Q3 2024 Electronic Arts Inc Earnings Conference Call
Good afternoon. My name is Brianna and I will be your conference operator today at this time I would like to welcome everyone to the electronic Arts third quarter fiscal year 'twenty 'twenty four earnings conference call.
I would now like to turn the conference over to MS. Katie back Director Investor Relations. Please go ahead.
Thank you welcome to Ea's third quarter fiscal year 2024 earnings call with me today are Andrew Wilson, our CEO and Stuart Canfield. Our CFO. Please note that our SEC filings and our earning release are available at IR Dot E dotcom.
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 and the transcript.
With regards to our calendar our fourth quarter fiscal year 2024 earnings call is scheduled for Tuesday may seven as a reminder, we post a schedule of upcoming earnings calls for the fiscal year 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-Q for a discussion of risks that could cause actual results to differ materially from those discussed today.
During this call the financial metrics with the exception of free cash flow will be presented on a GAAP basis. Please 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, Katy it was a strong Q3 as we continue to entertain hundreds of millions of players and fans around the world. Our exceptional teams created high quality games and experiences across a broad portfolio that drove deeper engagement and record live services.
This quarter two of the world's most celebrated interactive entertainment experiences EA sports UFC and EA sports Madden NFL delivered phenomenal strength is plausible drivers of long term growth.
We are launching amazing games and experiences that entertained massive online communities create blockbuster interactive storytelling and harnessed the power of community in and around games.
<unk> Q3 results are a great example of our execution across our strategy.
The FC platform is driving at the center of the action fandom and culture of the world's game. The launch of EA Sports UFC 24 has been a great success and has once again outperformed our expectations play.
Players are connecting competing and celebrating global football with their friends driving strong engagement across fc's multi experience ecosystem.
In Q3 players dove into ultimate team driving double digit net bookings growth and delivering the franchise's biggest net bookings whichever FC.
<unk> mobile also generated deep engagement with daily active users up by 29% year over year, while <unk> grew new players by 20% year over year.
In calendar 2023, Madden NFL was the best selling sports game in North America and continues to grow.
Madden NFL 24 is engaging more players year over year through new innovative game play features and compelling live services in Q3, net bookings grew and engagement with ultimate team increased 19% Madden mobile also saw an increase in players during the quarter generating double digit growth across the community.
The evolving world unfolding stories and rich characters of our live services are deepening plays relationship with our IP and broadening the global appeal of our portfolio to.
To further entertain our communities we are building more ways for them to play watch create and connect to generate growth and longevity in our biggest franchises.
This seems franchise is the definitive life simulation experience offering its multi generational community incredible ways to connect create and express their individuality.
During calendar 2023 players have spent an astounding one 8 billion hours in the Sims four and nearly 30% increase from the prior year.
We remain committed to the global growth and innovation of these franchise, we're focused on delivering what the community wants most from ongoing new content in game modes for the Sims four to the social innovation expansion and connection and our future seems release.
Millions of passionate fans continue to come together through the non stop action of battlefield.
Battlefield 2042 community continues to grow with total plays up 17% year over year and season six live services driving strong engagement with weekly average users up 37% year over year.
Our team is working hard to deliver for the community with increasingly engaging live services like the recent announcement of six and seven with new maps weekly missions and much more in.
In addition, we are making investments in the future of the franchise our exceptional teams from multiple World Class Studios, working with cutting edge frostbite technology.
Building, an expansive community focused battlefield universe for fans all over the world.
As a category leader with millions of loyal fans, we're looking forward to celebrating the fifth anniversary of apex legends over the past few months, we have listened closely to our community and have deployed new features new styles of play and new content.
We have also implemented tools to better understand day to day game performance in Q3, our new modes drove improved engagement and the early impact of our new content in the current quarter is promising.
To generate future growth, we are focused on entertaining KOL players and engaging new players by investing in geographic expansion innovating in the game economy, and making it easier than ever for players to jump into a game play.
Turning to FY 'twenty, five we will deliver even more excitement and entertainment through an expanded portfolio of connected ecosystems industry leader EA sports will launch a strong core slate of titles and always on live services to grow our sports business as a global community and drive value year after year.
Our journey building FC the world's largest indirectly platform for global football fans will continue with accelerated gameplay innovation more social connection and new brand collaborations to deliver even more value for players.
Our teams working with an incredible roster of partners are just getting started with FC.
We are well positioned to grow this platform as a cultural phenomenon.
The momentum in Madden NFL will continue with events and experience is tied to the biggest moments in sport alongside deeper investments in this ecosystem, including leaps and gameplay and depot fan immersion.
Looking further ahead as more people spend more time, playing in connecting in and around our titles, we see incredible potential for growth.
Within our online communities, we're expanding blockbuster storytelling through deep rich characters and new story mode to deliver bigger broad at games and live services.
Connected experiences offer new cutting edge ways to engage and inspire players and can unlock future innovative growth opportunities.
Over the coming years, we expect accelerated growth in our business, our long term outlook, coupled with secular tailwind drives further conviction in our strategy by aligning our priorities and investments with our greatest opportunities. We can make the biggest impact and drive long term value and service of our people our players and our shareholders.
Now I'll hand, the call over to Stuart to provide additional details on our business.
Thanks, Andrew and good afternoon, everyone for the third quarter, we delivered net bookings of $2 $3 7 billion.
Up 1% year over year or 2% in constant currency and in line with our expectations.
Stuart: Strength in our live services businesses, particularly esports FCA ultimate team was partially offset by some softness in full game.
Live services net bookings grew to a record $1 $71 billion in Q3 up 3% year over year or up 5% in constant currency exceeding our expectations as we continue to drive healthy engagement and bring new players to our franchises.
Full game net bookings of $654 million was down 5% year over year or down 4% in constant currency versus a high prior year comparable that included the World Cup event.
On a trailing 12 month basis total net bookings was up 8% year over year with lifestyle. It is contributing $5 6 billion or.
While 73% demonstrating the resilience of this evergreen business model.
Building on the strong momentum from our launch at the end of Q2.
Sports FC again exceeded expectations as esports FC Ultimate team and have T mobile delivered exceptional double digit net bookings growth against the World Cup comparable in the prior year.
Our global football business net bookings grew 7% year over year.
Our teams continue to drive strong retention of our core player base through the F C brand transition.
EA Sports Madden NFL also saw another strong quarter with net bookings up 5% year over year.
By strong engagement trends across full game ultimate team and mobile.
Additional highlights from the third quarter included new releases of EA Sports UFC, NHL, and while rally championship, which contributed a further expanding the aggregate fandom and strength of our esports community, creating additional value added services and one of the largest sports brands and platforms in the world.
In a highly competitive quarter apex legends did not meet our expectations as our teams continue to learn and iterate with each new season and events in.
In the past few weeks, our recent crossover promotion showed early promising signals delivering two of our highest net bookings days over the fiscal year.
With season 'twenty launching in February our teams will deliver more innovation as we continue to build for the long term.
We remain committed to apex legends, a proven franchise with loyal fans and we will continue to invest in opportunities to drive new growth points as we build and expand the franchise over time through engaging a broad base of players.
Moving to our GAAP results, we delivered net revenue of $1 $95 billion.
Up 3% year over year.
As we continue to operate with focus and discipline operating expenses were favorable to our expectations also benefiting from some phasing of spend to Q4.
On a year over year basis operating expenses were up 3% driven primarily by incremental marketing spend as we invested to support our titles and the EA sports UFC transition through the critical holiday season.
Our GAAP earnings per share was $1 seven.
Up 47% year over year.
Operating cash flow in the quarter it was $126 billion.
Up 13% year over year.
On a trailing 12 month basis free cash flow was a record $2 one 6 billion.
And we returned $376 million to shareholders through dividends and our ongoing share repurchase program.
We are entering the final quarter of FY 'twenty for well positioned to deliver on our commitments for the fiscal year with a strong business performance year to date, our unrivaled portfolio of IP and a consistent execution in our core live services business.
Even in an incredibly competitive market, we are poised to deliver growth in net bookings consistent with what we outlined at the beginning of the year.
At the same time, we are tracking to deliver higher levels of underlying profitability and record free cash flow.
We remain deliberate and focused around the proposition and allocation of resources across our teams and portfolio as we make progress against our long term strategy to drive durable growth strong cash flow and shareholder returns.
Turning to our Q4 outlook I'd like to start by sharing a few key considerations.
Q4, net bookings is impacted by timing, including releases of our full game and content offerings in the prior year.
Second we expect moderated growth in our EA Sports FC franchise, as we lap record prior year performance.
For the full year, we now expect EA sports FC net bookings to grow mid to high single digits, excluding FX.
Third we continue to take a measured approach to apex legends and its largest quarter of the year as we introduce new modes of play and content offerings.
And finally, we expect impact from FX to be minimal.
The benefit from more favorable currency exchange rates is offset by hedging gains from the prior year.
As a result, we expect net bookings of 1625 to $1 95 billion.
Down 16% to down 1% year over year, including approximately eight points of impact from the timing noted earlier.
We expect GAAP net revenue of $1 65 to $1 95 billion and cost of revenue of $360 million to $410 million.
We expect operating expenses of $1 125 to $1 $205 billion.
Including a $17 million impairment charge of certain acquisition related intangible assets.
This results in GAAP earnings per share of 20 to 68 for the fourth quarter.
Before handing back to Andrew I'd like to take a moment to share some early perspective on a multi year growth objectives.
<unk> is in an advantaged position to lead the future of interactive entertainment with ongoing secular tailwind and structural shifts within the industry further amplifying our strategy.
Our long term financial framework is founded upon creating value for our shareholders by accelerating growth.
<unk>, four operating leverage and increasing cash flow.
In executing on our strategy, we expect to scale operating leverage through the following growth levers one expanded player acquisition engagement and retention to highly accretive digital and live services.
Three blockbuster new releases from our development pipeline alongside compounding growth across our core franchises and for discipline and focus on aligning our cost structure to invest in support of our strategic growth opportunities.
As we look ahead to FY 'twenty five and <unk>.
More specific guidance in our upcoming Q4 earnings call I wanted to share some initial considerations.
Assuming minimal impact to our results from FX, we expect low single digit net bookings growth, reflecting continued execution in our core businesses and a lighter release slate yeah.
Stuart: And excluding any impact from future share repurchases, we expect mid to high single digit growth and underlying profitability.
Looking beyond FY 'twenty five over the next couple of years.
We expect our net bookings growth to accelerate.
Bolstered by our portfolio of industry, leading IP.
Compounding growth within our core sports franchises, new content and engaging experiences across a massive online communities and iconic new releases like battlefield Sims and other in development titles provide the inflection point that feels net bookings growth and increases underlying profitability.
And we expect to continue to deliver meaningful operating leverage and drive increased cash flow conversion, even as we continue to invest to support our strategic objectives.
In summary, with our incredible talent.
Leading IP and technology global and growing communities of fans and our focus on discipline around our strategic objectives. We are confident in our ability to continue to deliver on our long term growth commitments and drive value for our players and for our shareholders I.
I look forward to sharing more over the coming quarters.
Now I'll hand, it back to Andrew.
Thanks, Jewett I'm inspired by the opportunities ahead, as we continue to execute our long term strategy.
Our mission to inspire the world to play is evolving and expanding beyond the traditional bounds at play.
Technological advancements are powering creativity and innovation transforming what we can deliver we are positioned to bring big up broader games and experiences to an even larger global audience in the coming years.
Our awesome teams industry, leading technology World class IP and global network of players position as a leader of the future of entertainment.
Thank you Briana, we're ready for our first question.
Thank you at.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Yes.
Your first question comes from the line of Andrew <unk> with Jefferies. Please go ahead.
Hi, Thanks for taking my questions.
One tactical one long term on the tactical one it looks like the fourth quarter and full year guidance ranges are pretty wide.
Relative what you normally do just curious wanted if that's correct and two why is that when it seems like a lot of live services are performing.
Andrew This is Joe I'll take that.
Yes festival at the range as we look forward, we'll continue to be broader in this case in the quarter impart for two reasons.
One is a more dynamic quarter for us as you referenced on our core live services.
The range is that it reflects the both strength and opportunity we see with lapping a record World Cup compress see ounces of physical high quarter for apex. The second part of it also flag is that as a reminder, on the prepared remarks is that we have eight points of headwind as well from timing of content releases in the prior year, so hence the spread between the top and the bottom is.
Just around the biggest dynamic service that we have in the quarter, particularly FC in apex.
Got it that's helpful.
Then.
I appreciate you, giving the color on the forward years.
On the operating leverage.
Could you just maybe walk us through a little bit or give us additional color on that.
Primary drivers there is that more live services from games like Sims or escaped eventually.
Or is that just.
Naturally.
Leverage from the fact, you guys don't capitalized cost just kind of help us understand that dynamic a little bit better I. Appreciate it. Thank you.
Yes, So let me start with let's take a look at sort of the business over the longer term.
We're laying out the overarching framework is kind of grounded in three pesos accelerating growth on the topline expanding leverage on the bottom of increasing cash flow.
We're looking at that through a couple of different lenses. So one is we do expect to continue to drive compounding growth across our core franchises.
Plus we expect to release from our pipeline has been development on both of those will be bolstered by expanded player acquisition engagement and retention.
As you know our life Sciences makeup almost three quarters of our business, which highlights the evergreen nature of that business model and thus the ability to drive compounded growth on those franchises through the future.
In relation to the second part and they're an important lever for us on that multiyear growth journey.
We're really flagging for the long term joint they'll create some non linearity and that growth in terms of how we accelerate through the later years, depending on timing around that pipeline additional context would be that as we continue to drive through live service and we see quite a digital we get far more accretion through that mix.
We're also continue to be really focused around getting leverage and scale.
Opex in terms of our cost structure to drive growth as we think about those four pieces.
Core compounding growth across our current core business and live services are more digital in nature around that drives accretion and scale add to that the new releases that come through the pipeline and ongoing management of costs to it to ensure that we're investing for the future. We will ultimately provide leverage over the long term for us.
Got it. Thank you I appreciate the color.
Okay.
Next question please.
Our next question comes from Matthew cost with Morgan Stanley.
Hi, everybody. Thanks for taking the question.
One that would just be on some recent changes we've seen on the App store fees in Europe for Apple, specifically, I guess any early learnings there or any reflection on the possibility that you could see upside to gross margins for your mobile game business at least in Europe is that an option that you would be interested in because I know, it's an opt in saying for game.
Sure. So that's 0.1 question. One question two just be on college football as we get a little bit closer to released can you do anything to help us scale the opportunity for everyone sort of thinks through what is incremental versus what might come from the existing Madden.
Customer base. Thank you.
Hey, Matt I'll quickly touch on the Apple one first yes.
As you are aware of the the intention to update the the European App store tied to that phase. We're still active reviewing all of those updates in sort of walking to understand potential implications to our business and any changes that may flow through from a from a gross margin perspective.
As we gain more insight and understanding will be out of providing more updates next quarter in terms of how that my math through for US an impact on gross margin, but no updates a reflection of that at this point.
And in oncology football our expectation is it will be additive.
As we think about Madden Madden is performing incredibly well this year as we said in our prepared remarks.
The biggest game the biggest sports game in calendar year 2023, we're seeing increased engagement in the game and increased monetization in ultimate team as part of that the team at <unk>.
To invest meaningfully into the modes of Madden the expansion of Madden as a product and certainly as we look at the NFL broadly on the fan base continue to grow and the incredible season, we're having this year. Our expectation is that we will we will invest behind Madden and growing Madden and what college football represents is a game that's.
10 years in the Whiting for all fans.
Stuart: Incredible amount of pent up demand and we expect that to be additive to the ecosystem and over the broad course of time the way our team thinks about this is how do we really expand.
The football community in this country and internationally through a combination of both Madden and college that we think will be both complementary in game play, but but overall additive to the ecosystem.
Great. Thank you.
Thank you next question please.
Our next question comes from Chris Shaw with UBS.
Great. Thanks for taking my questions you mentioned in the press release that you are prioritizing investment in the largest opportunities for multiyear growth I appreciate youre looking to drive growth across the portfolio, but which franchises and particularly in particular do you see the most incremental opportunity as you look out into fiscal 'twenty five and beyond and then we've also seen some.
New developments and announcements.
From your peers around subscription gaming can you just remind us how youre thinking about the role of subscription gaming to your business and what traction you're seeing with EA play and how do you balance making content available on your platform versus third parties.
Yes, great question. Thank you first and foremost.
I would go back to is our core Entertainment company.
It is always important.
Developing and investing in new IP to growth the future pipeline opportunity that optionality that Stuart referred to earlier.
And we have the strongest pipeline I think we've had in many many years.
As we go into those out years in terms of both our core IP and new IP.
Stuart: Look at the trailing 12 months, both in terms of engagement and monetization what we do see however is that the biggest games. These games that really entertain and engage massive online communities and these are existing franchises that either evolve on a month by month cadence or evolved with annual releases plus live services.
So as we think about the foundation of growth for our business. We think about AFC again. This was the first year of FC branding, what we've spoken about in the past few quarters is is having that FC branding and partnering more closely with our colleagues in territory gives us more growth opportunities and we believe we ever had before it is building earn.
Round Madden NFL and expanding the broader college football base, but it's also investing in the Sims and apex and embattled fat and in battlefield and ultimately some of those as we go down through the next coming years and so while we will continue to invest meaningfully behind new IP, and we will be thoughtful and focused on those investments.
We see significant opportunity based on half communities are coming together and games around our biggest franchises FC Madden Sims battlefield apex.
And we will work meaningfully to expand those over the coming years.
And then on subscription remember we have been early in subscription.
As a company we have EA play as a subscription that exists across platforms. It is part of the game pass Ultimate service on Xbox live as well.
I think that we believe as we look forward.
Subscription will be a meaningful part of our industry over the course of time. It hasnt really translated in the same way that a linear television or movie subscription has or a music subscription just because of the nature of engagement in our content relative to those other mediums.
As we think about the future. We do believe there is an opportunity to fundamentally disrupt how households consume content broadly.
Stuart: As we look at lead us in this space like Netflix and then leaning into games as we listen to the performance of Warner Brothers as games Division and Theyre.
And their conversation around how that might feed into their broader subscription over time, we think we're an incredibly strong position to continue to lead on subscription at least as it relates with interactive because of both the depth and the breadth of our portfolio, which as we look at our portfolio. We believe it is unrivaled in the industry and and.
And spans across many John was including sport, which of course is a meaningful driver of entertainment value in the coming years.
That's very helpful. Thank you.
Okay.
Thank you Chris Briana next question please.
Our next question comes from the line of Eric Handler with Ross.
Okay.
Good afternoon. Thank you for the question Andrew I Wonder if.
If you have you ever thought about taking all of your essentially siloed.
<unk> communities and taking about a way to bring them all together so that.
Hockey fans can talk to soccer fans or football fans talk too.
UFC fans and that way you can build a huge community around that where you could then layer in.
Gary.
Stuart: Highlight clips of real World games and E Commerce.
Just sort of create for lack of a better word Amit averse given how massive your communities.
Incredible question.
And also very insightful and certainly as you think about our network, which is well over $700 million.
Right now about half of that indirect without sports games and so as we think about our sports community. It is almost certainly one of the largest collective sports communities on the planet and as we think about E sports as a brand we know from brand research around the World is also one of the most recognizable and recognized sports brands.
We think about emerging consumer generation Gen Z and Gen Alpha, but many of them that first relationship with sports comes through their relationship with the leagues and teams and sports. They love as a result of the interaction with the EA sports products and so what we know to be true is right now as we think about our players they spend on average about 90 minutes assertion.
Inside of one of our games they didn't leave that that game experience, where they've been deeply connected with their coal friend unit and they go when they talk about that experience on another platform and then they go and create content about that experience on yet another platform and then finally, they got on watch that content on another platform. We do believe we have a meaningful opportunity.
For the coming years actually harnessed the power of that community, both inside and outside of our games, which is really the third pillar of our core strategy and will be led by our EA sports brand. So again, a super insightful question nothing to announce today, but you should imagine that we see the very same thing, we see an incredible opportunity by virtue of.
The breadth and depth of our sports portfolio, the breadth and depth of our sports relationships around the world, which I think are unmatched on a global basis, and certainly the size and magnitude of our sports gaming community and the relationship they have with their favorite sports through us, but more importantly, the connections that theyre, making with their friends as a result of the time they spend with us.
We think there's a meaningful opportunity for us to expand on that both inside the game and we're seeing that already.
In our core products like Etsy and Madden.
But also outside the game and some of the starting point of that is some of the deals that we've done without license partners that do allow us to bring highlights and other non gaming content into the ecosystem broadly so best I can say is watch this space.
Thanks, and just as a quick follow up I'm.
I'm wondering if you could just give a little bit of an update about sort of the state of the mobile industry sort of what you're seeing you did mobile bookings were up modestly in the quarter do you think.
Reach stabilization in <unk>.
Can expand from here how are you what are you seeing in the market.
Yeah.
Alright, I'll, just I'll give a quick position.
Our position on the financial frame that you just talked to so yes sort of in in Q3, we actually tracked up 5% at constant currency when you exclude lapping of apex from the prior year.
We did see improvement.
Sequentially.
We saw a double digit improvement between Q2 and Q3 overall.
Overall mobile portfolio. Most of you talk to you saw the strength that we called out in particular around FC within that mix, we saw double digit growth year on year as we even entered.
A world Cup comp.
In terms of how we think about mobile as we move forward I think we've been very clear on the strategy that we're focused on which continue to lean into the success, we've seen around F. C and I brought our ecosystems as both an entry point and expansion for us in terms of players will continue to lean in and focus on those across our biggest opportunities through whether its FC Madden Sims battlefield.
And beyond <unk>.
Second part is we continue to look for.
The biggest hits on IP and opportunities that can standalone on mobile itself.
Wrapped inside of an incredibly disciplined approach as we focused on driving profitability across this platform.
Some of our more historic levels versus the past so that the three kind of profiles, we expect so yes quarter over quarter sequential improvement.
Strength overall year on year with plus 5%.
Stuart: Diligence trashing approach from us around our biggest opportunities on ecosystems.
Stuart: IP within the platform mobile itself and LC disciplined P&L performance around the business.
Thank you very much.
Yeah.
Thank you Eric Operator next question please.
Our next question comes from Brian Pitz with BMO capital markets.
Thanks for the question, Andrew we've seen reports that sports leagues like the NFL and NBA considering ownership stakes in the likes of ESPN. Obviously has one of the most valuable audiences in sports just curious are there opportunities for EBITDA to partner more closely with these leaks and also.
From another dimension I guess, how do you think about this opportunity as the NFL and other leagues embrace sports betting is there is there a real money gaming opportunity I know the industry has looked at it in the past, but I think we're in a new place now going forward. Thanks.
Again, great questions.
I think the <unk>.
The relationship between.
The NFL and the NBA and the likes of ESPN is super interesting to us.
Think about this on two vectors one.
We have incredible relationships without sports leagues many of them. We've had for over 30 years of night, they have evolved with us and we have evolved with them.
A big part of what we have done through the rebrand of NFC is actually gotten significantly closer to our European Football League partners and much of what we've done as we have.
Renewed and bolstered those relationships for the next decade and beyond is really think about how we can come together in service of fans more broadly not just fans in the context of interactive game play and part of what you're seeing there as we start to bring highlights into our games and really think about F. C. As a platform it's kind of a testament.
So that evolution of the nitrate relationship I do believe that we have the opportunity to do the same.
With the NFL and the NBA and you should imagine that we're working very closely with all of that League partners NHL UFC F. One.
And we see a tremendous opportunity to really think about E sports as a platform for engagement and how we might grow in service of our fans without League partners. I would also highlight we've had a relationship with ESPN for the best part of 30 years and have worked very closely with them and continue to work very closely with ESPN.
And the Walt Disney Company, as we think about the future of entertainment broadly and so.
We feel very good about our position in the future we feel very good about the connection we have with the fans we feel very good about our opportunity to grow our business as a result.
Of this evolved service opportunity, we have with them.
Thank you.
Operator next question please.
Our next question comes from the line of Andrew <unk> with Raymond James.
Thanks for taking my questions I wanted to dig into a couple of things on the <unk>.
Apex sedan.
This last month with that with final fantasy so commentary sounded really good in the prepared remarks, but with the dynamic that versus prior collection events. It was may be less expensive for the first few items, but more expensive to complete how does that affect payer dynamics and what are some of the key learnings coming out of that event for you guys.
I guess.
At a macro level, we're really really happy with that event. It was very well received by the community of it actually performed incredibly well and certainly as we were in what was a very very competitive quarter there were.
There are a couple of competitive titles that actually did some really unique and interesting things in the quarter and so the performance of apex with that collection event in the context of some of these other unique things happening in the competitive landscape, we think shows tremendous promise for.
How the franchise continues indices in 'twenty and beyond.
Been a lot of time with the team lately. The team is very committed to the game. They are very committed to the community. They're working diligently to offer new types of content, a new types of mechanics into the game and they put tools in place to test those meaningfully to ensure that both are enhancing gameplay, but also that they are fulfilling the needs at <unk>.
<unk> of the community and I am very encouraged by what we saw out of that collection event and I'm very encouraged as we go into season, 'twenty and all the new and interesting things that the team is doing.
Great. Thank you you kind of led into what was going to be the next part of my question. So we've seen apex to some smaller crossover events in the past, but how did the final fantasy partnership specifically kind of come about and with the increasing intense kind of in the rest of the state as you hinted at for a lot of these cross media partnerships.
How much room and intent is there for more of these more substantial crossovers within apex.
Yeah, I think we're still learning and the team is now thinking through what that might look like remember apex's is incredible game that has attracted hundreds of millions of people to play that's tremendous retention in its coal and underneath that core game play, which is incredible and what <unk> is known for is also tremendously deep law.
More about who these characters out where these characters come from and how those characters interact in the world and so we have to be very thoughtful about any brand crossovers that we do to make sure that we're not impeding.
The authenticity of the characters all the game in any way what I think the final fantasy crossover did was actually opened our eyes to the.
Kinds of things that are possible and the kinds of things that will be super well received by our KOL fan base and new fans alike.
And how that lines up with the goal of the game and so I would expect that we have more opportunities to do this in the future, but I would also expect that the team will continue to protect both the core game play the core character set and the coal lower in the world, but what this event does show is we have probably more ability to do things in that direction.
Then we might have thought previously.
Thank you operator last question please.
Our last question comes from the line of Mike Hickey with benchmark company.
Andrew Stuart Katy Thanks for squeezing me in here.
First question kind of a challenge Andrew because it hasn't been announced but we obviously have a certain amount of evidence that.
Switch to.
Contango should come out this year.
And from what we know it's going to be a bigger display more horsepower. It seems like it is something.
The platform that would better lend itself to your game. So in as much as you can sort of talk about an opportunity that's not beneficial.
Yeah.
Just curious.
If you think you can have more success on that sort of platform that seems better geared towards your games.
The second one is.
It looks like 25 is not calling an investment year, but most of the growth here is driven by your core games and live services that you look at year.
Longer term pipeline do you think about battlefield.
<unk> Star Wars, obviously, you've been great in the action genre, I think youre still developing a shooter from respond as well.
<unk>.
Ken for you to play maybe user generated content licensed property is like Iron Man Black Panther I mean, all of those <unk>.
Feasible by fiscal 2007, and so just sort of curious I know you've kind of talked about your your longer term growth opportunity in near term your focus on leverage that do you think youre sort of in a position here and there.
X gene years to sort of accelerate your time your topline growth just given how substantial your pipeline appears to be thanks, guys.
Yes.
And you're a little quiet, the beginning but I, but I think what you're asking or we're suggesting there has been some rumors that Nintendo was doing a new console and to the extent that I'm able to comment on things that are not yet announced do I think that might benefit our company in our portfolio.
I can absolutely not comment on anything that has not been announced or acknowledge it in any way.
I would say, though is to the extent that platforms over the course of the last 20 years have come out and in process and offered.
Improved.
CPU GPU memory battery live screen resolution to the extent those things have happened.
We're able to deliver more immersion for our players, particularly around our biggest franchises like F. C. Like Madden like battlefield like apex that has typically been very good for our business.
<unk> ability to really experience our games at the highest level.
Typically worked out very well for us.
So without commenting at all on anything around intend to all the switch I would just say.
New platforms are good for us when you platforms offer improved CPU GPU memory battery life screen resolution that typically is a plus for our particular portfolio of games and the community to place them.
And Mike just to kind of tackle your second question.
25.
Mike: First the second and I'll build it back into the longer term answer I gave before and we've prepared remarks on as well.
Speaker Change: So first 125, so I think the key here as we expect.
Growth in our core business with 73% live service nodes. They have a consistent full game sports release slate, possibly talks at college coming in the summer next year in 2024.
Second we do have a lighter release slate.
Which obviously comps to a star wars launch on a more expansive sports site, where we saw eight titles released this year.
We've called out also that battlefield is not in our FY 'twenty outlook.
Third we continue to drive leverage and I'll just point you to your question around sort of an investment year.
You can see solar by the underlying profitability range that we are still getting scale and leverage by virtue of efficiencies in the business, but also continue to results.
Twenty-five LCA core business growth will talk more about the details in our Q4 call lighter slate.
Ongoing scale and leverage from the core business itself and obviously what expenses. We go for an investment perspective, we do expect to see for all the titles in terms of new releases plus ongoing growth in that core business that we do believe we continue to get accretion and long term growth and incremental cash flow. They accelerate through the next following years to the comments, we laid out earlier.
Okay. Thank you all for being here and thank you for your great questions really good question today I want to extend my deepest appreciation to our teams for their passion their hard work and commitment in delivering incredible interactive entertainment to our growing global communities and to close I would say, we're confident in our ability to deliver.
<unk> through our accelerated growth forward operating leverage and increased cash flow over the longer term. We look forward to updating you next quarter on our fiscal year results on may 7th and before we saw it would be remiss of me if I didn't congratulate our local bay area team of 49 is making to the Super Bowl Hell of a game on Sunday Good luck.
Against the chiefs in Las Vegas go Niners.
That concludes today's meeting. Thank you all for joining you may now disconnect.
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