Q2 2024 Electronic Arts Inc Earnings Call
Good afternoon, My name is Lisa and that'll be your conference operator today at this time I'd like to welcome everyone to the electronic Arts, the second quarter of fiscal year 2024 earnings Conference call.
I would now like to turn the conference over at Miss Katie Barker Director of Investor Relations. Please go ahead.
Thank you welcome to E. A second quarter fiscal year 2024 earnings call with me today are Andrew Wilson R. C E O and Stewart Canfield R. C. F L. Please.
Please note that our SEC filings and our earnings release are available at I R. Dot E. A dot com. In addition, we have posted detailed earning slides to accompany our prepared remarks lastly, after the call. We will post are prepared remarks, and audio replay of this call and the transcript.
With regards to our calendar our third quarter of fiscal year 2024 earnings call is scheduled for Tuesday January 30th as.
As a reminder, we posed to schedule of upcoming earnings calls for the fiscal year on our I R website.
This presentation in our comments include forward looking statements regarding future events in the future financial performance of the company.
Julie events and results may differ materially from our expectations. We refer you to our most recent Form 10-Q for discussion of risks that could cause actual results to differ materially from those discussed today.
Electronic Arts makes these statements as of today November 1st 2023, and disclaimed any duty to update them.
During this call the financial metrics with the exception of free cash flow will be presented on a gap basis.
See our earnings slides for further information all comparisons made in the course of this call are against the same period in the prior year unless otherwise stated now I'll turn the call over to Andrew.
Thanks, Cavey, it's great to be here with all of US. It was a strong <unk> as we delivered results above expectations were.
We are making great progress against that strategy to build massive online communities still blockbuster stories and amplify the power of social connection to drive multimedia growth unlock longterm value and service about people all players and shareholders.
All of our teams through passion and creativity continued to deliver interactive entertainment and experiences that engage and inspire hundreds of millions of people as part about communities inside out global network everyone. It yeah. Thank.
Thank you.
During the quarter E. A sports continued to expand its position as a leader of the future of sports fandom as we launched two of the world's most celebrated indirectly experiences at the heart of sports culture E. A sports Madden N F. L 24, and Ea's Sports F. C 24. These.
These titles represent foundational drivers of growth in the biggest sports G and our company's history.
In Baton NFL, we have delivered the preeminent indirectly of American football experience for decades, we.
No. It's essential for today stands at the NFL broadcast growing popularity enrich to connect with their friends and celebrate their passion for the sport beyond what happens on the field each and every day.
Thrill Madden NFL franchise, we make this possible in ways no one else can through awesome game play deep social connection at a 365 day immersion in the sport.
So many people with so many different motivations and expressions of their fandom.
On console and P. C. Madden NFL twenty-four delivered an immersive experience with elevated realism control and game play.
He says energized R. Cole franchise players while mode like Super Star, bringing new players to these already giant community.
Madden N F. L 2004 is off to a strong start with almost 10% more applied in the title year over year and driving over 10% growth in weekly average users.
During the call it a modern mobile had more players diving into the gang year over year growing community over 20% and delivering double digit growth in weekly active users.
As we continue to expand American full bullet ecosystem. It seems also ushered in a new era for global football at the end of the quarter.
A successful launch of E. A sports FC represent a profound achievements, we have re imagined and expanded one of the largest franchises in the world setting new standards of old simplicity innovation and social interaction.
This cutting edge multi experienced ecosystem spans console P C mobile and free to play with a ground breaking game and F. C 24 advancements of S. T mobile NFC online in Asia, and a new global esports program and F C products.
The fans across geographies and generations applying connecting and celebrating in and around these incredible unnoticed of experiences.
Coming off a record setting twenty-three performance I made two world Cups F. C is set to deliver growth this year and beyond.
Dan reception of FC has been extraordinary expanding our already thriving global football community within the first four weeks after worldwide launch a 14 and a half million fans have played F. C 24 on console and premium P C, including double digit growth and new players F.
<unk> mobile has established new franchise records with over 2 million people installing the game on the first day of a $5 million in the first three days and over $11 million in the first 10 days.
S. C online continues to grow across all engagement matrix, while plays a truly embraced FC pro with a record number of registrations.
F C represents a giant leap forward as we aspire to more deeply connect and grow the world's largest football community to 1 billion fans and beyond.
The successful launch of FC shows out portfolio strategy at work, we are now able to accelerate creativity and innovation across platforms geographies and business models expand our football experiences across play watch create and connect and inspire and anytime even more fans around the world we.
You are in an extraordinary position to further collaborate with more amazing partners to grow F. C. As a cultural phenomenon F. C is more than just a game and this is just the beginning.
Halfway through the year, our sports teams the very best in the business have delivered an unprecedented slight amazing contact. The story continues into Q3 is E. A sports NHL 24 and E. A sports <unk> have already launched critical acclaim.
E. A sports W. C launch is also just two days away.
Looking ahead exciting updates taught at the biggest moments of the sports season will fuel momentum Ah cross-sell toddled through the rest of the fiscal year and beyond as we build at a multiplatform ecosystems with FC tactical releasing in 2024 and E. A sports College football coming next summer.
As we continue to build ecosystems Ah Randall biggest IP, we are prioritizing the massive online communities of are always on live services to lay a broad foundation for future launches and strong growth for the business.
Through the expanding worlds characters and storylines that we deliver people everywhere come together to celebrate their love of games cherished community and forge lifelong friendships.
It takes legend is a leader in its category with top gun quality and gripping content in.
Q2 C. As in 18 entertaining to energize players driving improvement in monetization over the price season.
We recognize the franchise exists in a competitive environment and looking forward out team at <unk> is focused on doing even more incredible things suppliers engaging the community and deepening the franchise exciting ways to drive growth Scott.
Starting with yesterday's launch of season 19, featuring dynamic game updates and content integration with music industry icon post Malone.
The city is full community is celebrating creativity and culture and growing across generations matches is using data inside and deep connections with the community to create fan favorite content.
New plays as well as weekly average users are up double digits year over year. The team is committed to entertaining and inspiring al sinful community with an increasing amount of new content as they work on a parallel expansive experience in the <unk> universe.
Just last month, we launch season, six the battlefield 2042, and our community is responding positively driving record engagement on screen.
Illustrates the strength today and long term potential of the franchise through innovation and creativity at teams continue to support this huge community of fans while building towards the future of battlefield.
Live services are the foundation of our business to the first half of the year, we have delivered unimpressive amount of content across new games and a a 285 game updates.
Seems create even more incredible entertainment plays will find more joy more inspiration and deeper connection powering engagement and expanding out communities across geographies and business models, we are driving growth today and over the long term.
Well being mindful of current events and varying global macro consumer outlooks. All season teams of leaders and World class teams are focused on doing what they do best delivering amazing games and services for applies everywhere.
As we continue to invest in our vision to lead the future of entertainment, we remained thoughtful and deliberate focusing on our largest opportunities.
Over the next few years out teams will innovate and expand our biggest IP as we build platforms of ecosystems to connect massive online communities that celebrate fandom across the world inspired engage apply through blockbuster storytelling and continue to create experiences to amplify out communities through social connection.
<unk> to provide additional details on our business.
Thank you, Andrew and Hello, everyone.
Strong Q2 performance delivered results exceeding our expectations across net bookings and EPS.
We sold growth in our plan network with healthy engagement driving strength E. A sports portfolio highlighted by the successful launches of a sports Madden N F. L 24, and a sport F C 24.
For the second quarter, net bookings will $1.82 billion up 4% year over year or five per cent in constant currency, which exceed our expectations for both full game and a lot of services.
At full game that bookings was $691 million up 9% year I began pull up 10% in constant currency driven by strength and I Q2 E. A sports releases.
Life's services net bookings will $1.13 billion up one per cent, you're out of the year or 2% in constant currency.
On a trailing 12 month basis lifestyle says with 73% of our business demonstrating the resiliency of of Evergreen life services business model.
E a sports Madden N F. L 24 delivered a strong launch in the quarter with netbook hangs up 6% year over year as exciting you in game innovations continue to drive growth across <unk> acquisition and engagement.
As Andrew noted the momentous transition to a sport F C with a huge achievement for <unk>.
In Q2 at total global full business significantly exceeded our expectations.
Net bookings grew 41% year over year, driven by continued momentum of fee for twenty-three, including triple digit mobile net bookings growth and strong demand for release of a sport F. C 24.
The launch had a tremendous stopped.
Delighted by health you attention, if I call cohort strong acquisition of new and reactivated players Gregory.
Right to demand for the luck traditions of F. C 24, and the benefit of four extra days of early access.
In the first four weeks F ultimate team with up high single digits on a year on year basis apex Legends go down on a year over year basis delivered net bookings above our expectations with season 18, driving greater anticipated Pio acquisition and monetization.
Apex legends remains one of the strongest franchises in the industry.
And we will continue to invest to engage I brought it base of players and drive longterm growth at the talented teams at <unk> introduce innovations and new offerings like in season 19.
Moving to GAAP results, we delivered net revenue of $1.91 billion.
1% year over year.
Operating expenses came in below our expectations, reflecting.
Reflecting savings and the phasing of some marketing spend into the holiday period as.
As we continue to make progress against focusing on Rationalising our investments.
On a year over year basis, Opex was up 7%, primarily driven by the incremental investment behind the launch of a sports F C.
Al GAAP earnings per shaft was one dollar and 47 cents up 37% year over year, including 34 cents from a one time non-cash tax benefit.
Printing cash flow in the quarter was $112 million, including benefit from lower cash taxes.
On a trailing 12 month basis free cash flow was a record $2 billion up 28% year over year.
And we returned $376 million to shareholders through dividends in our ongoing share repurchase program.
Now turning to guidance.
To start I'd like to recap the context and assumptions behind that full year net bookings guidance range, which remain unchanged.
First we expect healthy prior engagement across that portfolio.
Even as we continue to operate and missed a highly competitive market on a varying macro backdrop.
Second, but he exports F C. We.
We continue to expect low single digit growth for the full year, even ask we lap record fee for twenty-three performance, which included the impact of World Cup events.
Third FX continues to remain volatile if rates remain unchanged. We expect at two point headwind Internet bookings and six point headwind to underlying profitability matchup hedges relative to last year.
And finally, we continue to be focused deliberate and disciplined on our investments as we execute against that long term growth opportunities.
At full getting that bookings outlook remains unchanged at $7.3 billion to $7.7 billion, roughly flat to up 5% year over year, all up 1% to up 7% in constant currency.
At full year gap net revenue outlook of 7.32 $7.7 billion and the cost of revenue outlook of $1.67 billion to $1.75 billion full thug remain unchanged as.
As we continue to manage and prioritize investments across my portfolio, we all lowering at guidance operating expenses to $4.21 billion to $4.33 billion down 2% to 1% Yeah, right, Yeah, which we also expect to help drive improvements and Ah underlying profitability.
We are increasing our GAAP earnings per share guidance to $4.10 to $4.66 up 42% to 62% year over year, reflecting operational savings and the one time tax benefit and noted earlier.
We all raising at guidance range for upfront cash flow by $250 million to 1.952 $2.1 billion.
We are lowering our capital expenditures outlook to $250 million driven by deliberate decisions to optimize our real estate footprint.
And we now expect free cash flow of $1.7 billion to $1.85 billion up 27% to 38% on a year over year basis, <unk> and press release, the cash flow of information.
Turning to the third quarter outlook.
We expect net bookings to be $2.25 billion to $2.45 billion down 4% to up 5% year over year or down 2% to up 6% at constant currency.
For a sports F. C 24, we expect modest growth given the World Cup comparable noted earlier.
Apex legends, we continue to take a more measured approach at a team to introduce more do you most of play and content offerings.
We expect GAAP net revenue of $1.83 billion to $2.03 billion cost of revenue of $495 million to $535 million.
<unk>, writing expenses of approximately $1.05 billion to $1.11 billion.
This results in GAAP earnings per share of 75 cents to one dollar and one cent up 3% to 38% a year.
In closing.
I delivered a strong Q2 performance ahead of our expectations driven by a sports launches and strong prior engagement across a diverse portfolio of games and services.
Looking forward at teams are committed to delivering high quality experiences that players and building upon the momentum in that business, especially as we head into the holiday period.
We continue to make progress in a lining around our strategic opportunities, we remain proactive and focused and disciplined and our investments deliver multimedia growth.
Now I'll hand, it back to Andrew.
Thanks to you at industry is growing as more people around the world dive into the sports brands storytelling and legendary I P. They love most the definition of a game is also expanding beyond play as fans are watching creating content and making deep social connections in and around indirectly experiences.
How games are being made is changing as well advancements in January but i-i are accelerating the speed of development boosting creativity innovation transforming what we can deliver bringing bigger broad again as in experiences to an even larger global audience.
The value of an opportunity of delivering deeply interactive entertainment has never been greater.
Talented teams industry, leading technology World class I P and growing global network appliance position E E as a leader of the future of entertainment.
Yeah, let's do it not out here for your questions.
Lisa we're ready for our first question.
Thank you sorry remind everyone. If you would like to ask a question. Please press star one on your telephone keypad and to remove yourself from the queue that is star one again.
We'll take our first question from Matthew cost with Morgan Stanley.
Hi, everybody. Thanks for taking the questions I guess on the launch of a F. B I guess what were the areas where you are most pleased you know with the launch versus last year and the areas for maybe you saw the room to the most improvement and are you still on track to to hit the low single digit growth of the franchise you are near that.
<unk> had spoken about at the beginning of the year. Thank you.
Thanks for the question I would tell you where we are almost universally happy with the launch take you on this launch was a was a big challenge for US. It was a challenge for the nature of the game that out teams had to make a cross platforms across console P. C mobile and are free to play game.
Mostly in Asia. We wanted this to be a symbol of change not just a change of symbol and I think the teams have done an extraordinary job and delivering the most authentic immersive socially connected football experience ever certainly you know that we've ever made I think I'm marketing teams have done a tremendous job.
And ensuring that the the world's population of football fans understands the transition has happened understands the benefits of that transition and understands why this represents not the end, but the very beginning of what is going to be an incredible journey a football fan them for our fans and for our partners globally I think they you know if you.
Really sat down without al develop is there a market Israel partners. You know there are always things, we can do better and we're always learning, but on balance I would say, we feel very very proud of what we've achieved so far it's only early but certainly this all the signs are incredibly positive feedback is also incredibly positive and we feel good about.
Where we think the franchises going from a performance standpoint <unk>.
Now just add just to clarify so yes, we remain on track for the low single digit grocery represented I think too important piece of context, yes, we're off to a great start to Anders point Oh, Yeah. We also saw strength in Q2.
Importantly way of saying, we're up high single digits you have on the three the first four weeks on a life service business caveat being we remain prudent as we head into Q3 and Q Falls you remember from last year, we saw record Q4 across my business up 31%, but we still fail confident in on track for low single digit growth the rest of the year.
Thank you.
Thank you next question please.
Thank you and we'll take our next question from Benjamin Franklin like you think.
Hey, guys. Thanks for the question another one on on that fee again really strong lunch. So far so that's encouraging.
Wondering if you anticipate that the pacing of sales for this game will be similar to prior years or if you'd expect any changes to that trend as a result of the rebrand maybe either more front end loaded because there was some excitement or a longer tail because it might take time for some of the marketing to reach people. Thanks.
Yeah, I I think Stewart can can kind of talk about how it planning that I think what we're doing right. Now is we're planning for both of those potential outcomes. We feel very good about the launch sofa, we've certainly brought in.
A meaningful amount of net new fans of net new applies in an ecosystem, which is always an incredible sign and prediction for the future. We also know we still have a meaningful amount of people applying the previous game and and as we started to see and it's less about the F C transition and more about our lives service business.
In general as we think about lives services, we're seeing a transition from one launched the next b a little bit more organic and certainly as we have supported the lives services right up until the new launch. There's there's often very good reason for people to continue applying the previous game and so I do believe that we brought in your <unk>.
Lisa: Good afternoon, my name is Lisa and I'll be your conference operator today. At this time, I would like to welcome everyone to the electronic arts second quarter fiscal year 2024 earnings conference call.
Fans through an incredible game experience and incredible marketing, but we also recognized that we still have a meaningful population playing the previous game and when they are working very deliberately and diligently to bring those over two F. C and continue to grow device of extra you Wanna go forward basis.
Katherine Burke: I would now like to turn the conference over Ms. Katie Burke, Director of Investor Relations, please go ahead. Thank you.
Katherine Burke: Welcome to EA second quarter fiscal year 2024 earnings call.
Katherine Burke: With me today, our Andrew Wilson, our CEO and Stuart Canfield, our CFO. Please note that our SEC filings and our earnings release are available at IR.EA.com. In addition, we have posted detailed earnings slides to accompany our prepared remarks.
Yeah, I've been just on phasing I think you've seen a great style. So naturally you've seen as pull forward a little bit too Q2 in the first three weeks, which is natural and part of the strategy as we launch the F. C. We expect Q3 to offer I broadly in a similar manner as we progress through both season in the real world and heading into holiday, we expect Q4 will be more of a.
Katherine Burke: Lastly, after the call, we will post our prepared remarks and audio replay of this call and a transcript. With regards to our calendar, our third quarter fiscal year 2024 earnings call is scheduled for Tuesday, January 30th. As a reminder, we post the schedule of upcoming earnings calls for the fiscal year on our IR website.
<unk> in part because we had the World Cup pick up from plans that flow through in the queue for so macro yes strongest stop consistent through Q3, I'm more of a flat consistency around Q full given the comp on the prior year.
Got it and then an apex can you just talk a little bit more about what resonated with players receive an 18 and some of the drivers you see to generate growth for this franchise over the longterm. Thanks.
Katherine Burke: 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 10Q for discussion of risks that could cause actual results to differ materially from those discussed today. Electronic Arts makes these statements as of today November 1, 2023, 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 gap basis. We see our earnings slides for further information. All comparisons made in the course of this call are against the same period in the prior year unless otherwise dated.
Yeah. The the the team continues to develop incredible content, they're very deeply connected with a fan community and what we started to see is is different types of content more dynamic content more content has application across legends versus being legend specific and different chase mechanics inside the game again.
A deeply committed community are deeply engaged community and when they come in and see these chase mechanics, it really drives ongoing engagement and throw up my expectations. The team will continue to test and loan and continue to innovate and evolve the experienced in line with community needs and community demands it can be the expectations, but what we've seen so far.
Andrew Wilson: Now, I'll turn the call over to Andrew. Thanks, Katie. It's great to be here with all of you.
Andrew Wilson: It was a strong Q2 for EA as we delivered results above our expectations. We are making great progress against our strategies to build massive online communities, till blockbuster stories and amplify the power of social connection to drive multi-year growth and unlock long-term value in service of our people, our players, and our shareholders. All our teams through passion and creativity continue to deliver interactive entertainment and experiences that engage and inspire hundreds of means of people as part of our communities inside our global network.
<unk> very positive results to the more dynamic nature of the events in the office that they've been pushing into the experience.
Thank you our next question please.
Thank you we'll take our next question from Air Canada with rock and can.
The question Andrew now that you know you're not shackled with some of the FIFA restrictions that you have on E. A S. C. I was wondering if you could give a little perspective on what the impact was on revenue for sponsorship and advertising or maybe you know the.
Andrew Wilson: To everyone at EA, thank you. During the quarter, EA Sports continued to expand its position as a leader of the future of sports fandom, as we launched two of the world's most celebrated interactive experiences at the heart of sports culture. EA Sports, Madden NFL 24, and EA Sports FC 24. These titles represent foundational drivers of growth in the biggest sport year in our company's history. In Madden NFL, we have delivered the preeminent interactive American football experience for decades.
Impact from promotions.
Oh, well, it's still really early as we think about the future of this franchise. We are just getting started but as we talked before our orientation by transitioning to F. C was really about how do we work with more partners around the World you know why they want to work with us and that's both leagues teams players.
<unk> and commercial partners. It was really bad how do we expand the modality as of play inside the game to do new and interesting things for growing fanbase, how do we expand engagement opportunities outside the game, how do we really develop F C. As a football fan platform not just an indirect gaming experience.
Andrew Wilson: We know it's essential for today's stand as NFL broadcasts grow on popularity and reach to connect with their friends and celebrate their passion for the sport beyond what happens on the field each and every day. Through our Madden NFL franchise, we make this possible in ways no one else can. Through awesome gameplay, deep social connection, and a 365-day immersion in the sport. For so many people with so many different motivations and expressions of their fame.
And how do we move really really quickly we think that with a partner structure that we have now and the many partners that we have around us with a deep connection we have with the community and the investments that we've been making in and around development across the entire ecosystem console P. C mobile free to play and beyond the bounds of the game is that these things will.
Andrew Wilson: On console and PC, Madden NFL 24 delivered an immersive experience with elevated realism control and gameplay. This has energized our core franchise players, while modes like Superstar are bringing new players to this already giant community. During the quarter, Madden Mobile had more players diving into the game year of a year, growing the community over 20% and delivering double digit growth in weekly active users. As we continue to expand our American football ecosystem, our teams also ushered in a new era for global football at the end of the quarter.
Start to manifest over the coming months over the coming seasons and over the coming years.
That's great and then just as a follow up could you maybe talk a little bit about some of the.
Real estate strategies that you're sort of working through right now.
Alright, I'll I'll chime in here at all of that we you know we saw this out and we talked about the restructuring heading out of that Q4 last year.
And we continue to just to sort of optimize both how we build going forward in both at carbon footprint today, so ongoing exercise for us as we continue to look at that as we walk through the the future of luck.
Great. Thank you so much.
Andrew Wilson: The successful launch of EA Sports FC represents a profound achievement. We have reimagined and expanded one of the largest franchises in the world, setting new standards of authenticity, innovation, and social interaction. Discutting-edge multi-experience ecosystem spans console, PC, mobile, and free-to-play with a groundbreaking game in FC 24, advancements of FC mobile and FC online in Asia, and a new global eSports program in FC Pro. Fans across geographies and generations are playing, connecting, and celebrating in and around these incredible immersive experiences.
Thank you upgrade our next question please.
Thank you Mr remind everyone that is star one to ask a question we'll take our next question from David come asking with J P. Morgan Alright.
Alright. Thank you maybe just one for Stewart on the operating cash flow outlook, you're taking it up I think $250 million on a relatively changed operating income outlook can just walk through the puts and takes it out of their one off benefits or should we look at this as an underlying improvement and your conversion. Thanks.
Yeah. Thanks for the question ensure yes, we've got a couple of one off benefits we talked out in in the script before so we have all the C. Naturally have improved operating foundations and full of cash benefit from interests were seeing by virtue of the reco cashflow, we talked to in a in an active and secondly, yes.
Andrew Wilson: Coming up a record-setting FIFA 23 performance amidst two world cups, FC is set to deliver growth this year and beyond. Fan reception of FC has been extraordinary, expanding our already thriving global football community within the first four weeks after worldwide launch of a 14.5 million fans have played FC 24 on console and premium PC, including double digit growth in new players. FC mobile has established new franchise records, with over 2 million people installing the game on the first day, over 5 million in the first three days, and over 11 million in the first 10 days.
LC seeing some one time tax benefits the flying through that are giving us that lift you're talking about I was just 250 million. In addition, we're also obviously changing free cash as well to the question before from Eric as we pull down that's not that capital future strategy on investment to increase that off as well. So yes, one time benefits.
Tied around tax Nobody's I'm operating benefits picked up by having great to cash in hand, this driving quite an interest for us.
Thank you.
Andrew Wilson: FC online continues to grow across all engagement metrics, while players have truly embraced FC Pro with a record number of registrations. FC represents a giant leap forward as we aspire to more deeply connect and grow the world's largest football community to a billion fans and beyond. The successful launch of FC shows our portfolio strategy at work. We are now able to accelerate creativity and innovation across platforms, geographies, and business models, expand our football experiences across play, watch, create, and connect, and inspire and entertain even more fans around the world. We are in an extraordinary position to further collaborate with more amazing partners to grow FC as a cultural phenomenon.
Thank you operator, our next question please.
Thank you we'll take our next question from Brian Fitzgerald with Wells Fargo.
Thanks, guys. When when you think about F. C seasonal you spend as that dynamic shifted any when you look at annual cohorts. We we just ask because deep engagement was surprisingly robust all the way up to F. C launch and with these new F. C play modality pro tactical mobile online.
How do you see that impacting spend seasonality, maybe similar along with Playstyles.
All these levers should broaden out that that engagement and spend as <unk> as well right.
Yeah, I mean that that is out with <unk> I mean this is the biggest sport in the world and it's growing exponentially, it's growing meaningfully in this country as well, but also globally. It continues to grow and as as we think about the football fan community kind of growing into being of gaming age we've seen often.
Andrew Wilson: FC is more than just a game, and this is just the beginning.
Andrew Wilson: Halfway through the year, our sports teams, the very best in the business, have delivered an unprecedented slate for the amazing content. The story continues in the Q3, as EA Sports NHL 24 and EA Sports UFC 5 have already launched to critical acclaim. The EA Sports WRC launch is also just two days away. Looking ahead, exciting updates tied to the biggest moments of the sports season will fuel momentum across our titles through the rest of the fiscal year and beyond.
She needed to serve them across a bunch of different vectors and so as we think about the value of F. C. As a platform. It really comes down to three things one is how many people in the network and playing how much time are they playing in the context of that of that engagement and how deep, but the connections I have with those that they play with.
Andrew Wilson: As we build out our multi-platform ecosystems with FC Tactical Releasing in 2024 and EA Sports College Football coming next summer. As we continue to build ecosystems around our biggest IP, we are prioritising the massive online communities of our always on life services to lay a broad foundation for future launchers and strong growth for the business. Through the expanding worlds, characters and storylines that we deliver, people everywhere come together to celebrate their love of games, cherish community and forge lifelong friendships.
<unk> and as you look at our strategy as we roll it out across platforms Ah cross-modality across geographies and gross business models. Everything we are doing we are looking to pull on those leave is that bring more fans into the community and give them more opportunities to engage deeply with the experiences that we create and connect more meaningfully with her friends.
That they enjoy those experiences with and what that is man. It's just an overall expansion of the opportunity. Both in terms of how many people are in the in the community broadly and the overall seasonality of spend has has been elongate it throughout the year and so we're seeing far more consistent spend throughout the year, because it's not just about that connection.
To to a season of football is about a deep connection to the friends. They share the love of that season of football with and that Love is 365 days a year and so as we think about building. This out both in the context of F. C. In the context of American football in the context about broader E. A sports portfolio and in the context of all all the giant.
Andrew Wilson: We recognize the franchise exists in the competitive environment and, looking forward, our team at Respawn is focused on doing even more incredible things for players, engaging the community and deepening the franchise in exciting ways to drive growth. Starting with yesterday's launch of season 19, featuring dynamic game updates and content integration with music industry icon Post Malone. The Sims 4 community is celebrating creativity and culture and growing across generations. Maxis is using data insights and deep connections with the community to create fan favourite content.
IP apex. The Sims battlefield, you should expect that we will look to replicate this across the portfolios, we invest deeply and these opportunities to bring global communities of gamers together and give them the opportunity to engage more deeply and the experiences they love and connect more meaningfully with their friends that they enjoy the experiences with.
Andrew Wilson: New players as well as weekly average users are up double digits year over year. The team is committed to entertaining and inspiring our Sims 4 community with an increasing amount of new content as they work on a parallel expansive experience in the Sims universe. Just last month we launched season six for Battlefield 2042 and our community is responding positively, driving record engagement on Steam. This illustrates the strength today and long-term potential of the franchise. Through innovation and creativity, our teams continue to support this huge community of fans while building towards the future of Battlefield.
Thank you and you appreciate it.
Thank you operator next question. Please thank.
Thank you we'll take our next question from Eric Sheridan with Goldman Sachs.
Thank you so much maybe two questions. If I can first you know we continue to have a debate, which investors about the recession Brazilians versus.
Uhm of gaming overalls and industry I was curious what you're seeing in terms of spending habits on the consumer side of the equation across your portfolio of I P and and what it tells you in terms of Brazilians versus resistance to potential and consumer volatility from spending side. When do you think about the interactive entertainment <unk>.
Andrew Wilson: Live services are the foundation of our business. To the first half of the year, we have delivered an impressive amount of content across new games and over 285 game updates. As our teams create even more incredible entertainment, players will find more joy, more inspiration and deeper connection, powering engagement and expanding our communities. Across geographies and business models, we are driving growth today and over the long term. While being mindful of current events and varying global macro consumer outlooks, our season teams of leaders and world class teams are focused on doing what they do best, delivering amazing games and services for players everywhere.
<unk> number one and then number two which it really interesting to see the the the new user growth around the Madden franchise, where there's been sort of a geographic component to that IP overtime because of the sport itself. How do you think about building more audience scale and size and Madden over the longterm what were some of the key learnings.
From this year the joke to take into future years. Thanks, so much.
Wow, Eric two great questions I will try and cover them as best as I can and Stewart. Please add details as we go I think that when when we think about recessionary predictions in the industry broadly people as an industry. We have I don't want to say be recession proof, but we are.
Andrew Wilson: As we continue to invest in our vision to lead the future of entertainment, we remain thoughtful and deliberate, focusing on our largest opportunities. Over the next few years, our teams will innovate and expand our biggest IP as we build platforms and ecosystems to connect massive online communities that celebrate fandom across the world, inspire and engage our players through blockbuster storytelling and continue to create experiences that amplify our communities through social connection.
Be more resilient than many industries have been and that's really because of two key things. One entertainment is a fundamental human needed is very important to us as a species and to the form of entertainment that we offer to our communities represents incredible value, even where there is constrained spending as we look at the market.
Today, and we look at crosstown portfolio I think it probably is pretty consistent with what we see across the industry, which is the big games, where there is deep engagement in deep social connection continue to benefit across Ah Cross-out portfolio, and we are but we do see.
Stuart Canfield: Now I'll hand the call over to Stuart to provide additional details on our business. Thank you Andrew and hello everyone. Our strong Q2 performance delivered results exceeding our expectations across net bookings and EPS. We saw growth in our plan network with healthy engagement driving strength in our EA Sports portfolio highlighted by the successful launches of EA Sports Madden NFL 24 and EA Sports FC 24. The bookings were $691 million, up 9% year-over-year or up 10% in constant currency driven by strength in our Q2 EA Sports releases.
Different kind of spin patton's on a on a <unk> basis. There are some markets that are showing a little more softness than others relative to some of the growth that we're seeing across the world and that we we've heard you know I'll just speak to some of the softness in market in Europe, we've certainly seen some of that across sell portfolio.
But as in aggregate on a global basis, we're seeing growth.
As we think about Madden broadly again I just I think we we have being partners with the NFL for you know the best part of 30 years out teams worked very very closely with the N F. L. In the N F. L Players Association and more importantly, NFL fans football fans in this country and beer.
Stuart Canfield: Live services net bookings were $1.13 billion, up 1% year-over-year or 2% in constant currency. On a trailing 12 month basis, live services were 73% of our business demonstrating the resiliency of our evergreen live services business model. EA Sports Madden NFL 24 delivered a strong launch in the quarter with net bookings up 6% year-over-year as exciting new in-game innovations continue to drive growth across player acquisition and engagement. At Andrew noted, the momentous transition to EA Sports FC was a huge achievement for EA.
The boundaries of this country and the NFL is growing globally, and we see the NFL doing an incredible job of growing the sport and what out teams had been doing is building out again thinking about these game experiences not just as one of one time experiences, but mechanisms to fulfill many motivations of sports fans and football fans.
And those might be cole gaming moments those might be more play even though.
Tried moments they might be more casual moments they might be more archived light moments, while they might just be moments to connect with other fans of the community and what what you're seeing from out teams right. Now is a deep commitment to fulfilling the needs and motivations of what is a growing fan community for American football in this country and beyond and I expect it will continue.
Stuart Canfield: In Q2, a total global football business significantly exceeded our expectations. Net bookings grew 41% year-over-year driven by continued momentum of FIFA 23 including triple-digit mobile net bookings growth and strong demand for release of EA Sports FC 24. The launch had a tremendous start, highlighted by healthy retention of our core cohort, strong acquisition of new and reactivated players, greater demand for deluxe editions of FC 24 and the benefit of four extra days of early access.
What with the N F L. In the N F. L. Players Association I'll partners in the community broadly to continue to grow the business.
Great. Thank you Andrew.
Thank you that ends our call Andrew and do you have a few closing words.
Thank you all for being with us and for the great questions. Once again I want to express my deepest appreciation to our incredible teams for delivering a really strong Q2, we look forward to updating your next quota on January the 30th.
Stuart Canfield: In the first four weeks, FC ultimate team was up high single digits on a year-on-year basis. Apex Legends, though down on a year-over-year basis, delivered net bookings above our expectations with season 18 driving greater than anticipated player acquisition and monetization. Apex Legends remained one of the strongest franchises in the industry and will continue to invest to engage at broader base of players and drive long-term growth as a talented team that respawn, introduce innovations and new offerings like in season 19.
Thank you that concludes today's meeting thank you all for joining and you may now disconnect.
Please wait the conference will begin shortly.
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Stuart Canfield: Moving to our gap results, we delivered net revenue of $1.91 billion up 1% year-over-year. Operating expenses came in below our expectations, reflecting savings and the phasing of some marketing spend into the holiday period as we continued to make progress against focusing and rationalizing our investments. On a year-over-year basis, Apex was up 7% primarily driven by the incremental investment behind the launch of EA Sports FC. Our gap earnings per share was $1.47 up 37% year-over-year, including 34 cents from a one-time non-cash tax benefit. Operating cash flow in the quarter was $112 million, including benefit from lower cash tax.
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Stuart Canfield: Services. On a trailing 12 month basis, free cash flow was a record, $2 billion, up 28% year over year. And we returned $376 million to shareholders through dividends and our ongoing share repurchase program.
Stuart Canfield: Now turning to guidance. To start, I'd like to recap the context and assumptions behind our four year networking guidance range, which remain unchanged. First, we expect healthy player engagement across Apple Folio, even as we continue to operate and miss a highly competitive market and a varying macro backdrop.
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Stuart Canfield: Second, for Yeh Sports FC, we continue to expect low single digit growth for the full year, even as we lap record fee for 23 performance, which included the impact of World Cup events. Third, FX continues to remain volatile. If rates remain unchanged, we expect a two point headwind to net bookings and six point headwind to underlying profitability, net of hedges relative to last year. And finally, we continue to be focused, deliberate, and disciplined on our investments as we execute against our long term growth opportunities.
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Stuart Canfield: Our four year net bookings outlook remains unchanged at $7.3 to $7.7 billion, roughly flat to up 5% year over year, or up 1% to up 7% in constant currency. Our full year gap net revenue outlook of $7.3 to $7.7 billion and our cost of revenue outlook of $1.67 to $1.75 billion also remain unchanged.
Stuart Canfield: As we continue to manage and prioritize investments across our portfolio, we are lowering our guidance for operating expenses to $4.21 to $4.33 billion down 2% to up 1% year over year, which we also expect to help drive improvements in our underlying profitability. We are increasing our gap earnings per share guidance to $4.10 to $4.66 up 42% to 62% year over year, reflecting operational savings and the one-time tax benefit noted earlier. We are raising our guidance range for operating cash flow by $250 million to $1.95 to $2.1 billion.
Stuart Canfield: We are lowering our capital expenditures outlook to $250 million driven by deliberate decisions to optimize our real estate footprint. And we now expect free cash flow of $1.7 to $1.85 billion, up 27% to 38% on a year over year basis. Please see our earnings slides and press release for further cash flow information.
Stuart Canfield: Turning to the third quarter outlook, we expect net bookings to be 2.25 to $2.45 billion down 4% to up 5% year over year or down 2% to up 6% at constant currency. For EA Sports FC 24, we expect modest growth given the World Cup comparable noted earlier. And in Apex Legends, we continue to take a more measured approach as our teams introduce more new modes of play and content, offerings. We expect gap net revenue of $1.83 to $2.03 billion cost of revenue of $495 to $535 million and operating expenses of approximately $1.05 to $1.11 billion. This results in gap earnings per share of $75 to $1.01 up 3% to 38% year over year.
Stuart Canfield: In closing, EA delivered a strong Q2 performance, ahead of our expectations, driven by EA Sports launches and strong player engagement across our diverse portfolio of games and services. Looking forward, our teams are committed to delivering high-quality experiences for our players and building upon the momentum in our business, especially as we head into the holiday period. We continue to make progress in aligning around our strategic opportunities. We remain proactive and focused and disciplined in our investments to deliver multi-year growth.
Andrew Wilson: Now, I'll hand it back to Andrew. Thanks, Stuart. Our industry is growing as more people around the world of the sport, brand, storytelling and legendary IP they love most.
Andrew Wilson: The definition of a game is also expanding beyond play as fans are watching, creating content and making deep social connections in and around interactive experiences. How games are being made is changing as well. Advancements in January of AI are accelerating the speed of development, boosting creativity innovation, transforming what we can deliver, bringing bigger, broader game experiences to an even larger global audience. The value and opportunity of delivering deeply interactive entertainment has never been brighter.
Andrew Wilson: Our talent teams, industry leading technology, world-class IP, and growing global network applied position EA as a leader of the future entertainment.
Lisa: Now, Stuart and I are here for your questions. Lisa, we're ready for our first question. Thank you. I'd like to remind everyone if you would like to ask a question, please press star one on your telephone keypad and to remove yourself from the queue that is star one again.
Matthew Cost: We'll take our first question from Matthew Costs with Morgan Stanley. Hi, everybody. I think sticking to questions.
Andrew Wilson: I guess on the launch of EA FC, I guess what were the areas where you were most pleased with the launch versus last year and the areas you saw the room for the most improvement and are you still on track to hit the low single digit growth for the franchise you're in there that you had spoken about at the beginning of the year? Thank you. Thanks for the question. I would tell you, we are almost universally happy with the launch.
Andrew Wilson: Taking on this launch was a big challenge for us. It was a challenge for the nature of the game that is mostly in Asia. We wanted this to be a symbol of change, not just a change of symbol. I think the teams have done an extraordinary job in delivering the most authentic, immersive, socially connected football experience ever. Certainly, you know, that we've ever made. I think our marketing teams have done a tremendous job in ensuring that the world population of football fans understands the transition has happened, understands the benefits of that transition and understands why this represents not the end but the very beginning of what is going to be an incredible journey of football fandom for our fans and for our partners globally.
Andrew Wilson: I think that, you know, if you really sat down without our developers or our marketers or our partners, you know, there are always things we can do better and we're always learning. But on balance, I would say we feel very, very proud of what we've achieved so far. It's only early, but certainly, this all-the-signed are incredibly positive and a feedback is also incredibly positive. And we feel good about.., where we think the franchise is going from a performance standpoint.
Stuart Canfield: Stuart, do you have some more? Yeah, I'm now just bad just to clarify. So yes, we remain on track for the low single digit growth that we represented. I think two important pieces of context. Yes, we're off to a great start. Andrew's point earlier. We also saw strength in Q2. And obviously, importantly, we're seeing, we're up high single digits year on the air through the first four weeks on our live service business.
Stuart Canfield: Kathy App being, we remain prudent as we head into Q3 and Q4 as you remember from last year. We saw record Q4 across our business up 31% but we still feel confident and on track for low single digit growth the rest of the year. Thank you.
Lisa: Thank you, our next question, please. Thank you.
Benjamin Soff: We'll take our next question from Benjamin Soffley, Deutsche Bink. Hey, guys, thanks for the question. Another one on at sea, again, really strong launch, so far, so that's encouraging. I'm wondering if you anticipate that the pacing of sales for this game will be similar to prior years or if you'd expect any changes to that trend as a result of the rebrand. Maybe either more front and loaded because it's an excitement or a longer tail because it might take time for some of the marketing to reach people. Thanks.
Andrew Wilson: Yeah, I think Stuart can kind of talk about how we're planning that. I think what we're doing right now is we're planning for both of those potential outcomes. We feel very good about the launch so far. We've certainly brought in a meaningful amount of net new fans and net new plays that the ecosystem, which is always an incredible sign and prediction for the future. But we also know we still have a meaningful amount of people playing the previous game.
Andrew Wilson: And as we're starting to see, and it's less about the FC transition and more about our live service business in general. As we think about live services, we're seeing the transition from one launch to the next, be a little bit more organic. And certainly as we have supported the live services right up until the new launch, there's often very good reason for people to continue playing the previous game. And so I do believe that we brought in new fans through an incredible game experience and incredible marketing.
Andrew Wilson: But we also recognize that we still have a meaningful population playing the previous game. And we're now working very deliberately and diligently to bring those over to FC and continue to grow the base of FC on a go forward basis. The band is on phasing, I think you've seen a great start, so naturally you've seen us pull forward a little bit to Q2 in the first three weeks, which is natural and part of the strategy as we launched FC.
Andrew Wilson: But we expect Q3 to operate broadly in a similar manner as we progress through both season and the real world and heading into holiday. We expect Q4 will be more of a tough account in part because we had the world cup pick up from players that flow through in the Q4. So macro, yes, stronger start, consistent through Q3 and more of a flat consistency around Q4, given the comp on the prior year. Got it.
Andrew Wilson: And then an 8x can you just talk a little bit more about what resonated with players for season 18 and some of the drivers used to generate growth for this franchise over the long term. Thanks. Yeah, the team continues developing incredible content. They're very deeply connected with their fan community. And what we've started to see is different types of content, more dynamic content, more content that has application across legends versus being legends. Specific and different Chase Mechanics inside the game. Again, there's a deeply committed community, a deeply engaged community and when they come in and see this Chase Mechanics, it really drives ongoing engagement.
Andrew Wilson: And so my expectations, the team will continue to test and learn and continue to innovate and evolve the experience in a line with community needs and community demands and community expectations. But what we've seen so far is very positive results to the more dynamic nature of the events and the offers that they've been pushing into the experience. Thank you.
Lisa: Our next question, please. Thank you.
Andrew Wilson: We'll take our next question from Eric Handler with Roth MKM. The question. Andrew, now that, you know, you're not stockled with some of the beef art restrictions that you have on EASC. I wonder if you could give a little perspective on what the impact was on revenue for sponsorship and advertising or maybe, you know, the impact from promotions. Well, it's still really early, as we think about the future of this franchise, we are just getting started.
Andrew Wilson: But as we talked before, our orientation by transitioning to FC was really about how do we work with more partners around the world in a way they want to work with us. And that's both league teams, players, competitions and commercial partners. It was really about how do we expand the modalities of play inside the game to do new and interesting things for a growing fan base. How do we expand engagement opportunities outside the game?
Andrew Wilson: How do we really develop FC as a football fan platform, not just an interactive gaming experience? And how do we move really, really quickly? We think that with a partner structure that we have now and the many partners that we have around us, with a deep connection we have with the community and the investments that we've been making in and around development across the entire ecosystem.
Andrew Wilson: Console, PC, mobile, free to play and beyond the bounds of the game is that these things will start to manifest over the coming months over the coming seasons and over the coming years. That's great.
Stuart Canfield: And then just as a follow up, can you maybe talk a little bit about some of the real estate strategies that you're working through right now? I'll come in here a little bit. We tried this out and we talked about the restructuring, heading out of our queue for last year. And we continue just to sort of optimise both how we build going forward and both that current footprint today. So ongoing exercise for us. We continue to look at that as we work through the future of work. Great. Thank you so much.
Lisa: Thank you.
Lisa: Operator, our next question, please. Thank you. As a reminder, everyone, that is Star 1 to ask a question.
David Karnovsky: What's the current question from David Kronowski with DP Morgan? All right. Thank you. Moose is one for steward on the operating cash flow outlook. You're taking it up. I think 250 million on a relatively unchanged operating income outlook. Just walk through the puts and take to that at their one off benefits. Sir, should we look at this as an underlying improvement in your conversion? Thanks. Yeah.
Stuart Canfield: Thank you for the question. In short, yes, we've got a couple of one off benefits. We talked out in the script before. So we have obviously naturally have improved operating foundations and sort of cash benefit from interest we're seeing by virtue of the record cash flow. We talked to in our narrative. And secondly, yes, we'll see seeing some one time tax benefits that are flowing through the giving us that lift you're talking about, which is 250 million.
Stuart Canfield: In addition, we're also obviously changing free cash flow as well to the question before from Eric, as we pull down some of our capital future strategies on investment to increase that up as well. So, yes, one time benefits tied around tax. Obviously, some operating benefits picked up by having greater cash at hand that's driving credit interest for us. Thank you.
Lisa: Thank you, operator, our next question, please. Thank you.
Brian Fitzgerald: We'll take our next question from Brian Fitzgerald with Wells Fargo. Thanks, guys. When you think about FC seasonality, you spend, has that dynamic shifted any when you look at annual cohorts? We just asked because FIFA engagement was surprising a robust all the way up to FC launch. And with these new FC play modalities, pro tactical mobile online, how do you see that impacting spend seasonality? Maybe similar along with play styles. All these levers should just broaden out that engagement and spend as well, right?
Brian Fitzgerald: Yeah, I mean, that is our assumption. I mean, this is the biggest sport in the world and it's growing exponentially. It's growing meaningfully in this country as well. But also globally it continues to grow. And as we think about the football fan community kind of growing into being of gaming age, we see an opportunity to serve them across a bunch of different factors. And so as we think about the value of FC's platform, it really comes down to three things.
Brian Fitzgerald: One is how many people in the network and playing, how much time are they playing in the context of that engagement? And how deep are the connections they have with those that they play with? And as you look at our strategies, we roll that out across platforms, across modalities, across geographies and across business models, everything we are doing, we are looking to pull on those levers that bring more fans into the community and give them more opportunities to engage deeply with the experiences that we create, and connect more meaningfully with the friends that they enjoy those experiences with.
Brian Fitzgerald: And what that is, man, is just an overall expansion of the opportunity. Both in terms of how many people are in the community broadly and the overall seasonality of spend has been elongated throughout the year. And so we're seeing far more consistent spend throughout the year because it's not just about their connection to a season of football. It's about a deep connection to the friends they share the love of that season of football with. And that love is 365 days a year.
Andrew Wilson: And so as we think about building this out both in the context of FC, in the context of American football, in the context of our broader ESports portfolio, and in the context of our other giant IP, APACs, the Sims Battlefield, you should expect that we will look to replicate this across the portfolios. We invest deeply in these opportunities to bring global communities of gamers together, and give them opportunity to engage more deeply in the experiences they love, and connect more meaningfully with their friends that they enjoy the experiences with. Thank you, Andrew. Appreciate it.
Lisa: Thank you, operator. Next question, please. Thank you.
Eric Sheridan: We'll take our next question from Eric, a Sheridan with Goldman Sachs. Thank you so much. Maybe two questions if I can.
Andrew Wilson: First, you know, we could have a debate with investors about the recession, and resilience versus of gaming overalls and industry. I was curious what you were seeing in terms of spending habits on the consumer side of the equation across your portfolio of IP, and what it tells you in terms of resilience versus resistance to potential and consumer volatility from a spending side. When you think about the interactive entertainment landscape, number one.
Andrew Wilson: And then, number two, it's really interesting to see the new user growth around the man franchise, where there's been sort of a geographic component to that IP over time because of the sport itself. How do you think about building more audience scale and size in man over the long term? What were some of the key learnings from this year that drove to take into future years? Thanks so much.
Andrew Wilson: Well, there are two great questions. I will try and count them as best they can and Stuart please our details as we go. I think that when we think about recessionary predictions and the industry broadly, typically as an industry we have, I don't want to say be recession proof but we have been more resilient than many industries have been. And that's really because of two key things. One entertainment is a fundamental human needed, it is very important to us as a species.
Andrew Wilson: And to the form of entertainment that we offer to our communities represents incredible value even where there is constraint spending. As we look at the market today and we look across our portfolio, I think it probably is pretty consistent with what we see across the industry, which is the big games where there is deep engagement and deep social connection continue to benefit across our portfolio. But we do see different kind of spend patterns on a geobacist.
Andrew Wilson: There are some markets that are showing a little more softness than others relative to some of the growth that we're seeing across the world. We've heard others speak to some of the softness in markets in Europe. We've certainly seen some of that across our portfolio. But as in aggregate on a global basis, we're seeing growth.
Andrew Wilson: As we think about Madden broadly, again, I think we have been partners with the NFL for the best part of 30 years. Our teams were very, very closely with the NFL and the NFL Plays Association and more importantly NFL fans, football fans in this country and beyond the boundaries of this country. And the NFL is growing globally and we see the NFL doing an incredible job of growing the sport. And what our teams have been doing is building out again thinking about these gaming experiences, not just as one of one-time experiences, but mechanisms to fulfill many motivations of sports fans and football fans.
Andrew Wilson: And those might be call gaming moments. Those might be more trade moments. They might be more casual moments. They might be more arcade-like moments. Well, there might just be moments to connect with other fans of the community. And what you're seeing from our teams right now is a deep commitment to fulfilling the needs and motivations of what is a growing fan community for American football in this country and beyond. And I expect that we'll continue to work with the NFL and the NFL Plays Association, our partners and the community broadly to continue to grow the business.
Andrew Wilson: Okay. Thank you, Andrew. Thank you.
Andrew Wilson: That ends our call. Andrew, do you have a few closing words? Thank you all for being with us. And for the great questions. Once again, I want to express my deepest appreciation to our incredible teams for delivering a really strong cue to. We look forward to updating you next quarter on January the 30th. Thank you.
Lisa: That concludes today's meeting. Thank you all for joining. And you may now disconnect.
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