The paragraph is an introduction to the Electronic Arts (EA) Third Quarter Fiscal Year 2025 Earnings Conference Call. It is facilitated by an operator named JL, who introduces Andrew Uerkwitz, the Vice President of Investor Relations. Andrew Uerkwitz welcomes participants and introduces the CEO, Andrew Wilson, and CFO, Stuart Canfield. He mentions the availability of EA's SEC filings, earnings release, and detailed earnings slides on their website. Additionally, a replay and transcript of the call will be posted later. The fourth quarter earnings call is scheduled for May 6, 2025. The presentation includes forward-looking statements that may differ from actual results, and listeners are referred to their recent Form 10-Q for risks that may affect outcomes. Financial metrics are presented on a GAAP basis, except for free cash flow and non-GAAP operating margin. Finally, Andrew Wilson, EA's CEO, expresses gratitude to the teams for their creativity and dedication in the third quarter.

The paragraph discusses the challenges faced by a company in achieving its financial goals for Q3, despite focusing on execution and delivery of sports experiences and entertainment. It highlights a three-pronged strategy for successful storytelling in games and explains how certain titles, like Dragon Age, although well-reviewed, did not captivate a broad audience in a competitive market. Additionally, the paragraph elaborates on the temporary underperformance of EA Sports FC. Despite a strong start and several successes, the game's momentum waned due to weak customer acquisition and reduced player engagement later in the quarter.

The paragraph discusses challenges faced by a gaming company due to flat full HD experiences and slower new player acquisition, leading to underperformance compared to expectations. Player feedback highlighted balance issues, prompting significant gameplay and progression changes released before the "Team of the Year" event. These updates successfully re-engaged over two million players, resulting in high player retention and record active users during the event weekend. Consequently, net bookings increased year-over-year. Although individual dynamics normally wouldn't impact the quarter significantly, their convergence necessitated a comprehensive response to address the downside.

The paragraph discusses EA Sports' strong performance and growth, highlighting a 70% increase in global football franchise net bookings over five years. Despite a temporary dip in Q3 results, the fiscal year 2025 is expected to be their second biggest. EA Sports focuses on creating immersive and authentic sports experiences, contributing to the popularity of their American football ecosystem, which has seen a double-digit increase in players year-over-year. The company is optimistic about the momentum leading into FY '26 and has announced the launch of College Football 2026. EA Sports, along with the NFL and NFLPA, is working to expand the Madden NFL franchise and reach a global audience.

The paragraph outlines the company's strategy to enhance its American football titles by building a large online community and developing innovative social play models. It highlights ongoing investment in the company's core FC business and a vision for future expansion, involving a new world within the FC platform focused on advanced gameplay and social connection tools. The company has acquired TRACAB technologies to leverage its sports tracking and data capture technology, aiming to create more authentic gameplay and advance its vision for the EA Sports app as a leading interactive sports platform.

The paragraph discusses EA Sports' plans to enhance fan engagement through new real-time data technologies and interactive features in their app, alongside expanding its entertainment portfolio. It highlights the launch of Battlefield Labs as a significant step in developing massive online communities and preparing for the game's release in FY '26. The Sims is also celebrating its 25th anniversary with new updates and features, showcasing EA's strategy of engaging players across various geographies and platforms.

The paragraph discusses several strategic moves by The Sims development team and Electronic Arts (EA). It highlights the launch of a full collection of in-game assets created by community creators, marking a step towards a global creator platform. The upcoming launch of SCAPE, a cross-platform gaming model, is on track to promote community-driven gaming. Additionally, EA unified its central technology functions under Chief Technology Officer Matt Thomlinson to embed technology at the core of its operations, aiming to drive innovation and create deeper community connections. EA is focused on its long-term strategy to entertain and connect people worldwide, emphasizing strong creative talent, production, and technology leadership. Future plans involve bold steps across its sports and entertainment portfolio to shape interactive entertainment. The paragraph concludes by transitioning to Stuart Canfield for further insights into the quarter's performance.

The company remains confident in its long-term outlook despite short-term impacts on results. They are focusing on adapting their games and services to evolving player preferences and have announced a $1 billion accelerated stock repurchase, totaling $2.5 billion in their first year of a $5 billion authorization. This move underlines their strategy of returning capital to stockholders and belief in their growth potential, supported by a strong balance sheet and cash flow. In Q3, net bookings were $2.2 billion, a 6% decrease year-over-year, with Dragon Age: The Veilguard underperforming and EA Sports FC 25 softening after a strong start. Full game bookings were down 3%, and live services were down 8% year-over-year. Despite this, live services constitute 74% of the business. The performance of Dragon Age: The Veilguard highlights the industry's shifting landscape, necessitating a reallocation of resources to more promising opportunities. Further insights into their Global Football segment are mentioned.

The global football franchise experienced a mid-single-digit decline in net bookings in Q3 after two years of growth. This was due to lower-than-expected HD game sales, particularly FC 25, and accelerated engagement churn in a competitive cohort. Despite having 40 million HD players, conversion rates were below expectations during December promotions. Live service adaptability led to a turnaround following a January gameplay update, boosting engagement and net bookings. FC Mobile performed well with double-digit growth in new players and monetization, while FC Online saw a slight increase driven by strong promotional content. The company remains optimistic about long-term growth.

In the quarter, the American football community saw significant growth in active users and unique spenders, while Apex Legends' net bookings declined but met expectations. The Sims franchise experienced net bookings growth due to new updates and offerings like the MySim: Cozy Bundle, which exceeded expectations and attracted new players on the Switch platform. Overall, the company reported Q3 net revenue of $1.88 billion, a 3% decline year-over-year, but saw an increase in gross margins and a rise in earnings per share by 4%. Operating cash flow was $1.18 billion, down 7% year-over-year, but free cash flow was strong at $1.89 billion over the trailing 12 months. The company returned $425 million to stockholders through stock repurchases and dividends. Looking ahead, the American football business is expected to surpass $1 billion in net bookings for FY '25, with lower contributions expected from Dragon Age: The Veilguard, and assumptions are being outlined for Global Football.

In the paragraph, the company reports a mid-single-digit decline in Global Football net bookings for Q3, with further double-digit declines in December and early January. However, this trend reversed following updates and the launch of Team of the Year, leading to year-over-year growth. Despite this, the company takes a cautious outlook for FY '25, forecasting a low double-digit decline in Q4 bookings. They remain optimistic about future events and expect FY '25 net bookings to be $7 billion to $7.15 billion, reflecting a 4% to 6% decline. Revenue guidance is adjusted to $7.25 billion to $7.4 billion with operating expenses rising slightly, impacting GAAP and non-GAAP operating margins. Earnings per share are projected to be $3.90 to $4.25, and operating cash flow guidance is set at $1.8 billion to $1.9 billion.

The paragraph outlines financial expectations and strategies for the company. Capital expenditures are projected at $225 million with free cash flow guidance between $1.575 billion and $1.675 billion. Despite experiencing a one-time $150 million cash tax benefit last year, minimal impact from foreign exchange rates is anticipated. For Q4, net bookings are expected to decline 4% to 13% year-over-year, due to reduced performance in Global Football and Apex Legends, somewhat balanced by a new release. The company forecasts Q4 net revenue between $1.682 billion and $1.832 billion, with operating expenses around $1.112 billion to $1.122 billion, and earnings per share between $0.65 and $1. Looking ahead, the company's multiyear financial strategy focuses on flexible management of game development and market dynamics, aiming for growth in FY '26 and beyond, by expanding franchises and exploring advertising opportunities, to drive growth and margin expansion through FY '27. Further updates will be provided in May.

In the paragraph, Andrew Wilson acknowledges that despite exceptional efforts, their desired results weren't met in a recent quarter, particularly with their franchise FC (presumably FIFA Soccer). He emphasizes the importance of adapting to changing definitions of entertainment and exceeding player expectations. Wilson also notes that while the current acquisition of the FC title was slower than anticipated, it is still expected to be the second largest in the franchise history following two years of record growth. Wilson suggests potential reasons for the slower uptake, such as market structure changes or community feedback, and underscores the significance of their ongoing efforts to engage and innovate for their audience. Andrew Marok from Raymond James is introduced and poses a question regarding the slower acquisition of FC.

The paragraph discusses the fluctuations within massive online communities and live service-driven businesses, using the example of FC. Despite minor deviations causing significant quarterly impacts, the franchise has maintained a strong player base with over 40 million participants, partly due to high-profile events like the World Cups and extensive marketing efforts for their new brand, EA Sports FC. The company acknowledges the need to improve transitioning players to newer game versions, despite having received positive feedback for their latest iteration, which won Game of the Year. Management of these communities involves continuously adjusting based on player feedback to enhance the overall gaming experience.

The paragraph discusses the successful tuning and update of a football game's gameplay to address feedback from its competitive player community. The update shifted the game to a more open, aggressive play style, which was well-received and led to high engagement during the Team of the Year event. The game recorded record net bookings and active users, reversing previous declines in engagement. The update reactivated two million ultimate team players and showed positive trends across all player cohorts, maintaining momentum through subsequent events. Despite initial setbacks in the quarter, the company's commitment to its players and strategic adjustments have led to a strong outlook for future quarters.

The paragraph discusses two primary topics. First, Stuart Canfield explains that their financial guidance for Q4 includes anticipated low double-digit declines at the midpoint. However, recent events, such as the Team of the Year, showed a significant year-over-year increase in net bookings, which could positively impact the quarter if the momentum continues. Second, Andrew Wilson addresses the positive community reception to the Battlefield Labs initiative, exceeding expectations due to fan love for the franchise. The company is taking a careful approach to address community concerns about the new Battlefield release.

The paragraph discusses the challenges faced by recent iterations of the Battlefield franchise, which have not been well-received by parts of the global community. In response, the largest development team ever for Battlefield is working closely with players to ensure the game is finely tuned and balanced. The upcoming game is set to be the biggest Battlefield to date, with extensive gameplay options. The team is focusing on testing and tuning to ensure a stable launch. The introduction of "Battlefield Labs" has been positively received by the community. The discussion then shifts to a question about Apex Legends, with Andrew Wilson expressing pride in the franchise and its impact over the last decade.

The paragraph discusses the current state and future plans for the Apex game franchise. Despite having over 200 million players, the business trajectory has not met expectations. Efforts are focused on supporting the existing community by enhancing the game's quality and introducing new content, though progress has been slower than desired. Additionally, there are plans for a significant update to the game after the launch of Battlefield, with aspirations for Apex to be a long-lasting franchise. The company is committed to developing an even larger update, potentially Apex 2.0, on a longer-term horizon.

The article discusses the continued investment in the Apex franchise, particularly focusing on supporting its large community of players and planning a major update post-Battlefield launch. Financial details reveal a year-on-year decline in Q3, though there is an improvement in player conversion and monetization, especially in Battle Pass spending. The outlook for Q4 remains stable. Chris Schoell from UBS raises questions about how major industry releases affect their title launches and potential collaborations with the anticipated new Switch console. Andrew Wilson acknowledges the competitive marketplace.

The company has been part of the gaming industry for 25 years, with a strong track record in competition. They're heavily investing in their upcoming Battlefield game, which they aim to be their largest ever, by involving four studios and dedicating significant time. They're targeting a Fiscal Year 2026 launch but are open to adjusting if the timing doesn't seem optimal for maximizing the game's potential and community growth. They discuss a flexible, multi-year growth framework to adapt to market changes and potential timing issues. They also anticipate growth from other projects like FC's recovery, a College Football game, and lifestyle brands.

In the paragraph, the discussion revolves around the impact of new console releases on EA's business. Andrew Wilson highlights that new consoles provide an opportunity for EA to acquire new players, emphasizing the success of their franchises on Nintendo platforms and the potential for titles like FC and Madden to perform well. He mentions the unexpected success of The Sims and MySims: Cozy Bundle, with 50% of players being new to EA, showcasing the potential of new platforms to reach new communities. Chris Schoell thanks Andrew for the insights, and the operator introduces the next question from Clay Griffin, who asks about the performance of FC, noting that engagement has declined more than expected over the quarter.

In the conversation, Andrew Wilson discusses the impact of the new "Rush" mode in a game, noting that unlike the "Volta" mode, Rush integrates more comprehensively and has become the game's second most played mode. Although it's not yet monetized, it is expected to contribute positively to monetization in the future. Wilson attributes a recent drop in engagement to challenges in acquiring new players and gameplay issues which have since been addressed, leading to positive trends. He concludes that Rush is beneficial for the franchise in the long term. Clay Griffin then inquires about reported issues like server delay and desync in FC 25 and how these might be affecting gameplay, asking for clarification on whether these problems are significant and how they might be resolved.

In the paragraph, Andrew Wilson discusses the stability of their current gaming platform, suggesting it is more stable than previous versions. He acknowledges occasional server issues but claims they have minimal impact on player experience. Mike Hickey then asks about growth expectations for fiscal 2026 without the release of Battlefield and comments on the success of their College Football game, suggesting pent-up demand may have boosted its growth. Stuart Canfield responds, indicating that they expect growth in 2026 due to broader pipeline initiatives, including but not exclusively reliant on Battlefield. He mentions ongoing developments with their FC platform and anticipates further opportunities as they approach the World Cup year in North America and the launch of SCAPE.

The paragraph discusses the continued expansion efforts for the Sims franchise and American football games, including Madden and college football. The focus is on growing the audience and platforms, particularly with the anticipated return of college games in the 2020s. The company expects growth by 2026 through a multiyear framework to stabilize timing and set benchmarks for business advancement over the next 12 to 24 months. The demand for college games is strong, driven by young athletes who serve as franchise ambassadors and the growing popularity of college football, alongside the expanding NFL reach, including new broadcasting deals with platforms like Amazon and Netflix.

The paragraph discusses the growth potential of American football, both college and NFL, by merging communities to enhance user experiences through competition, collaboration, and social connections. The speaker expresses confidence in the early stages of building a massive online community akin to FC and highlights the potential for year-over-year growth in the American Football business. Additionally, the discussion touches on interactive entertainment's evolution, driven by player expectations, with a strong pipeline of future projects such as Battlefield and SCAPE. The speaker is optimistic about expanding EA Sports franchises and delivering sustainable growth, long-term value, and engaging experiences for players worldwide.

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