Electronic Arts Inc. (NASDAQ:EA) Q4 2024 Earnings Call Transcript

We also see naturally a mobile business that wraps inside of that live service number and we’ve talked to that we see outside of the portfolio rationalization, we see low single digit growth in that business through next year. That kind of the big compositions that we see around that service business that makes up 73% today and ultimately gives us the flexibility and agility to be convicted in the future as we layer on both the pipeline and our strategic objectives.

Andrew Wilson: Yes. I might just add, one of the great differentiators of our company is actually the breadth of our live services. So if you look at FY 2024 as we come into FY 2025, at the very center of our FY 2024 was this incredible rebranding of FC and the launching and growth of that even as we lapped a World Cup year. We had Madden, again, a live service that grew and reached record levels of revenue. We had our biggest EA SPORTS year, I would argue that EA SPORTS may be one of the greatest global multi-sport media brands in the world and certainly has greater fandom than most other brands that it competes with. We had double-digit growth in the community on the Sims, which again targets a very, very different demographic of players.

And when we look at the many hundreds of millions of shared user-generated content items, you are seeing the evolution of that live service into a broader community creation platform. We continue to build resilience into Apex. And as a community sentiment of that grew 29 points over the last fiscal year. And as we’re primed to continue to grow and expand that live service, we have great opportunity. And again, as I talked about in the prepared remarks, I’ve just spent a whole bunch of time with the collective Battlefield team, playing what they’re building and it is going to be another tremendous live service. And if you really use FC as the blueprint and you think about across platforms, across modalities, across business models, across geographies and also branching fan beyond the bounds of the traditional game to create truly a football fan platform that really extends the magnitude of the live service.

This really is at the very center of our strategy when we talk about building content and experiences that entertain and engage massive online communities. And so, as we think about this going forward, we believe this differentiates us from the marketplace in videogames and certainly in the marketplace in entertainment and really positions us for real growth against what these emerging generations are looking for in the context of their entertainment consumption.

Eric Handler: Thank you.

Operator: Thank you. Our next question comes from the line of Andrew Marok from Raymond James. Please go ahead.

Andrew Marok: Hi, thanks for taking my question. Maybe one on Apex, if I could. Since it was a limited-time mode back in 2020, Respawn has kind of always been pretty adamant that the solo mode was never going to come back to Apex despite players clamoring for it, because it didn’t mesh with their view of player behavior. So with that mode coming back in season 21 for a long-time for a limited time mode, I guess what changed? Is that part of the easier onboarding that you were referring to in the prepared remarks or something you’re leaning into based on player signals?

Andrew Wilson: Well, again, I think what the Respawn team has done and continues to do incredibly well is really work in a very transparent open way with the community. Again, this is an incredible community of hundreds of millions of players. Retention is very high. They’re a very vocal community and the Respawn team may be better than many other teams in the industry works very closely with that community. And I think what we’re starting to see is the evolution of both the player personality, the Apex player personality, Apex is a game and how Respawn serves that community broadly. And this will be one of those steps. But you shouldn’t imagine that this is the sum total of those steps as we really think about both expansion of modalities at play for Apex when we think about deep culturalization on a geographic basis to attract new and more deeply engaged global communities.

And as we think of — as we look to what the Respawn team is doing over time, we believe that this will be a cornerstone of our live service business for many, many years to come.

Andrew Marok: All right. Great. Thank you. I’ll jump back in the queue.

Operator: Thank you. Our next question comes from the line of Colin Sebastian from R.W. Baird. Please go ahead.

Colin Sebastian: Thanks. Good afternoon. I guess, first on the Mobile segment kind of broadly, I understand the different puts and takes on that with the pipeline. But also just trying to understand a little bit better, the underlying growth expectations for the Mobile segment of the industry, EA’s market share expectations as you look out to fiscal 2026 and 2027 in that segment and what the key drivers are there? And then apologies if I missed the Stuart, but just in terms of that fiscal 2026, 2027 outlook, how should we think about the step-up between those years into 2026 and into 2027, if that contemplates any changing dynamics around the competitive landscape next year. Thanks.

Andrew Wilson: Yes. Great question. Let me start with kind of the mobile macro. As you’ve heard from us before, mobile is a very important platform to us. We’ve spent the last number of years really focusing our mobile business and driving meaningful profitability in that area of the business, which hasn’t always been the traditional shape of the mobile business in the industry. As we look forward, our expectation is over the next 12 months or so, we probably have low-to-mid-single-digit growth in the mobile market overall. But it’s still — the mobile market remains a fairly high-risk opportunity that requires significant user acquisition cost to kind of ramp a new mobile game. And so, when we kind of couple what are increasingly longer development cycles in mobile, sometimes two to three years and we hear stories of five, six, seven years in the marketplace, meaningful user acquisition spend and long ramp times once you get to-market, mobile isn’t an easy market to capitalize on.

With that being said, we feel like our mobile businesses is in a very good position given its profitability. We’ll be leaning into our massive online communities around FC, around Madden, around the Sims [indiscernible] will be mobile native and we’ll also be looking at opportunities to invest in a very limited number of mobile native titles that we believe have breakout potential.