Electronic Arts, Inc. (EA) Q3 2014 Earnings Call

corrected transcript Other Participants Other Participants Corporate Rob Sison, Vice President Vice Sison, Rob MANAGEMENT DISCUSSION DISCUSSION MANAGEMENTSECTION PARTICIPANTS DoshiA. Neil Schachter Ben Hic Mike Gee Ryan Ju D. Stephen Crum E. Drew Pitz J. Brian Hard L. James J. Olson Michael Bhatia Arvind L. Creutz Doug Williams S. Edward Sebastian A. Colin Söderlund Patrick Moore Robert Peter Jorgensen J. Blake Wilson Andrew Sison Rob statement these makes Arts Electronic today. discussed those from materially differ to results actual cause could that risks 10 Form recent most to our you refer We expectations. ourfrom materially A company. the of performance financial futurethe and events forwardinclude comments our and presentation This transcript. a andcall, ofthis replay anaudio remarks, preparedour Last remarks. preparedour accompany to slides earnings posted havewe addition, In ir.ea.com. at availableare release earningsour and filings SEC our that note Please call. ofthe portion Q&A the for us joining bewill Studios, of EA EVP our Söderlund, Patrick and COO, our Moore, Peter CFO. our Jorgensen, Blake and CEO; our Wilson, Andreware today call the onme With Call. Earnings QuarterThird 2014 Fiscal EA’s to Welcome you. Thank begin. Re ofInvestor President Vice Sison, Rob Mr. to overmeeting the turnI’ll Now, time. at this disconnect may you objections, any have you If recorded. is being conference Today’s Instructions] [Operator mode. th At by. standing for you thank and Welcome, Operator:

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Analyst, Bank of America Merrill Lynch Merrill of America Bank Analyst, Electronic Arts, Inc.

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– Analyst, The Benchmark Co. LLC Co. Benchmark TheAnalyst, – LLC JefferiesAnalyst, iman –

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(Broker)LLC (USA) Securities Suisse Credit Analyst,

Analyst, Macquarie Capital (USA), Inc. (USA), Capital Macquarie Analyst, – Analyst, Cowen & Co. LLCCo. & CowenAnalyst, Chief Executive Officer & Director, Electronic Arts, Inc. Arts, Electronic & Director, Officer Executive Chief

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Executive Vice President Vice Executive Analyst, Robert W. W. Robert Analyst,

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1 corrected transcript Andrew Wilson, Chief Executive Officer &Director Officer Executive Chief Wilson, Andrew generation consoles; FIFA 14, Battlefield 4, Madden NFL 2 NFL Madden 4, Battlefield 14, FIFA consoles; generation next ofthe launch the with released we titles six The market. gaming console the for catalysts new bestrong to proved One Xbox Microsoft and4 PlayStation the of Thelaunches expected. next of uptake is the forward us looking for exciting What’s billion. $3.91 be to revenuesannual our forecastingnow are we and guidance, revenueyear fullour impact primathe was softness that andrate, fastera at Q3in declined consoles 360 Xboxand3 PlayStation for games major sales of industry noted,have others As billion. $1.65 of guidanceour below was which revenue, generatedweline top onthe performance,quarterlyour of terms In next bothfor titles top of EA’s slate full a launching of challengethe came that With other.each of weeks within launching consoles gamenew exci unprecedentedthe had we 2014,year fiscal of quarterthird the In Rob. Thanks, Andrew. to over call the turnI’ll Now, next as to referred current as 360 Xboxand3 PlayStation remarks, today’s in note: last One stated. otherwise unless year priorthe in period same the against are in made All comparisons decision. aninvestment making beforemeasures all consider to investors encourage We results. GAAP our to orsuperior for, substitute a as non These measures. GAAP non to GAAP our of reconciliation a provide slides earnings the and release Ourearnings basis. nona on bepresentedwill metrics financialthe stated, otherwise unless call this During the during users active daily oflevel record a reached Out Tapped TheSimpsons: worldwide. the Play, Googleand Store App the across downloadsgame million 71 over with downloadsmobile for ever month biggest EA’s was December portfolio, digital ourInside FY 2014. forrevenue digital in billion of$1.7 guidanceour exceed full mobile, at full continues also transition digital EA’s grow. to continue bases pipelinerobust a have also We consoles. newthe to shift gamers more as beyondand Q4 through sales driving services, live through next our to keep is goal our forward,Looking numbers. share segment our by next ourof popularity The globe. the across One Xboxand4 PlayStation the on titles EA playing ofgamers millions with December, We’re games. next a bought that Europe in gamer every average,On Europe.in shares similar garneredwe indicate estimates ourand One, Xboxonthe share segment achievEA U.S., the in results December next the on position leadershipearly an taken havewe result, aAs forecasts. Q3 our exceeded and expectations above sold collectively 2, Peggle and

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ry driver of our revenue shortfall in Q3. This shortfall will shortfall This Q3. in shortfall revenue ofour driver ry 1 - 877 30% and4 PlayStation onthe share segment 40% ed

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CallStreet Jan. 28, 201428, Jan. - - - gen Date▲

corrected transcript Blake J. Jorgensen, Chief Financial Officer & Executive Vice President Vice Executive & Officer Financial Chief Jorgensen, J. Blake Blake. to you, Over conclusion the for set properlyis now Thestage profits. operating increasing towards step positive another and growth, digital forquarter greata games, of generationnewa to start anexciting was Q3 t confident andwe’re gameplay, and scope size, in game amazing is an 4 Battlefield players. 4 Battlefield all for experience game greata ensure to service live ourof part as refinements make to continue they and updates, game through to swiftly acted team Battlefield Thegame. the with issues experiencing were who community the in players some from hearing began welive, went4 Battlefield after Shortly PC. inn with packed game massive a deliveringDICE at teams our with effort, complex a was Battlefield Launching talked most the of onone word cal the Iturn Before full nonQ3 our nex on position our from Benefiting focus. ongoingbean to continue will growth profit operating long 2014: FY foreffort anjust not is this However,cycle. transition console a in achievement ontr andremain costs, our manage to continue We year. fiscal this during discipline financial by our strengthenedfurther are We growth. revenueand expansion EA’s foropportunity fantastic bea to continues largestits deliveredago, years two overlaunched that game a FreePlay, TheSimpsons and quarter, holiday December. Onein Xbox PS4 and on publisher one numberthe the of 35% represented onnext titles of these each of Sales 4. Battlefield and Rivals, Speed forNeed14, FIFA by led expectations, ourofahead well a One Xbox Our future.ourfor well plays this fortunatelyand oncurrent trend downwardThis revenues. Battlefield as such titles key ourof some and trendthis by impacted negativelywere results quarterly Our year. prior the versus 35% declining sales software 360 Xboxand PS3 with trend that reflected results NPD U.S. the December, of current signs showed industry The current for demandin anticipated next to upgrade consumers allowed that programs fromQ4 into million $36 deferredwe note, a as And 14. NHLand25, NFL Madden14, FIFA 4, Battlefield by driven wasyear last Q3 over growth revenue Our year. last than higher33% but guidance, our belowwas non EA’s results, Q3 our to TurningAndrew. Thanks,

- year EPS guidance today by $0.05 to $1.30 per share on a nonona share per to $1.30$0.05 by today guidance EPS year - generation titles. Our Q3 revenue shortfall was driven by a much sharper decline than decline sharper much a by drivenwas shortfall revenue Q3 Our titles. generation w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w

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4, FIFA 14, and Need for Speed Rivals came in below our expectations for currentfor expectations ourbelow in came RivalsSpeed for Needand14, FIFA 4, - of our fiscal year, as well as the long the wellas as year, fiscal ourof GAAP EPS of $1.26 exceeded our expectations by $0.04 per share, and we are raising arewe and share, per $0.04 by expectations our exceeded $1.26of EPS GAAP Electronic Electronic Arts, Inc. ovative new features for players on next on players for features new ovative

l over to Blake to give additional details of our financial performance, a quick quick a performance,financialour of details additional to giveBlake to over l Western World next World Western - gen platforms exceeded our forecasts. Based on estimates, EA titles titles EA estimates, on Based forecasts. our exceeded platforms gen - Company▲ - 4. Battlefield Q3, of titles about e sfwr wsprilyofe b u oiie next positive by our offset partially was software gen - eeain software. generation t - year expenses ourlower to ack

gen consoles, digital growth and continued cost management,cost continued and growth digital consoles, gen - gen software market weakness in the t the in weakness market software gen 1 - 877 mber. These milestones demonstrate how mobile how demonstrate milestones These mber.

hat gamers will be playing for a long time to come. to time longafor playing bewill gamershat - - gen software market in the third quarter, and EA was EA andquarter, thirdthe in market software gen CSET ACTS F Ticker▲ - term opportunity in front of EA. of frontin opportunity term EA - GAAP net revenue was $1.57 billion, w billion, $1.57 was revenuenet GAAP

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corrected transcript Operating expenses for the quarter the for expenses Operating platform. digital ournew of benefitsthe and business, social the from away movewe as fees transaction lower digital, in growth as the well and 65.7%, year’s non our margins; gross onto Moving grow. to continues offering freethe as revenue, subscription Republic Old TheWars: Star in declinea and revenue, subscripti POGO in by declinea drivenwas This year. last period same the over16% down million, $66 totaled revenuedigital other and advertising, subscriptions, finally, And quarter.the in PC on4 Battlefield of launchthe by driven year prior the overup157% million, $113 addeddownloads game full Third, year 39% growingand total, million $125the of million $110for accounting revenue, ove19% and year, prior theover up26% quarter,the for million $125 generated business mobile our Second, titles. social our of several sunset to decision our by conti year Our Republic. TheOld Wars: Star and 3, Online FIFA Team, Ultimate FIFA in growth continuedthe freePC and content extra First, business. each of performancethe highlights components key its into revenuedigital our down Breaking billion. $1.86record a to year prior the over year by 27% increased non Q3 steeper non Our $0.72. be to expected is share per earnings and GAAP billion, our to respect With guidance. to turningNow shares. any repurchase not did wequarter, the During2005. since EA for flow cash operating12month trailing highest p the in million $363 to compared million, $685 was quarter the for activities operating by provided cash Net U.S. short and cash this of 60% Roughly share. per $6.70 short and cash Our performance greater through expenses marketing our managing and opportunities return onhigh investments i came EPS Our share. non resulting The growth. future in oninvesting focused remainingwhile succe the illustrates leverage expense operating improvingOur year. prior the in 45% to compared 34%, was revenue of percentagea as expenses Operatingguidance. our than lower million $60

nue to demonstrate revenue growth year growth revenuedemonstrate to nue to ss of our cost control programs, as we continue to drive our operating margins above 20%, 20%, above margins operating our drive to continue we as programs, control cost ourof ss - w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w - 12 trailinga On year. rior - date results for all of our Ultimate Team services, FIFA, Madden NFL, and NHL Hockey Hockey NHLand NFL, Madden FIFA, services, Team Ultimate our of all for results date than - revenuenet Digital year. prior the over to grow continues revenuenet digital GAAP GAAP revenue for the quarter is expected to be $800 million. This estimate factors in the in factors estimate This million. be$800 to is expected quarter the for revenue GAAP

- - ae avriig strategies. advertising based the of majority a to represent continue tablets and Smartphones quarter. prior the r Electronic Electronic Arts, Inc. anticipated declines we saw in c in saw we declines anticipated - GAAP EPS was $1.26 per share, which exceeded our guidance of $1.22 per $1.22 of guidanceour exceeded which share, per $1.26was EPS GAAP in line with our guidance. The improvement was due to our product mix shift as as shift mix product our to due was improvement The guidance. ourwithline in - term investments at the end of the quathe ofend the at investments term - n above our guidance due to our continued efforts to focus R&D to focus efforts continued our to dueguidance our aboven over

- er to year - Company▲ to - month basis, operating cash flow was $664 million. This is is the This million. $664was flow cash operating basis, month - play

were $540 million, up 11% (sic) [$11 million] from last year, and year, last from million] [$11 (sic) up11% million, $540were - 12 Trailing million. $517 GAAP gross margin for the quarter was 68.1%, up over last last upover 68.1%, was quarterthe for margin gross GAAP 1

- contributed $213 million, up 15% over the prior year, led by by led year, prior theover up15% million, $213 contributed 877

- CSET ACTS F - Q4 guidance, GAAP revenue is expected to be$1.07 to is expected revenue GAAP guidance,Q4 urrent over Ticker▲ - year. Extra content growth was partially offset partially was growth Extra content year. - EA e sfwr rvne. lo sarmne in remindera as Also, revenues. software gen - term investment balance is held outside of the of held outside is balance investment term

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to year. CallStreet - Jan. 28, 201428, Jan. play play

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corrected transcript Andrew Wilson, Chief Executive Officer &Director Officer Executive Chief Wilson, Andrew Regarding fiscal year 2015, we will provide guidance during our Q4 earnings call, when we will be wewill when call, earnings Q4 our during guidance providewill we 2015, year fiscal Regarding 2013. fiscal in generated we what twice than more and guidance, previousourfrom million $200 is up which million, $500 approximately of generationflow cash free expected implies This million. $600 approximately estimat our raising arewe flow, cash Regarding flows. cash non onour impact no has period service longer This 2015. fiscal into revenuenet of million $385 anincremental of deferral the drivewill which revenue, GAAP recognize re arewe which over time of length the affects period longerthis and time, ofperiods longerover online games our playing are consumers our quarters, past in out pointedhave we is guidance GAAP The share. per $1.30 to $0.05 by guidanceEPS our raising arewe and billion, $2.04 approximately to reduced to be expenses operating estimating expect non year, fullthe For nona onnext titles key our for advertising and marketing plannedour by impacted be non total our expect We quarter.fourththe in revenue subscription Premium 3 Battlefield the ofall of recognitionthe pr upgradepromotional forQ3 from deferredofrevenue million $36 includes Q4in forecast Our 74%. of margin gross non Our 4 Battlefield recording and quarterthe in titles two belaunchingwill we This year, revenue. subscription Premium 3 Battlefield fullyear’s the recognized andtitles core fivewelaunched year last Q4 inves can we so returns, our protecting are measures discipline cost And geographies. and platforms multiple across heights new reachingare businesses digital Our next on been have to proudare We to close. thoughts fewa Just Blake. Thanks, Andrew. to back call the turnI’ll that, With g next in position leadershipour extending to committed remain we forwardgoingand One, Xboxand PS4 for sales software initial our by encouragedare We flow. cash and earnings, IP, futureservices, ou of developmentthe in investing still while expenses operating our managing currentin decline the weather to ablewere we summary, In flow. cash and profits operating improving will which guidance, financial expected ourand year the for slate title our you givewill wetime, that At insights. our share to position better much a in profits. operating our to improvecontinuing and services, and games digital our rowing - GAAP diluted EPS of $0.09 per share. per $0.09of EPS diluted GAAP ed to be 66%. Due to the favorable results of our continued cost control efforts, we are noware we efforts,control cost continued ourof results favorable to the Due be66%. to ed w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w - - gen consoles in December, with more new games on the way. the on games newmore with December,in consoles gen APgosmri sfrcse t eapoiaey 1,dw gis h ro Q4 priorthe against down 71%, approximately to be forecasted is margin gross GAAP

Premium subscription revenue on a ratable basis. ratablea on revenue subscription Premium Electronic Electronic Arts, Inc. - GAAP revenue is now estimated to be $3.91 billion and gross margin is is margin gross and billion $3.91 to be estimated now is revenue GAAP ograms. As a reminder, last year’s higher gross margin was attributable to to attributable was margin gross higher year’s last reminder,a As ograms. estimated to be $3.52 billion in revenue, and a loss per share of $0.42. As As $0.42. ofshare per loss a and revenue,inbillion $3.52 be to estimated - ex operatingOur million. $525be to expenses operating GAAP Company▲ 1 - 877

CSET ACTS F Ticker▲ es for fiscal 2014 operating cash flow to to flow cash operating 2014 fiscal for es

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CallStreet Jan. 28, 201428, Jan.

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corrected transcript term. long the to for committed fully weare that one and improvement,profitability and growth revenueline top both for striving journey discipl on focus increased this fromreturns strong expect andwe profits, operatinggrow to ability our demonstrating been we’ve2014, FY Throughout ahead. opportunitiesstrong more we see and onsuccess, repeat O IPs. provenourof one around designed experience mobile recently Our launch. after long growing Theand3 Racing Real14, FIFA Out, Tapped Simpsons: like The Games time. over them grow and games great of portfolioa build to ability our demonstrate and charts the up rise to continue titles mobile EA’s a Chinain games FIFA free onlineour with connect to fans more expect we and revenue,andtraffic bothin Korea in well extremely is doing 3 OnlineFIFA markets: new in growth our accelerating is also Digital current which Premium, 4 Battlefield nowandTeam Ultimate Madden Team, Ultimate like FIFA franchises established ourof some for services livedigital inyear each deeper engagingare Players Arts. d a as continue to growthdigital expect We call. next quarterlyour on slate 2015 FY ourof more share we’ll and titles, future our foronplan continues development Studios, EA Across Respawn. specta is a This PC. and 360 Xbox highlythis on touches finishingthe putting now are Entertainment at Respawnpartners Our 11. March on Titanfall of arrival the for excited incredibly all We’re question your take to hereIare and Patrick Peter, Blake, that, With longthe on capitalize to ready arewe and day, everygamers our to experiences new exciting delivering We’re strength. clos to forwardwe look priorities, strategic our against executing By

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efining characteristic of this fiscal year for Electronic Electronic foryear fiscal ofthis characteristic efining - CSET ACTS F - engaged fan bases on iOS and Android that are still still are that Android and iOS on bases fan engaged Ticker▲ ine across our business. This is a multi is a This business. our across ine EA

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corrected transcript QUESTION AND ANSWER SECTION QUESTION AND ANSWER And so for me, our strategy continues to be sound. We have to go strongly after the next the after gostrongly to We havesound. be to continues strategy me, our for so And Korea.in 3 Online freePC certainly nowand Age, Dragon of Heroes next these on gamers console newwith both resonate really that see to starting we’reand IP, of portfolio beeI’ve what reiterate

o.]. Your line is open. is line Your o.]. tness that was indicated by Andrew and Blake in their prepared statements, but this is not, we is not, this but statements, preparedtheirin Blake and Andrew by indicated was that tness – – – – – – – -

in us for strong very been have that titles with onmobile platforms, gen Peter Moore Moore Peter Sison Rob Wilson Andrew Moore Peter Ed Williams Williams Ed Sebastian Colin Sebastian Colin

w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w - generation, can you give some color as to your kind of attach rates and what we should whatwe and rates attach of kind your to as color some give you can generation, egically where you think there’s still more work to be done? Thanks.done?be to work morestill think there’s you where egically Electronic Electronic Arts, Inc. inventory levels are for that legacy software in the retail channel? And then looking at at looking then And channel? retail the in software legacy that for are levels inventory –

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gen software that wasn’t picked up by the increased anticipation that that anticipation increasedthe by up picked wasn’t that software gen Electronic Arts, Inc.>: Inc.>: Arts, Electronic

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thank you, comes from Edward Williams with BMO Capital Markets. Markets. Capital BMO with Williams Edwardfrom comes you, thank Company▲ - gen once next once gen - e software? gen

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Next question? Next - CSET ACTS F Hi, Colin. It’s Peter. Let me take the first part of that that of part first the take me Let Peter. It’s Colin. Hi, Hi, Ed. It’s Peter. Let me try and plow through that. that. throughplow try and me Let Peter. It’s Ed. Hi, her server issues had any noticeable impact onsell impact noticeable any had issues serverher

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up on Battlefield 4. If you could comment comment could you If 4. Battlefield on up answer session. [Operator Instructions] Instructions] [Operator session. answer • • - play games across the globe. And globe.the across games play Copyright © © Copyright Yeah. Good afternoon. A couple of A couple afternoon.Good Yeah. Q 3 2014 Earnings Call Earnings 2014 3 rkets>: Event Type▲ Event - up to that, how clear do clear how that, to up Thanks. Good Thanks. Great. Thanks veryThanks Great. 2001 like things past, the e will continue to to continue will e

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gen CallStreet Jan. 28, 201428, Jan. - gen - Date▲

corrected transcript

– – – – – – –

Andrew Wilson Wilson Andrew Sison Rob Moore Peter Jorgensen Blake Doug Creutz Creutz Doug Williams Ed Williams Ed w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w Electronic Electronic Arts, Inc. ery well. Having ran that Xbox business as you know, I think Microsoft is committed committed is Microsoft think Iknow, as you business Xbox that ran Having well. ery –

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BMO Capital Markets (United States)>: (United Markets Capital BMO States)>: (United Markets Capital BMO Electronic Arts, Inc.>: Inc.>: Arts, Electronic Cowen & Co. LLC>: &Co. Cowen – o retail to pick up their boxes, and as a result they’ve probably bought the bought probably they’ve result a as and boxes, uptheir pick to retailo

activities in Q4 and beyond to move any inventory issues that we have to to wehave that issues inventory any move to beyond and Q4in activities Electronic Arts, Inc.>: Inc.>: Arts, Electronic – comes from Doug Creutz with Cowen and Company. Your line is open. is line Your Company. and Cowenwith Creutz Dougfrom comes

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- gen, the tie ratios, I’m actually pretty bullish in what I’m seein I’m whatin bullish pretty actually I’m ratios, tie the gen, Company▲ 1 - 877 ontinue in FY 2015. FY in ontinue

Thanks, Ed. Thanks, Thank you. I wonder if you can speak to what’s going on going to what’s speak can if you Iwonder you. Thank - CSET ACTS F Ed, it’s Peter again. I again. Peter it’s Ed, – Ticker▲

when you compare it to the first two months of their of months two first the to it compare you when

Yes. Contrary to some reports, we still ahave still we reports, some to ContraryYes. And, Ed, just to be crystal clear here onhere clear crystal be to just Ed, And,

clear channel. Part of our lower revenue in Q3 in revenuelowerour of Part channel. clear EA

ky ra.Tak you. Thank Great. Okay. any seen you havethen And Okay. Q 3 2014 Earnings Call Earnings 2014 3 think it’s a little early. Imean early. little a it’s think Event Type▲ Event ng this to a 10 a to this ng

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CallStreet Jan. 28, 201428, Jan. g so far. so g

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corrected transcript Ultimate Team offering for all of the sports. So, while FIFA continues to grow, we’re seeing great seeing we’regrow, to continues FIFA while So, sports. the ofall for offeringTeam Ultimate expe the exceeding that of partAnd expectations. our exceeding clearly we’re So, flat. berelatively would that was there yearthe for guidance originalOur 15%. is up which pub been have that documents the in see can you what but Teams, Ultimate other versusTeam Ultimate FIFA the out China.in be to soon and Koreain business top On experience. Team Ultimate overall the improving really it’s And Hockey. NHL as well as NFL Madden,of out growth

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Blake Jorgensen Jorgensen Blake Jorgensen Blake Moore Peter Arvind Bhatia Bhatia Arvind Bhatia Arvind Creutz Doug

w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w of that, also in that category is the growth of FIFA Online 3, which is primarily a freea is primarily which 3, OnlineFIFA of growththe is that category in also that, of Electronic Electronic Arts, Inc. ear, and we plan to ratably recognize that revenue. So, if you were to purchase to were you So, if revenue. that recognize ratably to plan we ear,and alluded to your bullishness on the next the on bullishness your to alluded

lished is that the extra content revenue for the quarter was up to $213 million, million, to $213up was quarter the for revenue content extra the is that lished – –

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Terrific. March 31. I think, it’s 10 million plus, Arvind. plus, 10million it’s Ithink, 31. March - CSET ACTS F I don’t know if it’s 10 million, Arvind, right on the nose, nose, the on right Arvind, 10million, it’s if knowdon’t I Ticker▲ Yes. So, Yes. to break going not we’re content, extra the On m revenues up 60%. In the past, you guys have guys you past, the In up60%. revenues m

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perator: Our next question comes from Mike Olson with Piper Jaffray. Your line is is open. line Your Jaffray.Piperwith Olson Mike from comes question next Our perator: rt to reduce the profitability of the product over time. But the initial shipment at the volumes that that volumesthe at shipment initial the But time. overproductthe of profitability the to rt reduce – – – – – –

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- CSET ACTS F Ticker▲

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of Xbox Ones or play the title either on 360 or 360 on eithertitle the or play Ones Xboxof This is Patrick. On the product side, I think it’s it’s Ithink side, product theOn Patrick. is This EA ve also been in the quarter.the in been also ve Okay. Great. Thank you, guys. you, ThankGreat. Okay.

• •

Q 3 2014 Earnings Call Earnings 2014 3 - gen

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corrected transcript have we done since we encountered the problems is, we were fortunate to have an architecture in architecture anhave to fortunate were weis, problems the weencountered since wedone have what So, situation. the address to beganquickly team developmentthe and community, player a hearingbegan we however, launch, after Shortly launched.was it when to preonour Based gamethe in features int as commandera tablet mobile via connect to ability the plus 64 players for play game second per 60frames deliveringwe’re and heavily current as as well platforms console new entirely two co verya it was launched,4 Battlefield whenis, part happenedwhatthe segment, first onthe So, it. from learning we’re howand done,we’ve what happened,what of kind

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Blake Jorgensen Jorgensen Blake S Patrick Wilson Andrew James Hardiman Hardiman James Hardiman James OlsonMike w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w - up for Blake. for up cut and paste, because it seems like every quarter you’re beating on the OpEx line by a by line OpEx the on beating you’re quarterevery like it seems because paste, andcut field. Just wanted to check and make sure that at this point, are all the issues that you you that issues the all are point, this at that sure make andcheck to wanted Just field. Electronic Electronic Arts, Inc. öderlund öderlund - launch testing and our beta performance, we were confident the game was ready was game the confident wewere performance,beta ourand testing launch –

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Yeah, so I guess I’ll restate your f your restate I’ll guess so I Yeah, and I’ll hand off to Patrick to give a little bit more bit little a give to to Patrick offhand I’ll and I’ll cover Battlefield 4 and I’ll quickly touch on touch quickly andI’ll 4 Battlefield coverI’ll EA - - class teams at both Respawn and Microsoft Microsoft and Respawnboth at teams class gen and PC. We were pushing innovation pushing We were PC. and gen - launch live environment. We’re taking taking We’re liveenvironment. launch Hey. Thanks for taking my call. Quick follow Quick call. my taking for Thanks Hey. That’s really helpful. And then I had a Ihad then And helpful. really That’s

• • –

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– – – – – – – –

Peter Moore Moore Peter Wilson Andrew Wilson Andrew Drew Crum Drew Crum Drew Crum Drew Pitz Brian Hardiman James w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w look and stores those in participants activeare We factors. of numbera by etermined lso that so none of what we do cuts back on our future IP development and our ability to to ability our and development IP futureonour back cuts do we of what none so that lso Electronic Electronic Arts, Inc.

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Well, if you could address that, and also, Peter, Peter, also, and that, address could if you Well, Correct. So, I everyone. afternoon, Good Thanks. Okay.

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r maybe Brazil or other territories? Thanks. territories? other or Brazil maybe r ll evolve over time as we see how the player base evolves through the year. the through evolvesbase playerthe how see we as time overevolve ll – – - – – – – – to

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years has been driven by the movement into digital, not just full game, but game, fulljust not digital, into movementthe by drivenbeen has years –

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CallStreet Jan. 28, 201428, Jan. e - by s - Date▲

corrected transcript first other there’s Also year. co can titles two those if wonderingwe’re But digital. Titanfallthe about much too talked onBattle question’s Frostbite us aroundfrom lot a heardyou’ve and engines, common more to movethe is second The one seen haven’t you why that’s And sidelines. still are consumers the of many where consoles, old the andout coming consoles new the betweennow right pocket anair of bit a in still think we’reIdo not. orin consumers current orGen3 all the forpricing until because time of period some for Gen3 around cautious belikely

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