The Electronic Arts First Quarter Fiscal Year 2024 Conference Call has begun, with Katie Burke, Director of Investor Relations, introducing Andrew Wilson (CEO), Stuart Canfield (CFO), and Laura Miele (President of EA Entertainment, Technology, and Central Development). Burke reminds listeners of the company's SEC filings, earnings release, and earnings slides, and outlines the upcoming earnings calls for the fiscal year. She then reviews the risks associated with forward-looking statements and provides an overview of the financial metrics and comparisons to the prior year. Finally, she turns the call over to Andrew Wilson.

Stuart Canfield has been appointed as the new Chief Financial Officer at Electronic Arts, and the company had a record Q1 with net bookings of $1.6 billion. EA also launched five new titles and provided content updates across 37 titles. FIFA had the biggest Q1 in the company's history, with FIFA Ultimate Team engaging tens of millions of fans and FIFA Mobile attracting over 65 million new players in the quarter. Star Wars Jedi: Survivor was also released to critical acclaim and commercial success, with millions of players engaging with the game.

The development team has committed to bringing a new Jedi experience to PlayStation 4 and Xbox 1, while The Sims 4 community continues to reach a broader global audience. Additionally, mobile business is delivering ahead of expectations, and Lord of the Rings: Heroes of Middle-Earth was launched during the quarter. Apex Legends has 18 million active monthly players and a 70% retention rate, and Season 17 was launched in May with new variations of gameplay and monetization. The team is applying learnings from the season to engage and retain players with new game mechanics and regional marketing.

EA Sports has announced many new initiatives and partnerships, such as Josh Allen as Madden NFL 24’s cover athlete, EA SPORTS FC 24, FC Mobile and FC Online in Asia, FC Tactical mobile and FC Pro esports, and partnerships with UEFA, The Premier League, LaLiga, Frauen-Bundesliga, and Liga F. These initiatives and partnerships will create the most authentic and interactive football experience ever created, with Hypermotion V, PlayStyles by Opta, and a revolutionized Frostbite engine.

EA is preparing to release FC 24 in September, which is the first step towards creating a global platform connecting over a billion fans. They are investing in numerous experiences to grow and deepen the fandom of their IP, including Dragon Age, skate, EA SPORTS College Football, The Sims, Iron Man, Battlefield, Apex Legends, and a Black Panther project. These investments will drive player engagement, tell blockbuster stories, and amplify the power of community in and around their games. They are being thoughtful and deliberate with feature sets, launch timing, and quality in order to ensure long-term profitability.

EA had a strong Q1, with net bookings up 21% year-over-year and full game net bookings up 143% year-over-year, primarily driven by the release of Star Wars Jedi: Survivor. Live services were up 4% year-over-year, and mobile net bookings were up 3% year-over-year. EA SPORTS FIFA and Ultimate Team remain key growth engines for the company, with strength across acquisition, engagement, and monetization.

EA had record net bookings for FIFA Mobile in Q1, and initial metrics for Lord of the Rings: Heroes of Middle-Earth are promising. Apex Legends had lower net bookings due to underperformance from Season 17, and EA is taking a more measured approach for the game. On a GAAP basis, Q1 net revenue was $1.9 billion, and earnings per share was $1.47. Operating cash flow was $359 million, and free cash flow was up 2% year-over-year. EA's Q2 guidance assumes momentum in their existing football business and a strong launch for EA SPORTS FC.

EA is reaffirming its full-year net bookings guidance range of $7.3 billion to $7.7 billion, roughly flat to up 5%, or up 1% to up 6% in constant currency. They are revising their GAAP operating expenses guidance range to $4.25 to $4.37 billion, driven largely by reductions in stock based compensation. This will result in their earnings per share guidance range being $3.42 to $3.92. They also plan to heavily invest ahead of the launch of the fan platform for the global football community EA SPORTS FC and expect Q2 net bookings of $1.7 billion to $1.8 billion, down 3% to up 3%, or down 2% to up 4% in constant currency. Additionally, they are expecting operating cash flow of $1.7 billion to $1.9 billion and capital expenditures of around $275 million, delivering free cash flow of about $1.4 billion to $1.6 billion.

EA believes that mobile gaming is an incredibly valuable platform, both for its ability to generate returns from blockbuster IP and for its ability to acquire new users to its broader ecosystems of play. Andrew Wilson and Stuart Laura are available to answer questions about the company's perspective on mobile performance and growth in the coming years.

EA has seen positive results in their mobile business, outperforming expectations on titles such as Galaxy of Heroes, FIFA, and Lord of the Rings: Heroes of Middle-Earth. They anticipate a 1% growth in Q2 as well. They have seen a stabilization in Q4 and an acceleration in terms of the GAAP Q-over-Q in terms of declines year-over-year. They are looking to build out their biggest IP into blockbuster ecosystems.

Andrew Wilson provides an update on College Football, mentioning that the team is making progress and has most of the school's licenses. He also mentions that the team is working with various governing bodies and third-party partners to include college athletes into the game. He expresses his confidence in the team's work.

Stuart Canfield and Clay Griffin discussed FIFA's success in the last quarter, with net bookings almost doubling quarter-over-quarter, and double-digit growth across all platforms. They also discussed the daily active increases, which is attributed to the team's increased frequency in content drops and the overall performance of the mobile SKU. Andrew Wilson then added that EA has been able to effectively drive their live services at scale, thanks to their Glu acquisition with Golf Clash.

Andrew Wilson discusses how the company builds core game mechanics and drives user acquisition and retention through modalities of play and live events. He mentions the success of their football franchise across console, PC, free-to-play, and mobile, and the learning they have had with Apex. He then talks about the short-term weakness of Apex, but assures that it is not bad enough to affect the full year guide.

EA has been running live services at scale for nearly two decades, and they have seen ebbs and flows with their services, such as with Apex. While EA had a record-level Season 16, Season 17 didn't meet their expectations. They have been responding quickly to community feedback and are already seeing momentum in their current quarter. EA has the strength of Respawn to optimize for shooter audiences and create new game modes with more accessibility for a broader player base.

The Apex team is focused on increasing active monthly players, retaining players, and expanding geographically. They are also looking to monetize the game by introducing IP integration, brand partnerships, and heirlooms that can span across all legends. Despite the more measured approach to the year due to prior Q3 and Q4, FIFA performance has been record-breaking and mobile is ahead of expectations.

Andrew Uerkwitz asked a long-term question regarding the development of connected game ecosystems and blockbuster action titles in a post-COVID world. Laura Miele and Stuart Canfield responded that there is significant growth potential in entertainment and sports divisions, and they are looking forward and continuing to reinvent and evolve their development approach and practices. They also mentioned that their long-term financial thinking has not changed.

Andrew Wilson and Laura discussed reorganizing EA's studios into two new segments, entertainment and sports, in order to better serve their 700 million players. They want to offer interactive entertainment as the first form of entertainment for their players and provide them with games and experiences to connect and stay connected with their friends.

Electronic Arts is looking to serve their growing audience of over 700 million players by empowering their creative leaders with more autonomy and decision-making power. This will allow for accelerated development and growth of their franchises and live services. They believe that interactive entertainment is the future of entertainment and that they need to be able to develop for these audiences in order to be successful.

Andrew and Laura discuss how Electronic Arts is working to build platforms that deliver experiences and entertainment to massive online communities, and how their teams are increasing their clock speed to create higher-quality products to entertain more people worldwide. They emphasize the importance of talent-centric leadership, and how they are focused on removing barriers and friction for their talent to provide content and updates for their players.

Andrew Wilson states that Electronic Arts has great talent, IP, and technology that will help them to accelerate growth in the coming years. He also mentions that they are always looking for opportunities to drive more growth and entertain more people through great games and experiences. He mentions the recent mobile gaming M&A deal in the news and that they are open to potential acquisitions, but that they are currently happy with the capabilities and talent they have.

Laura Miele addressed Colin Sebastian's question about Apex, explaining that changes to the game mechanics and monetization will be seen in Season 18 and more impactful changes will be seen in future seasons. She also stated that some changes, such as modes or mechanics, take longer to develop.

Andrew Wilson and Colin Sebastian discussed the success of the Star Wars franchise, specifically the Battlefront and Jedi games, as well as Galaxy of Heroes. They discussed the potential for future experiences, such as live services, within the partnership between Electronic Arts and Disney. Wilson mentioned that there is nothing to announce yet, but they are exploring possibilities for the franchise.

Andrew Wilson discussed the successful launch of FIFA 24, which was nearly double the performance of FIFA 23. He noted that the launch was successful due to the close collaboration with partners, the right license content, and the positive reception from the global community across different platforms and geographies.

EA is confident in the success of the new franchise symbol, FC, due to the positive launch feedback and the strong performance of the existing franchise. Additionally, they have a large marketing budget to ensure that everyone who loves football knows about FC and the new benefits it brings, which will be available in September for mobile, PC and console players.

Matt, Andrew, and Stuart discussed the financial guidance for the company and how it will be impacted by the launch of the new products. They noted that there will be ebbs and flows in the timing of revenue recognition and that the licensing structure will transition to the back half of the year. They also discussed the impact of investments in long-term projects on margins and asked whether consumer spending will be affected if student debt payments were to resume at scale.

Stuart Canfield and Andrew Wilson address the issue of student debt and its impact on interactive entertainment. Canfield states that margins have been depressed but are expected to improve with the introduction of new titles and business models. Wilson states that interactive entertainment is a more engaging and rewarding form of entertainment than traditional entertainment, and it is also the best value entertainment on a per-hour basis. He does not comment on what will happen with student debt.

EA believes that the trend of big titles getting bigger and live services getting bigger will be beneficial to them in the long-term. They are focusing their investments on their biggest opportunities, and building experiences that will entertain massive online communities. They are also looking into the potential of relaunching titles on mobile, with an approach that could differ from the prior game.

EA executives Laura Miele and Andrew Wilson discussed the potential for the Apex mobile game to expand into new genres, platforms, and geographic regions, as well as their plans for a record-breaking EA Sports season with the launch of Madden 24 and EA SPORTS FC 24. They believe that big blockbuster games like Dragon Age and Jedi will continue to be the focus of the industry in the future.

This summary was generated with AI and may contain some inaccuracies.