The paragraph is the introduction to Electronic Arts' Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. Abby, the conference operator, introduces the event and hands it over to Andrew Uerkwitz, Vice President of Investor Relations. Andrew introduces the key participants, including CEO Andrew Wilson and CFO Stuart Canfield. He provides information about the availability of their SEC filings, earnings release, and detailed earnings slides. He also mentions future earnings call schedules and gives a disclaimer about forward-looking statements, which can differ from actual results due to various risks. The financial metrics are presented on a GAAP basis except for free cash flow and non-GAAP operating margin. Andrew Wilson then takes over, expressing gratitude for the efforts of EA's teams.

In FY25, the company saw significant success across its gaming portfolio, surpassing expectations in Q4 due to strong execution and strategic focus. EA SPORTS FC experienced renewed growth following a major gameplay update and community engagement efforts, resulting in increased player engagement and net bookings. The Sims and American football games showed double-digit net bookings growth, and the new game Split Fiction launched successfully. FC Mobile also exceeded expectations, with notable increases in player acquisition and daily active users year-over-year, driven by strategic initiatives like hyperculturalization and a web store launch. Overall, these outcomes highlight the company's increasing momentum and effective execution of its strategic roadmap.

The paragraph highlights the growth and diversification of the audience for FC Mobile, noting differences in mobile and HD markets, with significant engagement and monetization in American football games like Madden NFL resulting in over $1 billion in net bookings. Postseason events, such as the NFL draft, continue to engage players beyond traditional seasons. Additionally, UFC 5, F124, and NHL 25 have strengthened player connections. The EA Sports app, in soft launch with LaLiga, shows promising engagement and retention. The company plans to expand its market reach and enhance the app with new features and personalized content, aiming to establish itself as the world's leading interactive sports platform.

The paragraph highlights EA Sports' expansion opportunities, emphasizing a partnership with Apple and MLS to enhance player engagement through FC Mobile. EA Sports achieved record net bookings, driven by successful franchises like EA SPORTS FC and Madden NFL. The Sims franchise also saw significant growth, with new content releases contributing to the best Q4 performance ever. Additionally, a new IP, Split Fiction from Hazelight Studios, exceeded expectations by selling nearly 4 million units, showcasing the impact of shared experiences and compelling storytelling.

The company concluded a transformative year by optimizing resources, managing costs, and seizing key opportunities, setting up for future growth driven by live services and new game launches. In FY26, they plan to release new iterations of Skate and Battlefield. Skate will be a dynamic live service fostering creativity and progression, while Battlefield is adopting a player-first approach through extensive playtesting with global players. Successful testing and high engagement have led to an expansion of their playtesting program, preparing for a global launch to meet strong demand.

The paragraph outlines EA's plans for future growth and innovation across its gaming franchises. The company aims to release a new Battlefield game by FY26, enhance The Sims as a leading creator platform, and unify the franchise ecosystem. EA also sees growth opportunities in its sports franchises, particularly in global and American football, leveraging innovations like the acquisition of TRACAB to enhance gameplay. The relaunch of College Football 25 marks the beginning of a multi-year strategy to expand their audience, already adding over 5 million new fans. EA plans to continue engaging football fans through ongoing developments in EA SPORTS FC, Madden NFL, and College Football.

The paragraph discusses upcoming strategies and developments in the realm of EA Sports' American football and global football franchises, emphasizing a more unified online community through deeper integration between Madden NFL and College Football. The 2026 World Cup is highlighted as a significant opportunity for growth in the global football franchise. EA Sports aims to drive growth with new experiences, platform integration, community tools, and leveraging AI for creative expansion and personalized experiences. The paragraph concludes by mentioning a focused execution strategy in FY25, enhancing their long-term growth outlook as they move into FY26.

In the fourth quarter, the company experienced strong performance driven by EA SPORTS FC's updates and community engagement, boosting both engagement and monetization. The success extended across the American football ecosystem and new releases, resulting in expanded margins and strong cash flow, with over $1 billion returned to stockholders. For FY25, net bookings reached $7.36 billion, a slight decline of 1%, with the American football segment seeing significant growth. However, this was offset by challenges in Apex Legends and FC Ultimate Team. Net revenue was $7.46 billion, with a gross margin improvement due to reduced licensing fees, despite a slight increase in operating expenses. Earnings per share stood at $4.25.

The company achieved its second-highest fiscal year operating cash flow of $2.08 billion, with capital expenditures at $221 million and a resulting free cash flow of $1.86 billion. They returned 145% of this free cash flow, or $2.7 billion, to stockholders through stock repurchases and dividends. In Q4, net bookings reached $1.8 billion, an 8% increase, driven by strong performance in full game net bookings, particularly due to the successful launch of "Split Fiction." Live services accounted for $1.42 billion of the net bookings, with growth in "FC Ultimate Team," "College Football Ultimate Team," and "The Sims." Engagement and monetization improved following updates, with significant growth in "FC Mobile," especially in Southeast Asia and the Middle East. In American football, engagement remained strong, with an increase in weekly active users in Q4 compared to the fiscal year average.

In the recent quarter, College Football Ultimate Team exceeded expectations with a significant increase in average net bookings per spender, aided by notable content updates. Madden NFL 25 also performed well due to expanded platform reach and strong demand. The Sims franchise saw over 30% growth in net bookings thanks to its 25th birthday celebrations, which boosted player engagement. Overall, net revenue increased by 7% to $1.9 billion, while operating expenses decreased by 5%, resulting in a 46% rise in earnings per share to $0.98. The company generated an operating cash flow of $549 million and free cash flow of $495 million. Looking ahead, it projects fiscal year net bookings to rise to $7.6 billion to $8 billion, driven by new launches and growth in key franchises, despite anticipated challenges from currency fluctuations and specific games like Apex Legends.

The company is experiencing challenges as it shifts its catalog focus to major online communities and blockbuster stories, reducing its historical contribution to net bookings and affecting year-over-year comparisons. Apex Legends is expected to see a 40% decline in net bookings for FY26, with stronger headwinds in the first half of the year. Despite this, the company plans to invest in its core players and the franchise's long-term growth. GAAP revenue is projected to be $7.1 billion to $7.5 billion, with operating expenses rising due to Battlefield marketing. GAAP and non-GAAP operating margins are forecasted to improve, and EPS is anticipated between $3.09 and $3.79. The company aims for increased live service growth and has several key releases and events planned through FY '27. Operating cash flow is projected to be $2.2 billion to $2.4 billion, resulting in a free cash flow increase of 6% to 17%. The company is committed to returning at least 80% of free cash flow to shareholders via stock buybacks and dividends by FY '27.

The paragraph outlines the Q1 financial guidance for the company, projecting net bookings between $1.175 billion and $1.275 billion, with a slight decline or a marginal increase. Seasonal factors and specific games like Apex Legends and Catalog contribute to anticipated challenges. However, growth is expected to accelerate in the latter half of the year due to EA SPORTS franchises and a new Battlefield launch. Live services, excluding Apex Legends, are anticipated to grow slightly, with EA SPORTS FC showing positive momentum. For GAAP, expected net revenue is between $1.55 billion and $1.65 billion, with operating expenses increasing between 7% and 8% due to continued investments and resource reprioritization. Earnings per share are projected to range from $0.49 to $0.66. The fiscal year was described as successful, marked by strong franchise performance, expanded margins, significant operating cash flow, and $2.7 billion returned to shareholders.

The paragraph discusses Electronic Arts' (EA) strong position as it enters fiscal years 2026 and 2027, focusing on growth and margin expansion, driven by popular titles like EA SPORTS, The Sims, and Battlefield, as well as new releases. The company emphasizes its multi-year growth trajectory and unchanged financial margin framework. EA is committed to disciplined investment and operational agility to deliver strong returns. CEO Andrew Wilson reflects on FY25 as pivotal, highlighting creative breakthroughs and a stronger player connection. Looking forward, EA remains confident in its strategy, substantial IP, and creative talent to navigate economic uncertainties and lead in a rapidly evolving world. The paragraph also introduces the Q&A session with analysts.

The paragraph discusses a temporary slowdown in the performance of the FC franchise, emphasizing that such fluctuations are typical for large-scale franchises, particularly in a post-COVID context. Andrew Wilson explains that while many global franchises experienced significant slowdowns post-COVID, FC didn't initially because it benefited from continuous growth driven by new players during COVID and the momentum of a World Cup, which boosted acquisition and engagement. The franchise then transitioned directly into a rebrand to FC, which may have also contributed to some volatility. Wilson suggests that understanding these patterns will influence how future FC games are approached.

The paragraph discusses the relaunch of EA Sports' football franchise under the EA Sports FC brand. Despite a strong overall reception and engagement, including being named Sports Game of the Year, there were two main challenges. First, there was less migration from the previous game version to the new one compared to past launches, although player retention in the ecosystem remained stable. Second, the core competitive players found the game more defensively tuned than desired, affecting gameplay outcomes. While generally well-received, the feedback from this important group led to considerations for tuning adjustments in the gameplay experience.

In the paragraph, the company outlines their two-track strategy to transition players from their 24 to 25 game title. The first approach involved personalized marketing to incentivize players still engaged with the 24 version to switch to 25, leading to a successful transition by Q4. The second track involved the development team actively interacting with the core community, gathering feedback, and implementing a significant gameplay update that received positive feedback and re-engaged players. The overall outcome was a year-over-year increase in engagement. The company learned the importance of managing the natural ebbs and flows of online live services and the need to communicate effectively with their core audience and tailor marketing efforts to different player groups.

In this paragraph, the discussion revolves around the company's strategy for future fiscal years, particularly FY26 and FY27. They emphasize the importance of closely collaborating with core cohorts for game tuning and balancing, and have gained insights into encouraging players to transition between annual game versions. The company expresses optimism about entering FY26 with strong momentum, which supports their confidence in the franchise's future. Additionally, the conversation touches upon growth in live services and plans for launching new non-annual titles in FY27. Stuart Canfield confirms that these strategies align with the long-term growth plans outlined during a recent Investor Day, highlighting the company's commitment to expanding margins and cash flow while enhancing growth in live services and preparing for new titles in the pipeline. Overall, the company maintains confidence in its established growth framework.

The paragraph features Eric Sheridan asking two questions about the development and future of the Battlefield game. The first question focuses on what key learnings have been gained from the extended beta testing to ensure both creative and commercial success, and how these learnings compare to previous game versions. The second question seeks insight into the growth investments planned for Battlefield in light of the fiscal '26 guidance. Andrew Wilson responds by stating that this is the largest Battlefield game ever made, with the biggest team and ample development time to achieve high quality in alignment with the community's expectations. He reflects on past games, noting that while they have always been high quality and involved community collaboration, there is room for improvement in understanding and meeting the community's desires. Wilson emphasizes that when done correctly, Battlefield can be the biggest shooter franchise of the year.

The paragraph discusses the development process of the latest Battlefield game, emphasizing the importance of community feedback in shaping the game's features like map construction and weapon lineup. The initiative, called Battlefield Labs, has garnered extensive engagement and feedback from players, helping the developers fine-tune the game. As they expand testing to a broader audience in North America, Europe, and Asia, they aim to align the game's development with player expectations. Additionally, the paragraph touches on financial aspects, noting that this year's operating expenses remain consistent, except for increased marketing costs associated with Battlefield.

The paragraph discusses the company's financial strategy and projections related to their American football video game franchises. It highlights that the main financial focus for the year is the go-to-market costs, with efforts to control other expenses through disciplined cost management. The demand for American football games, particularly after the release of College Football '25, is expected to be high due to growing interest in NFL and college football. The company believes that meeting fan expectations will enable them to capitalize on the expanding popularity of these sports, leading to potential growth in the franchise's fiscal performance.

The paragraph discusses the ambition of building the largest football community and leading digital football fan platform through interactive entertainment, starting with the successful launch of the College Football franchise. The team is focused on strengthening the connection between college football and the NFL, as well as expanding social ecosystems. Stuart Canfield acknowledges that while last year saw record success due to pent-up demand, the expectation is to continue learning and growing the business, albeit with a balanced and pragmatic approach. The goal is to maintain growth in line with the sport's popularity and the engagement of young fans. Doug Creutz and the operator facilitate the conversation about these plans.

In the paragraph, Chris Schoell asks Andrew Wilson how macroeconomic changes might impact their business and about potential pricing strategies for their intellectual property (IP). Wilson, having been with the company for 25 years, discusses how the company has historically been resilient during economic challenges, with their biggest franchises performing well. This is attributed to the essential nature of entertainment as a human need and the value that their games provide. Despite macroeconomic uncertainties, Wilson emphasizes the importance of delivering exceptional entertainment experiences and investing in major franchises that foster both entertainment and connection.

The paragraph discusses the resilience and growth potential of a business amidst macroeconomic challenges. It highlights the shift from selling physical discs to a diverse pricing strategy, including free-to-play and deluxe editions, with the focus on delivering quality and value to the player base. The discussion also includes a brief mention of business guidance with no changes in strategy. Additionally, Andrew Marok from Raymond James asks about the impact of a major game release being moved out of Fiscal 26 on the gaming industry's release schedules and how it affects the competitive landscape for the Battlefield launch and its performance expectations.

In the paragraph, Andrew Wilson discusses the timing and strategy for launching the next Battlefield game, indicating that they aim to release it in fiscal year 2026 when they believe there will be an optimal window. He emphasizes not rushing the launch to preserve the game's value. James Heaney from Jefferies asks about the expected operating leverage in fiscal 2026, to which Stuart Canfield responds by highlighting the benefits of leveraging strong intellectual property (IP) like Battlefield and Skate. He mentions that holding the costs of Battlefield across multiple studios for several years will lead to significant revenue growth at high margins when the games are released, particularly due to their high PC market penetration.

The paragraph discusses a strategic approach to leveraging business growth through disciplined investment structures that have been realigned and prioritized for better outcomes. The speaker emphasizes the benefits of expensing investments and utilizing in-house intellectual property and service scaling to drive growth, resulting in a substantial alignment between cash flow and growth. The conversation then shifts to marketing strategies for the Madden and college football games, highlighting the successful bundling of these games in the past and the expectation of continued interest and participation from fans in both sports. The focus is on providing opportunities for players who enjoy both college football and the NFL.

The paragraph discusses a strategy focused on building the largest American football fan community through games like Madden and college football, and expanding the digital football fan platform. James Heaney and Eric Handler discuss the monetization impact of the World Cup, noting that while spending might not be immediate, it tends to increase later. Andrew Wilson highlights that the World Cup positively influences their business by increasing engagement and acquisition, as global attention on football enhances their franchises.

The paragraph discusses the growth opportunities for EA Sports, focusing on the increased interest in football (soccer) in North America, particularly with the upcoming World Cup. The company experienced a significant increase in its player base during the last World Cup and anticipates further growth as the sport's popularity continues to rise. EA Sports plans to leverage this by engaging fans across various platforms, including console, PC, and especially mobile, to tap into new markets. The success of their college football games and FC titles, along with the strong performance of The Sims, highlights a record year, and the company is optimistic about its future growth prospects.

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