Electronic Arts Reports Q1 FY13 Financial Results

Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its first fiscal quarter ended June 30, 2012.

“We have established an unmatched diversity in our business with multiple brands performing across several channels, business models and geographies,” said Chief Executive Officer John Riccitiello. “This allows us to drive profitable growth in a rapidly transforming marketplace for games.”

“We had a solid first quarter and are reconfirming non-GAAP guidance of annual earnings per share growth of 30% at the midpoint of our guidance,” said Interim Chief Financial Officer Ken Barker. “The $500 million stock buyback demonstrates our confidence in EA’s future.”

“We continue to make progress in our goal of becoming the leading digital entertainment company,” said President of EA Labels Frank Gibeau. “Over the last twelve months, we generated over $1.3 billion in non-GAAP digital net revenue, and approximately two-thirds of our non-GAAP net revenue in the first fiscal quarter was in digital.”

Selected Operating Highlights and Metrics: *On a non-GAAP basis

• EA and Nexon signed a publishing agreement for EA SPORTS™ FIFA Online 3, expected to debut in Korea later this fiscal year. FIFA World Class Soccer and EA SPORTS FIFA Online 2 generated more than $25 million* in digital net revenue in Asia in Q1.
• FIFA Ultimate Team contributed over $30 million* in net digital revenue in the first quarter.
• Battlefield 3™ Premium service sold over 1.3 million subscriptions to date, with all of the revenue deferred and set to be recognized in fiscal Q4.
• SimCity™ Social launched on Facebook and currently has over ten million MAUs.
• STAR WARS®: The Old Republic™ will move to a more accessible two-tiered pricing model in November. Players can chose between a $14.99 premium monthly subscription and a free-to-play model with some restrictions on content and advanced features. Players will be able to purchase upgrades with in-game currency.
• EA’s games and services for mobile phones and tablets have generated a 37% year-over-year increase in digital net revenue*.
• Catalog continues to outperform expectations with Battlefield 3 and FIFA 12 together selling through over 2 million units in the first quarter .
• Trailing twelve month non-GAAP digital net revenue a record $1.342 billion*.
• Trailing twelve month operating cash flow of $307 million, a $30 million improvement from the prior quarter.
• EA’s Origin™ platform for downloading digital games and services has registered over 21 million users, including 9 million mobile users. Origin has signed agreements with 57 independent developers.
• EA’s new Executive Vice President, Chief Financial Officer Blake Jorgensen will join the Company in early September 2012.

Q1 Financial Highlights:

For the quarter, non-GAAP net revenue of $491 million was in line with our guidance of approximately $500 million. Non-GAAP diluted loss per share of ($0.41) was above the midpoint of our guidance of ($0.45) to ($0.40). Non-GAAP net revenue in Q1 fiscal 2013 was slightly lower compared to Q1 fiscal 2012 due to a reduction in distribution revenue in the quarter.

(in millions of $ except per share amounts)			Quarter Ended 6/30/12						Quarter Ended 6/30/11
Net Digital Revenue			$	342					$	232
Net Publishing Packaged Goods and Other Revenue				592						647
Net Distribution Packaged Goods Revenue				21						120
GAAP Total Net Revenue				955						999
Non-GAAP Net Digital Revenue			$	324					$	209
Non-GAAP Net Publishing Packaged Goods and Other Revenue				146						195
Non-GAAP Net Distribution Packaged Goods Revenue				21						120
Non-GAAP Total Net Revenue				491						524
GAAP Net Income			$	201					$	221
Non-GAAP Net Loss				(130	)					(123	)
GAAP Diluted Earnings Per Share				0.63						0.66
Non-GAAP Diluted Loss Per Share				(0.41	)					(0.37	)
Cash Used in Operations			$	(244	)				$	(274	)

Trailing Twelve Month (TTM) Financial Highlights:

(in millions of $ except per share amounts)				TTM Ended 6/30/12					TTM Ended 6/30/11
GAAP Net Revenue				$	4,099				$	3,773
GAAP Net Income (Loss)					56					(151	)
GAAP Diluted Earnings (Loss) Per Share					0.18					(0.47	)
Non-GAAP Net Revenue				$	4,153				$	3,813
Non-GAAP Net Income					277					188
Non-GAAP Diluted Earnings Per Share					0.80					0.57
Cash Flow from Operations				$	307				$	194

Q1 FY13 Digital Metrics:

(in millions)				Quarter Ended 6/30/12				Quarter Ended 6/30/11
GAAP Net Mobile Revenue				$69				$57
Non-GAAP Net Mobile Revenue				$78				$57
Monthly Active Users (MAU) in Social Games				41				32
Core Registered Users				234				125

Stock Repurchase Program

EA has announced that its Board of Directors has authorized a program to repurchase up to $500 million of EA’s common stock.

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