Electronic Arts(EA) - 2024 Q4 - Annual Report

Financial Performance - Total net revenue for the fiscal year ended March 31, 2024, was $7,562 million, representing a 2% year-over-year increase[135]. - Live services and other net revenue reached$ 5,547 million, up 1% year-over-year, with net revenue from extra content at $4,463 million, a 4% increase from the previous year[135]. - Net income was$ 1,273 million, with diluted earnings per share of $4.68[135]. - Net bookings for fiscal year 2024 were$ 7,430 million, a 1% increase compared to $7,341 million in fiscal year 2023[145]. - The increase in net revenue was primarily driven by a$ 2,105 million increase from EA SPORTS FC 24 and Star Wars Jedi: Survivor, offset by a $1,969 million decrease from legacy franchises[173]. - Revenue from live services and other includes sales of extra content, subscriptions, and advertising, contributing significantly to overall revenue growth[178]. Revenue Sources - Live services net revenue accounted for 73% of total net revenue in fiscal year 2024, highlighting the importance of extra content and subscription offerings[19]. - EA Play subscription service allows players access to a selection of games for a monthly or annual fee, contributing to recurring revenue[24]. - A significant portion of digital net revenue is derived from sales through major partners like Sony and Microsoft, exposing the company to risks associated with these partners' business health[84]. - The company recognizes revenue from subscriptions ratably over the subscription term as the performance obligation is satisfied[155]. - Revenue for service-related performance obligations for digitally-distributed games is recognized over an estimated eight-month period beginning in the month of sale[163]. Market and Competition - EA's business is subject to intense competition, with the risk of competitors developing more successful products that could shift consumer engagement away from EA's offerings[55]. - The company faces intense competition for licenses and rights to intellectual property, which could adversely affect its ability to develop successful products and services, potentially leading to significant declines in revenue and profitability[72]. - Increased competition for licenses may result in higher costs due to elevated minimum guarantees or royalty rates, which could further reduce profitability[74]. - The company is focused on expanding its global football experiences and engaging more fans through innovative platforms and business models[18]. Operational Challenges - The company has faced development delays in the past, which can lead to significant shortfalls in anticipated revenue and harm profitability[57]. - EA's ability to meet product development schedules is influenced by various factors, including player feedback and the complexity of products[57]. - The company may experience fluctuations in its recurring revenue, which could negatively impact financial and operating results[67]. - The company relies on various business partners, and any failure of these partners to meet their obligations could disrupt operations and harm the company's reputation[75]. Cybersecurity and Risks - The company faces ongoing cybersecurity risks that could materially impact its business and financial results[117]. - The company has experienced security breaches and cyber threats, which could lead to financial losses and damage to its brand and reputation[77]. - Catastrophic events, including natural disasters and cyber incidents, pose risks that could materially impact the company's financial condition and operating results[76]. Employee and Corporate Culture - The company aims to build a supportive culture that prioritizes employee engagement and development, with 78% participation in the latest Engagement Survey[43]. - Attracting and retaining skilled talent is critical, and failure to do so could impair the company's business and culture[83]. Financial Management - The company paid aggregate cash dividends of$ 205 million during the fiscal year ended March 31, 2024, with a quarterly cash dividend of $0.19 per share[124]. - The company repurchased approximately 10.0 million shares for approximately$ 1,300 million under the stock repurchase program during the fiscal year ended March 31, 2024[125]. - A new stock repurchase program was authorized in May 2024 to repurchase up to $5.0 billion of common stock, replacing the previous program[126]. - The company returned$ 1,505 million to stockholders in fiscal year 2024, including $1,300 million for share repurchases and$ 205 million in dividends[208]. Regulatory Environment - The company is subject to evolving global data privacy and consumer protection regulations, which could result in increased operational costs and potential penalties for non-compliance[89]. - New laws and regulations regarding virtual currencies and artificial intelligence could negatively impact the company's operations and financial results[94]. International Operations - For the fiscal year ended March 31, 2024, international net revenue comprised 60% of total net revenue[102]. - The strengthening of the U.S. dollar negatively affects reported international net revenue while positively impacting international operating expenses due to lower translation rates[214]. - The company employs foreign currency forward contracts to hedge against anticipated foreign currency exchange risks, although these hedges do not completely eliminate the impact of currency fluctuations[215].