Electronic Arts(EA) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The second quarter of FY 2021 showed continued strength with net revenue and earnings above guidance, driven by live services and new game launches [6][22] - Operating expenses came in materially below expectations, leading to a record trailing 12-month cash flow of $2.04 billion [26][27] - The company initiated a$2.6 billion share repurchase program and declared a quarterly cash dividend of $0.17 per share, marking the first dividend in the company's history [27][28] Business Line Data and Key Metrics Changes - EA SPORTS continues to lead with Madden NFL 21 having nearly 30$500 million in net bookings, with significant growth potential in mobile and international markets [23][17] Market Data and Key Metrics Changes - The FIFA franchise had a 26% year-over-year increase in net bookings, with FIFA 20 reaching nearly 35 million players on console and PC [8][25] - Japan is now the second-largest market for Apex Legends, indicating strong international expansion opportunities [17] - The company expects to double its EA PLAY subscriber base over the next 12 months, with over 6.5 million paid subscribers currently [11][12] Company Strategy and Development Direction - The company plans to launch at least six new games on next-gen consoles in FY 2022, including a new Need for Speed and the next Battlefield game [16][18] - There is a focus on expanding live services and reaching more players across platforms, including new titles on Switch and Google Stadia [14][18] - The company is exploring new mobile game opportunities and partnerships to enhance its mobile gaming portfolio [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth into FY 2022 and beyond, driven by strong engagement and new game launches [31][30] - The ongoing pandemic has shifted entertainment consumption towards online gaming, which the company expects to benefit from [35] - Management is cautious about predicting the impact of COVID-19 resurgence but believes online entertainment will remain a key engagement avenue [34][35] Other Important Information - The company is optimistic about game approvals in China and is focusing on key markets for mobile game rollouts [36][37] - The partnership with Microsoft Game Pass is seen as a strategic move to enhance subscription access and grow the player base [40][41] Q&A Session Summary Question: Trends in Europe and the U.S. amid COVID-19 resurgence - Management noted that the current situation differs from earlier in the year, with expectations of continued online engagement despite pandemic fatigue [34][35] Question: Update on China game approvals for Apex - Management expressed optimism about approvals but acknowledged the unpredictability of the process [36][37] Question: EA PLAY partnership with Microsoft Game Pass - The partnership aims to provide frictionless access to EA PLAY, enhancing player engagement across platforms [40][41] Question: Performance of Madden NFL 21's new mode, The Yard - Early engagement in The Yard has been strong, contributing positively to player experience [46][48] Question: Future of mobile games under new leadership - The new head of mobile games is expected to enhance engagement and monetization strategies for existing franchises [52][55] Question: Free next-gen upgrades and impact on purchasing decisions - Management acknowledged that some players may delay purchases due to the upgrade option but emphasized the importance of consumer experience [59][60] Question: M&A activity in relation to buybacks and dividends - Management clarified that the buyback and dividend do not indicate a lack of interest in M&A, maintaining a focus on growth opportunities [75][78]