Q3 2021 Electronic Arts Inc Earnings Call
Good afternoon, My name is David and I will be your conference operator today.
At this time I would like to welcome everyone to the electronic Arts Q3 fiscal 'twenty 'twenty, One earnings conference call Mr. Chris <unk> VP of Investor Relations you May begin your conference.
Thanks, David welcome to Ea's third quarter fiscal 2021 earnings call with me from their homes today are Andrew Wilson, our CEO and Blake Jorgensen, our CFO and CLO.
Please note that our SEC filings on our earnings release are available at IR EA Dot Com. In addition, we have posted earnings slides to accompany on prepared remarks.
The cold wheel Paysop prepared remarks, an audio replay on this call our financial model and a transcript once again I'd like to direct you to the earnings slide this quarter. They now contain the metrics and color that we have historically included in Blakes remarks with regards to our calendar our Q4 fiscal 'twenty and 'twenty. One earnings call is scheduled for Tuesday may the 11th as a reminder.
We placed our entire year of earnings calls on our IR website. This.
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 February the second 'twenty 'twenty, one 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. All comparisons made in the course of this call are against the same period in the prior year, unless otherwise stated and now I'll turn the call over to Andrew.
Thanks, Chris I Hope this finds all of you well and staying healthy amidst the ongoing pandemic. This continues to be a record breaking year for electronic arts with diluted net bookings and earnings above our guidance each quarter and we are raising guidance today for the remainder of FY 'twenty one.
After starting this fiscal year with guidance for $555 billion in net bookings, we're now expecting to achieve nearly $6 $1 billion in net bookings for the full year and we are projecting growth in our business to continue next fiscal year.
We are delivering exceptional high quality experiences across the unmatched breadth and depth of our portfolio. We are driving growth through our live services and we are reaching new players by bringing our content and subscription to mobile platform.
Drilling down on these growth drivers E sports is at the core of the sports experience for hundreds of millions of fans more and more people, especially younger Gen. G players and now define their sports day, and then through the games day play like FIFA Madden NHL and UFC.
In the past fiscal year, we've had more than 240 million people engage with our EA sports franchises and content.
We delivered six new high quality sports games in FY, 'twenty, one including feed for 'twenty, one and Madden NFL 21 on the new Xbox series X and Playstation five ushering in a new generation of sports games.
FIFA continues to grow on every platform, we set a new record of nearly 6 million daily active players in FIFA Ultimate team in December and fought matches have grown a staggering 177% year over year.
FIFA online four in Korea has had higher player acquisition in every quarter of this year compared to last year and we now have nearly 21 million players in FIFA Mobile Asia.
We are driving growth across our E sports portfolio Madden NFL has more players engaged in the franchise than ever before.
NHL engagement is up 13% year over year and since launch UFC for has consistently had 20% more daily players that our previous game.
E Sports is at the center of innovation in our games as well as how fans are connecting through our games to their friends and to the sports day Law for example, in a year, where an in person trouble event was not possible. We worked without NFL partners to create the first ever virtual portable in Madden NFL 20.
One.
This was a groundbreaking experience for fans, we're playing Madden actually helped to select two global players.
Mobile itself, then took place in Madden NFL 21, with the show on Watson and Calamari, leading teams of NFL stars in highly entertaining broadcast that add on Twitch, the NFL network and NFL social channels last Sunday.
The other superbowl is just a few days away and we're preparing new content in and outside Madden NFL for the increasing number of players engaging without franchise around the NFL Championship game.
Events like this used for bold demonstrate how real world sports experiences are evolving to become interactive and you can expect to see us continue to lead here.
Our fans are telling us that they want more of what E sports can deliver deploying more of our games than ever before they are spending more time without content and then connecting with each Alba the plays and teams and sport day loved throughout experiences.
We are now set to build on our leadership position with an aggressive expansion plan for EA sports. We have important announcements, we are making today and more that we expect to make in the weeks ahead that will lead to more great games and content for fans and significant new growth for our company.
We are a major global expansion on our soccer business underway as the scale about EA sports FIFA player audience explains including a growing Gen. Z population, we will offer more great content on more platforms with our longstanding partners across all of the top leagues and teams in the sport.
We are bringing FIFA online to new territories, including Russia, Poland, and Turkey with a combined audience of 80 million players. We're also accelerating our focus on mobile with six new socket mobile experiences in development today for different regions and genres.
Sports is the premier partner for football organizations leagues and teams around the world and today, we are announcing that EA sports FIFA will continue to be the exclusive home of UEFA Champions League football.
As part of our renewed partnership with UEFA, We will also be launching new esports competitions, and we will have even more news in this space in the months ahead.
We're bringing new types of experiences to market that will expand the genre in partnership with Caleb we are developing a groundbreaking new mobile experience inspired by the Japanese market, which we believe will have global appeal.
We're thrilled to announce today that E sports is returning to college football. So many fans have been asking us to please bring back college football Videogames. The passion for this top selling sports franchise has never wavered.
We lost college football as well and today, we're very excited to say, yes, we are coming back.
We have started work on all new next Gen experience working closely with our exclusive licensing partners at CLC to include the universities logos venues and game day traditions that fans know and love and college football.
We will grow the EA sports pulp portfolio to include experiences and more sports for more fans around the world in the weeks and months ahead, we will make more announcements about our expansion into different sports, including at least one new experience that will launch next fiscal year.
We're also incredibly excited to build a rising powerhouse with our proposed acquisition of code losses. These are amazing teams that we know very well and we are adding significantly to our writing portfolio to drive growth.
Formula One is one of the few truly global sport and is already seeing unprecedented growth in worldwide standard, including in North America and Asia.
We believe the combination of EA sports and code losses can take the game franchise to an even greater level. We are awaiting the results of a toy Mazda shareholder vote on Alpha, which we anticipate having tomorrow February the third.
With the strength of our EA sports franchises and these announcements today, we are in a position to deliver the world's best sports games and content, we intend to leverage our capabilities in this space to grow to more support and more experiences reaching large audiences in more markets all over the world.
These announcing today adjusted beginning for $240 million EA sports players and viewers, we are providing a social network that enables them to experience more of the sport. They love with their friends. We believe we can growth at 500 million players and viewers and esports experiences over the next five years.
For the future of Inc. Entertainment is interactive and the future of sports will continue to blur the lines between live sports and our Moose immersive and engaging new experiences.
Sports is at the center of this convergence and in collaboration with our Amazing League partners, we're prepared to accelerate the future of sports Entertainment.
In addition to EA sports, we are driving growth for our portfolio of more than 20 top live services I'll give you two examples from our deep roster of wholly owned IP.
We were at the two year anniversary of the launch of apex legends and with 30% growth in new players year over year. Its success is accelerating.
On a unique seasons of live service content delivered by a talib respawn team are expanding the apex audience, bringing in more players with great storytelling and engaging in game events.
Competitive play and apex legends is also reaching an entertaining more viewers with recent event in November driving new viewership and watch time records.
This is an outstanding live service business that continues to grow across multiple dimensions launching the game on steam is bringing a new DC players we will launch on the Nintendo switch on March nine and we will expand for all that without apex mobile game rolling out in FY 'twenty two.
This is in for has grown every year since launch as we expand the experience more new and relevant content, we engage a diverse and growing audience spanning players of all ages and demographics lost a day more than 33 million people have now played that seems for and daily weekly and monthly average players in the game.
All reached all time highs for the third quarter in December.
Max's team just delivered the 10th expansion packs from assumes for and we see continued growth for our <unk> business in FY 'twenty two.
We have the ability to bring games to every platform and we are driving continued expansion of our total addressable market.
Mobile continues to be a key opportunity for us games like Star Wars Galaxy of heroes continues to be a deeply engaging for players and very successful businesses and we have plans to aggressively grow on mobile portfolio.
We're also expanding our lead in subscriptions the groundbreaking integration about EA play service with Microsoft game for US has accelerated as subscription business with nearly 13 million players now active in our service across all platforms, Xbox Playstation steam and our EBITDA client.
With more players valuing a subscription model.
And without scale across platforms and content, we are building a strong growing business with recurrent revenue.
We also have new streaming players joining our network through X box cloud gaming with game pass Ultimate and other partners and we are committed to advancing cloud as a meaningful part of the future of the gaming ecosystem.
Yes.
FY 'twenty, one has been a year of outstanding growth, while working through the challenges of the ongoing pandemic. Our execution continues to be strong even with our employees working from home and we expect that most will continue to do so through September.
Creativity and innovation of our talented teams is enabling us to deliver more great experiences in our leading franchises and live services, we have a deep and robust pipeline of new content with more than 35, new games in various levels of incubation and development for the future.
We're looking for to sharing a lot more about our FY 'twenty two planned in the months ahead, including on next battlefield experience, which will Mark a return to all that military warfare.
The game takes full advantage of the power of next generation platforms to bring massive immersive battles to life with more players than ever before.
Featuring maps with unprecedented scale. The next patient on battlefield types, all the destruction player agency Vigo and weapon combat the franchise is known for and elevate it to another level.
The team is focused and the game is ahead of our internal milestones we will reveal the game in the spring and deliver defining battlefield experience for our players in the 'twenty and 'twenty one holiday season.
Games helped fill a great need in People's lives through 2020, our franchises of west. So many around the world are coming for connection entertainment and inspiration. We're looking forward to delivering more great experiences for hundreds of millions of people engaging with us and driving continued growth in our business through Q4 and into FY 'twenty two.
Now I will turn the call over to Blake.
Thanks, Andrew we delivered net bookings well above our expectations this quarter the.
The beat was driven by our live services led by outperformance in ultimate team on apex legends.
We delivered GAAP net revenue of $1 $7 billion on record net bookings of $2 4 billion.
We've built our live services prolonged Germany, FIFA and Madden on both been around for decades measured over the last 10 fiscal years. The FIFA franchise has grown at a cumulative annual growth rate of nearly 50% and madden at nearly 60%.
On the Sims four is on track for its sixth consecutive year of growth on apex legends for its second at the beginning of what we hope will be a similar long run for this title.
On Iterating amplify here that we expect for apex to deliver well over $500 million in net bookings this year compared to our original expectations for $300 million to $400 million.
The apex team has really embraced the playfulness of the characters and gameplay.
Team is focused on having more fun in the craft of building and experiment with new modes and ways to explore the apex universe and characters.
This has been paying off with a compound average growth rate of 14% per season.
Measured from season, two that's equivalent to an annual compounded annual growth rate of about 65%.
With regards to the force the sports opportunity in particular, we estimate the world where sports Videogames software segment is about 7 billion on console and PC today, it's grown by about 13% annually. Since 2016, we're the leader in that segment and are now applying our full focus for the spec.
From a sports opportunities from casual to core the.
The global gaming market for sports is presently about $4 3 billion in size and growing fast at about 24% a year, we're barely scratching the surface of this massive opportunity, but we have a lot of projects in flight and you'll hear more about our activities here in the year to come.
Operationally, we are working on challenging working on challenging times, but we've been able to lean into the advantages that come with our scale to deliver games at quality with remarkably little impact on timing.
This quarter, we launched fee for 'twenty, one NHL 21 need for speed Hot pursuit remastered and medal of honor above and beyond.
We also extended FIFA and Madden to Playstation five and Xbox series X and Star Wars, Jedi fallen order to stadia and added our EA play services to Microsoft's game pass we continued a packed schedule of live events for ultimate team across FIFA Madden and NHL, we launched the season seven for <unk>.
Apex and launched season eight per day.
We launched the Snowy escapes package for the Sims.
The step function jump in digital sales prompted by Covid appears resilient with digital representing 62% of units sold through in the quarter up 13 percentage points from last year.
Mobile showed its third consecutive quarter of year on year growth with outperformance across the board. This quarter led by Star Wars Galaxy of heroes on FIFA mobile will have much more to say about our mobile strategy. Later this year and we continue to be excited about the games. We currently have in place.
Operating expenses came in materially below our expectations, primarily driven by the phasing of marketing investments, we hit a new record in trailing 12 month operating cash flow of two point over $6 billion. The quarter was very close to a record for quarterly cash flow, which we delivered back from Q3 fiscal 2000.
2017, with the help of battlefield one.
Needless to say, we're excited about the potential for the next battlefield Q3 next fiscal year.
Our expectations for full year GAAP revenue was $5 6 billion cost of revenue to be one for $4 7 billion and earnings per share of $2 54, remember that our guidance EPS calculations does not factor in future buybacks under our recently announced two year $2 6 billion.
Share repurchase programs, we are reaffirming our operating cash flow guidance of 1.85 billion. We continue to anticipate capital expenditures of around $125 million, which would deliver free cash flow of about one 7% to $5 billion.
Please see our earnings slides and press release for further cash flow information.
We're raising our net bookings expectation for the year to be 6.0, $75 billion up $125 million from our prior guidance. This.
This was driven by continued strength in our services, particularly FIFA apex legends.
Is $525 million above our expectations at the start of the year.
Despite the changes we made to the product slate during the year.
We expect this year to be 13% over prior year, even with a lighter release slate versus the prior year on an FX headwind of about $55 million.
For the force fourth quarter, we now expect GAAP net revenue of 131 $7 billion cash.
Cost of revenue to be $302 million net operating expenses of $837 million. This results in a loss per share of seven for the fourth quarter.
We anticipate net bookings for the fourth quarter to be 137, 5 billion, which is an increase of $75 million over our prior guidance.
We've built a foundation for growth in fiscal 2022.
We have successfully brought new people into our ecosystem.
We're providing great content for people, who want to spend more time there.
<unk> been working hard on new titles and new platforms. We expect this to deliver significant organic growth in fiscal 2022.
Formal guidance will follow on our Q4 call, but I can tell you now the battlefield battlefield team is doing an incredible job. They're way ahead of where we were getting product for prior product cycles on tracking early as future complete in franchise history. Meanwhile, for live service games for FIFA apex legends the Sims.
Madden all continue to outdo themselves and <unk>.
Of course, we will have other surprises that will reveal when the time is right now I'll hand, the call back to Andrew.
Yes.
Thanks, Blake strong execution throughout FY 'twenty, one has brought us to this point and the drivers for future growth are foundational to our business.
Teams are creating amazing high quality games and content for more players around the world than ever before our live services that extend and enhance these experiences on keeping players engaged over the long term and.
And we are transforming our business for continued expansion and growing our portfolio and enabling ways for players to connect in each other and engaged deeply with their favorite content. We're looking forward to a strong Q4 and a year for continued growth in FY 'twenty two now Blake and I are here for your questions.
In order to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please standby, while we compile the Q&A roster.
Your first question comes from the line on Brian Nowak with Morgan Stanley. Your line is open.
Hi, guys, it's Matt on for Brian. Thanks for taking the question two if I could so you guys put out a statement last month that you have multiple star Wars game still in development I'm. Just curious if you can give us an update on on.
Those franchises and what we should expect from 2023 forward and then just the second one as you know at the point that you guys kind of came into the beginning of fiscal Q3. It was on the tail end of the summer it felt like.
Parts of the country had partially reopened before locking down again, so I just wonder what the experience you saw over the course of Q3 was in terms of had people churned out at the beginning we then came back into gaming.
No other entertainment options became more restricted or what did you see in user behavior over the course of the quarter. Thank you.
Yes, So let me let me jump into that in the context of Star Wars.
We won't be announcing new things here, but what I would say is if you look at our history with Star Wars.
Had a long and very profitable relationship for.
For us with Lucas Arts, and then with Lucas film and then with Lucasfilm as part of Disney.
We have generated.
A number of great franchises star was not to be older public Galaxy of heroes Battlefront Jedi fallen order and most recently squadrons that represent over 3 billion lots of day net bookings and 52 million games sold on Galaxy of heroes.
<unk> is a 1 billion dollar franchise as we establish these very strong.
Part of that franchise, you should expect that we will continue to invest in those as well as some new.
On new experiences across platforms for the future.
With respect to engagement more broadly I think that we've seen strong engagement.
Throughout the last year.
Blake and I are both being relative conservative I think as we look to the future at each moment in time, but we feel good about where engagement has been and we feel we now feel more confident that the.
The increase in gauge what we've seen in our experiences is likely to continue on a go forward basis like I don't know if you have any more to add to that.
I would say clearly.
Looking at Q3 in terms of live services.
And 24% growth year over year of live services should prove only one simple thing, which is engagement is stronger than we have ever seen.
It is spectacular and it's because we're fulfilling the.
Social connection between people, who love the same things be it.
Some sport.
Sims apex whatever it is.
Figure out how to make that happen and you don't see growth.
John.
Billion and a half dollars of revenue.
Without knowing that that's what's driving the engagement and the social networks of what we've created and that's the secret sauce of what we've done.
Great. Thanks.
Okay.
Your next question comes from the line of Michael Inc. With Goldman Sachs. Your line is open.
Great. Thanks for the question I just have two.
First just on battlefield with first person shooters using free to play game mode to expand the top of funnel can.
Could you talk a little bit about your ambitions do something like that with battlefield is there anything you could share with us with us about.
About the content Road map and then my second question is just on the <unk> deal.
For those of us who weren't around when you guys were doing.
For both 2014 was the last one.
Could you just give us.
Some parameters in terms of.
What the unit for unit demand for that game with like is that a good way to think about some of the future anti double a game that you will do going forward. Thank you.
On on battlefield, we don't have anything more to share with you at this point other than we believe that it's going to Austrian on.
New generation for battlefield games on battlefield fans and we'll be taking.
Benefiting from the full power of next Gen platforms, and you should imagine that we're looking across.
All forms of the experience to ensure that this is exactly the game that battlefield fans want to play.
And the game that we believe will drive growth on the battlefield franchise, but more on that to come in the months ahead, and we're excited to share more on that at the appropriate time.
With respect to our college football game again this was.
This was kind of part of my my my past life, leading EA sports. It was a really strong game. It was a fan favorite game.
It sold tens of millions of units over its life.
And we expect that it will continue to be a really strong fan favorite game is measured by the amount of emails I get on my inbox, each week requesting us to bring back for this game.
I think that we could look to the past as a effective for the future, but I'd also say that I think college football as a fan audience has grown dramatically since we launched the last game in 2013 I also think the nature of game play has changed dramatically as we think about the future of <unk>.
And you heard us speak to that.
The conversion of sports and independent more broadly and so we're excited to bring that back and the use of net.
Great. Thanks, Andrew that's really helpful.
Your next question comes from the line of Mario Lu with Barclays. Your line is open.
Great. Thanks for taking the questions I have one on apex and one on FIFA mobile.
For the first one on APAC very excited for the Nintendo switch version coming out in March.
So with close to 80 million switches sold worldwide and the fact that Japan is the game's number two market can you help us frame that switches opportunity to the franchise, reaching $1 billion in annual bookings versus growth.
From organic and mobile.
And then secondly, I'll see if on mobile can you just expand a bit more on the credit strategy and growing that title I believe you mentioned there are six different FIFA games.
I think in the.
Similar with each other just being low glass for each region or are they completely separate gains and why not just have one title tied to the console and PC version like Madden. Thanks.
Yes, so on I'll start with apex, and then Andrew might want to jump on paper.
So on apex.
Clearly as you said, Japan is the second largest market for apex, which is very exciting for us.
And we know that it's one of the largest markets for Nintendo switch and thus the reason we decided to put it out on Nintendo switch, but we also know that Nintendo switch as a global business not just the Japanese business, we think the combination of Nintendo switch apex, plus mobile apex.
We will be very powerful.
We believe mobile apex will be in soft launch sometime in the next three to.
For months.
And hopefully gets into the marketplace quickly.
Obviously, it will take longer to get into the market in China because of some other regulatory issues, but in the rest of the world, We don't see those issues happening.
But we also want to make sure. It is the exact product that we want I think the team is very dedicated to making sure. The product is the perfect product for a global market.
What they've learned a lot from Japan, they've learned a lot from character development and so forth in that market and we think that will continue to help us.
And you know.
Let's all remember.
Less than two years ago, no one knew this product exists.
Today, it's over $1 billion, we think there is a huge upside for this product over time and I just encourage people to keep focused on that because we don't have a mobile product today, we don't have a switch product today. There are still other platforms around the world that we might go on this as an opportunity that will last for a very long time and we are.
Trying to build it for the long range not just for one year blip. So we're very excited about it.
Andrew I'll throw it over to you on the fee for question.
Yeah on FIFA I think the best way to think about this is soccer is the world's largest sport by a wide margin.
Mobile is the world's largest gaming platform also as it turns out by a wide margin in terms of magnitude of players.
What we know about software as we travel around the world and what we know about mobile as we look at the big growing player base is that soccer means different things to different people in different markets and certainly as we look at the magnitude of players that come into the mobile ecosystem. They are often looking for different types of experiences with respect.
The subject matter of a day logs and so as we look at out Peter business building off the strength of our licensing relationships on a global basis. We think there is an opportunity to deliver a number of different experiences.
Across the mobile platform for different geographies and different player cohorts based on what they're looking for and we think that represents a tremendous growth opportunity for us.
Great helpful. Thank you both.
Okay.
Your next question comes from the line of Ryan Gee with Bank of America. Your line is open.
Hey, good afternoon, everybody. Thanks for taking the question on the first on live services, So I think <unk>.
Last quarter was down 7% year over year. This quarter was up I believe 28%, but given the.
The timing shift for some of the sports games I don't know that either quarters really that representative. So I was hoping you could clarify what the right cadence is.
For ultimate team since FIFA, and Madden launched and how much life services this quarter.
<unk> benefited from subscriptions and game pass partnerships with Microsoft and Mike.
Yeah, I would say Ryan thanks for the question I'd say the.
The impact on.
Subscriptions is relatively a rounding error.
I would say year over year growth of 24%.
Would imply that it's a pretty strong business.
Last year based on what I'm looking the numbers on I'm looking at it wasn't down it was up year over year, it's been up year over year every year for I don't know how many years so.
It is extremely strong and it's strong across almost all of our live services for you.
For apex Madden.
Medal of honor.
And Simmons and even hockey has one of the best quarters Ive seen in years.
So what I would try to remember is the bulk of our business.
<unk> is still live services, and we're seeing incredible growth across did year over year.
And subscription while just nice growth, it's still very small compared to the overall live services growth across all of the all other games.
Okay, Yeah I was for.
For the down last quarter, because there was timing of fees, where my searches were down year on year, but I get your point Nonetheless.
On the other question was really just could you kind of give us your with the new next Gen consoles out there on the market could you give us maybe your high level observations on.
Consumer response, and how the pace of adoption has been relative to your expectations.
Weather does that now have the console the new one has exhibited any different.
Purchase behavior time spent engagement versus the prior gen that'd be great.
So I answered that.
Yeah.
On balance, it's probably a better question for Microsoft and Sony at this point I think it's too early to tell for US I think on a.
Totally what we know to be true is demand is extraordinarily high for both consoles.
On the retail is both digital and physical is struggling to keep them in stock.
What we've seen is the games that we've been able to build on those platforms are really really strong and as I look for the games that we go into the other build on those platforms on a go forward basis, I'm really excited about the new innovations and creativity and gameplay, we're going to be able to deliver on inevitably I think that is going to offer a more engaging and immersive experience for our players.
That will ultimately see see growth bolt imply is overall on the time spent in our games.
Your next question comes from the line of Todd Juenger with Sanford Bernstein. Your line is open.
Hi, Thanks for taking the question I've also got two one on basketball and one on the broad topic on social.
Just because you talked about the expansion of sports on lots of dimensions.
Noticeably absent was any mention of NBA basketball I just wondered.
If you could comment on your sort of latest thinking on that and in particular.
College basketball might be a particular opportunity.
White space, there that certainly has a large fan base and wonder if that.
Is it potential way for you guys to get back in the basketball business in a big way second.
Second question on the broad topic of social it's a pretty broad question I'll, just I'll try and make it short but.
I think the word social was mentioned in your prepared remarks multiple times surely we all can agree that the convergence of what we call gaming and so social.
As is happening in front of our eyes Fortnite roadblocks, just wondering how you think about <unk>.
All of your portfolio of games, what that means for the year evolution, where your biggest opportunities are to take advantage of that to meet clearly the Sims is an obvious place that comes to mind are you proactively doing anything too to be Moore.
On sort of aggressive in pursuing that aspect of gaming. Thanks.
Two great questions.
First off no announcements on basketball Tonight today, I would say two things one I think we underperformed on basketball over the last number of years and that's been very disappointing to us.
With that said, we continue to have a really good relationship with the NBA and remain committed to basketball long term and you should imagine that we are thinking through the best ways for us to use the strength of our business the strength of that technology and the amazing creativity of our teams to deliver really cool new.
<unk> innovative experiences for basketball fans.
Respect the social in general.
The short answer is yes part of what we have recognized now is our play is particularly over the last year.
I've been using our games is as ways to remain connected with their friends, even while they were part of that.
You might have heard me studies before but social interaction is moving from physical to digital more broadly for the Gen Z population on the consumption of sporting and the timing is moving from linear to interactive for the Gen Z population and we kind of sit at the intersection of those two secular trends.
And so on what we've started to do is really built around our content to ensure that we are providing more social opportunities for our fans.
On the Madden global over the weekend was one such example of how we can take out game at the center of a social ecosystem and build around that for fans both fans, who play out games and fans who interact with players about games on when we think about our sports franchises. When we think about <unk>. When we think about the same as when we think.
Mobile on a go forward basis, we think there was a tremendous opportunity for us to build more into that and deliver on the social interaction I'll fans on asking for.
And you should expect us to talk more about that in the future as we think about community commentary social interaction competition.
All wrapped in the data that our Gen Z fans I use.
On a day to day basis to play our games.
Okay.
Terrific. Thanks, a lot.
Okay.
Your next question comes from the line of Mike Hickey with Benchmark Company. Your line is open.
Hey, Andrew Blake, Chris and congrats on the quarter guys. Thanks.
Thanks for taking my questions just two as well.
First one on your Bioware studio look like.
<unk>.
Q Moore executive turnover from Casey.
Mark.
The studio can you update us.
From the executive leadership at bio Ware on the program.
On Kronos.
Products excuse me.
Road map on loans guide would.
It would be helpful. On the non star Wars, obviously that licenses not exclusive but it seems like you probably be doing less units. How do you think about sort of realigning the debarment resources and broadly speaking how do you think about licensed IP versus owned.
In the sort of non sports category. Thanks, guys.
Yeah.
Two great questions first off on Bioware again that is an incredible studio are filled with incredible people who do on.
Incredible work.
And I think that.
From the outside wall, there have been some blips in the delivery of the on the last couple of years, but that has come as a result of them pushing deeply into innovation and creativity and we feel very very confident about their future roadmap that we've talked about.
Games like Dragon age and mass effect in their future with respect.
Casey Mark, leaving again, both good friends of mine, we have tremendous respect for both of them.
But this this happened in the natural course of creative organizations from time to time.
And we feel very very good about the the ongoing leadership of that studio and the many people who come to work every day to deliver great innovation creativity, and we look forward to sharing more about whats coming from bioware.
In the in the near future and you will have just seen.
Affect trilogy legendary edition.
<unk> and that has been extraordinarily well received by Bioware fans and so we're encouraged by what that studio will continue to live on in terms of Star Wars I don't think you should imagine that.
With that.
With some other people will build some star wars games is going to change our commitment to that IP or our ability to build the appropriate number of games and as I've said before we've had a long partnership with Disney both booked but for our exclusive period that gave us a great opportunity to really establish.
So very strong franchises like battlefront lifestyle loans Galaxy of heroes like Jedi fallen order life squadrons.
Should expect us to continue to invest in on Star Wars relationship. It's been very profitable for this point of the $3 billion of net bookings.
And we're excited about what we'll be able to do on the future, but you shouldn't read this as necessarily on building less titles I think what you should take from US more broadly as a company is that we are we believe in our ability to execute and deliver great high quality deeply engaging content for our fans.
For us both our sports business, our wholly owned IP business and our license partnership business like the one we have with Star Wars, and we feel confident and comfortable that we're going to be able to deliver great games for the future.
Thanks, guys best of luck.
Your next.
Question comes from the line of drew Crum with Stifel. Your line is open.
Okay. Thanks, Hey, guys good afternoon.
On Codemasters, then as it relates to your commentary on sports and the accompanying growth rates by platform.
I was racing on the genre performed and how quickly would you intend to ramp live services on the code Master titles.
My second question pertains to your guidance. So you know last year with fiscal <unk> earnings you suggested that fiscal 'twenty two growth would accelerate with the next gen console over on battlefield, serving as the key drivers now you fast forward to today your comp will presumably be.
<unk> much higher than where you thought it would be but you still have those two pieces in place cluster, adding codemasters and you've talked about a number of initiatives with P. For an apex today. So given that is accelerating growth in fiscal 'twenty two remotely possible.
<unk>.
Yeah, Yeah, Let me drew let me just start with the second question.
We wouldn't come out and say that accelerating growth was possible for <unk>.
And I know that if we weren't confident of it.
I mean.
What we're saying is.
We believe that the trends that we see in this year the business will continue.
Battlefield next year.
And we haven't actually even put.
In place, what we think codecs or codemasters could could deliver because the deal has not closed yet.
And so we're clearly thinking and saying, we see coming off of a year on which we started at 555 billion. We're now telling people, we're close to $6 $1 billion on revenue and we're telling people we're going to grow again next year. I think you guys should take that as an incredible level of commitment and.
Confidence on where the business is growing.
Absent <unk>.
Even additions from non organic growth because we spilled out this is organic growth, we're talking about right and so I would get people I'd be very focused on that.
There is a lot of spin right now in the marketplace around the fact that we decided to capitalize.
Part of the guilty tax regimes R&D expenses in our fourth quarter to try to get behind it.
Because we had a strong year and so the reason we have a fourth quarter that shows a GAAP non non-GAAP, but a GAAP decline.
In EPS is purely getting ahead of what is going to be a tax cost for every company out there that gets hit probably guilty.
And we're trying to be aggressive and stay in front of that but the cash impact of that is minimal.
And we think in a year in which we are already well above our EPS.
And our earnings it was the exact right thing to do.
And I'm not sure why everyone wants to spin on that but I would dig in a little bit ask for questions and make sure you understand what that really means I know that's not the question you asked but I want to make sure it's clear to everybody.
That's exactly what's going on right now.
Now.
Codecs on its own could be a nice addition to the company we know that they have some incredible franchises. The S. One franchise is so nascent.
As a new franchise for them, we know if you're based on the U S. There's very little F. One races going on in the U S and yet we know that the owners of F. One would like to build on F. One business in the U S.
We know that there is still expansion around the globe. It is probably one of the best growth opportunities. There isn't a reason that we are willing to pay what we were willing to pay for it on top of the fact that the dirt franchise the grid franchise.
All of their franchises are incredible games, but none of them have actually taken advantage of a large publishing organization.
On marketing muscle that we're able to deliver and we think that has growth to it not to mention the talent in that organization that could continue to help our need for speed business for a real racing business. It could be very powerful. So we know it is not a fee for size business, but we know there.
His incredible opportunity.
One essentially all of the driving business for us.
So with that passionate answer I've forgotten what your other question was so.
Yeah, I would just ask you a lot of the right things on her.
Yeah, how racing has performed at a category.
Well you know what we know that.
Every year, we put out a need for speed. It does extremely well, it's one of those kind of games that is.
If mom goes into the store or goes online and doesn't want her son or daughter to be playing something that might look a little too competitive or might be two sports oriented driving has always been an incredible opportunity in the marketplace.
And we know it's not going to be the size of FIFA, but we believe that there is a huge potential, particularly as you think about the growth of the underlying franchises that we might be able to help drive.
That's why we're so excited about it.
Okay. Thanks Blake.
Yeah.