Q1 2023 Electronic Arts Inc Earnings Call
Good afternoon, My name is Josh and I will be a conference operator today.
At this time I would like to welcome everyone to the electronic Arts first quarter fiscal year 2023 earnings conference call.
Mr. Kratz evident Vice President Investor Relations you May begin your conference.
Thank you welcome to Ea's first quarter fiscal 2023 earnings call with me today are Andrew Wilson, our CEO , Chris <unk>, our CFO and Laura Anatomy CLO. Please.
Please note that our SEC filings and our earnings release are available at IR EA Dot Com. In addition, we have posted detailed earnings slides to accompany our prepared remarks lastly, after the call. We will post our prepared remarks, an audio replay of this call our financial model and a transcript.
With regards to our calendar our Q2 fiscal 'twenty three earnings call is scheduled for Tuesday November the first.
As a reminder, we posted schedule of our entire fiscal 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 of the company actual events and results may differ materially from our expectations. We refer you to our most recent Form 10-K for a discussion of risks that could cause actual results to differ materially from those discussed today.
Barack Arts makes these statements as of today August <unk> 2022, 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 now I'll turn the call over to Andrew Thanks.
Thanks, Chris it's great to be here with you all we delivered a strong performance across our business in Q1, our broad IP portfolio, our amazing talent and our growing network of players deeply engaged in our live services all serve as unique structural advantages, especially as we navigate the fluidity of the macro environment, while we were.
Ignite is there is more uncertainty in the market. Our teams are focused on what they do best delivering amazing games and services that keep players engaged connected and in spine as we take entertainment and play to the next level.
Our portfolio of sports and owned IP franchises continues to power resilience and longevity in our business EA sports and racing is a growth center with franchises that are at the heart of how sports fandom is becoming increasingly interactive.
122 styles are up double digits launch to date and the sport continues to boom, especially with younger fans EA.
EA sports FIFA franchise is exceptionally strong on a global basis with record business for Q1 in Asia significant growth in mobile with da use up another 10% over last quarter and fought engagement growing nearly 40% year over year, which is well above the industry average.
We're going from strength to strength and EA sports, including Madden NFL 23, just weeks away and most expansive FIFA game ever coming this fall.
Sport is the ultimate evergreen form of entertainment and our New Cross media partnership with La Liga perfectly illustrates how we continue to innovate at the forefront of sport media and interactive content with these multifaceted collaborations we're able to bring the most authentic experiences to fans and expand into new ways to watch create.
Compete connect and participate in sport across platforms business models and geographies.
Our owned IP franchises are some of the most deeply engaging and culturally relevant entertainment properties in the world.
Apex legends is a leading multi platform franchise with a live service on console and PC driving massive ongoing engagement and a new mobile game that is delivering on our early expectations engagement. Now seems franchise is also outperforming the market with content that resonates for a broad and diverse audience, we have a proven ability to.
Grow successful long term live services across our portfolio with ongoing engagement that drives resiliency reoccurring revenue and lifetime value for our business.
Through all of these experiences are large global network has grown to nearly $600 million.
Every day, our players are forging new friendships and social connections with the scale of our network and our team's ability to utilize our data, we can understand where how and what our audience is that playing today and where they want to go next.
We continue to see Gen Alpha and Gen Z turning to games as the primary form of entertainment.
You mean more content than any generation of the past they love playing with friends. They stay connected with family and they are creating content at every turn while it's in and around the entire gaming experience.
Whether they play games from our expansive EA sports portfolio to fuel their fandom enjoyed the intensity and competition of apex legends will seek adventure in games, such as Star Wars Jedi. The next generations of consumers use the power of play to fully immerse and express themselves to build deeper more meaningful connections with the community as they identify with.
And what they feel they belong there using games like the Sims to unleash that personal and creative autonomy building characters and new stories with difference.
Delivering games that fuel creativity, where players can join compete and interact with each other through social and immersive experiences is an exciting growth lever for electronic arts as we continue to expand and diversify our portfolio and build global online communities spanning more geographies.
Games are the social networks of the future.
Leading in this highly competitive market requires a strong focus on people, we continue to invest in our culture and in fueling our talent pipeline. The best character artists animators graphic designers data scientists engineers and many more talented creators are all joining our team to level up their careers with award winning franchises.
Studios.
From career development and wellness programs to workplace experiences and technologies and spas collaboration and innovation, we strive to make electronic adds a great place to work and growth.
Through our IP, our talent and our growing network of players, we are adding strength and long term value to our business in with short term uncertainties Interactive entertainment will continue to evolve and grow and we are in a very strong position now I'll turn the call over to Chris.
Thanks, Andrew.
Andrew said, we had another strong quarter driven by continued healthy engagement from our bass player network across our broad portfolio of live services and games net.
Net bookings for the first quarter exceeded our expectations coming in at $1 3 billion.
Driven by our FIFA franchise, and the F 122 launch.
<unk> to the prior year net bookings were down 3% or 1% in constant currency driven by two game launches last year compared to one this year offset by strength in our FIFA franchise, the acquisition of <unk> and the launch of apex legends mobile.
Our live services net bookings grew 8% year on year or 10% in constant currency again, demonstrating the resiliency of the highly reoccurring revenue stream.
On a trailing 12 month basis life services were 73% of our business.
With regard to full game sales digital sales accounted for 65% of units sold through up four percentage points from last year.
We delivered Q1 net revenue of $1 $77 billion.
Also above our expectations and with the higher mix of console base revenue gross margins and underlying profit were also well above our expectations.
We saw strength across the entire FIFA franchise during the quarter, particularly with FIFA online four and FIFA mobile and FIFA online four hit a new high in engagement and FIFA mobile delivered its biggest net bookings quarter ever.
FIFA 22 is the largest FIFA ever like to date with regard to net bookings.
F 122, net bookings also materially outperformed our expectations and the franchise has become a dependable driver of growth having delivered double digit growth for each of the last four years.
Andrew highlighted the success of our owned IP games exemplify the apex legends, which saw double digit net bookings growth again in Q1.
Apex legends mobile had a successful launch during the quarter, making apex legends.
A leading multi platform global franchise opt.
Operating expenses were up 11% on last year in line with our expectations as we continue to invest in our development teams and new product launches.
Operating cash flow for the quarter was negative $78 million and we returned to further $373 million to shareholders through dividends and our ongoing share repurchase program.
Turning now to guidance, we are maintaining our full year net bookings guidance of seven nine to $8 1 billion.
Up 5% to 8% year on year or 11% in constant currency now.
Now, let me give a little bit more color within this range.
Based on current exchange rates, we see nearly $100 million of incremental net bookings headwind within our full year guidance or about one point of growth, which mostly impacts the second half of our year.
As rates remained quite volatile will provide a more current update and our Q2 earnings call about the expected half II impact.
Second we're seeing some shift within our business, we expect a strong Q1 results and our EA sports and racing portfolio to continue offsetting the anticipated impact of an overall softer mobile market.
This mix shift has a positive benefit to gross margins and therefore minimize the likely increased impact of FX on our underlying profitability.
We expect fiscal 'twenty, three GAAP revenue to be seven 6% to $7 8 billion.
And cost of revenue to be $2 <unk> to $2 <unk> 5 billion.
Our expectations for operating expenses are unchanged at $4 two to $4 315 billion.
And we anticipate earnings per share of $2 79 to.
The $2 87.
Our guidance for operating cash flow also remains unchanged at one six to $1 $65 billion.
With capital expenditures of about 200 million that will deliver free cash flow of about one four to 145 billion.
See our earnings slides and press release for further cash flow information.
Turning to the quarter, we expect Q2 fiscal 'twenty three net bookings to be $1 75 to $1 $775 billion drip.
Driven by the launch of bad in 'twenty three on August 19th and FIFA 23 on September 30th.
Both Madden and FIFA benefit from having built decades long relationships with their passionate player communities and broader sports ecosystem and we're seeing strong prelaunch momentum for these reliably well performing titles.
For the second quarter, we expect GAAP net revenue of $1 85 to $1 9 billion.
Cost of revenue to be $467 million to $480 million and operating expenses of approximately 1.036 to 1.041 billion.
This results in earnings per share of <unk> 78 to 86 for the quarter.
Our strong first quarter reflects the continued healthy engagement for our vast player network across our broad portfolio.
We're confident in our ability to execute with discipline navigating through a more uneven market with a robust half two slate and the durable power of our live services model to deliver continued growth in fiscal 'twenty three now.
Now I'll hand, the call back over to Andrew.
Thanks, Chris it's been a good start to the year, while the macro outlook remains fluid every one of us at electronic Arts is focused on the things we can control even amid market uncertainty more people than ever before turning to games as the primary choice for entertainment.
This is what they love to do more than anything else and it's how they want to connect and share experiences with people around the world with gaming so central to our lives today.
Is uniquely well positioned with our broad demographic reach about portfolio and the strongest content pipeline in our history.
Leveraging the talents of the best teams of the industry. We are poised to lead. This next chapter of entertainment and to continue building long term value in our company.
As we move into the Q&A portion of the call I want to take a moment to welcome Lorem Eni as Chief operating Officer, Laura has a deep connection to our business from game creation at our studios to revenue generation and our commercial organization.
<unk> join us to address strategic perspective, and insights on the business now, Chris Laura and I are here for your questions.
If you would like to ask a question at this time. Please press star followed by the number one on your telephone keypad.
First question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.
Thanks, So much for taking the question hope everyone on the team is well maybe two big picture questions. If I can Andrew first.
We are in the console cycle on how Theyre still continues to be allowed to supply chain and logistics challenges globally can you talk a little bit about your current thinking on this console cycle versus historical precedents and how you plan on.
Sort of building in the organization on the content side to align when we get to sort of mass deployment of the next generation consoles Love. Your view on that first and then obviously on the mobile gaming side, we continue to see a lot of challenges on distribution and go to market and monetization can you talk a little bit about your efforts to realign the organization for this sort of new <unk>.
World Order for mobile and how you think about capitalizing on that opportunity over the next couple of years. Thanks, So much.
Thanks, Eric.
Two great questions I'm going to get a bunch of I'm going to hand off the lower a little bit on mobile structure. She's been working very closely with the team on how we're thinking about that future.
In terms of console cycle first.
Still really early in this console cycle, so our expectation typically.
Console partners think about console cycles cycles on a 10 year time horizon and so we're still really early and while there are some some supply chain constraints I think what we're hearing from our partners is that we that we feel like they are going to ease up towards the back half and certainly into next year, but the most important.
Thing that we're seeing is demand is off the charts and I think we heard Microsoft side.
As good a position as I've ever been in terms of the.
Console console demand and we also know that Sony consoles.
Our in deep demand and as the supply chain starts to ease our expectation is that more and more people pick up that next console. So as we think about what is the next eight years of this cycle.
You should expect that we'll continue to invest deeply and now <unk>.
Existing owned IP.
Sports portfolio, but you should also expect that as we get through that cycle, we're investing deeper into our slight to have a stronger pipeline down in the back half of the cycle and the good news about that for game is is when we have a cycle that goes for this long and we're able to invest on this time horizon the quality of the software and the nature of the.
We were able to deliver.
Gets better every single year and so we're looking at is in the same way we have in the past now I think your next question on mobile is also really important one because what we also know as these cycles continue is mobile plays a big part PC continues to play a big part over time cloud gaming will also play a big part as well.
Wiring other mechanisms for this global community of $3 5 billion people, who currently play games to interact with our content and services. We provide at a macro level mobile continues to be the world's largest gaming platform. Three 5 billion people, it's hard to imagine any other platform having that.
Kind of reach for US we also see that it gives us reach in markets, where we typically havent been as strong and as we've talked about our FIFA mobile business growing on mobile we've actually seen.
The majority of that growth happened in markets, where typically we have not been able to monetize that experience in the same way given the limited penetration of consoles or the premium model in those in those markets. So long term. We continue to believe that mobile is going to represent an incredibly strong opportunity for us.
But on a global basis is about 50% of the gaming industry is about 17% of our business. So that represents tremendous upside for us and so what Laura has really been working with the team on particularly with our most recent acquisitions is how can we build one single mobile organization, that's really targeted at the future.
A future where brands really matter network really matters and incredible teams really matter and I'll hand off to lora to add a little bit more detail, yes, thanks, Andrew and thanks, Eric for the question and we have successfully integrated glue and play demick into our business into one mobile organization that is actually seeing growth year over year and we continue.
We expect to see that in the coming years.
As Andrew mentioned and theirs.
There is an outside strategic value that mobile brings to our portfolio. It has a significant contribution and impact on the ecosystems of our big franchises. So one example, we discussed the success of FIFA mobile and when we look at our player profile, 46% of our FIFA mobile players were located in Asia Pacific.
And Latin America, compared to just 28% for HD players. So we see this as a significant expansion of the overall ecosystem for these big brands that we have it's also an amazing entry point for when the largest growth drivers for acid with Gen Z and Gen Alpha players and of course as Andrew mentioned, it's a dominant engagement platform for emerging Mark.
And then as we think about cross platform play also for our franchises. So we are optimistic not just about the individual mobile business, but the strategic impact mobile brings to our overall growth plans that we have for the future.
Your next question comes from the line of David Karnofsky with J P. Morgan Your line is open.
Hi, Thanks for taking the question just to follow up on Chris's commentary for a softer mobile market in the back half I think that's how I heard it can you maybe just walk through some of the drivers of that is that.
Something specific with your pipeline or is that more related to broader factors like the economy or UA challenges at some of the platforms.
Yes, I think we're seeing some more.
Macro.
Mobile slowdown at least that's what we're hearing about our model.
Stablish has is built on the basis that we will see some slowdown in the macro mobile market again, our mobile business on balance is doing very well inside of this.
And so we're we're confident in our coal business, we're confident in our core franchises, but we are we are seeing kind of a macro slowdown I think there's probably a few different reasons for that.
One is I think the market is still working through ESI and how to deal with that again in a world that we have brands that matter and a strong network of players and incredible technology, we feel like we're able to navigate that very well.
Two I think where we're dealing with some tough COVID-19 comps mobile benefited greatly through COVID-19.
And three.
If you've traveled all over the summer I think the world is on vacation.
And so.
Can you speak to any of the travel companies. They will tell you. They are seeing unprecedented levels of travel and I think that might also have.
Some impact.
Long term, though when we come back to this.
It represents $3 5 billion players.
It represents a way for us to access plays in markets that al traditional business does not we think that the future is going to lend itself to big important entertainment brands and brands that exist across platforms.
And we think the overall ecosystem will be strong and so while we we never want to go into a market overly confident we always want to use <unk>.
Strong disciplined with how we plan for the market, we're confident in our business.
But even as we hear about some softness in the market. We just wanted to account for that as we move into the second half of the year.
Okay, maybe I can just also follow up with one about economic risk more broadly.
We've tended to think historically of PC console games as kind of recession resistant just given the cheap cost on a per hour basis of the content, but wondering how you think that kind.
Dynamic holds up today, just given the industry has shifted so much towards light services.
But then also increase in player engagement for things like subscription.
Yes, I think it's a great question typically as we've looked through past macro challenges our industry has done extremely well relative to everything else that's going on around it even relative to other forms of entertainment is a few reasons for that one.
Highly interactive and it's deeply engaging and represents extraordinary value for money.
Two at a time, it's kind of a fundamental human need and even as humanity is dealt with many challenges through its course entertainment is always risen to the top as something that has brought us together as.
As we think about the business now versus the last macro challenges that we might have faced I think the good news with live services is that we have more people engaging in our games for more time and more deeply connected to each other.
All of those things speak to I think real strength of the nature of the live service business that we operate in today I think there is one open question. If we were to have one which is in a world where you can engage deeply without spending how we will see spending through this period in the context of live services.
I said in the prepared remarks is what we're focused on is the things that we can really control, which is driving deeper engagement because what we know about engagement now business, particularly in the context of that large services is over the lifetime of an experience. If we can continue to drive really strong engagement across the portfolio.
Across our 600 million strong community.
The lifetime dilute protected over time.
Thanks, so much.
Your next question comes from the line of Andrew <unk> with Jefferies. Your line is open.
Great. Thanks, Thanks for let me ask a couple of questions here. The first one probably for Laura but just generally.
Covid, obviously impacted the way people play games, but it also impacted greatly.
How games are being made we've seen a ton of a lot of the delays in the industry, where do you think we're at.
Are we to a point, where delays will become fewer and fewer.
Fewer.
How do you feel about making games today in the current environment.
Hi, Andrew Thanks for the question really great question.
A couple of things, yes, we did see initially.
Disruptions and how our teams make games.
I will say and I've said, so many times I am just blown away by the ingenuity and creativity of our teams and how they have adapted to get to not only a more productive place.
Highly creative place and how theyre, creating games and so we've seen a lot of progress actually in.
How the rhythm and how our teams have created operating systems and processes around how to create games and that said we are seeing more people come back to the office. We are here in our office in our headquarters right now in person and so and we've been traveling around visiting studios, Andrew within the U K last week visiting our racing teams. There. So we're seeing more people come back.
And we're also seeing people adapt to productivity and environments that are more meaningful and productive for them and for their creativity.
I would say that what we've learned is that having people and teams in place in the beginning of the production cycle for development and then usually at the end as we final has become critical and our teams have adapted incredibly well on the production side and sometimes it's more meaningful for them to be in the office together and sometimes they are more productive from homes that we're seeing.
<unk>.
Really strong.
Adaptation to how the teams are developing so we believe we are in our new rhythm and work and we're continuing to evolve that.
<unk> goes on we also have seen.
Really strong demand and people joining our company and people choose to work with companies that they have a strong value and moral attachments to as well as clearly.
Compensation is really important that people really want to have a connection and emotional and personal connection to where they are and we've seen really strong.
<unk> and desire to work here so we're seeing.
Good.
Good options for us to bring new talent in and we're seeing our teams and infrastructure and adapt to a new work environment.
Got it and I really appreciate that color Laura.
Switching over to.
Thinking about kind of medium to long term growth.
You guys I believe I mean, you've announced or we've speculated that theres quite a few single player games coming.
How should we think about.
Growth from that from that vector.
It should be should it be bigger in scale, so that they will each kind of comp one after another nicely or.
Is it a quantity game, where you launched one big one and then we get a couple after that how should we think about comping.
The single player games going forward as we build our models over the next couple of years. Thanks.
And maybe Chris can add some detail on our model.
The way, we think about this is really less about.
Which game and more about which motivations for these games fulfill so we know that our players is on balance. They have these core motivations inspiration escape social connection and competition self improvement creation. These things that bring us together as players of games.
The creation of worlds and the building of characters that telling of stories.
Really important in the fulfillment of some of those motivations when we think about our portfolio. We think about building. It out we really think about it on two key vectors. One how can we tell incredible stories and two how can we build tremendous online communities and then how do we bring those two things together so the Y when you.
Look at our portfolio what you should be looking for is how are we doing that how are we building. These worlds intelligent stories, how are we developing global online communities and how we bring those two things together.
Fulfillment of motivations and what we see when we get that it's one we grow network until we grow the amount of time that plays in our network spend in and around our games and as we think about single player games. We think it's a really really important part of the overall portfolio that we deliver in the fulfillment of those coal motivations.
Why will plan for overtime is really just looking at our community and looking at how they're spending their time and looking at where motivations may or may not be fulfilled and we will look to supplement that with the addition of new online games, new multiplayer games and new single player games.
Yes, Andrew and maybe if I could just add on top of that Andrew.
Andrew here.
<unk> explained it well, but as we think about the model impact and the financial impact of that I mean, I think the first thing to always keep in mind is that live services still encompasses.
On a trailing 12 month basis over 70% of our business and that has been proven very reliable highly reoccurring revenue stream and that will still be the predominant driver in our P&L long term second we've talked a lot about the areas of investment that we're making and that's both in the live service as well as some of the single title launches that you've seen.
And so over the course of time, we will continue to invest in our long term growth will continue to invest in the ongoing stable performance of our live services business and and there'll be some puts and takes along the way.
Got it thanks, thanks, so much.
Your next question comes from the line of Omar <unk> with Bank of America. Your line is open.
Alright, thanks, so much for taking my question.
You mentioned that apex legends mobile was successful versus your expectations and I wanted to double click on that.
By what measures would you consider apex legends mobile launch successful.
And as bookings one of those measures.
And then.
Have you launched apex legends mobile and all of the geographies that you are intended.
And how should we think about the.
Second half advertising intensity of apex legends mobile.
Compared to what we've seen so far, especially in light of your comments on a weaker mobile.
Environment in the second half.
And then I have a high Omar.
Hi, Mark first yes, we are pleased with the launch of the game and it's met our expectations for the quarter.
And what we saw with apex legends on console as we all know is it was a massive uptake in the beginning and then followed by stabilization and really steady growth over the lifecycle of the game and we expect the same at this title on mobile and in fact this is the pattern seen by many mobile shooters. There are many years of revenue and return generation to be.
<unk>, particularly when you look at the shooter category and Lee.
We expect the same thing to be true for <unk>.
<unk> and keep in mind, we are currently in week eight. So many years ahead and we are in week eight just getting started one thing. We know is we are we're very good at listening to our community and we know how to respond to the needs of players and then the game dynamics that are required to respond.
And keep in mind is while we have an incredible team on this we have respond. He was just best in class in the business for shooters, we are a meaningful mobile infrastructure now to execute globally with the additions of Glu and <unk> and our mobile organization and we also have an exceptional partnership with Tencent. So we are we've met our.
<unk>, we're encouraged and we also know we have a significant runway ahead of us on this on this title.
As it relates to advertising.
We are again looking at advertising is a dimension of our mobile business and this is one that is primarily going to be focused on the in turn on the internal game monetization and that's how we're looking at the optimization of return on our investment in apex.
Okay, I guess in the context of this weakening mobile macro environment for the second half.
And kind of a <unk>.
Stable expense guide.
Stable expense guide.
Assume more or less or the same.
<unk> in mobile user acquisition.
For apex. We are it is we're holding it steady so we are not changing our outlook on our investment.
Or are the returns that we were holding that for now but again as we the great thing about the mobile business is it's quite dynamic and we're able to use multiple levers as it relates to game changes evaluate engagement and evaluate the return that we're seeing but at this time, we arent changing our outlook on our investment or the revenue returned.
We get from that.
And just a quickie again on apex legends PC console this time.
Does your guide for the full year.
Include any kind of effect from competition of new shooters that maybe launching this fall.
No.
The way I would think about that Omar is that our guide takes into account what we view as the overall market conditions apex legends had double digit growth again in Q1, we are anticipating the full year to continue to grow on that very important franchise and it does take into account both.
The things that we control from a from an execution standpoint, as well as what we view as the market conditions and that's all factored into the guidance that you heard.
Wonderful. Thank you so much.
Yeah.
Your next question comes from the line of Mario Lu with Barclays. Your line is open.
Great. Thanks for taking my questions just to follow up on APAC.
The mobile game coming out mid quarter.
Did it have any impact if any on the console PC version in terms of bookings and users.
In other words that growth.
Pick up or slow down.
The mobile launch.
Hi, Mario Thanks for the question.
So early to be candidate. We are seeing is we are seeing tens of millions of new players coming into apex, and we're seeing a significant impact in geographies and growth in geographies as far as penetration of the brand and the experience that are expanding the apex brand and places that that high Def.
And PC console didn't necessarily sell it again more expansion into emerging markets.
And a lot a lot of new players coming into the brand that we're optimistic about it but it's early days for us to understand and to see how things will play out we have a new season coming on the high Def and PC.
Game and about a few weeks here and so we will study and understand the impact that mobile has had on that so more to come in our next earnings and potentially on the context around the impact on the overall business.
Great. That's helpful and just one on paper you guys mentioned the whole franchise was strong during the quarter.
Was there anything in particular that drove the strength in Stifel.
And then can you guys remind us.
Once the piece.
License rolls off by what happens to the persist.
Persistent games like FIFA online and see if a mobile.
Or kind of renamed how is that going to work. Thank you.
Yes.
Laura take the first part on just the performance in the quarter and then I'll talk a little bit more broadly about.
How do we think about the franchise going forward.
So on FIFA online four performance the studio has steadied and strongly focused for the last few years on efforts to improve the game play feel and this is really starting to pay off and player sentiment. So we continue to deepen our relationship with our players and we have strong partners as we go to market in Asia, and we're factoring that feed back into the game.
We're also seeing improved marketing and the growth of popularity of global football in Korea, which has had a big impact on the business.
And more broadly as we said we're going to launch the most expansive FIFA ever this year I think it's extraordinary and demand is really strong.
In Europe , and I was bumping into young kids they'd find out I was doing that already preordered, FIFA, which was extraordinary.
We're seeing growth in the sport of course, we've got a world Cup year and so our belief is that this is going to be a very strong year for our FIFA business.
The way without going broadly into the mechanics of.
Our relationship with FIFA contracts or what have you. What you should expect is that we will launch the most expensive FIFA ever.
We will then continue to sell that in the market and we have.
The ability to continue to do that.
And then we will begin launching the EA sports UFC brand more deliberately.
And and more broadly in the market beyond again, what we did early this year, where we had nearly 200 about 300 partners came out.
And promoted the EA Sports FC brand as a brand that we all collectively owned 300 partners electronic Arts and a community of many hundreds of millions of players around the world.
And so while the name of the game will change the nature of the experience and the connection that players have to the game to the leagues and teams they love and to the players they play with and play against in the community. Many hundreds of millions strong none of that changes we will invest.
Strongly into that.
And we're very excited about what that future will bring and again, we announced a new la Liga partnership, which is going to expand on the nature of things. We can do and you remember as we've talked about this through we've been deeply grateful for our partnership with FIFA, which has existed for nearly 30 years and we've built a tremendous business together.
We've been very excited every conversation we've had about the types of things, we're going to be able to do with our partners and for our community in the context of the blurring of the lines of football fandom between linear and interactive what we do in the virtual world and what we do on the real World, What we watch on TV, what we experienced in game.
And what we've announced with La Liga is just the first step of that and you should imagine that will continue to build and expand on this opportunity to truly bring together what is the largest global football community around a brand that we all own together EA sports UFC.
Very helpful. Thank you.
Your next question comes from the line of Eric Handler with <unk> Partners. Your line is open.
Yes, good afternoon, and thanks for the question.
Wonder if you could talk about.
First.
With one selling growth on a year over year basis.
Second year now.
The title.
Anything youre doing differently from a marketing perspective too.
Just a game perspective too.
Drive.
The improved numbers there.
Secondly, with regards to the Sims decided your first expansion pack in about a year.
Maybe talk about what's been going on there.
Okay.
Okay.
Well listen.
London.
Oh, sorry.
Thanks, Eric.
Question I was muted there.
We remain incredibly bullish and excited about the <unk> business and I would say that the development teams have integrated well into.
Art and I think that they are seeing some of the benefits of our scale globally and certainly when you look at our marketing and commercial divisions and we've had some of the developers actually comment and note that.
The global footprint and reach and impact they've been able to have through our presence that we have with our marketing teams commercial teams and commercial partnerships that they just haven't been able to benefit from before so we are seeing.
Throng in development.
Impact from the leadership, we have here probably mostly in this year's release and we are very optimistic about some of the dimensions of the game that we're going to bring to.
To market in the years ahead, and then just the strength EA sports brand and they're really strong marketing and commercial teams that we have.
And for the <unk> question, you mentioned, so we one of my favorite things about the sensors business is healthy.
Healthy and strong it is.
We actually release game packs content and expansion packs several a year. So we are persistently connected to our players in that community and we are pretty excited about how strong and the size of this business. After about 10 years, we'd have the Sims four brand out so.
This is something that we persistently putting content into the player community and well continue to do that for the years to come.
Thank you.
Your next question comes from Mike Hickey with the Benchmark Company. Your line is open.
Hey, Andrew Chris Laura Chris Congrats on the quarter.
Thanks for taking my questions. Thanks, Mike two questions.
No problem.
First question sort of broad ranging year, but really exciting news at least for me.
And I think the community on state.
And your decision your team's decision to move from a sort of premium plus live service release.
Two it looks like a pure free to play.
Live service, so just kind of curious qualitative or quantitative the decision making process.
To move from what was sort of.
I think kind of highly anticipated premium launch.
To a pure free to play.
There's sort of a quality level for our use.
And that expectation that disorder part of the process there.
You are free to play.
This is sort of maybe the beginning of <unk>.
Seeing this in other genres are those lower tier sports games.
That.
Sort of a three to five units, whether it's auto racing or MMA.
Maybe better live services in this market versus premium.
A follow up thanks, guys.
Yeah, Great question I'll start and then I'll hand over to Laura who has been working deeply with the team. The first thing is as I was saying earlier.
We really see growth in our future built on on two key vectors, one the ability to create world and characters until stories and that was to build a really large global online communities. When we look at scale.
I think what's happened is our ambitions have continued to grow as they've seen what the team has been able to do around that experience I think we continue to see opportunity.
<unk> boarding is kind of a cultural language.
Many generations it trends and so many things certainly geographies and as we think about the ability to bring our global community of used together through the language of skateboarding. We think this represents one of the biggest and strongest opportunities we have to build a global online community.
Deeply engaged in a world that involves creativity, both from us and from them experiencing what stopped out of skateboarding and almost certainly reaches more deeply into the cultural sensibilities of regeneration. So as we thought about that we really took a step back and evaluate how best do we deliver that and law.
<unk> been working with the teams on on how this thought through that puzzle.
Yeah.
Yes.
Great. Thanks.
Okay.
Yes.
And how they.
So one of the.
One of the most important growth potential that we have as a company is how we show up for Gen Z engine Alpha players how they socially connect how they consume content. So there's been a significant focus from the team on this.
And I'll talk about the team for a minute we have some of the original creative leaders from the original <unk> franchise. So much of the DNA and goodness that people loved about skate exist in the team and then we also brought in someone Daniel Mccullough, who ran the Xbox live platform. So he deeply understands the art and nuance.
Social connection social engagement and how do you nurture our community.
And third I think that scale back in the day skate was a bit even ahead of its time. It was a lot of the core motivation around our scale experience was around creative self expression and social connection and competition and we are bringing that to life in the biggest way, we possibly can so more to come on this we are in community testing now.
And we're very close to this skate community to get feedback and we're we're pretty optimistic about.
We're going to be coming to market soon.
Thanks, Andrew.
Second question.
Drew a bit awkward here bear with me.
Sort of subsequent year.
Your last call there was a media article.
That came out sort of related to consolidation and sort of frame.
Persistently pursuing a sale.
Which was I think kind of somewhat unsettling or at least puzzling too.
Asking the community our clients and do a lot of questions on just curious if you can sort of provide.
Provide some framework around that or clarification or sort of your motivation to run.
On a stand alone company or otherwise thanks.
First I'm sure you don't expect me to comment on rumors and speculation from some.
Small small red media outlets, but be that as it may I would tell you I think we are in an incredible position.
<unk>.
We're soon to be the largest standalone independent developer and publisher of interactive entertainment in the World I think we have the most incredible teams in our industry on the planet as lower spoke to earlier, we're attracting more and more incredible creative talent.
We have a community that 600 million strong.
It is growing and certainly we are well on our aspiration to being able to engage a billion people in play across the planet.
Growing across platforms are growing across business models, and we're growing across geographies.
In a world where gaming is becoming more important to the lives of Gen Z and Gen Alpha who with a leading generations in terms of consumption of entertainment for the future I don't think we could be in a stronger position as a standalone company.
Our objective always and my objective as the CEO of this company has always to take care of our people our players and our shareholders and should there ever be a way for us to do that differently. The way we're doing it today I of course have to be open to that but I would tell you today, we feel very very confident and excited for our future.
Thank you.
Your next question comes from the line of Doug <unk> with Cowen Your line is open.
Hey, thanks.
Since the last conference call, you guys announced star.
The Star Wars Jedi Survivor.
Your your fiscal Q4 Big IP title is still unspecified in your current guidance and just wondering if since you've announced star Wars should we assume that therefore that isn't the star wars game or should we not assume anything.
I think the advice would be do not assume anything we will named the titles and filling the blank at the appropriate types.
Okay. Thank you okay.
Thanks, Doug.
That is all the time, we have for questions. This does conclude today's conference call. Thank you for joining US you may now disconnect.
Please wait the conference will begin shortly.
[music].
Yes.
[music].
Yes.
[music].
Yes.
Okay.
Yes.
[music].
Yes.
Okay.
[music].