Electronic Arts Inc. (NASDAQ:EA) Q3 2024 Earnings Call Transcript

And so, what we know to be true is right now, as we think about our players. They spend on average about 90 minutes a session inside of one of our games. They then leave that game experience, where they’ve been deeply connected with their core friend unit, and they go and they talk about that experience on another platform. And then they go and create content about, that experience on yet another platform, and then finally, they go and watch that content on another platform. We do believe, we have a meaningful opportunity over the coming years to actually harness the power of that community, both inside and outside of our games, which is really the third pillar of our core strategy, and will be led by our EA SPORTS brand. So again, a super insightful question, nothing to announce today, but you should imagine that we see the very same thing.

We see an incredible opportunity by virtue of the breadth and depth of our sports portfolio, the breadth and depth of our sports relationships around the world, which I think are unmatched on a global basis, and certainly the size and magnitude of our sports gaming community, and the relationship they have with their favorite sports through us, but more importantly, the connections that they’re making with their friends, as a result of the time they spend with us. We think there’s a meaningful opportunity for us to expand on that, both inside the game, and we’re seeing that already, in our core products like FC and Madden, but also outside the game. And some of the starting points of that, are some of the deals that we’ve done with our licensed partners that do allow us to bring highlights, and other non-gaming content into the ecosystem broadly.

So, best I can say is watch this space.

Eric Handler: Thanks. And just as a quick follow-up, I wonder if you could just give a little bit of an update about sort of the state of the mobile industry, sort of what you’re seeing. Did mobile bookings were up modestly in the quarter. Do you think you’ve reached stabilization and you can expand from here? What are you seeing in the market?

Stuart Canfield: All right. I’ll – give a quick position on the financial framing that you just talked to. So yes, sort of in Q3, we actually tracked up 5% at constant currency when you exclude lapping of Apex from the prior year. We did see improvement sequentially. We saw double-digit improvement between Q2 and Q3. Our overall mobile portfolio, as you talked to, you saw the strength that we called out in particular around FC within that mix. We saw double-digit growth year-on-year, as we even entered a World Cup comp. In terms of how we think about mobile, as we move forward. I think we’ve been very clear on the strategy that, we’re focused on, which continues to lean into the success we’ve seen around FC and our broader ecosystems as both an entry point, and expansion for us in terms of players.

We’ll continue to lean and focus on those across our biggest opportunities through whether it’s FC, Madden, Sims, Battlefield and beyond. Second part is we continue to look for the biggest hits in IP and opportunities that can stand alone on mobile itself. Wrapped inside of an incredibly disciplined approach as we’ve focused on driving profitability across this platform to some of our more historic levels versus the past. So, those are three kind of profiles we expect. So yes, quarter-over-quarter sequential improvement, strength overall year-on-year with plus 5% and a diligent strategy and approach from us around our biggest opportunities on ecosystems, IP within the platform with mobile itself, and obviously disciplined P&L performance around the business.

Eric Handler: Thank you very much.

Katie Burke: Thank you, Eric. Operator, next question, please.

Operator: Our next question comes from Brian Pitz with BMO Capital Market.

Brian Pitz: Thanks for the question. Andrew, we’ve seen reports that sports leagues like the NFL and NBA considering ownership stakes in the likes of ESPN. Obviously, EA has one of the most valuable audiences in sports. Just curious, are there opportunities for EA to partner more closely with these leagues? And also from another dimension, I guess, how do you think about this opportunity as the NFL and other leagues embrace sports betting? Is there a real money gaming opportunity? I know the industry has looked at it in the past, but I think we’re in a new place now going forward? Thanks.

Andrew Wilson: Yes, again, great questions. I think the relationship between the NFL and the NBA and the likes of ESPN, is super interesting to us. I would think about this on two vectors. One, we have incredible relationships with our sports leagues. Many of them we’ve had for over 30 years and they have evolved with us, and we have evolved with them. A big part of what we have done through the rebrand of FC, is actually gotten significantly closer to our European Football League partners. And much of what we’ve done as we have renewed and bolstered those relationships for the next decade, and beyond is really think about, how we can come together in service of fans more broadly, not just fans in the context of interactive gameplay.

And part of what you’re seeing here as we start to bring highlights into our games and really think about FC as a platform, is kind of testament to that evolution of the nature of our relationship. I do believe that we have the opportunity to do the same, with the NFL and the NBA and you should imagine that we’re working very closely with all of our league partners, NHL, UFC, F1, and we see a tremendous opportunity to really think about, EA SPORTS as a platform for engagement, and how we might grow in service of our fans, with our league partners. I would also highlight we’ve had a relationship with ESPN for the best part of 30 years and have worked very closely with them and continue to work very closely with ESPN and the Walt Disney Company as we think about the future of entertainment broadly.

And so, we feel very good about our position in this future. We feel very good about the connection we have with the fans. We feel very good about our opportunity to grow our business as a result of this evolved service opportunity we have with them.

Brian Pitz: Thank you.

Katie Burke: Operator, next question please.

Operator: Our next question comes from the line of Andrew Marok with Raymond James.

Andrew Marok: Thanks for taking my questions. I wanted to dig into a couple of things on the recent Apex event this last month with FINAL FANTASY. So commentary sounded really good in the prepared remarks, but with the dynamic that versus prior collection events, it was maybe less expensive for the first few items, but more expensive to complete. How did that affect payer dynamics and what are some of the key learnings coming out of that event for you guys?

Andrew Wilson: I guess – at a macro level we’re really, really happy with that event. It was very well received by the community and it actually performed incredibly well. And certainly as we were in what was a very, very competitive quarter, there were a couple of competitive titles that, actually did some really unique and interesting things in the quarter. And so, the performance of Apex with that collection event in the context of some of these other unique things happening in the competitive landscape. We think shows tremendous promise for how the franchise continues into Season 20 and beyond. I’ve spent a lot of time with the team lately. The team are very committed to the game. They’re very committed to the community.