Electronic Arts Spends $64m on Restructuring

Although Electronic Arts increased its revenue and net income in the last financial year, the company also undertook a multi-million dollar restructuring programme again.

Electronic Arts is not dissatisfied with the past financial year. This is stated in the press release issued by the company on the publication of its preliminary Q4 and annual results. "This year, EA delivered bigger, bolder world class entertainment that engaged and connected hundreds of millions of players and fans," said Andrew Wilson, CEO of EA. "We will continue to build on this strong momentum through an incredible pipeline of new experiences, starting with College Football in FY25, positioning us for accelerated growth in FY26 and beyond." And Stuart Canfield added: "EA’s FY24 was highlighted by record cash flow and strong earnings growth driven by EA Sports FC and Madden NFL. With strong conviction in our future, we are announcing an expanded stock repurchase program. We look forward to sharing more about our long-term strategy and financial framework at our Investor Day this fall."

So far, so good. In fact, given the general market situation, the figures presented by EA are quite pleasing, even if analysts had expected more, especially when looking ahead, according to US media reports. Revenues for the past fiscal year totalled $7.56 billion. This is almost $140 million more than the previous year. Net income rose by more than 50 per cent from $802 million in fiscal 2023 to $1.27 billion in fiscal 2024.

For the current fiscal year, EA expects net revenues in the range of $7.1 billion to $7.5 billion and net income in the range of $904 million to $1.085 billion.

Once again, the details contained in the preliminary tables that have already been published are interesting. For example, the sale of full games only accounts for around 26.65 per cent of total revenue. 73.35 percent of revenues come from the 'live services and other' segment. If only the physical sale of games is considered, the change in the industry becomes even clearer. Only about a third of full game revenues now come from physical distribution, and the trend is downward. Physical sales no longer account for nine per cent of EA's total revenue.

In terms of platforms, consoles remain the most important sales channel for EA. While EA generated between $1.05 billion and $1.23 billion from console games in each of the last four quarters, the mobile games segment generated only around $300 million and the 'PC and other' segment between $420 million and $450 million.

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Last but not least, the preliminary figures for the year also reveal the costs that Electronic Arts had to bear as a result of the restructuring measures. These totalled 64 million dollars last year. Although this is significantly less than in the previous year, when EA spent 155 million dollars on restructuring in the fourth quarter alone, it is still considerable for a company where the CFO talks about "record cash flow and strong earnings growth".