Electronic Arts Inc.

With me today are Andrew Wilson, our CEO, and Stuart Canfield, our CFO. Please note that our SEC filings and our earning release are available at ir.ea.com. In addition, we have posted detailed earnings slides to accompany our prepared remarks. Lastly, after the call, we will post our prepared remarks, an audio replay of this call, and a transcript. With regards to our calendar, Our fourth quarter fiscal year 2024 earnings call is scheduled for Tuesday, May 7. As a reminder, we post the schedule of upcoming earnings calls for the fiscal year on our IR website. This presentation and our comments include forward-looking statements regarding future events and the future financial performance of the company. Actual events and results may differ materially from our expectations. We refer you to our most recent Form 10-Q for a discussion of risks that could cause actual results to differ materially from those discussed today. Electronic Arts makes these statements as of today, January 30, 2024, and disclaims any duty to update them. During this call, the financial metrics, with the exception of free cash flow, will be presented on a GAAP basis. Please see our earnings slides for further information. All comparisons made in the course of this call are against the same period in the prior year unless otherwise stated. Now, I'll turn the call over to Andrew.

Thanks, Katie. It was a strong Q3 as we continue to entertain hundreds of millions of players and fans around the world. Our exceptional teams created high-quality games and experiences across our broad portfolio that drove deep engagement and record live services. This quarter, two of the world's most celebrated interactive entertainment experiences, EA Sports FC and EA Sports Madden NFL, delivered phenomenal strength as sizable drivers of long-term growth. We are launching amazing games and experiences that entertain massive online communities, create blockbuster interactive storytelling, and harness the power of community in and around our games. EA's Q3 results are a great example of our execution across our strategy. The FC platform is thriving at the center of the action, fandom, and culture of the world's game. The launch of EA Sports FC24 has been a great success and has once again outperformed our expectations. Players are connecting, competing, and celebrating global football with their friends, driving strong engagement across FC's multi-experience ecosystem. In Q3, players dove into Ultimate Team, driving double-digit net bookings growth and delivering the franchise's biggest net bookings week ever. FC Mobile also generated deep engagement with daily active users up by 29% year over year, while FC Online grew new players by 20% year over year. In calendar 2023, Madden NFL was the best-selling sports game in North America and continues to grow. Madden NFL 24 is engaging more players year over year through new, innovative gameplay features and compelling live services. In Q3, net bookings grew and engagement with Ultimate Team increased 19%. Madden Mobile also saw an increase in players during the quarter, generating double-digit growth across the community. Our business is gaining momentum as our communities continue to grow and the definition of play rapidly expands to include watching gameplay, creating user-generated content, and connecting with friends and families in and around beloved IP. There are billions of players around the world, and this number is expected to increase as younger generations choose gaming as their number one form of entertainment, generating incredible opportunities for us to engage and deliver new experiences. The evolving world's unfolding stories and rich characters of our live services are deepening players' relationship with our IP and broadening the global appeal of our portfolio. To further entertain our communities, we are building more ways for them to play, watch, create, and connect to generate growth and longevity in our biggest franchises. The Sims franchise is the definitive life simulation experience, offering its multi-generational community incredible ways to connect, create, and express their individuality. During calendar 2023, players have spent an astounding 1.8 billion hours in The Sims 4, a nearly 30% increase from the prior year. We remain committed to the global growth and innovation of this franchise. We're focused on delivering what the community wants most, from ongoing new content and game modes for The Sims 4 to the social innovation expansion and connection in our future Sims release. Millions of passionate fans continue to come together through the non-stop action of Battlefield. The Battlefield 2042 community continues to grow with total players up 70% year-over-year and Season 6 live services driving strong engagement with weekly average users up 37% year-over-year. Our team is working hard to deliver for the community with increasingly engaging live services, like the recent announcement of Season 7 with new maps, weekly missions, and much more. In addition, we are making investments in the future of the franchise. Our exceptional teams from multiple world-class studios working with cutting-edge Frostbite technology are building an expansive community-focused battlefield universe for fans all over the world. As a category leader with millions of loyal fans, we are looking forward to celebrating the fifth anniversary of Apex Legends. Over the past few months, we have listened closely to our community and have deployed new features, new styles of play, and new content. We have also implemented tools to better understand day-to-day game performance. In Q3, our new modes drove improved engagement and the early impact of our new content in the current quarter is promising. To generate future growth, we have focused on entertaining core players and engaging new players by investing in geographic expansion, innovating in the game economy, and making it easier than ever for players to jump into our gameplay. Turning to FY25, we will deliver even more excitement and entertainment through an expanded portfolio of connected ecosystems. Industry leader EA Sports will launch a strong core slate of titles and always-on live services to grow our sports business as a global community and drive value year after year. Our journey-building FC, the world's largest interactive platform for global football fans, will continue with accelerated gameplay innovation, more social connection, and new brand collaborations to deliver even more value for players. Our teams working with an incredible roster of partners are just getting started with FC. We are well positioned to grow this platform as a cultural phenomenon. The momentum in Madden NFL will continue with events and experiences tied to the biggest moments in the sport alongside deeper investments in this ecosystem. including leaps in gameplay and deeper fan immersion. In addition to the meaningful advancements in Madden, we are bringing back fan-favorite EA Sports College football for the first time in over a decade. Looking further ahead, as more people spend more time playing and connecting in and around our titles, we see incredible potential for growth. Within our online communities, we are expanding blockbuster storytelling through deep, rich characters and new story modes to deliver bigger, broader games and live services. Connected experiences offer new cutting-edge ways to engage and inspire players and can unlock future innovative growth opportunities. Over the coming years, we expect accelerated growth in our business. Our long-term outlook, coupled with secular tailwinds, drives further conviction in our strategy. By aligning our priorities and investments with our greatest opportunities, we can make the biggest impact and drive long-term value in service of our people, our players, and our shareholders. Now, I'll hand the call over to Stuart to provide additional details on our business.

Thanks, Andrew, and good afternoon, everyone. For the third quarter, we delivered net bookings of $2.37 billion, up 1% year over year, or 2% in constant currency, and in line with our expectations. Strengthen our live services businesses particularly EA Sports FC Ultimate Team, was partially offset by some softness in full game. Live services net bookings grew to a record $1.71 billion in the Q3, up 3% year over year, or up 5% in constant currency, exceeding our expectations as we continue to drive healthy engagement and bring new players to our franchises. Full game net bookings of $654 million was down 5% year over year, or down 4% in constant currency, versus a high prior year comparable that included the World Cup event. On a trailing 12-month basis, total net bookings was up 8% year over year, with live services contributing $5.6 billion, or 73%, demonstrating the resilience of this evergreen business model. Building on the strong momentum from our launch at the end of Q2, EA Sports FC again exceeded expectations. as EA Sports FC Ultimate Team and FC Mobile delivered exceptional double-digit net bookings growth against the World Cup comparable in the prior year. Our global football business net bookings grew 7% year-over-year as our teams continue to drive strong retention of our core player base through the FC brand transition. EA Sports Madden NFL also saw another strong quarter, with net bookings up 5% year-over-year highlighted by strong engagement trends across full game, ultimate team, and mobile. Additional highlights from the third quarter included new releases of EA Sports UFC, NHL, and World Rally Championship, which contributed to further expanding the aggregate fandom and strength of our EA Sports community, creating additional value-added services in one of the largest sports brands and platforms in the world. In a highly competitive quarter, Apex Legends did not meet our expectations as our teams continue to learn and iterate with each new season and event. In the past few weeks, our recent crossover promotion showed early promising signals, delivering two of our highest net bookings days over the fiscal year. With Season 20 launching in February, our teams will deliver more innovation as we continue to build for the long term. We remain committed to Apex Legends, a proven franchise with loyal fans and we'll continue to invest in opportunities to drive new growth points as we build and expand the franchise over time through engaging a broader base of players. Moving to our GAAP results, we delivered net revenue of $1.95 billion, up 3% year over year. As we continue to operate with focus and discipline, operating expenses were favorable to our expectations, also benefiting from some phasing of spend to Q4. On a year-over-year basis, Operating expenses were up 3%, driven primarily by incremental marketing spend as we invested to support our titles and the EA Sports FC transition through the critical holiday season. Our gap earnings per share was $1.07, up 47% year over year. Operating cash flow in the quarter was $1.26 billion, up 13% year over year. On a training 12-month basis, free cash flow was a record $2.16 billion. And we returned $376 million to shareholders through dividends and our ongoing share repurchase program. We are entering the final quarter of FY24, well positioned to deliver on our commitments for the fiscal year, with our strong business performance year to date, our unrivaled portfolio of IP, and our consistent execution in our core life services business. Even in an incredibly competitive market, we are poised to deliver growth in net bookings consistent with what we outlined at the beginning of the year. At the same time, we are tracking to deliver higher levels of underlying profitability and record-free cash flow. We remain deliberate and focused around the prioritization and allocation of resources across our teams and portfolio as we make progress against our long-term strategy to drive durable growth, strong cash flow, and shareholder returns. Turning to our Q4 outlook, I'd like to start by sharing a few key considerations. First, as a reminder, our Q4 net bookings is impacted by timing, including releases of our full game and content offerings in the prior year. Second, we expect moderated growth in our EA Sports FC franchise as we lap record prior year performance. For the full year, we now expect EA Sports FC net bookings to grow mid to high single digits, excluding FX. Third, we continue to take a measured approach to Apex Legends in its largest quarter of the year as we introduce new modes of play and content offerings. And finally, we expect impact from FX to be minimal as the benefit from more favorable currency exchange rates is offset by hedging gains from the prior year. As a result, we expect net bookings of 1.625 to $1.925 billion, down 16% to down 1% year over year, including approximately eight points of impact from the timing noted earlier. We expect GAAP net revenue of $1.625 to $1.925 billion, and cost of revenue of $360 to $410 million. We expect operating expenses of $1.125 to $1.205 billion, including a $70 million impairment charge of certain acquisition-related intangible assets. This results in gap earnings per share of $0.20 to $0.68 for the fourth quarter. Before handing back to Andrew, I'd like to take a moment to share some early perspective on our multi-year growth objectives. EA is in an advantaged position to lead the future of interactive entertainment, with ongoing secular tailwinds and structural shifts within the industry further amplifying our strategy. Our long-term financial framework is founded upon creating value for our shareholders by accelerating growth, delivering forward operating leverage, and increasing cash flow. In executing on our strategy, we expect to scale operating leverage through the following growth levers. expanded player acquisition, engagement, and retention. Two, highly accretive digital and live services. Three, blockbuster new releases from our development pipeline alongside compounding growth across our core franchises. And four, discipline and focus on aligning our cost structure to invest in support of our strategic growth opportunities. As we look ahead to FY25, and more specific guidance in our upcoming Q4 earnings call, I wanted to share some initial considerations. Assuming minimal impact to our results from FX, we expect low single-digit net bookings growth, reflecting continued execution in our core businesses in a lighter release late year. And excluding any impact from future share repurchases, we expect mid to high single-digit growth in underlying profitability. Looking beyond FY25 over the next couple of years, we expect our net bookings growth to accelerate, bolstered by our portfolio of industry-leading IP. Compounding growth within our core sports franchises, new content and engaging experiences across our massive online communities, and iconic new releases like Battlefield Sims and other in-development titles provide the inflection point that fuels net bookings growth and increases underlying profitability. And we expect to continue to deliver meaningful operating leverage and drive increased cash flow conversion, even as we continue to invest to support our strategic objectives. In summary, with our incredible talent, industry-leading IP and technology, global and growing communities of fans, and our focus and discipline around our strategic objectives, we are confident in our ability to continue to deliver on our long-term growth commitments and drive value for our players and for our shareholders. I look forward to sharing more over the coming quarters. Now, I'll hand it back to Andrew. Thanks, Stuart.