest quarter ever with unique new players surging ~80% YoY .

What Went Wrong

  • Macros: FX headwind (~3pts) and cessation of Russia/Belarus sales (−1pt bookings, −2pt underlying profit) tempered FY23 guidance on a reported basis .
  • Battlefield franchise remains under repair; management acknowledged more work to improve the core experience before investing to grow beyond today’s game .
  • Q4 operating expenses rose YoY to $1.041B (vs. $0.852B), reflecting higher R&D and amortization; tax provision increased to $131M (vs. $89M), pressuring net margin versus potential .

Financial Results

MetricQ4 FY21Q3 FY22Q4 FY22
Total Net Revenue ($USD Billions)$1.346 $1.789 $1.825
Gross Profit ($USD Billions)$1.027 $1.158 $1.406
Operating Income ($USD Billions)$0.175 $0.102 $0.365
Net Income ($USD Billions)$0.076 $0.066 $0.225
Diluted EPS ($USD)$0.26 $0.23 $0.80
Operating Cash Flow ($USD Billions)$0.371 $1.534 $0.444
Margin MetricQ4 FY21Q3 FY22Q4 FY22
Gross Profit Margin %76% 65% 77%
Operating Income Margin %13% 6% 20%
Net Income Margin %6% 4% 12%
Segment Composition (Net Revenue)Q4 FY21Q3 FY22Q4 FY22
Full Game ($USD Billions)$0.250 $0.616 $0.438
Live Services & Other ($USD Billions)$1.096 $1.173 $1.387
Total ($USD Billions)$1.346 $1.789 $1.825
KPIs / Cash ReturnsQ4 FY21Q3 FY22Q4 FY22
Net Bookings ($USD Billions)$1.490 $2.58 $1.751
Live Services Share of Net Bookings (%)——85%
Shares Repurchased (Value, $USD Millions)$325 $325 $325
Cash Dividend Paid ($USD Millions)$49 $48 $48

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP Net RevenueFY23—$7.600–$7.800B Initial issue
Net BookingsFY23—$7.900–$8.100B Initial issue
Net IncomeFY23—$793–$815M Initial issue
Diluted EPSFY23—$2.79–$2.87 Initial issue
Operating Cash FlowFY23—$1.600–$1.650B Initial issue
Management Tax RateLong-term18%19% Raised
GAAP Net RevenueQ1 FY23—$1.675–$1.725B Initial issue
Net BookingsQ1 FY23—$1.200–$1.250B Initial issue
Diluted EPSQ1 FY23—$0.76–$0.85 Initial issue
DividendQuarterly$0.17/share$0.19/share Raised

Q4 FY22 actuals versus prior intra-quarter guidance (Feb 1, 2022):

MetricGuidance (Q4 FY22)Actual (Q4 FY22)Variance
GAAP Net Revenue ($USD Billions)$1.759 $1.825 +$0.066B
Cost of Revenue ($USD Billions)$0.404 $0.419 +$0.015B
Operating Expenses ($USD Billions)$1.086 $1.041 −$0.045B
Income Before Tax ($USD Billions)$0.259 $0.356 +$0.097B
Diluted EPS ($USD)$0.46 $0.80 +$0.34

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Mobile growth & IDFAMobile softness from IDFA; building mobile org via Glu/Playdemic; minimal FY22 guide impact; Apex/BF mobile testing underway . Q3: “mobile a core growth engine,” double-digit growth expected; FIFA Mobile update performing strongly .FY23 OpEx to fund UA for Apex Mobile, Lord of the Rings; underlying ROAS near pre-IDFA; OCF implies FCF $1.4–$1.45B despite timing/tax .Improving execution; investment upfront, margins expand over time .
FIFA license → EA SPORTS FCQ2: multi-year football strategy; broad licensing (>300 partners) . Q3: FIFA leaders reaffirm portfolio strength .Announced EA SPORTS FC branding for next fiscal year; focus on modalities, partners; 150M+ unique FIFA accounts; World Cup content in the final FIFA-branded release .Confident transition; partner support; marketing investment TBD .
FX & Russia impactsNot present in Q2/Q3 as explicit points.FX ~3pt headwind; Russia/Belarus stoppage −1pt bookings, −2pt underlying profit; constant-currency bookings growth 8–10% .New headwinds; mitigated by portfolio durability .
Apex Legends cadence & scaleApex approaching ~$1B annual; MAUs +30%; Season updates drive monetization; long-term live service strategy .Season 12 record engagement; console/PC growth and major mobile launch planned; profitable growth again in FY23 .Sustained strength; expanding across platforms .
Supply chain (consoles/GPUs)Concern in Q2/Q3 but portfolio resilience highlighted .Management sees Gen5 console units up YoY, tailwind to business .Improving availability .
Macro/recession readinessQ3: diversified portfolio, live services resilience .Prepared to invest from position of strength; cost discipline with plan flexibility .Prudent, opportunistic .
Advertising in free-to-playQ2: Glu ad stack being applied; potential revenue uplift .Ads viable when player experience benefits; continue testing .Expanding, player-first .
Battlefield strategyQ2/Q3: acknowledging BF2042 miss; plan to fix core and build sustainable live service .Focused on core quality; mobile testing; investment to grow after core fixed .Repair phase continues .

Management Commentary

  • CEO: “FY22 was a record year… We delivered $7.515 billion in net bookings and underlying profit grew more than 20%… our talented teams rose to the challenge” .
  • CFO: “Q4 net revenue… ahead of our expectations… operating expenses came in lower than our expectations… We generated $444 million in operating cash flow during the quarter” .
  • CEO on EA SPORTS FC: “We’re excited to grow EA SPORTS FC… with over 300 license partners… the future of global football is huge” .
  • CFO on FY23 outlook: “FX is a headwind of nearly three points… Russia sales stoppage… puts net bookings guidance in constant currency at 8% to 10%” .

Q&A Highlights

  • Guidance math: Normalizing FX and Russia, FY23 bookings growth sits in high single digits; engagement remained strong post-COVID .
  • FIFA transition: Brand shift enables faster innovation and broader partnerships; World Cup content planned in the final FIFA-branded release; regional league focus drives player relevance .
  • Mobile margin profile: Expect near-term margin compression from UA for major launches; margins accrete at scale given 5+ year live service lifecycles .
  • Apex franchise: Profitable growth planned again in FY23 across HD and mobile; cadence calibrated with community to sustain engagement .
  • Macro discipline: Prepared to invest through uncertainty from a position of strength, with levers to adjust costs if needed .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 FY22 EPS and revenue was unavailable due to data access limits at time of request. As a proxy, EA beat its own intra-quarter guidance on revenue (+$66M) and delivered EPS of $0.80 versus $0.46 guided, driven by lower-than-expected OpEx and strong live services performance .
  • Implication: Street models will likely lift FY23 mobile/live services contributions while reflecting FX/Russia headwinds and increased management tax rate; monitor revisions to revenue/EPS and bookings growth given the constant-currency commentary .

Key Takeaways for Investors

  • Live services strength drove a high-quality beat versus intra-quarter guidance; margins expanded as OpEx timing and engagement supported profitability .
  • FY23 guide shows underlying growth despite FX and Russia pressures; constant-currency bookings growth of 8–10% underlines portfolio durability .
  • Apex (HD + Mobile), FIFA Mobile, and Lord of the Rings are near-term mobile catalysts; expect upfront UA spend with medium-term margin expansion .
  • EA SPORTS FC rebrand in 2023 is a strategic unlock to accelerate content/modalities and partner ecosystem; World Cup content supports FIFA 23 sell-through .
  • Dividend up 12% and ongoing repurchases reflect confidence in cash generation (FY23 OCF $1.60–$1.65B) .
  • Battlefield repair remains a watch item; upside optionality after core fixes and mobile launch, but timeline depends on quality progress .
  • Near-term trading: focus on Q1 FY23 live services phasing (F1 later in quarter, Madden/FIFA in Q2) and FX/Russia impacts; medium-term thesis rests on mobile scaling and EA SPORTS FC execution .