Q4 2021 Electronic Arts Inc Earnings Call
Good afternoon. My name is my travel the your conference operator today.
I would like to welcome everyone to the electronic Arts Q for 2021 earnings Conference call.
Mr. Christian just the VP of Investor Relations you May begin your conference.
Thanks, Mike and welcome everyone to Ea's fourth quarter of fiscal 2021 earnings call with me from the IMS today are Andrew Wilson, our CEO and Blake Jorgensen of CSI and C. O M P.
Please note that our SEC filings and all of that earnings release are available at IR took the eye and Telecom. In addition, we've posted earnings slides to accompany our Petro malls lastly.
Lastly, after the call, we'll probably saw hydro marks.
Play all of this call of financial model and the transcript.
Once again I'd like to direct you to the earnings slides this quarter. They now contained the metrics and kind of the weeds historically included the Mike's remarks.
With regards to what kind of Q1 fiscal 2022 earnings call is scheduled for Wednesday August of fourth and as a reminder, we placed the schedule for entire year of upcoming earnings calls on our IR website.
This presentation and our comments include forward looking statements regarding future events and the future financial performance for the company.
Actual events and results may differ materially from 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 electric.
Electronic Arts Macy's statements as of today may 11th of '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 cool are against the same period in the prior year unless otherwise stated now I'll turn the call over to Andrew.
Yeah.
Thanks, Chris I Hope this funds all of you are staying healthy and well I want to start today by saying and welcomed our newest teammates from Cold Masters Glu mobile and metal had software. We're very excited to have out of these incredibly talented teams to the EA family and we're looking forward to creating some amazing new experiences together.
FY 'twenty, one was a record year for electronic cats engagement in our games continues to expand worldwide, leading industry transformation and fueling demand from a new generation of players that will continue for years to come.
We delivered 13, new games in FY, 'twenty, one and welcomed more than 42 million new plays to our network of more than 500 million unique accounts.
The tremendous engagement across our leading live services is a powerful demonstration of apps players coming together and for me.
The social networks through our experiences.
We drove net bookings growth of more than $600 million above our original guidance for the fiscal year and achieved bottom line results significantly ahead of our expectations of teams continue to live with for all players the spot the challenges of the pandemic and how execution of long term strategies to create exceptional like all the experiences drive growth through our leading.
Live services and expand our reach the more players are continuing to build strength nowadays.
As we look forward the FY 'twenty two we are accelerating powered by organic growth of now existing business development of new businesses and Larry and growth from recent acquisitions, we are forecasting growth in FY 'twenty two.
Our net bookings guidance reflects 18% year over year of growth to seven 3 billion. This includes organic growth in our core business and the addition of Glu Codemasters and metals had acquisitions.
From this position of strength. We are also investing in the future of out of business and we expect to continue to grow underlying profitability.
I want to spend time day on three primary growth drivers for us in FY 'twenty to expand the E sports business growing the apex legends and battlefield train charges and our mobile growth strategy.
With the foundational strategy for growing these blockbuster brands that we are applying best in class premium experiences deeply engaging live services the create social networks in our games and expansion of the more platforms, new business models and new geographies.
The model is how we'd go people apex legends Madden NFL and the savings into some of the most successful global live service businesses in the industry.
We're applying it as a blueprint of cross sell franchises.
As the undisputed leader in sports games EA sports is moving from strength the strength as we grow current our current business and include more sports and reach new audiences.
In FY 'twenty, one L E sports games brought plays together at record levels of esports.
In the sports pay for experiences continue to engage more of 100 million players worldwide.
More than 20 million players played FIFA ultimate team in the last year and FIFA Ultimate team matches were up an incredible 180 per cent.
Non NFL had its biggest year ever and games of course, our EA sports portfolio continue to acquire more players than ever before.
We'll now build on that strength with a massive year of innovation and expansion.
All of our new EA sports games in FY 'twenty. Two are designed for the next gen console platforms, including FIFA Madden NHL and EA Sports PGA tour, a return of the Gulf, but it set for Q4 of this year.
We're very excited about the opportunity of the live off of baseball fans around the world with the addition of Superman Goodbye spool for metal head software and MLB tap sports baseball on mobile from the Glu team.
The sports is also publishing the highest rated sports franchises in the world with F. One 2021 our first total from our recently completed cold months of acquisition.
And with the combined expertise of the glue and E teams focused on engaging more sports fans, we plan to grow our sports mobile business by over 50% this year.
Yeah.
We continue to see the consumption of sports move from linear to interactive representing a major growth opportunity for us spanning more sports and more platforms, especially mobile.
The premium experiences to live services, the mobile EA sports isn't an unparalleled position through each of you more players with new ways to play watch and connect.
With apex legends and battlefield, we have two leading franchises in the category. We are positioned for continued growth in FY 'twenty two through new launches expansion of mobile and preparing for the addition of new business models that will expand our total addressable audience.
Apex legends is one of the most successful games in the market today, we now have more of a 100 million unique players in the game on console and PC with player engagement growing globally at incredible levels throughout the last year.
We are forecasting continued growth.
Susan eight so well of the 12 billion weekly active users the highest levels we've seen since season, one in 2019.
We're also seeing explosive growth for apex in Asia, especially in Japan.
It has grown significantly in the last three quarters.
As reasonable and continues to live the more new content and evolve. The main game. This year. We are also beginning of regional beta testing of apex Legends mobile. This is the new experience from Don specifically of the touch screens, which we expect the launch worldwide light of this fiscal year.
I think diligence continues to have tremendous momentum and is growing in every dimension. We are forecasting of close to 20 per cent year over year of growth of $750 million of net bookings for apex legends in FY 'twenty, two with significant potential for upside this year and beyond as we launched the mobile game.
We are realizing the next time.
Now of vision for battlefield with tubular experiences launching in FY 'twenty true.
Three world Class of studios dice, Stockholm criterion, and Das L. A and technology team and got them. The now for my largest ever battlefield development team. They are working in lockstep to the live in the definitive nextgen experience for battlefield fans.
The game has everything fans love about battlefield ethics scale, all out warfare unexpected moment and game changing destruction.
And it takes it all to the next level through the power of next Gen consoles and Pcs. We're excited to reveal the guidance of fans next month and share a lot more about the game throughout the summer. We also have the battlefield game for mobile platforms in development of an industrial toys in close partnership with dice built from the ground up for mobile the game is going into early test.
<unk> now and we're looking forward to players around the world getting the hand on the innovative battlefield experience later in FY 'twenty two.
As I mentioned before our strategy is to grow of battlefield as we have with all of the blockbuster franchises like fee for an apex. The best in class game play deeply engaging live service, a new mobile experience and more ways to play that we'll introduce to reach more players all over the world.
Throughout FY 'twenty, two we will continue transforming mobile into a growth channel for our business with the recent reorganization and hiring of new leadership and talent and dwell in mobile teams were in position to maximize that will lead the leading mobile live services, including Star Wars Galaxy of heroes, the symbols and real racing by growing.
Higher acquisition deepening engagement and player investment and driving new opportunities in non western markets.
Growth in sports mobile with innovation in our leading franchises, including FIFA Madden and UFC as well as the addition of MLB tap Sports Baseball John Mobile sports portfolio.
The two biggest shoot of franchises the launch of mobile for the first time in FY 'twenty, two which is another demonstration of our multi platform strategy for leading global franchises.
With the addition of Glu light into the E. M mobile growth plans, we expect the more than double of our mobile business the $2 billion in annual net bookings within the next three years.
We have the year of strong growth ahead in FY 'twenty, two and we see many more opportunities as we continue to lead in the expansion and transformation of the industry. We have a very clear long term growth strategy for our biggest blockbuster franchises.
This is the foundation of our business and you're seeing us grow all major platforms and business models.
We're thrilled to have the team from COVID-19 losses glue and metal had joined the electronic Arts family and together, we expect the developed many games and experiences that will the lot a growing player base and the catalyst for growth in the use to come with.
We are of a deep pipeline of new content, including new franchises, new IP deeper focus on mobile games and experiences that will lean into the user generated content.
We're also continuing to invest in opportunities, where we have differentiate of the ability to reach and engage more players, including I'm rolling subscription service and our esports content and competitions that we'll expanding scope this year.
The three growth drivers that aren't focused on today expanding out of EA sports portfolio growing out of blockbuster shoot of franchises and the transformation of our mobile business provide clear growth and significant upside for electronic arts in FY 'twenty two and beyond.
We're excited to bring some amazing new games and content to our players and viewers around the world This year.
Now I'll turn the call over to Blake.
Thanks, Andrew we delivered a big beat this quarter driven by live services, primarily an extraordinary performance by apex legends.
GAAP net revenue was 1.35 billion and net.
Net bookings of one point of four 9 billion.
Which were new records for Q4.
Andrew gave you apex phenomenal engagement SaaS as a result of this engagement apex delivered its largest net bookings quarter on record.
It also delivered the best day, the best 24 hour period, the best week, the best month and best in gaming, but we.
We suggest.
We suggested it would deliver over $1 billion in life to date net bookings by the end of the quarter. It actually passed that milestone with half of the quarter to go.
Apex legends delivered over 600 million for the you're well above our original expectations of 300, the $400 million.
Importantly, apex legends steadily grew through the year.
The apex surely benefiting from a stay at home tailwind the upwards trajectory is driven by the game teams and the content there of living they are delivering that is the strength that is the strength of the structural to the point season, Inc. Was the first season and built by a new content team.
Put together in Vancouver, proving our ability to scale resources on our fastest growing franchise.
Our two major shooter franchise apex legends and battlefield and our ongoing strength in the ultimate team provides a tremendous foundation for growth in FY 'twenty true.
The addition of Glu and Codemasters accelerates of this to 18%.
Revenue growth year on year I'll go through the details of our guidance for the moment.
First though I thought I'd start with a quick look at what we achieved in fiscal 2021, we closed out the year with $5.63 billion of net revenue. We delivered net bookings of 6.19 billion the highest in our history and about $640 million of above.
Our original expectations.
Underlying profit was also an all time record as was for your operating cash flow of $1.93 billion of.
That $6.19 billion of net bookings for point $6 billion of his life services, there couldn't be more dramatic illustration of the way the business has evolved with our focus from engagement and ongoing entertainment now generating three quarters of our net bookings the.
To give some perspective debt.
For point $6 billion is equivalent to the scale of around 130 million copies of console games.
Digital represent 62% of our full game unit sold in fiscal 2021 for consoles up 13 percentage points from last year.
Turning to Q4, specifically the beat was driven by live services, primarily apex legends and people estimate King mobile also beat our expectations driven by outperformance from Star Wars Galaxy of heroes and Simcity build it.
Operating expenses came in slightly above our expectations for the quarter driven by the acquisition acquisition related expenses.
Now turning to guidance, we expect fiscal 2022, GAAP revenue to be $6 8 billion.
Cost of revenue to be 1.828 billion and earnings per share of the dollar 30 for.
Remember that this EPS calculation does not factor in the future buybacks under our two year $2 $6 billion share repurchase program.
We expect the operating cash flows of 1.75 billion and capital expenditures of expenditures to be around $250 million, which would deliver free cash flow of around $1 5 billion.
Cash flow was down year on year, primarily due to tax integration costs associated with the acquisitions.
The level of these costs reflect the strength of the IP glue and Codemasters have developed and burden to each day.
Capex is up temporarily with office build outs in Bucharest, Los Angeles, Orlando and the United Kingdom.
See our earnings slides and press release for for the cash flow of information.
We expect fiscal 2022 net bookings to be $7.3 billion up about 18% over fiscal 2021, we.
We expect to continue to drive strong organic growth in apex legends of fiscal 2022, and expand the franchise to new platforms with the launch of apex mobile in the back half of the year.
Sports, we expect FIFA and Madden to be strong and we're launching of new PGA tour golf game.
F. One 2021 developed by Codemasters, and which now sits under the E sports Brown or as well, we'll launch on July 16th and of.
Of course rounding out the year for our shooter franchises as the launch of battlefield and the holiday season.
Because of this is the first time, we're forecasting glue and Codemasters, we took a very conservative posture on net bookings from those businesses.
In addition, we're not yet in modeling any synergies from the two acquisitions for.
For fiscal 2022, we've assumed simple addition of your existing businesses in the U K.
Revenue and synergies will come further out because we combine our IP with blues mobile expertise to build out of a suite of new casual mobile games leverage our sports Knowhow with Codemasters F. One franchise of others and implement a holistic strategy for racing games.
Meanwhile, Opex for this year will be impacted by some one time costs associated with the acquisitions.
We're also leaning heavily into our biggest franchises with increased R&D investments and marketing ahead of key launches for battlefield and apex mobile.
We expect these near term investments to pay off in years to come.
For the quarter, we now expect GAAP net revenue of one point for seven and $5 billion.
Cost of revenue to be 287 million and operating expenses of $955 million. This results in an earnings per share of 24 cents for the first.
For the first quarter.
We anticipate net bookings for the first quarter to be one point to $5 billion.
We expect the apex legends momentum will carry through to fiscal 2022.
Given what we've seen of the game are ready, we believe our financial model of battlefield may be conservative and we're looking forward to player reaction when.
When we reveal this game.
The next month.
In addition, we're very excited for the franchises the whole as we add new platforms and business models. We expect strong organic growth. This year growth that has further accelerated by the addition of talented teams of Codemasters and glue and middle of her.
It is an exciting time for electronic arts.
Now I'll hand, it back to Andrew.
Thanks Blake.
As we wrap up our remarks here I want to share of heartfelt congratulations to respawn entertainment. The team achieved another amazing milestone last month when they received the gaming industry's first Academy award the co producing the documentary short subject Colette, which was released within the medal of honor above and beyond the hour experience congrats.
The license to Vince Dusty Peter and the entire team is a truly outstanding achievement in such an incredible recognition of the creativity and passion for groundbreaking work the all of that teams put into our games.
Games of the game I'll bring joy to more players around the world than ever before and our experiences are bringing hundreds of millions of players together our business has never been stronger we have clear growth drivers accelerating out of trajectory of FY 'twenty, two and the acquisitions, a new catalyst for growth as.
As we continue building blockbuster franchises with best in class large services that region can I players on more platforms in more geographies around the world, we see significant upside for electronic arts this year and in the used to come.
Thank you for our teams for their incredible work delivering for our players every day now Blake and I are here for your questions.
At this time I'd like to inform everyone in order to ask a question press star one on your telephone to withdraw your question press the pound key.
For a moment to compile the Q&A roster.
The first question comes from Colin Sebastian from Baird.
Great. Thanks, good afternoon, everyone.
First off Blake it looks like live services on console and PC increased almost 40% in fiscal Q4, if all of the.
The Apple's numbers there right.
So curious how you expect that portion of the business to track in Q1, and then in the next fiscal year.
And then secondly, Andrew within core.
It sounds like you've of pretty ambitious roadmap for new releases and live ops. So I'm curious if you have the studio structure and the development team and resources in place now.
We're comfortable with in order to execute on that pipeline or are there still some gaps that need to be filled in thanks.
Thanks, Colin it's Blake.
You know we've seen across the board our live services increases.
Clearly apex has driven a huge changes in that business, it's up dramatically year over year.
In the fourth quarter alone year over year, it's up 145 per cent.
And the way we've done that as you know is continue to add amazing content amazing characters of amazing things for people to play and it's engaging more and more people all the time.
While COVID-19.
As horrible as it has been.
<unk> brought a lot of people of the gaming.
And what we've done is try to do our best to bring more and more people into social networks around the games. They love the sports did a shooter game being the <unk>.
And that's what we've been able to leverage over time and those people stay in the social networks, because they enjoy the game and enjoy the people are playing with and so we see across all of our live services Ultimate team Apacs. The Sims all of our mobile games that is.
Helped us get the confidence that we could give the guidance that we just provided for next year.
Think youre going to continue to see that as a huge part of our business. It's gonna be a huge part of the industries of business as we've already seen but it will continue on for US and we will continue to add to that with new content, new ways to play new opportunities for people to deeply get connected.
The other people that like what they like to do.
Okay.
And all of the second question Great question, we feel really good about our studio organization as you heard in the prepared remarks, and you've heard me talk about before over the last year, we really reorganized our mobile group we brought in new leadership both of the very top of the organization and throughout the organization, who really bring great mobile experts.
And the experience and knowledge and know how and of course, bringing code masters of bringing glu mobile to that group puts us in a really really strong position for an increased focus on mobile where we see tremendous growth opportunity across the rest of the studios structure. I also feel really really good about our leadership in all of our creative talent there.
Again, we brought in Codemasters, which are you know some of the leading racing developers in the world, but you'll see more from us around out of holistic pricing strategy, but F. One is already looking really really strong for this year.
And we've been recruiting over the last 12 to 18 months, some amazing industry, leading talent some of those of doing and then how come the debt to be announced yet the very ambitious growth plan ahead, and we feel really good about the structure, we have in place but of course, we'll always be tuning and balancing that all the time.
But I feel blessed and lucky to have the creating the leadership and the creative talent that we do to achieve the things that we have planned.
Alright, thanks, guys.
Your next question comes from Stephen Ju from Credit Suisse.
Okay. Thank you so Andrew Blake.
I think our investors that the waiting for the audience. Some hawke from mobile for some time now.
Particularly as it comes to your larger franchises. So can you talk about the initial integration plans for the good folks at Glu and you know what that might look like from a franchise by franchise standpoint. So you know what are the opportunities to get you to one plus one to be more than two so of that Blake you're forecasting guy.
Those parameters, that's going to be greater than just the straightforward addition of these onto existing results. Thanks.
I would say from a philosophical standpoint, our orientation around glu is to protect and amplify.
Ensure that we protect the creator of integrity of the cultural integrity of that organization and they've been very very successful in developing great games like design home tap sports baseball and many others.
But we also want to give them access to our IP to our technology to our market out of global marketing reach and the network of 500 million you know unique accounts that we have and we think that the combination of those two things represent an extraordinary opportunity, but at the same time, we also been worth.
Looking on our organic more on the E T mobile team around the organic growth and you've heard me talk about significant increase in the center and hopefully for franchise.
Relaunch of Madden and UFC.
Aggressive plans around the seams and the number of other properties, including battlefield and apex legends and so our sense is with the with the reorganization and focus on mobile.
Bringing in blue to the organization with kind of of protecting the amplify orientation on the collective growth plans that we have an investment that we're making we have tremendous upside opportunity at a time, where brands are breaking the true more strongly the most anything else in the mobile market.
Thank you.
Your next question comes from Brian Fitzgerald from Wells Fargo.
Thanks.
A bit of a follow on to the.
The Stephen's question and that's around with all of the.
M&A activity, you've seen on the mobile shot of App loving and machine Zone and then they also just bought adjust and then you guys for Glu and Zynga.
Sharp boost as is.
The mobile piece the advertising piece of that in the in the cross platform pieces that initiative.
Kind of catalyze of more vertically integrated approach to the business of more holistic and robust approach to consumer engagement and how you monetize those guys lifetime value of yield perspective.
Perspective are you missing anything on the on the AD Tech side.
Do you think for from your from your kind of holistic mobile approach.
Yeah, I would say, it's too early to say on AD Tech.
We know Theres a lot of changes going on in the market as you guys know, Rob and we'll watch closely as to how those changes may impact.
Uh-huh advertising inside of the mobile games.
We also know that most of mobile gaming advertising is for other mobile games and we've always wanted to try to keep people in our own network.
Right or wrong, but that's been our focus.
Think of the near term opportunity is really the talent.
The these teams have the could impact of.
Our own franchises in the eye.
P that we have with the most franchises so building more casual games for example building new sports games I think that's where we're most of the we were most excited about blue and the reason we bought them.
And I think longer term over the next couple of years as we see how the AD business changes, we might be more aggressive there, but really this is about building new franchises with great talent.
Yeah.
Got it thanks Blake appreciate it.
Your next question comes from Alex for your question from J P. Morgan.
Hi, Thank you can you elaborate on the exact same tremendous success you've seen in apex legends I mean, it's sort of core group of players playing the game more and more.
Or have you noticed the expanded the player base as well.
And then the update on timeline of apex for China.
I would say as we look at the data on apex legends, we have seen it from season to season, one of the apex legends team have been able to do is growth pretty much every meaningful metric around the business. The the amount of play is the amount of time play of spend.
The amount of connections place having the game the.
Non of touch points suppliers have and of course revenue generation from that growing player base. I think you know as we as we project for wood, what they hadn't have done from the very beginning is ensure that they always protect the game community, they're very close and listen to the game the community offering what that community wants the return the.
Of the day retention is off the charts for free to play the game and that's why we're confident in projecting future growth around both the existing business and then of course apex mobile.
And what we've talked about is.
Releasing of itself launching I think for mobile later this year as is the <unk>.
True of mobile games, we have a series of closed beta tests open beta tests, and then soft launches to ensure we're appropriately choosing the metrics.
Not gotten big numbers in our plan this year for Blake can comment more on that but.
But what we've really done is apply the same orientation of the team has had around the coal franchise, which is let's make sure we get the game play right, let's make sure we get the event strategy around the game play right and let's make sure we're listening applies and delivering on what players want out of that experience that is growing every meaningful metric of apex.
Legends every single season since launch and our expectation is that we'll also be out of grow that in the same way in mobile.
Yeah, we've we've put a relative I think of it.
You mentioned in his prepared remarks, we put relatively little.
Our revenue and for apex mobile in this coming year, because you don't know exactly when you will release of mobile game you want to make sure you tested a tune it and then release it at the right time, and that's globally, including China.
We believe there are some huge markets for apex mobile as Andrew also mentioned, Japan is one of our largest markets for the console and PC game.
And the switch game and so we believe it'll be a huge market for mobile so we'll prioritize some of those markets, but we also know people love the game all around the world.
The more to come on that I would just trust that we have not put a large number in our forecast for apex mobile yet because of some of those unknowns.
Thank you.
Your next question comes from Nike, Inc. From Goldman Sachs.
Hi, Thank you very much for the question I was just wondering if you could elaborate a little bit on the comment about how the new E sports are designed for nexgen.
You know what does that enable from a from a pricing perspective, and then separately.
He made similar comments around battlefield as well.
For battlefield, specifically will that be available for both current Gen and next gen. Thank you.
So yes, the battlefield will be available for both current generic and Nextgen as a lot of sports titles the.
The reference specifically from my prepared remarks was around the nature of game play.
We can do with fidelity of the game, what we can do with physics artificial intelligence and the immersive nature of the gain out of the case of battlefield and what we can do with respect the amount of plays that we can have in the game and the nature of destruction of those only in battlefield moments.
That are truly nextgen opportunities that we're able to do in the context of the nextgen franchises because of the increased processing power in memory of output of all the new consoles. We're really excited about that what that means for our products Inc.
Back to the history of our industry every time, we were able to deliver high fidelity more meaningfully and most of the products as a result of increased processing power of the platform transitions, we've been able to grow the market dramatically.
And sports and games like battlefield had been the lead us on that.
Every platform generation shift and we're excited by the fact that one entire EA sports portfolio and battlefield will be developed.
You know specifically around features for next Gen players.
Great. Thank you very much and.
Just a follow up if I may I was just wondering if you could talk a little bit more about.
The ultimate team of live services content in the quarter and if you have any outlook for the year.
Are there any notable events that you'll be rolling out.
And.
Sorry, if I missed it but did you talk about ultimate team growth in the quarter. Thank you.
Yeah, we didn't we didn't call out of ultimate team growth in the coming quarter, which we don't typically do.
We just talked about ultimate team growth in last quarter.
Which year over year it was up 30.
<unk> 30 per cent.
You know the team has done an amazing job across all sports.
To find ways to continue to innovate and add new events.
And that's what's always drives it brings people in to ultimate team.
And drives people to play ultimate team and we've gotten better and better of that over the life of the product and we will continue to do that and we have.
Optimism for the coming year, and many years to come around all of the sports Ultimate teams because we will continue to innovate on those and look for new ways for people to play them.
Great. Thank you Blake and thanks, Andrew.
And as of remind you to ask a question press Star one on your telephone. Your next question comes from Mario Lu from Barclays.
Great. Thanks for taking the questions I have one non apex and one on battlefield. So the.
First one of the apex I know, it's only been of weeks since launch but can.
Can you comment on how the second per minute mode Arena is performing versus your expectations and do you expect this merits of kind of bringing more new players.
Increasing the engagement of the others.
Yeah.
It's still too early to tell in terms of macro numbers other than the demand was a pretty incredible first weekend at the point, where we had a few stability issues with the community where out of what it was all of those very quickly just the nature of demand was so extraordinary.
In terms of do we expect that just to engage more of existing players of bringing a new price I think we believe both of those things will happen and what you've seen from the apex team each and every season, whether it's launching new maps, new characters or new modalities of play every season has grown both planned and the engagement of the existing player.
And the player investment that the that comes from those two things and so you know it's still early to tell all of them to say you know the season eight with the biggest season since season, one in 2019 and season nine as of right now it looks like it will be bigger than the season eight mm meaningfully.
Meaningfully so and we're very excited about what these new modes will do and you should expect many more new modes from apex, you know over the coming years.
Great. Thanks, and then the launch of battlefield the.
The new mobile title of that's coming in late fiscal 'twenty two.
I believe it's developed by industrial twice. So like can you provide some background on how you decided to choose that studio versus partnering with.
You know one of the Chinese companies like Tencent Arnett, Inc.
Great question Industrial choice, we acquired.
Some number of years ago now it's led by the original team helped quite high low as a franchise and then had gone on to work in a number of kind of mobile companies. I mean, we're really committed to building a truly in a variety of experience around the first person shooter mechanics. When we met the team. We just feel that we're an incredible team that had re.
Really unbelievable design ideas and when we talked with them about the opportunity to work on the battlefield that we're as excited as we were and so we brought that team of the company.
All of a while ago now they've been working a number of all of a number of years through a number of cycles.
And we've got to a place where we're really really excited about the mechanic its a different kind of shoot of mechanic to our apex legends. We believe day that will speak the two very different markets, both of which have tremendous upside and tremendous opportunity for us in both games of coming from really talented studios.
Great. Thanks, Andrew.
Your next question comes from Mike Hickey from Benchmark company.
Hey, Andrew Blake Congrats on the quarter guys. Thanks for taking my questions just curious again on battlefield here.
If you've seen the opportunity to annualize the.
Premium experience, obviously done well with that in sports.
And prior battlefield I think you had some experience with the Battle Royale curious so that's the consideration for the U S for the.
Franchise moving forward.
Hum.
Nothing to announce at the moment on either an annualized a release of battlefield and all of the nature of the modes in the upcoming battlefield game, we're going to talk about a lot of around that in the months to come starting next month without reveal trailer, which I had the chance of seeing of work in progress last week and it is incredible.
What the team has been able to do in the context of next generation consoles and yeah.
Epic scale battles unbelievable play of accounts destruction of these types of things as reading quite well and there's some very innovative and creative modes for the future of of the franchise.
The other thing that you should know and I talked about in the prepared remarks is we do have a blueprint, which is how do we start with of Triple a premium experience that is truly interbody of in its category. How do we build out live service for long term engagement and then how do we think about modalities of play and business models to further extend.
The outreach.
And penetration of that game on a global basis across platforms across geographies across business models, and so you'll hear a lot more from us in the months of head.
But I would just I would finish by saying, we're really excited about battlefield everything ive seen in the game is spectacular and I think it's going to be an amazing re launch of that franchise. This year and lead us into an incredible lots of service for the future.
Yeah, and Mike you know you might you know that.
We believe that wont give the battlefield fans many ways to play.
And let them play for a long time, and I think you'll see that and what we'll talk about it in the future.
It is an opportunity to extend the battlefield experience for people because it is such an engaged community.
I'd Love to tell you what I said when I saw the trailer the last week, but I would I can't because it would get censored so but it's just to.
Emphasize Andrew point I.
I think people are going to be really blown away and I'll tell you on gen five consoles.
Is even more spectacular, but it'll be great on the ether console, but it's it's it's going to be very exciting I think.
Nice set of.
The plan.
Last question for me I think last call you noted that.
The development of battlefield was ahead of expectations, obviously, you've seen it subsiding.
Maybe buzz is building the at the same time it looks like the B y criterion.
That studio to do additional work with the dice team just curious on the.
The decision to do that but in the plans are for.
Need for speed in the future.
Yeah I you know there was two things at play here. One is we have incredible ambition around battlefield.
Got dice Stockholm dos of light criteria in our technology team in Gothenburg in our entire frostbite team quite honestly focused on making this the best possible battlefield. It can be we've.
We've made tremendous progress the teams have unbelievable ambition to be truly.
Truly creative and innovative of the experience and having criteria and who have delivered some of the most amazing experiences in our history and have worked really closely with das in the past come together to help realize the full of some of that ambition was just a no brainer for us.
This year well.
What it also happened of course is we had acquired code Masters and the number of new racing games, including the F. One franchise, which is shaping up to be really really strong this year and it was an opportunity for us to really think more broadly about our holistic rising strategy need for speed will absolutely be a meaningful part of our future. We actually think there as you know.
With the combination of <unk> and cold losses, we can actually expand and extend and enhance our need for speed franchise.
But those two things together meant that having criteria and work on battlefield. This year was absolutely the right choice for us.
Yeah, and and Mike No the criterion, the actually delivered much of the driving associated with or flying associated with battle from one in battlefront two.
That they've worked very closely with dice for a long time and they are experts in driving flying the things that are really hard to do.
And so it's not the first time that we've pulled them into projects and they love it they love to be able in this week we've.
We've tried to create a culture, where people want to work together.
And I think that's what you're seeing here versus some other you know idea of the wells something must be wrong. None of this was an opportunity to bring the right talent.
And at the right time.
And we always are measuring how that might impact future schedules, but as Andrew said with the addition of Codemasters, we have a plethora of.
Driving game of opportunities right now that we can go after and.
Criteria and will continue to work on those going forward.
Thanks, guys.
Your next question comes from drew Crum from Stifel.
Okay. Thanks, Hey, guys good afternoon.
I'm wondering if you'd be willing to discuss the pipeline for glu.
What's contemplated in fiscal 'twenty, two net bookings guidance. They had previously planned to.
The release of new Deer, Hunter game and table and taste.
And then separately Blake I think you mentioned from one time expenses related the Codemasters and glue acquisitions are those cash for noncash and is it embedded in the 7% non-GAAP EPS growth that you're forecasting and if not what's the disconnect between that and the 18th.
<unk> net bookings growth of your forecasting.
Yeah, you know.
We basically took their forecast that we used when we did the acquisitions, which were fairly consistent with what they had done in the past we didn't want to we wanted to make sure we didn't over inflate those.
We wanted to make sure we were pretty consistent with how they have talked about their forecasts in the past. So you should assume they are pretty similar to what you've seen historically.
In terms of the one time costs. They are cash costs. They are in most cases for might be some tax or R&D capitalization of occurs that will go into our P&L, but at the end of the day the core cost in.
The opex are things like.
The deal fees legal fees closing fees integration fees and those impact mainly the first quarter and not the full year.
But you know there will be longer term.
Our GAAP EPS.
There will be some accounting for acquisitions.
That are you know collection of.
Buying in of IP, which is a positive right for that.
Have great IP, some amortization of intangibles related to the acquisition and some one time cash tax charges that may impact cash taxes.
And the cash flow of the other two that I mentioned, the most most likely will not impact cash flow. So so but we wanted to make sure. We were transparent about that I would not worry about it because I think we will be able to.
Continue to grow these businesses and generate a.
Higher returns off of businesses than they have in the past and as I said, we did not put in to our forecast any of the synergies associated with those acquisitions yet.
More to come on that in a couple of the next couple of quarters of just where we.
We literally just closed the glue, what a few weeks ago and Codemasters a month ago. So we're just getting to a point, where we truly understand what the integrations are going to look like what the cash and noncash charges will look like we'll keep everyone informed I would say it is not a big swing.
And the year on the non-GAAP side, it's the only a swing on the GAAP EPS side, just because of the way the accounting works for acquisition.
Okay. Thanks Blake.
Your next question comes from Andrew of Aircrafts from Jefferies.
Yeah.
Thanks, gentlemen, just two quick ones. The first one how should we read into.
E <unk> plane moving into the July from June lots of reasons why that could be moved back just curious.
How youre thinking about that in the future of marketing for your titles and then secondly.
It sounds like battlefield in the future for sports franchise of really trying to take advantage of next gen consoles.
How should we think about the obviously some games that have tried doing that struggled the.
On previous console for being too ambitious.
How should we think about those titles relative to the two different generation of consoles. Thanks guys.
Yeah.
I play I think the you know typically E. Three govern the the key promotional timeframe across most of the industry happened in June given COVID-19 and virtual marketing and the and the nature of these things I think we'd be in a way of kind of thinking about what's the most appropriate time line for us.
And given the launch schedules of our games, we feel like July is the right timeframe from that but what I'd also say is as we talked about you know you'll hear a lot from us on battlefield in June.
<unk>.
And you know, we will kind of ramp up to that July. So it's not like you won't hear anything from us into July the July timeframe, just ultimately con for out of title launches better suits US. We've we've showed up in June of the Pos because the whole industry has at that time, but with the world that we live in now we have greater flexibility to do what's.
More relevant for our business.
With respect to you.
The current generation versus next generation titles or maybe we should say current generation versus past generation platforms of autos. I mean, this is something that we have done exceptionally well for decades I had the great fortune of growing up in this company and building our games on multiple generations and I think when you think about our infrastructure around our frostbite.
The team our digital services teams and our game change sort of have unbelievable experience getting the very best out of the past generation consoles to ensure that the even as we as we move to the next generation, we're getting more and more out of the old generation platforms and so those games of Gotta look great.
When we think about new platform generations again with the advantages that we make in trust spot with the advances that we're making the digital ecosystem with the advances that we're making out of feature design level with the new unlocks the come from power of the games of next generation consoles are going to be extraordinary remember, we've already launched FIFA and Madden on those platforms in total.
The going into year two of those.
And we're getting a lot of learning without all of the franchises as as we move into the second year of the platform.
Awesome. Thank you Danielle yeah. The only other thing I would add to that is remember.
If our business is approaching 70 plus percent live services.
It is critical is getting people into a franchise.
Because once they are in a franchise around the social network with other people that love the same thing they do and that means the will engage in the live service, which means they're gonna stay longer they may spend but most importantly, it becomes something that they do for a long time, because it is that network the.
Holds them together, if you love football you Wanna engagement football with all of the people that love. The same thing you do the same team the.
The same league whatever it might be so part of the logic of around.
Building out the subscription platform on multiple.
Vehicles is making sure we're continuing to bring people into our live services, which we know people will love overtime to play.
Got it. Thank you next question.
Your next question comes from Matthew Thornton country of Securities.
Yeah.
Hey, Andrew Hey, Blake. Thanks for taking the question, maybe maybe a couple of quick ones from me for.
First one of the apex, you talked about obviously the layering in mobile growth.
Yes, if we think about just the base game. This year do you expect growth in the base game you know, maybe just driven by the full year of all of the launch on apex any color. There secondly, as it relates the battlefield I don't know if you can maybe give us any context as to how you were thinking about that in the fiscal 'twenty two guidance maybe relative to prior <unk>.
And for the game again any color there and then just lastly, I'm not sure if you'd be willing to buy it but on any developments of our progress you'd be willing to talk about as it relates to maybe the out year pipeline and several of the titles that you've.
Disclosed and discussed in the past thanks, guys.
Yeah.
Well I'll start.
I would I would say is in our guidance.
No were traditionally conservative sort of in our guidance for battlefield.
We are we are of a lot of expectations of a lot of excitement, but I would tell you. We don't have a number that is an achievable. There I think we clearly can achieve it and we hope to exceed it because we know that the battlefield title is going to be very strong.
Apex, we've seen growth year or quarter over quarter.
Basically since it started and we have high confidence that the team can continue to do that even before the mobile product comes out of mobile obviously, we'll accelerate that and I think of as we said earlier, we don't have the joint number in there for mobile this year, because we don't it's hard to predict exactly when it goes live.
And monetize so I think you know where.
If you look at our forecast at the.
Large forecast.
Probably the biggest the we've ever done, but I would say theres still conservatism in that forecast around.
Both mobile battlefield and other titles, where we're all focused on front of grown.
I can't remember what your third question was the Pall of drugs.
It was around the out year content and would we buy.
So what I would offer is.
I think the what we talked about earlier was we have been recruiting amazing talent into the organization from across the industry and we feel really really good about our bench strength of in the context of mobile and the culmination of about HD organization of you've also seen us growing.
And really good why he's in Asia, we've talked about of college football game, we've talked about of state game, we've talked about of new game from motive, we've talked about many things from apex and we've talked about the number of new fee for titles from out of mobile group and new mobile titles in Asia I would tell you that we still feel really good and really strong.
How about all of those that tracking.
As a as we believe that had including a new title coming out of Bioware.
So nothing new to give you beyond that other than we still feel very confident in our.
Outgoing our out year of portfolio.
We also have some other things that were kind of incubating, we think metro the add to them and it used to come.
Yeah.
Your next the next question comes from.
Your next question comes from Todd Juenger from Sanford Bernstein.
Hi, Thanks, Good afternoon I appreciate you squeezing me in here at the end, which is perfect for this question I think I'm I guess I'm struck having been sitting here listening.
At the issue of <unk>.
How consumers will behave as we move through this next year and beyond.
It has barely been discussed, especially given the fact that you're in a position on the calendar, where youre, giving us. Thank you.
The guidance for of your forward so.
I guess I just wanted to visit that briefly and just.
Given everything you did you observe.
Served and learned during this the have you.
Do you want to just share with us what your underlying assumptions are in your guidance for two however, consumers are going to change their lives as we move through this and have you basically concluded that it doesn't matter that much to your own success.
Or how should we be thinking about that and I appreciate it.
Yeah.
Oh go ahead, sorry, Andrew it's all of it.
I'll, let I'll, let Blake kind of put some some sort of the thinking around this but I would say pre pandemic. We had seen two fundamental secular trends social interaction was moving from physical to digital and the consumption of sports and other type of was moving from winning the interaction so that was already happening.
Happens for COVID-19 was those two secular trends with accelerated exponentially and we sold of almost all interaction happens digitally I'd almost all consumption of sport and much of entertainment.
It was done through interacting for them was supposed to the linear of homes.
As we project forward, we don't see that going backwards in any meaningful way in fact, we think it will continue to grow stronger.
We've really established social networks inside of about games and inside of that network and we're really we're really offering players.
The intimate way to connect with the sports and leagues and teams and entertainment content. They love. So as we think of that the growth of our business. We think that we don't think of anything and it goes back to where it was before we think is growth continues there will of course of the something changes as various parts of the world moved through the post pandemic stages, but theres no.
Ocean of social interaction moving from physical to digital and the consumption of sports Entertainment moving from linear of the interactive we don't think that goes back and we think that underpins and it's foundational to the ongoing strength of our business going forward.
Yeah, I'd just add to that we obviously know that our Q1 last year was extremely strong because of that was when everyone. The.
Essentially went home and many people even didn't work right. So clearly we benefited from that but.
But if you look at Q2 through Q4 of <unk>.
Last year, what you saw is still strength.
The strength of Q1, but still strength every quarter.
Beating guidance every quarter unbelievable strength across the ultimate team apex and other.
Hey, Andrew point, we we were able to steer people into games and social networks that were very important for them and they stayed around and we're seeing that trend going forward.
And even if we all go back because maybe some day normal life, which we all hope.
We believe we brought a lot of new people into the games and into the social networks that they want to be in and they enjoy being in and it will continue the plan. So you know we no one quite knows how to predict COVID-19 going forward, but we're very confident that we have done something that we need.
Ever anticipated.
At the start of last year.
But it has worked to our advantage to bring people into our games that they love and networks that they love and we think that'll help us long term.
So with that I think our that was our last question. We appreciate everybody's.
The constant attention and health and look forward to seeing people hopefully in person one day.
But if.
If not bye bye zoom. So thank you for everybody taken any of the time to it.
Thank you all.
This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
Yes.
[music].
Net.
John.
Hum.
Okay.