Q4 2024 Electronic Arts Inc Earnings Conference Call
Okay.
Babish: Good afternoon, my name is Babish, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Electronic Arts Fourth Quarter and Fiscal Year End 2024 Earnings Conference Call. I would like to turn the conference over to Mr. Andrew Uerkwitz, Vice President, Investor Relations. Please go ahead.
Good afternoon, My name is Bob and I'll be your conference operator today at this time I would like to welcome everyone to the electronic Arts fourth quarter and fiscal year end 2020 earnings conference call I would like to turn the conference over to Mr. Andrew <unk>, Vice President Investor Relations. Please go ahead.
Unknown Executive: Please wait; the conference will begin shortly.
Andrew Paul Uerkwitz: Thank you. Welcome to EA's fourth quarter and fiscal 2024 earnings call. With me today are 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. Lastly, after the call, we will post our prepared remarks, an audio replay of this call, and a transcript. With regard to our calendar, our first quarter fiscal year 2025 earnings call is scheduled for Tuesday, July 30th.
Andrew Paul Uerkwitz: Thank you welcome to Ea's fourth quarter and fiscal 2024 earnings call with me today are Andrew Wilson, our CEO and Stuart Canfield our CFO.
Andrew Paul Uerkwitz: Please note that our SEC filings and our earnings release are available at IR Dot E Dot com and.
Andrew Paul Uerkwitz: 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 a transcript.
Andrew Paul Uerkwitz: With regards to our calendar our first quarter fiscal year 2025 earnings call is scheduled for Tuesday July 30th as a reminder, we posted a schedule of upcoming earnings calls for the fiscal year on our IR website.
Andrew Paul Uerkwitz: 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. Electronic Arts makes these statements as of today, May 7, 2024, and disclaims any duty to update them.
Andrew Paul Uerkwitz: 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 electric.
Andrew Paul Uerkwitz: <unk> Arts makes these statements as of today may seven 2024, and disclaims any duty to update them.
Andrew Paul Uerkwitz: During this call, the financial metrics, with the exception of free cash flow and non-GAAP operating margin, will be presented on a GAAP basis. For more information on our non-GAAP operating margin, please see our earnings slides in the FAQ document available on our investor relations website. 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 Wilson.
Andrew Paul Uerkwitz: During this call the financial metrics with the exception of free cash flow and non-GAAP operating margin will be presented on a GAAP basis for more information on our non-GAAP operating margin. Please see our earnings slides and the FAA Q document available on our Investor Relations website. All comparisons made in the course of this call are against the same period in the <unk>.
Andrew Paul Uerkwitz: Prior year, unless otherwise stated now I'll turn the call over to Andrew Wilson.
Andrew Wilson: Thanks, Andrew. In FY24, we entertained and connected hundreds of millions of people around the world. I'm inspired by how our teams continue to create and deliver more innovative content and deeper experiences than ever. But before I dive into our results, I want to talk about the accelerating transformations across the entertainment landscape and how we have been navigating and leading through change. Firstly, consumer attention and spend are increasingly concentrated in top franchises. As live services deliver fresh content, players are going deeper and spending more time with their friends in blockbuster experiences.
Andrew Wilson: Thanks, Android in FY 'twenty, four we entertained and connected hundreds of millions of people around the world I'm inspired by how our teams continue to create and deliver more innovative content and deeper experiences than ever before diving into our results I want to talk about the accelerating transformation across the entertainment landscape and.
Andrew Wilson: For example, in North America, engagement for the top 10 franchises has increased their market share since fiscal 2022. For a company that has some of the biggest IP in the world, this trend presents an incredible opportunity to evolve as an industry leader.
Andrew Wilson: Now, we would be navigating and leading through change.
Andrew Wilson: Firstly consumer attention and spend are increasingly consolidated in top franchises as live services deliver fresh content players are going deeper and spending more time with their friends in blockbuster experiences.
Andrew Wilson: For example in North America engagement for the top 10 franchises have increased their market share since fiscal 2022.
Andrew Wilson: For a company that has some of the biggest IP in the world. This trend presents an incredible opportunity to evolve as an industry leader.
Andrew Wilson: It is against this backdrop that we have built our three strategic pillars around entertaining and engaging massive online communities, telling blockbuster stories and harnessing the power of community in and around our games. Secondly, players and fans are increasingly looking to us to deliver the entertainment they want today and tomorrow, bigger, bolder, more connected experiences where they can play, watch, create, and connect like never before. As players' needs and motivations expand, we continue to sharpen our focus. Across this past fiscal year, we took proactive steps to further empower our creative leaders by relining our investments, organization, and portfolio in support of our largest growth opportunities.
Andrew Wilson: Against this backdrop that we have built our three strategic pillars around entertaining and engaging massive online communities telling.
Andrew Wilson: <unk> blockbuster stories, and harnessing the power of community in and around our games.
Andrew Wilson: Secondly, players and fans are increasingly looking to us to deliver the entertainment they want today and tomorrow.
Andrew Wilson: <unk> balder more connected experiences where they can play watch create and connect like never before.
Andrew Wilson: Players' needs and motivations expand we continue to sharpen our focus.
Andrew Wilson: Across this past fiscal year, we took proactive steps to further empower our creative leaders by realigning Alan vestments organization and portfolio in support of our largest growth opportunities.
Andrew Wilson: As we have demonstrated several times in the past by building some of the world's largest franchises, when we rally behind a shared goal, EA delivers more creativity, more connection, and more cutting-edge experiences for players and fans. The most recent example of this is the incredible launch of our multi-platform experience, EA Sports FC, which was a truly profound moment for our players, our teams, and our partners. This milestone, as well as our execution across this fiscal year, demonstrates how EA is leading the future of entertainment. I'm excited to share more details about our development pipeline, innovative experiences, and new revenue streams at our Investor Day this September in New York.
Andrew Wilson: As we have demonstrated several times in the past by building some of the world's largest franchises when we rally behind a shared goal yeah delivers more creativity more connection and more cutting edge experiences for our players and fans. The most recent example of this is the incredible launch of our multi platform experience Eas.
Andrew Wilson: Sports FC which was a truly profound moment for our players our teams and our partners.
Andrew Wilson: This milestone as well as our execution across this fiscal year demonstrates how he is leading the future of entertainment.
Andrew Wilson: I'm excited to share more details about our development pipeline innovative experiences and new revenue streams at our Investor Day. This September in New York.
Andrew Wilson: Our teams at EA Sports are the best in the business, delivering awesome gameplay, innovation, and unmatched authenticity to fire the passion and imagination of hundreds of millions of players and fans. FY24 was the biggest EA Sports year in our history, a year in which we launched eight titles across the year, including the highly successful launch of our own brand, EA Sports FC. Players are connecting, competing, and celebrating global football with their friends, driving strong engagement across FC's multi-platform experience.
Andrew Wilson: Our teams at EA sports are the best in the business delivering Olson gameplay innovation and unmatched authenticity to Phi the passion and imagination of hundreds of millions of players and fans.
Andrew Wilson: Why 24 was the biggest EA sports.
Andrew Wilson: History, a year in which we launched eight titles across the year, including the highly successful launch of our own brand E Sports FC.
Andrew Wilson: Players are connecting competing and celebrating global football with their friends driving strong engagement across <unk> multi platform experiences.
Andrew Wilson: In FY24, our global football franchise grew net bookings by high teens, a remarkable year considering the prior year benefited from significant tailwinds related to the World Cup. During calendar 2023, there were billions of matches played across FC experiences, and the franchise's astounding success goes far beyond gameplay. Our massive global football community watches more than a billion hours of content in and around our game. Gameplay videos, pitch notes, and eSports, in addition to content produced by our community.
Andrew Wilson: In FY 'twenty for a global football franchise grew net bookings by high teens, a remarkable year considering the prior year benefited from significant <unk> relates to the World Cup.
Andrew Wilson: During calendar 2023, there were billions of matches played across FC experiences and the franchise is astounding success goes far beyond gameplay.
Andrew Wilson: Our massive global football community watch more than 1 billion hours of content in and around our game.
Andrew Wilson: Gameplay videos pitch notes and esports in addition to content produced by our community.
Andrew Wilson: These many interactions on and off the platform meaningfully increase in-game engagement, which drives stronger retention and ultimately greater levels of monetization. As we know, when we look at player behavior in our games, as players spend more time with their friends, they play more, they play for longer, and this engagement leads to more in-game space.
Andrew Wilson: These many interactions on and off platform meaningfully increase in game engagement, which drives stronger retention and ultimately greater levels of monetization.
Andrew Wilson: What we know when we look at play behavior in our games and player spend more time with their friends. They play more they play for longer and this engagement leads to more in game spend.
Andrew Wilson: With the successful launch of EA Sports FC, our focus was twofold, delivering innovation in gameplay with Hypermotion V, new features, and improvements across all modes of play for our core players, while continuing to expand the game's reach through the acquisition of new players and the re-engagement of lapsed players. Our Go Forward strategy is anchored in building a platform that enables us to deepen our connection with players, lead the future of immersion by bringing the real world of sport and our experiences closer together, and expanding the tools, modalities, and partnerships to drive enhanced socialization, self-expression, and creation for sports fans.
Andrew Wilson: With the successful launch of EA sports UFC, our focus was twofold delivering innovation in game play with high promotion D. New features and improvements across all modes of play for our coal players while continuing to expand the game's reach through the acquisition of new players and Reengagement of lapsed players.
Andrew Wilson: Our go forward strategy is anchored in building a platform that enables us to deepen our connection with players lead the future of immersion by bringing the real world of sport and our experience is closer together and expanding the tools modalities and partnerships to drive enhanced socialization self expression and creation for sports fans.
Andrew Wilson: We've engaged with partners like Nike, Pepsi, Uber Eats, and Beats over the last year and will continue to do so, integrating them into match day experiences and providing them with a platform to deeply connect with our global audience. We're also building to unlock new multifaceted sponsorship and advertising opportunities. Real Football is more than just a game. It's the world's leading digital football fan platform. And this is just the beginning.
Andrew Wilson: We've engaged with partners like Nike, Pepsi Uber eats and beats over the last year and we'll continue to do so integrating them in the matchday experiences and providing them with a platform the deeply connect with a global audience.
Andrew Wilson: We are also building to unlock new multifaceted sponsorship and advertising opportunities.
Andrew Wilson: FC is more than just a game, it's the world's leading digital football fan platform and this is just the beginning.
Andrew Wilson: Year after year in Madden NFL unites fans and athletes through interactive experiences that fuel passion connection and creativity.
Andrew Wilson: Year after year, Madden NFL unites fans and athletes through interactive experiences that fuel passion, connection, and creativity. No one can match Madden's unparalleled authenticity in American football. Our talented teams pushed more innovation into Madden NFL 24, more modes of play, and amazing content throughout the season, leading to the highest selling instalment for Madden since the early 2000s and record overall net booking. Further innovation in live service events has led to deep, ongoing engagement well beyond the NFL season, especially with younger audiences, as we've seen increases in weekly active users into and following the Super Bowl.
Andrew Wilson: No one can match maddened unparalleled authenticity and American football.
Andrew Wilson: Our talented team has pushed more innovation in our Madden NFL 24, more modalities of play and amazing content throughout the season, leading to the highest selling installments on madden since the early two thousands and record overall net bookings.
Andrew Wilson: Further innovation and live service events has led to deep ongoing engagement well beyond the NFL season, especially with younger audiences as we've seen increases in weekly active users into and following the Super Bowl.
Andrew Wilson: Most recently, excitement has continued through the NFL Draft, as top picks were dropped into Ultimate Team in real time. We see this excitement leading us right into an incredible Madden NFL 25. To expand the American football experience, this summer, we are launching the highly anticipated EA Sports College Football 25, bringing new innovations, always-on social connection, and unrivaled immersion. This awesome experience will feature all 134 football bowl subdivision schools, more than 11,000 college athletes, the iconic traditions and pageantry of the United States' biggest college sport, and unparalleled gameplay to inspire the fandom of millions of fans.
Andrew Wilson: Recently excitement has continued through the NFL draft is top picks were dropped into ultimate team in real time.
Andrew Wilson: We see this excitement leading us right into an incredible Madden NFL 25.
Andrew Wilson: To expand the American football experience. This summer we are launching the highly anticipated EA Sports College football 25, bringing new innovations always on social connection and unrivaled immersion.
Andrew Wilson: There's also an experienced will feature all 134 football Bowl subdivision schools more than 11000 college athletes the iconic traditions and pageantry of the United States is biggest college sports and unparalleled gameplay to inspire the fandom of millions of fans.
Andrew Wilson: This is the next step in a multi-year plan to further evolve and grow our American football experiences into a connected ecosystem to more deeply engage and expand an already thriving community. We see incredible opportunities ahead for us across our sports business. As we continue to build ecosystems around our biggest communities, we are also prioritizing our owned IP in the rest of our broad portfolio, which are among the most deeply engaging and culturally relevant entertainment properties in the world.
Andrew Wilson: This is the next step in our multiyear plan to further evolve and grow our American football experiences into a connected ecosystem to more deeply engage and expand and already thriving community.
Andrew Wilson: We see incredible opportunities ahead for us across our sports business as we continue to build ecosystems around our biggest communities. We are also prioritizing our owned IP in the rest of our broad portfolio, which are among the most deeply engaging and culturally relevant entertainment properties in the world.
Andrew Wilson: Since it surprise smash hit release in 2019, the HD title of apex Legends has to pass three $4 billion in lifetime net bookings.
Andrew Wilson: Since its surprise smash-hit release in 2019, the HD title of Apex Legends has surpassed $3.4 billion in lifetime netbook sales. In FY24, we focused on building features and improving the quality of the experience to drive long-term engagement, positioning us for future revenue growth. For example, we finished the year with significant changes to the mechanics of our popular ranked mode. We engaged with the community, increased transparency, and thoughtfully addressed their feedback. And, as a result, saw dramatic improvements in player sentiment across the world, improving by 29%. We have also prioritized expanding Apex's appeal, making it more approachable for new and more casual players with improved onboarding and simplified modes of play like three strikes and straight shots.
Andrew Wilson: In FY 'twenty four we focused on building features and improving quality of the experience to drive long term engagement positioning us for future revenue growth.
Andrew Wilson: For example, we finished the year with significant changes to the mechanics of our popular ranked mode. We engage with the community increased transparency and thoughtfully address their feedback and as a result, so dramatic improvements in player sentiment across the world improving 29 points.
Andrew Wilson: We have also prioritize expanding apex appeal.
Andrew Wilson: More approachable for new and more casual players with improved on boarding and simplified modes of play like three strikes and strike shot.
Andrew Wilson: Looking to the future, we will continue to invest in broadening the audience by building upon the epic characters and storytelling of this world that go beyond the current battle royale. The passion of the Sims community remains strong as the franchise powers towards its 25th anniversary. Since its launch in 2014, The Sims 4 has surpassed 85 million players, with FY24 up double digits year over year. The Sims Online and The Sims Mobile combined have been downloaded over 500 million times.
Andrew Wilson: Looking to the future we will continue to invest in broadening the audience by building upon the epic characters and storytelling of this world that go beyond the current Battle Royale.
Andrew Wilson: The posture of the Sims community remains strong as the franchise powered towards its 25th anniversary since.
Andrew Wilson: Since its launch in 2014, the Sims four has surpassed 85 million players with FY 'twenty four up double digits year over year.
Andrew Wilson: The Sims online in a seamless mobile combined have been downloaded over 500 million times. This is already one of the largest communities in the world and we believe this hugely successful franchise has the potential to become one of the largest greater platforms in entertainment.
Andrew Wilson: This is already one of the largest communities in the world, and we believe this hugely successful franchise has the potential to become one of the largest creator platforms in entertainment. An early proof point of the platform's evolution is the hundreds of millions of user-generated content items that were shared in this fiscal year. Looking ahead, we're committed to entertaining and inspiring our loyal and engaged Sims 4 fans through over 15 content updates over the coming year, while working on multiple experiences in the Sims universe to leverage user-generated content to deepen our community and expand our audience.
Andrew Wilson: And early proof point of the platform's evolution is the one hundreds of millions of user generated content items that was shared in this fiscal year.
Andrew Wilson: Looking ahead, we are committed to entertaining and inspiring our loyal and engaged seems full fans through over 15 content updates over the coming year, while working on multiple experiences in assumes universe to leverage user generated content to deepen our community and expand our audience.
Andrew Wilson: With each immersive action packed season of battlefield 2042 players have made it clear that they wanted an even deeper experience.
Andrew Wilson: With each immersive, action-packed season of Battlefield 2042, players have made it clear that they wanted an even deeper experience. Our teams have listened to the community, learned valuable lessons, and are driving the future. Motive, armed with cutting-edge Frostbite technology and compelling storytelling, is joining DICE, Criterion, and Ripple Effect to build a battlefield universe across connected multiplayer and single-player experiences. This is the largest battlefield team in franchise history. A few weeks ago, I was visiting with the teams, and I couldn't be more excited about what they showed and what we were able to play.
Andrew Wilson: Our teams have listened to the community.
Andrew Wilson: I have learned valuable lessons and are driving to the future.
Andrew Wilson: Motive armed with cutting edge frostbite technology, and compelling storytelling is joining dice criterion and ripple effect to build a battlefield universe across connected multi player and single player experiences.
Andrew Wilson: This is the largest battlefield team in franchise history a.
Andrew Wilson: A few weeks ago I was visiting with the teams and I couldnt be more excited about what they showed and what we were able to apply.
Andrew Wilson: Turning to mobile we are heads down on bringing together mobile and HD franchise leadership for EA Sports UFC Madden NFL and assumes while also continuing to make strategic investments in Standalone mobile titles.
Andrew Wilson: Turning to mobile, we are focusing on bringing together mobile and HD franchise leadership for EA Sports FC, Madden NFL, and The Sims, while also continuing to make strategic investments in standalone mobile titles. Mobile is the largest platform in our industry, and with our teams aligned and more empowered than ever, we see growth opportunities in this part of our business over time. I will now turn it over to Stuart for more detail on FY24 with additional color on the near-term industry outlook and incremental detail and metrics around our confidence in FY26 and FY27.
Andrew Wilson: <unk> is the largest platform in our industry and without teams aligned and more empowered than ever we see growth opportunities in this part of our business over time.
Andrew Wilson: I will now turn it over to Stuart for more detail on FY 'twenty four with additional color on the near term industry outlook and incremental detail and metrics around our confidence in FY 'twenty, six and FY 'twenty seven.
Stuart Canfield: Thanks, Andrew, and good afternoon, everyone. As Andrew spoke earlier, we've been on a journey to transform our business to meet the needs of an evolving industry landscape, which has seen players develop new engagement behaviors and demands. To meet these changing plan needs, we've been deliberate over the last fiscal year to prioritise our investments, streamline our portfolio, and align our teams and organization behind our biggest strategic opportunities. Overall, these changes set us up to deliver accelerated growth from the core business while building the foundational blocks to expand and deepen both engagement and monetization into the emerging interactive entertainment categories of Create, Watch, and Connect.
Stuart: Thanks, Andrew and good afternoon, everyone as Andrew spoke to earlier, we have been on a journey to transform our business to meet the needs of an evolving industry landscape, which has seen plans develop new engagement behaviors and demands.
Stuart Canfield: To meet these changing plan needs, we've been deliberate over the last fiscal year to prioritize our investments to streamline our portfolio and align our teams and organization behind our biggest strategic opportunities.
Stuart Canfield: Overall, these changes set us up to deliver accelerated growth from the core business, while building the foundational blocks to expand and deepen both engagement and monetization into the emerging interactive entertainment categories of create watch and connect.
Stuart Canfield: Turning first to fiscal year 2024, EA delivered strong earnings growth and record cash flow in a highly competitive market. Our results were highlighted by the hugely successful rebrand of EA Sports FC and growth across our largest sports franchises, with both Global Football and Madden delivering record net bookings results. For the fiscal year, we delivered total net bookings of $7.43 billion, up 1% year over year, or up 3% in constant currency.
Stuart Canfield: Turning first to fiscal year 2020 for EAA delivered strong earnings growth and record cash flow in a highly competitive market.
Stuart Canfield: Our results were highlighted by the hugely successful rebrand of EA Sports FC.
Stuart Canfield: And growth across our largest sports franchises with both global football and Madden franchises delivering record net bookings results.
Stuart Canfield: For the fiscal year, we delivered total net bookings of 743 billion.
Stuart Canfield: Up 1% year over year were up 3% in constant currency.
Stuart Canfield: Full-game net bookings of $2.01 billion, up 11% year-over-year, or 12% in constant currency, were driven by the release of Star Wars Jedi Survivor and our EA Sports portfolio. We launched four new non-annual sports titles in FY24, strengthening our EA Sports brand as it further expands fandom across one of the largest platforms in the world. Live Services net bookings were $5.43 billion, down 2% year over year or down 1% in constant currency. Excluding the impact of the sunset of Apex Mobile, live service net bookings were about flat year over year.
Stuart Canfield: Full game net bookings of $2.01 billion.
Stuart Canfield: Up 11% year over year or 12% in constant currency was driven by the release of Star Wars, Jedi Survivor, and our EA sports portfolio.
Stuart Canfield: We launched four new non annual sports titles in FY 'twenty four strengthening our EA sports brand as it further expands fandom across one of the largest platforms in the world.
Stuart Canfield: Live services net bookings was $543 billion down.
Stuart Canfield: <unk>, 2% year over year or down 1% in constant currency <unk>.
Stuart Canfield: Excluding the impact of the Sunset of apex Mobile live service net bookings was about flat year over year.
Stuart Canfield: Strength in Life Services was driven by high teens growth year over year in our global football franchise, fuelled by FC Ultimate Team and FC Mobile, but was offset by declines in Apex Legends. Moving to our GAAP results, we delivered net revenue of $7.56 billion, up 2% year-over-year. Cost of revenue was $1.71 billion, down 5% year-over-year, driven by lower royalties and lower acquisition-related expenses, resulting in a gross margin of 77.4% for the year and an improvement of 150 basis points.
Stuart Canfield: Strength in life services was driven by high teens growth year over year, and our global football franchise fueled by FC Ultimate team and S. T mobile, but was offset by declines in apex legends.
Stuart Canfield: Moving to our GAAP results, we delivered net revenue of $7 56 billion.
Stuart Canfield: Up 2% year over year.
Stuart Canfield: Cost of revenue was $1 seven 1 billion down.
Stuart Canfield: Down 5% year over year, driven by lower royalties and lower acquisition related expenses, resulting in a gross margin of 77, 4% for the year, an improvement of 150 basis points.
Stuart Canfield: As we continue to operate with focus and discipline, GAAP operating expenses were $4.33 billion, up 1% year over year, driven predominantly by incremental marketing spend to support our new releases and launch of EA Sports FC. Our adjusted earnings per share was $4.68, which included $64 million of restructuring and related charges, significantly outpacing our original expectations, growing 63% year-over-year.
Stuart Canfield: As we continue to operate with focus and discipline GAAP operating expenses were $4 three 3 billion.
Stuart Canfield: Up 1% year over year, driven predominantly by incremental marketing spend to support our new releases and launch of EA Sports FC.
Stuart Canfield: Our GAAP earnings per share was $4 68.
Stuart Canfield: Which included $64 million of restructuring and related charges significantly outpacing our original expectations growing 63% year over year.
Stuart Canfield: Operating cash flow of $2.32 billion, a record for a fiscal year, delivered considerable improvement and accelerated growth year over year. Capital expenditures for the year were $199 million, below our original $275 million guide as we further rationalized our real estate investment and footprint over the year. This resulted in a record year for free cash flow of $2.12 billion, up 58% year over year. This includes a one-time cash tax savings of approximately $150 million.
Stuart Canfield: Operating cash flow of $2 three 2 billion.
Stuart Canfield: A record for a fiscal year deliver considerable improvement an accelerated growth year over year.
Stuart Canfield: Capital expenditures for the year were $199 million below our original $275 million guide.
Stuart Canfield: We further rationalized, our real estate investment and footprint over the year.
Stuart Canfield: This resulted in a record year for free cash flow up to one 2 billion up 58% year over year.
Stuart Canfield: This includes a onetime cash tax savings of approximately $150 million.
Stuart Canfield: Over the year, we returned $1.51 billion to shareholders through buybacks and dividends. Moving to fourth-quarter results, total net bookings for the fourth quarter were $1.67 billion, down 14% year-over-year in both actual and constant currency. Full game net bookings for the quarter were $259 million, driven by slate timing, and Life Services for the quarter was $1.41 billion. As a reminder, we expected Q4 net bookings to be impacted by eight points related to slate timing. We also provided a wider guidance range to account for the dynamics of Apex Legends and EA Sports FC, which faced difficult comparable periods.
Stuart Canfield: Over the year, we returned 151 billion to shareholders through buybacks and dividends moving to fourth quarter results total net bookings for the fourth quarter was $1 67 billion.
Stuart Canfield: Around 14% year over year in both actual and constant currency full.
Stuart Canfield: Full game net bookings for the quarter was $259 million driven by slight timing and.
Stuart Canfield: And live services for the quarter was 141 billion.
Stuart Canfield: As a reminder, we expected Q4 net bookings to be impacted by eight points related to slight timing.
Stuart Canfield: We also provided a wider guidance range to account for the dynamics of apex legends NBA sports FC which faced difficult comparable periods.
Stuart Canfield: In Apex Legends, we saw elevated engagement and monetization trends early in the quarter. As the quarter progressed, monetization returned to prior norms, while player sentiment and engagement remained strong. FC Mobile and Online declined year-over-year as they faced record comparables in the prior year period, fueled by World Cup tailwinds.
Stuart Canfield: Apex legends, we saw elevated engagement and monetization trends early in the quarter.
Stuart Canfield: As the quarter progressed monetization returned to prior norms, while player sentiment and engagement remained strong.
Stuart Canfield: T mobile and online decline year over year as they face reco comparables in the prior year period fueled by World Cup tailwind, However, FC ultimate team lapping a record 20% growth in Q4 FY2023.
Stuart Canfield: However, the FC Ultimate team, lapping a record 20% growth in Q4 FY23, again grew year-over-year, delivering low single-digit growth. We've delivered net revenue of $1.78 billion, down 5% year over year. Cost of revenue was $357 million, which translated to a gross margin of 79.9%, up 380 basis points year over year, as we benefited from lower royalties and a change in deferred net revenue related to the product. GAAP operating expenses for the quarter were $1.19 billion, down 5% year-over-year from lower restructuring-related charges. Gap's EPS for the quarter was 67 cents.
Stuart Canfield: <unk> grew year over year, delivering low single digit growth.
Stuart Canfield: We delivered net revenue of $1 seven 8 billion.
Stuart Canfield: Down 5% year over year.
Stuart Canfield: Cost of revenue was $357 million, which translated to a gross margin of 79, 9% up 380 basis points year over year.
Stuart Canfield: We benefited from lower royalties and change in deferred net revenue related to product mix.
Stuart Canfield: GAAP operating expenses for the quarter with 1.1 dollars 9 billion.
Stuart Canfield: Down 5% year over year from lower restructuring related charges.
Stuart Canfield: GAAP EPS for the quarter was 67.
Stuart Canfield: We delivered operating cash flow of $580 million in the quarter and free cash flow of $529 million. Now, let me turn to our outlook. In FY25, we expect to again drive results in a highly dynamic market, delivering fiscal year growth, strong cash flow, and enhanced return on capital. We expect to do this despite a lighter slate through new releases of iconic and fan-favorite IP, continued execution and growth in our core live services, and by staying focused and disciplined against our strategic growth initiatives.
Stuart Canfield: We delivered operating cash flow of $518 million in the quarter and free cash flow of $529 million.
Speaker Change: Now, let me turn to our outlook.
Stuart Canfield: In FY 'twenty five we expect to again drive results in a highly dynamic market delivering fiscal year growth strong cash flow and enhance return on capital.
Stuart Canfield: We expect to do this despite a lighter slate through new releases of iconic and fan favorite IP <unk>.
Stuart Canfield: Continued execution and growth in our core life sciences, and by staying focused and disciplined against our strategic growth initiatives.
Stuart Canfield: Our Q1 FY25 outlook reflects many of the trends we saw in Q4 2024 related to slate timing and atypical seasonality as we lapped difficult comps year over year. We expect the quarter to be impacted by a 15 point headwind related to release and content timing versus the prior year due to three additional title launches. Live services, including EA Sports FC and Apex Legends, will continue to face difficult comparable periods.
Stuart Canfield: Our Q1 FY 'twenty five outlook reflects many of the trend we saw in Q4 of 2024 related to <unk> timing and atypical seasonality as we lap difficult comps year over year.
Stuart Canfield: We expect the quarter to be impacted by 15 point headwind blade to release and content timing versus prior year due to three additional title launches.
Stuart Canfield: Live services, including EA Sports FC and apex legends will continue to face difficult comparable periods.
Stuart Canfield: As a reminder, Q1 FY24 was the largest Q1 in company history for our global football franchise. We expect net bookings for Q1 to be $1.15 billion to $1.25 billion, down 27% to down 21% year over year. We expect net revenue of $1.575 billion to $1.675 billion and cost of revenue to be $240 million to $250 million. And operating expenses were approximately $1.065 billion to $1.085 billion, resulting in earnings per share of 73 cents to 90 cents.
Stuart Canfield: As a reminder, Q1 FY 'twenty four with the largest Q1 in company history Frac level football franchise, we expect net bookings for Q1 to be 115 billion to $125 billion down.
Stuart Canfield: Down 27% to down 21% year over year.
Stuart Canfield: We expect net revenue of $1 $5 75 billion.
Stuart Canfield: To one $6 75 billion.
Stuart Canfield: Cost of revenue to be $240 million to $250 million.
Stuart Canfield: And operating expenses were approximately $1 <unk> 5 billion to 1.08.
Stuart Canfield: <unk> 5 billion.
Stuart Canfield: Resulting in earnings per share of <unk> 73 to.
Stuart Canfield: <unk> hundred 90 <unk>.
Stuart Canfield: Now, moving to our Outlook for FY25. We expect fiscal year net bookings of $7.3 billion to $7.7 billion, down 2% to up 4% year-over-year, with mid-single-digit growth in our core live services business, partially offset by fewer title launches, lighter catalog contributions, and headwinds from our mobile business related to portfolio optimization decisions taken over the last six months. Excluding our Sunset titles, we expect mobile to be up a low single digit.
Stuart Canfield: Now moving to our outlook for FY 'twenty five we.
Stuart Canfield: We expect fiscal year net bookings of $7 3 billion to $7 7 billion.
Stuart Canfield: Down 2% to up 4% year over year.
Stuart Canfield: With mid single digit growth in our core live services business, partially offset by fewer title launches like that catalog contributions and headwinds from my mobile business relates to portfolio optimization decisions taken over the last six months.
Stuart Canfield: Excluding at Sunset titles, we expect mobile to be up low single digits.
Stuart Canfield: Turning to gap.
Stuart Canfield: Turning to GAAP, we expect net revenue of $7.1 billion to $7.5 billion. We expect GAAP operating expenses to be $4.35 billion to $4.44 billion, flat to up 2% year over year as focused investment to drive growth is largely balanced by less marketing spend and acquisition-related expenses. We expect the gap operating margin to be 18% to 20.6%. We expect the non-GAP operating margin to be 29.6% to 31.7%. The impact from the change in deferred net revenue is expected to be approximately 200 to 170 basis points. We expect fiscal year gap EPS of $3.34 to $4.
Stuart Canfield: We expect net revenue of $7 1 billion to $7 5 billion.
Stuart Canfield: We expect GAAP operating expenses to be $4 35 billion to $4 4 billion.
Stuart Canfield: Flat to up 2% year over year as focused investments to drive growth is largely balanced by less marketing spend and acquisition related expenses.
Stuart Canfield: We expect GAAP operating margin to be 18% to 26%.
Stuart Canfield: We expect non-GAAP operating margin to be 29, 6% to 31, 7%.
Stuart Canfield: The impact from change in deferred net revenue is expected to be approximately 200 to 170 basis points, we expect fiscal year GAAP EPS of $3 34 to $4.
Stuart Canfield: We expect our business to continue to be a strong generator of cash with operating cash flow of $2 5 billion to $2 two 5 billion.
Stuart Canfield: We expect our business to continue to be a strong generator of cash, with operating cash flow of $2.05 billion to $2.25 billion and capital expenditures of around $200 million, which would deliver free cash flow of about $1.85 billion to $2.05 billion, roughly flat year over year, when excluding the one-time cash tax benefit noted earlier. Expanding upon the long-term financial framework we introduced last quarter, we are introducing non-GAAP operating margin guidance through FY27.
Stuart Canfield: And capital expenditures of around $200 million, which would deliver free cash flow of about $1 85 billion to $2 <unk> 5 billion.
Stuart Canfield: Roughly flat year over year, when excluding the onetime cash tax benefit noted earlier.
Stuart Canfield: Expanding upon the long term financial framework, we introduced last quarter, we are introducing non-GAAP operating margin guidance through FY 'twenty seven.
Stuart Canfield: We believe this best reflects our confidence in accelerating growth, our ability to expand margins, and grow cash flow. Moreover, it provides greater transparency around the impact of our strategy and our future pipeline for our shareholders. By FY27, we expect our GAAP operating margin to expand an additional 300 to 350 basis points, and we expect our non-GAAP operating margin to expand another 150 to 200 basis points. We do not expect any additional impact from the change in deferred net revenue.
Stuart Canfield: We believe this best reflects our confidence in accelerating growth abrasive expand margins and grow cash flows.
Stuart Canfield: Moreover, it provides greater transparency around the impact of our strategy and future pipeline for our shareholders.
Stuart Canfield: By FY 'twenty seven we expect our GAAP operating margin to expand an additional 300 to 350 basis points and we expect our non-GAAP operating margin to expand another 150 to 200 basis points.
Stuart Canfield: We do not expect any additional impact from change in deferred net revenue.
Stuart Canfield: Please refer to our slides and FAQs for further information. Our conviction in expanding margins and accelerating growth led us to increase our stock repurchase program and extend it by an additional year. Returning capital to shareholders is an important priority for us. Our board has authorized a stock repurchase program of $5 billion over the next three years. We expect $1.5 billion to be returned in FY25, with the remainder skewed with growth in our business across FY26 and FY27.
Stuart Canfield: Please refer to our slides and Faq's for further information.
Stuart Canfield: Our conviction in expanding margins and accelerating growth leads us to increase our stock repurchase program and extended by an additional year.
Stuart Canfield: Returning capital to shareholders is an important priority for us.
Stuart Canfield: Our board has authorized a stock repurchase program of $5 billion over the next three years.
Stuart Canfield: We expect $1 5 billion to be returned in FY 'twenty five.
Stuart Canfield: With the remainder scaling with growth in that business across FY 'twenty six in FY 'twenty seven.
Stuart Canfield: In closing, as we look ahead to our September Investor Day, I'm excited to share more about our ongoing value creation framework with insights into the growth drivers across our core business and upcoming releases from our development pipeline, as well as our key strategic priorities to harness the power of our community. Now I'll hand it back over to Andrew.
Stuart Canfield: In closing as we look ahead to our September Investor Day, I'm excited to share more on our ongoing value creation framework with insights into the growth drivers across our core business and upcoming releases from our development pipeline as well as our key strategic priorities to harness the power of our community.
Stuart Canfield: Now I'll hand, it back over to Andrew.
Andrew Wilson: Thank you, Stuart. 25 years ago, there were dozens of major independent publishers in the video game space. Today, there are only a handful, and we have an incredible competitive advantage with the excellence of our creative talent, our production strength, our broad portfolio of incredible IP, including EA Sports, and our massive player network. With these enviable strengths, we are well positioned to grow the industry and increase our market share. As we leverage the capabilities of AI, we believe it will further supercharge these differentiators.
Andrew Wilson: Thank you Stuart 25 years ago, there were dozens of major independent publishes in the video game space. Today, there are only a handful and we have an incredible competitive advantage with the excellence of our creative talent, our production strength, our broad portfolio of incredible IP, including E sports and a massive.
Andrew Wilson: Player network.
Andrew Wilson: With these enviable strength, we are well positioned to grow the industry and increase our market share as.
Andrew Wilson: As we leverage the capabilities of AI, we believe it will further supercharge these differentiators.
Andrew Wilson: Through decades of experience and leadership, we have led through multiple transformations in our industry. Now we have an incredible opportunity, in the service of our players, communities, and shareholders, to lead through the one taking place right now. Now Stuart and I are here for your questions.
Andrew Wilson: Through decades of experience and leadership, we have led through multiple transformations in our industry now we have an incredible opportunity in service of our players communities and shareholders to lead through the one taking place right now.
Speaker Change: Now Stuart and I are here for your questions.
Unknown Executive: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We will pause for just a moment to compile the Q&A row.
Speaker Change: Thank you we will now begin the question and answer session. If you have darden and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue if you'd like to withdraw your question simply press Star one again.
Unknown Executive: You are called upon to ask you a question than a listing viola speak on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question. We will pause for just a moment to compile the Q&A roster.
Babish: Babish, we're ready for your first question.
Speaker Change: <unk>, we're ready for your first question.
Babish: Thank you. Our first question comes from the line of Matthew Cost of Morgan Stanley. Please go ahead.
Babish: Thank you. Our first question comes from the line of Matthew <unk> of Morgan Stanley. Please go ahead.
Babish: Hi team this is Dave on for Matt.
Dave: Hi team. This is Dave on for Matt.
Dave: Just a quick housekeeping question it.
Dave: Just a quick housekeeping question. It looks like in the new non-GAAP guidance, you're providing us with a better bridge to what we're already doing in our model. So if I'm following correctly, we can now take the new non-GAAP operating margin and add or subtract for the change in deferred revenue. And so if I'm doing the math correctly, does that bring us to an operating margin on net bookings of 31.6% to 33.4%? And then, just as a quick follow-up, if you could speak more about why the change in disclosure. Thanks. Dave, many thanks for the questions, Stuart.
Dave: It looks like in the new non-GAAP guidance, you are providing us a better bridge to what were already doing in our model.
Dave: So if I'm following correctly, we can now takes the new non-GAAP operating margin and add or subtract for the change in deferred.
Dave: And so if im doing the math correctly does that bring us to an operating margin on net bookings of 31, 6% to 33, 4%.
Dave: And then I guess just as a quick follow up if you could speak more to why the change in disclosure.
Dave: Thanks.
Dave: Okay.
Stuart Canfield: Dave, many thanks for the questions. Stuart, let me just quickly step back and talk about why now and why the change. We know that video game companies take different approaches with regard to capitalizing software costs. As you know, we don't capitalize software costs, and we expense them as we go into the P&L.
Dave: Many thanks for the question and Stuart.
Stuart Canfield: Just quickly step back and talk about why now and why the change.
Stuart Canfield: We know that PD.
Stuart Canfield: So game companies take different approaches with regards to capitalizing software costs.
Stuart Canfield: As you know, we don't capitalized software costs and we expense as we go into the P&L Sotheby's.
Stuart Canfield: Thus, we felt it was important that, by bringing this measure forward, it helps you better understand our business as we move forward, in particular as we think about the pipeline in 26 and 27, and as a way for us to clearly demonstrate the conviction in the strategy and the direction that we see the business going forward into the future. Based on your assessment and using the adjustment for the change in deferred revenue, yes, you are correct. And what it would tell you is a couple of pieces.
Stuart Canfield: We thought it was important that by bringing this measure it helps you better understand our business as we move forward in particular as we think about the pipeline in 'twenty six 'twenty seven and is a way for us to clearly demonstrate the conviction in the strategy and the direction that we see the business going forward into the future.
Stuart Canfield: Based on your assessment and using the adjustment for the change in deferred revenue, Yes, you are correct.
Stuart Canfield: And what I would tell you is a couple of pieces. One is that obviously you see expansion FY 'twenty, five which is certainly driven by our licensing changes.
Stuart Canfield: One is that, obviously, you see expansion in FY25, which is suddenly driven by our licensing changes, revenue mixed through the year, and the ongoing focus and discipline around cost as you look at the 25 guide and the framework of OPEX around net bookings. And then secondly, as we outline in the prepared remarks, you'll see FY26 and 27 expansion driven by the pipeline as we start to bring products to market through those later years and continue to enable us to drive return on the core business and, importantly, continue to invest in the future.
Stuart Canfield: Our revenue mix through the year and the ongoing focus and discipline around cost as you look at the 25 guide in the framework of Opex around that bookings and then secondly, as we outlined in prepared remarks, Youll see FY 'twenty six 'twenty seven expansion driven by the pipeline as we start to bring to market through those later years and continue to.
Stuart Canfield: <unk> enable us to drive return in the core business and importantly, still investing in the future.
Stuart Canfield: I'd also add that around all of that conviction and for using that metric, that would obviously have also announced the increased stock repurchase program, which is, again, another really meaningful signal in conjunction with this metric of where we see the business moving in the coming years.
Stuart Canfield: I'd also add the around all of that conviction and for using that metric.
Stuart Canfield: That would obviously have also announced the increased stock repurchase program.
Stuart Canfield: Again, another really meaningful signal in conjunction of this metric of where we see the business moving in the later years.
Speaker Change: Great. Thank you.
Babish: Thank you. Our next question comes from Lana Quist-Scholl of UBS. Please go ahead.
Stuart Canfield: Thank you. Our next question comes from the line of Chris Shaw of UBS. Please go ahead.
Unknown Executive: Great, thank you. I appreciate you've been facing very difficult comps, but can you give some color on what you're assuming for some of your larger franchises, including Apex and FC and Fiscal 25? And it appears the midpoint of the guidance is similar to your prior growth commentary, but anything you would flag as a change relative to your last earnings call in regard to your expectations for next year? Thank you.
Unknown Executive: Great. Thank you.
Unknown Executive: And <unk> been facing very difficult comps, but can you give us some color on what you're assuming for some of your larger franchises, including apex NFC in fiscal 'twenty five.
Unknown Executive: And it appears the midpoint of the guidance is similar to your prior growth commentary, but anything you would flag that has changed relative to last earnings call in regard to your expectations for next year. Thank you.
Stuart Canfield: Thanks, Chris. First, I'll take the last question first. No, no material expectation shift from the framework that we outlined back in January. To your second question, Tam, about the broader assumption, I think it would be important to think about the phasing of how we're thinking through the year. Obviously, we've put out Q1, and you'll see the challenging sort of headwinds around the title comps and slate from last year, which is really driven around because we had those extra titles from before.
Speaker Change: Thanks, Chris I'll, Firstly I'll take the last question first no no material expectations shifts from the framework that we outlined back in January.
Stuart Canfield: Second question, Tom broader assumption I think it would be important to think about the phasing of how we're thinking through the year.
Stuart Canfield: Obviously, we put out Q1 and.
Stuart Canfield: And you'll see the challenging sort of headwinds around the types of comps and slate from last year.
Stuart Canfield: Which is really driven around we had those extra tunnels from before.
Stuart Canfield: As you think through the rest of the year and how we build out the business, obviously, we look to Q2, and we see, obviously, the addition of college football, and we expect overall aggregated growth in our American football business. You would expect that we continue to see growth in both our core live service business, and we talked about in the prepared remarks that we see that outpacing the market and sort of mid-single-digit growth.
Stuart Canfield: As you think through the rest of the year and how we build out the business. So as we look to Q2 and we see obviously the addition of college football and then we expect an overall aggregated growth.
Stuart Canfield: Around American football business.
Stuart Canfield: You would expect that we continue to see growth in both our core live service business and we talked to in the prepared remarks that we see that outpacing the market in sort of mid single digit growth.
Stuart Canfield: You'd expect the FC that has grown for us in the game; we grew FC again last year in 2040, expect that FC 25 being both new innovations, and we continue to grow that franchise through next year. In terms of APEX, we saw great engagement and retention from players in Q4. We continue to invest behind the franchise and expect to see some advancements and innovations in new seasons over the next couple of seasons in front of us that would start to believe we can drive growth back into the franchise through FY25. That overall brings us to the profile we've put out, which is again, low single-digit bookings growth for the year in a lighter release slate, but offset by growth in that core life service.
Stuart Canfield: You'd expect the FCC that has grown for us in the game. We grew FC again last year in 2004 do you expect that FC 25, being probably from new innovations and we continue to grow that franchise through next year in terms of apex. We.
Stuart Canfield: We saw great engagement and retention from players in Q4.
Stuart Canfield: We continue to invest behind the franchise.
Stuart Canfield: I would expect to see some advancements innovations and new seasons over the next couple of seasons in front of us that would start to continue to believe we drive growth back into the franchise through FY 'twenty five.
Stuart Canfield: That overall brings us to a the profile we've put out which is again low single digit bookings growth for the year and a lighter release slate, but offset by growth in our core life service business.
Stuart Canfield: And if I can just fit in one more quick one, just regarding the stock repurchase program, how did you think about accelerating the buyback versus other capital allocation opportunities you had at your disposal?
Speaker Change: Thank you for that and if I can just fit in one more quick one just regarding the stock repurchase program. How do you think about accelerating the buyback versus other capital allocation opportunities opportunities you could you had at your disposal.
Stuart Canfield: Yeah, great question. I think the first thing I would just say is that our dividend remains unchanged. The second part is you want to kind of reinforce three validations through the stock repurchase program. One is aligning the length of the program with the framework we're putting out in terms of the extended guidance we gave around the new disclosure metric. Secondly, we want to emphasize that the alteration is obviously bigger than our current one at $2.6 billion, rising to $5 billion.
Speaker Change: Yes, Great question I think the first thing I would just say is that our dividend remains unchanged the.
Stuart Canfield: The second part is you want to kind of reinforce from the stock repurchase program sort of three validation story. One is aligning the length of the program with the framework, we're putting out in terms of the extended guidance, we gave around the new disclosure metric.
Stuart Canfield: Secondly, I want to emphasize that the illustration, obviously being bigger than our current one at $2 6 billion rising to $5 billion.
Stuart Canfield: And basically, sending a signal that we want to continue to scale that through the approach of a stock repurchase plan, which obviously gives us continued value in our minds back to shareholders and obviously flexibility as we scale through the next two or three years.
Stuart Canfield: And basically sending a signal that you want to continue to scale that through the through the approach of a stock repurchase plan, which obviously gives us continued value and online back to shareholders and also the flexibility as we scale through the next two or three years.
Stuart Canfield: Great, thank you very much for the color. Thank you. In the interest of time, we kindly request our analysts limit themselves to one question and one follow-up to allow for as many questions from our audience as possible. We'll take our next question.
Speaker Change: Great. Thank you very much for the color.
Unknown Executive: In the interest of time, we kindly request that analysts limit themselves to one question and one follow-up to allow for as many questions from our audience as possible. We'll take our next question from Mr. Eric Handler of RothMKM. Please go ahead.
Stuart Canfield: Thank you and the interest of time, we kindly request the analysts to limit yourselves to one question and one follow up to allow for as many questions from our audience as possible.
Unknown Executive: We will take our next question from Mr. Eric Handler of <unk>. Please go ahead.
Unknown Executive: Yes.
Eric Owen Handler: Good afternoon, thanks for the question.
Eric Owen Handler: You have a big live services bucket and yes, we can decipher how much is PC and console versus mobile, but I'm wondering if you could break it up between let's say sports.
Eric Owen Handler: Action shooter action shooter and casual how like how would that break down in terms of percentages.
Eric Owen Handler: Hey Eric, this is Stuart. We're not going to break down directly the splits across the live service businesses. As a reminder, the live service category encompasses not only some sports, but also incorporates mobile, and incorporates other parts of our business, whether it's our subscription business from EA Play, and other parts that comprise live services. It's a heavily aggregated category across multiple levels we have by virtue of the portfolio and the strategy we carry today.
Eric Owen Handler: Hey, Eric This is Joe.
Eric Owen Handler: We're not going to break down directly.
Eric Owen Handler: Splits across the cost of our live service business systems. As a reminder, the live service category encompasses not only sort of sports also incorporates mobile incorporates other parts of our business, whether SaaS subscription business from EA play another path that comprise lifesize is a heavily aggregated category across multiple <unk>.
Eric Owen Handler: <unk>, we have by virtue of the portfolio.
Eric Owen Handler: And the strategy, we carry today policy, we think the throw a massive online communities there out of largest components as we come through that line service piece. When you think about F C.
Eric Owen Handler: Obviously, we think that our massive online communities are our largest components as we come through that live service piece. When you think about FC, Sims, and Apex as comprising the biggest three of those massive online communities, we look to add college football this year, and obviously Madden accompanies that inside of that envelope.
Eric Owen Handler: <unk> and apex is comprising the biggest three of those masks while in communities. We look to add obviously college football this year, and obviously madden accompanies that in Saudi that envelope.
Stuart Canfield: We also see, naturally, a mobile business that wraps inside of that live service number, and we've talked to that we see outside of the portfolio rationalization. We see low single-digit growth in that business through next year. That's kind of the big compositions that we see around that service business that makes up 73% today and ultimately gives us the flexibility and agility to be successful in the future as we layer on both the pipeline and our third strategic objective. Yeah, I might just add. All right, thanks.
Eric Owen Handler: We also see naturally a mobile business that wraps inside of that live service number and we've talked to is that we.
Stuart Canfield: See outside of the portfolio rationalization, we see low single digit growth in that business through next year.
Stuart Canfield: That kind of the big competitions that we see around that service business that makes up 73% today ultimately gives us the flexibility and agility to be convicted in the future as we layer on both the pipeline and as such Q. Okay.
Andrew Wilson: Yeah, I might just add, one of the great differentiators of our company is actually the breadth of our live services. So, if you look at FY24, as we come into FY25, you know, the very center of our FY24 was this incredible rebranding of FC and the launching and growth of that, even as we lapped a World Cup year. We had Madden again, a live service that grew and reached record levels of revenue.
Speaker Change: Yeah, I might just add.
Andrew Wilson: One of the great differentiator of our company is actually the breadth of that live services. So if you look at FY 'twenty four as we come into FY 'twenty five.
Andrew Wilson: Center about FY 'twenty four was this incredible rebranding of FC and the launch and growth of that even as we lapped a world Cup year, we had Matt and again, a live service that grew and reached record levels of revenue. We had our biggest EA sports year I would argue that EA sports maybe one of the greatest.
Andrew Wilson: We had our biggest EA Sports year. I would argue that EA Sports may be one of the greatest global multi-sport media brands in the world and certainly has greater fandom than most other brands that it competes with.
Andrew Wilson: Global multi sport media brands in the World and certainly has great a faint than most other brands that it competes with we had double digit growth in the community on the savings, which again positive very very different demographic of players and when we look at the many hundreds of millions of shared user generated content.
Andrew Wilson: We had double-digit growth in the community on The Sims, which, again, targets a very, very different demographic of players. And when we look at the many hundreds of millions of shared user-generated content items, you are seeing the evolution of that live service into a broader community creation platform. We continue to build resilience into APEX, and as a community center for that, it grew 29 points over the last fiscal year, and as we're primed to continue to grow and expand that live service, we have a great opportunity.
Andrew Wilson: <unk> you are seeing the evolution of that live service into a broader community creation platform.
Andrew Wilson: We continue to build resilience.
Andrew Wilson: To apex and is a key.
Andrew Wilson: Community sentiment of that grew 29 points over the last fiscal year as we are primed to continue to grow and expand that live service, we have great opportunity and again as I talked about in our prepared remarks, I'll just spend a whole bunch of time with the collective battlefield team playing what they are building and it is going to be another tremendous lives served.
Andrew Wilson: And again, as I talked about in the prepared remarks, you know, I've just spent a whole bunch of time with the collective Battlefield team playing what they're building, and it is going to be another tremendous live service. And if you really use FC as the blueprint and think about across platforms, across modalities, across business models, across geographies, and also branching fandom beyond the bounds of the traditional game to create truly a football fan platform that really extends the magnitude of the live service, this really is at the very center of our strategy when we talk about building content and experiences that entertain and engage massive online communities.
Andrew Wilson: If you really use FC as the blueprint and you think about across platforms across modalities across business models across geographies and also branching sand and beyond the bounds of the traditional game.
Andrew Wilson: Truly a football fan platform.
Andrew Wilson: It really extends the magnitude of a live service. This really is at the very center of our strategy. When we talk about building content and experiences to entertain and engage massive online communities and so as we think about this going forward. We believe this differentiates us from the marketplace in Videogames are certainly in the marketplace and entertainment and really position.
Andrew Wilson: And so as we think about this going forward, we believe this differentiates us from the marketplace for video games, certainly in the marketplace for entertainment, and really positions us for real growth in relation to what these emerging generations are looking for in the context of their entertainment consumption.
Andrew Wilson: <unk> for real growth against what these emerging generations are looking for in the contest context of the entertainment consumption.
Speaker Change: Thank you.
Andrew Jordan Marok: Thank you. Our next question comes from Andrew Marok from Raymond James. Please go ahead.
Andrew Wilson: Thank you. Our next question comes from the line of Andrew <unk> from Raymond James. Please go ahead.
Andrew Wilson: Hi, thanks for taking my question. Maybe one on APEX if I could. Since it was a limited time mode back in 2020, Respawn has kind of always been pretty adamant that the solo mode was never going to come back to APEX, despite players clamoring for it, because it didn't mesh with their view of player behavior. So with that mode coming back in Season 21, for a long time for a limited time mode, I guess what changed? Is that part of the easier onboarding that you were referring to in the prepared remarks or something you're leaning into based on player signals?
Andrew Jordan Marok: Hi, Thanks for taking my question, maybe one on apex, if I could since it was a limited time mode back in 2020 respond is kind of always been pretty adamant that the solo mode was never going to come back to apex. Despite players clamoring for it because it didn't mesh with their view of player behavior, So with that mode coming back in <unk> and 'twenty one for a long time.
Andrew Wilson: For a limited time mode I guess, what changed is that part of the easier Onboarding that you were referring to in the prepared remarks or something you are leaning into based on player signals.
Andrew Wilson: Well again, I think what the respawn team has done and continues to do incredibly well is really work in a very transparent and open way with the community again. This is an incredible community of hundreds of millions of players retention is very high there are very vocal community and the respawn team maybe better than many other teams.
Andrew Wilson: Well, again, I think what the Respawn team has done and continues to do incredibly well is really work in a very transparent, open way with the community. Again, this is an incredible community of hundreds of millions of players, retention is very high, they're a very vocal community, and the Respawn team, maybe better than many other teams in the industry, works very closely with that community. And I think what we're starting to see is the evolution of both the player personality, the Apex player personality, because Apex is a game, and how Respawn serves that community broadly.
Andrew Wilson: The industry.
Andrew Wilson: Works very closely with that community and I think what we're starting to see is the evolution of both the playa personality of the apex player personality Apex's, a game and how respawn.
Andrew Wilson: <unk> serves that community broadly and this will be one of those steps, but you shouldnt imagine that this is the sum total of those steps as we really think about both expansion of modalities of play for apex. When we think about culture deep Culturalize Asian on a geographic basis to attract new and more deeply engage global communities.
Andrew Wilson: And this will be one of those steps, but you shouldn't imagine that this is the sum total of those steps, as we really think about both the expansion of modalities of play for Apex when we think about deep culturalization on a geographic basis to attract new and more deeply engaged global communities. And as we look to what the Respawn team is doing over time, we believe that this will be a cornerstone of our live service business for many, many years to come.
Andrew Wilson: And as we think as we look to what the <unk> team is doing over time, we believe that this will be a cornerstone of our live service business, but many many years to come.
Andrew Jordan Marok: All right, great. Thank you. I'll jump back in the queue.
Speaker Change: Alright, great. Thank you I'll jump back in the queue.
Colin Alan Sebastian: Thank you. Our next question comes from the line of Colin Sebastian from RW Baird. Please go ahead.
Andrew Jordan Marok: Thank you. Our next question comes from the line of Colin Sebastian from RW Baird. Please go ahead.
Colin Alan Sebastian: Thanks. Good afternoon, I guess first on the mobile segment, kind of broadly, I understand the different puts and takes on that with the pipeline, but also just trying to understand a little better the underlying growth expectations for the mobile segment of the industry, EA's market share expectations as you look out to fiscal 26 and 27 in that segment, and what the key drivers are there. And then apologies if I missed this, Stuart, but just in terms of that fiscal 26-27 outlook, how should we think about the step up between those years into 26 and 27 if that contemplates any changing dynamics around the competitive landscape next year?
Colin Alan Sebastian: Thanks, Good afternoon.
Colin Alan Sebastian: I guess first on the mobile segment kind of broadly understand the different puts and takes on that with the pipeline.
Colin Alan Sebastian: But also just just trying to understand a little better the underlying growth expectations for the mobile segment of the industry Eas.
Colin Alan Sebastian: <unk> market share expectations as you look out to fiscal 'twenty six 'twenty seven in that segment and what the key drivers are there.
Colin Alan Sebastian: Then apologies if I missed this stewart, but just in terms of that fiscal 'twenty six 'twenty seven outlook.
Colin Alan Sebastian: How should we think about the step up between those years into 'twenty six 'twenty seven.
Colin Alan Sebastian: That contemplates any changing dynamics around the competitive landscape next year. Thanks.
Andrew Wilson: Yeah, great question. Let me start with a kind of mobile macro. As you've heard from us before, mobile is a very important platform to us. We've spent the last number of years really focusing on the mobile business and driving meaningful profitability in that area of the business, which hasn't always been the traditional shape of the mobile business in the industry. As we look forward, our expectation is that over the next 12 months or so, we will probably have low to mid single-digit growth in the mobile market overall.
Stuart Canfield: Yes, Great question, let me start with kind of the mobile macros as you've heard from US before mobile is a very important platform to us. We've spent the last number of years really focusing on mobile business and driving meaningful profitability in that area of the business, which hasn't always been the traditional shape of the mobile business in the industry.
Andrew Wilson: As we look forward our expectation is over the next 12 months or so we probably had low to mid single digit growth in the mobile market overall.
Andrew Wilson: But it's still the mobile market remains a fairly high risk opportunity that requires significant user acquisition cost to kind of ramp a new mobile game and so when we kind of couple what are increasingly longer development cycles in mobile sometimes two to three years and we hear stories of <unk>.
Andrew Wilson: But it's still, you know, the mobile market remains a fairly high-risk opportunity that requires, you know, significant user acquisition costs to kind of ramp up a new mobile game. And so when we kind of couple what are increasingly longer development cycles in mobile, sometimes two to three years, and you know, we hear stories of five, six, seven years in the marketplace, meaningful user acquisition spend, and how long is it an easy market to capitalize on?
Andrew Wilson: 567 years in the marketplace.
Andrew Wilson: Meaningful user acquisition spend and a long ramp times once you get the market mobile isn't.
Andrew Wilson: With that being said, we feel like our mobile business is in a very good position, given its profitability. We'll be leaning into our massive online communities around FC, around Madden, around The Sims. Skate will be mobile native, and we'll also be looking at opportunities to invest in a very limited number of mobile native titles that we believe have breakout potential.
Andrew Wilson: Is it an easy market to capitalize on them with that being said, we feel like our mobile business is in a very good position given its profitability, we'll be leaning into a massive online communities around NFC around that and around the Sims well.
Andrew Wilson: It will be mobile native.
Andrew Wilson: And we'll also be looking at opportunities to invest in a very limited number of mobile native titles that we believe have breakout potential.
Speaker Change: And Colin with regard to your second question, we basically in my prepared remarks, we framed up.
Stuart Canfield: Colin, with regard to your second question, we basically, in my prepared remarks, we framed up the range of growth we expect to see through 26 and 27, so a range through that entire period. We referenced it in the new non-GAAP operating margin disclosure we made, and we are referencing expanding 150 to 200 basis points on the 25 platform that we just put out. The intent there is to demonstrate the growth acceleration in both 26 to 27, as we think about growth driven by some sort of growth in a core business to expand player acquisition, engagement, and retention.
Stuart Canfield: The range of growth, we expect to see through 2006, and 27, so range through that entire period.
Stuart Canfield: We reference it through the the new non-GAAP operating margin disclosure, we made and we are referencing expanding 150 to 200 basis points.
Stuart Canfield: On the 25 platform that we just put out so intent there is to demonstrate the growth acceleration in both 26 to 27 as.
Stuart Canfield: As we think about growth and Bevan book, driven by sort of growth in our core business from Tim expand player acquisition engagement retention, we know the live services to Andrew's onshore Nikola second how we continue to expand both grow through the releases and our ongoing business. The new IP, we've talked to in the pipeline that continues to give us lever in growth on top in the later years.
Stuart Canfield: We know the live services to Andrew's answer on the call second, how we continue to expand both growth through the releases and our ongoing business. The new IP we've talked to in the pipeline that continues to give us leverage and growth on top in the later years, and as we see leverage from the cost structure and our investment all relates down to that non-GAAP operating margin expansion through 26 and 27.
Stuart Canfield: As we see leverage from the cost structure, and our investment or lights down to that non-GAAP operating margin expansion through 'twenty six 'twenty seven.
Speaker Change: Okay. Thanks, guys.
Michael Joseph Hickey: Thank you. Our next question comes from the line of Mike Hickey from Benchmark Company. Please go ahead.
Stuart Canfield: Thank you. Our next question comes from the line of Mike Hickey from Benchmark Company. Please go ahead.
Michael Joseph Hickey: Okay.
Michael Joseph Hickey: Hey, Andrew, Stuart, Andrew, Katie, thanks for taking our questions. Andrew, you had some pretty interesting comments recently at a conference talking about sort of efficiency and expansion with AI. I think you gave one example where you're talking about building out game environments like stadiums. You said that process went from six months to six weeks, so pretty incredible efficiency step up. Just curious how you're thinking about further deploying AI on other development processes, other games, other platforms like mobile you talked about.
Michael Joseph Hickey: Hey, Andrew Stuart.
Michael Joseph Hickey: Katy Thanks for taking our questions. Andrew you had some pretty interesting comments recently at a conference talking about sort of efficiency and.
Michael Joseph Hickey: An expansion with AI I think you gave.
Michael Joseph Hickey: Example, where youre talking about building out game environments like stadiums. He said that process went from.
Michael Joseph Hickey: Six months to six weeks, so pretty incredible.
Michael Joseph Hickey: Bob just curious how youre thinking about.
Michael Joseph Hickey: Further deploying AI on other development processes other games other platforms like mobile you talked about the <unk>.
Michael Joseph Hickey: The duration of development on mobile, maybe there's some efficiencies there. And then, as a follow-up, just curious about the generative AI NPC in key franchises like sports, battlefield, and sims, the opportunity you see there over time. Thanks, guys.
Michael Joseph Hickey: <unk> development on mobile maybe there are some efficiencies there.
Michael Joseph Hickey: And then as a follow up just curious on the generative AI EPC.
Michael Joseph Hickey: Exports battlefield fans the opportunity you see there over time, thanks, guys.
Speaker Change: Yes, Great question first is we're still very early in the evolution or at least the generative II evolution as a company we've been deeply tied to <unk> since our inception.
Andrew Wilson: Yeah, great question. The first thing to say is that we're still very early in the AI evolution, or at least the generative AI evolution. As a company, we've been deeply tied to AI since our inception. It has been the very center of all of the games that we create, replicating human intelligence in the context of a gameplay experience. But certainly, as we think about the wave of generative AI today and as it merges into, you know, artificial general intelligence broadly, we're still very early. But, you know, the things I talked about in the conference were really twofold.
Andrew Wilson: It has been the very center of all of the games that we create replicating human intelligence in the context of the gameplay experience.
Andrew Wilson: But certainly as we think about the the wave of generative AI today and as it merges into artificial general intelligence broadly, we're still very early but the things I talked about in the conference was really both twofold, one how do we get more efficient.
Andrew Wilson: One, how do we get more efficient? And the stat I used was where, you know, we've moved from being able to create stadiums in six months to six weeks. And my expectation is that will continue to shrink over time.
Andrew Wilson: That I used was where we've moved from being able to create stadiums from six months to six weeks and my expectation is that we'll continue to shrink over time, maybe even more profound than that was we went from.
Andrew Wilson: When we build a game and we have animation and run cycles. So when FIFA 23, we had 36 run cycles, which gave you kind of believe ability of human performance inside of that gain when we launched <unk> 24, we had 1200 run cycles and so again starting to add to the India.
Andrew Wilson: Maybe even more profound than that was we went from, you know, when we build a game and we have animation and run cycles. So in FIFA 23, we had 36 run cycles, which gave you a kind of believability of human performance inside of that game. When we launched FC 24, we had 1200 run cycles.
Andrew Wilson: And so again, starting to add to the individuality and uniqueness of each player and delivering to our players more immersion in the game, a more engaging experience that is more true to what they watch on television on a Sunday afternoon. And so as we think about, you know, the first pillar of generative AI for us, we're really looking at how can it make us more efficient? How can it give our developers more power? How can it give them back more time and allow them to get to the fun more quickly?
Andrew Wilson: The Jew Allen and uniqueness of each player in delivering our players more immersion in the game a more engaging experience that is more true to what they watch on television on Sunday afternoon, and so as we think about the first pillar of generative II for US we're really looking at how can it make us more efficient how can they give out developers more power how.
Andrew Wilson: Can you give them back more time and allow them to get to the fund more quickly. When we think about that our expectation is that there is meaningful opportunity for us we've done analysis across all of our development processes and right now based on our early assessment, we believe that more than 50% of our development processes will be.
Andrew Wilson: When we think about that, our expectation is that there is meaningful opportunity for us. We've done analysis across all of our development processes. And right now, based on our early assessment, we believe that more than 50% of our development processes will be positively impacted by the advances in generative AI. And we've got teams across the company really looking to execute on that. The second phase for us, of course, is how do we further expand our games?
Andrew Wilson: Positively impacted by the advances in generative II and we've got teams across the company really looking to execute against that.
Andrew Wilson: On the second phase for US of course is how do we further expand our games, how do we build big a world with more characters and more interesting storylines.
Andrew Wilson: How do we build bigger worlds with more characters and more interesting storylines? And if efficiency starts to really take place over the next one to three years, our expectation is that, over a three to five year time horizon, we will be able to, as part of our massive online communities and blockbuster storytelling, build bigger, more immersive worlds that engage more players uniquely around the world. And we think about that on a three to five year time horizon.
Andrew Wilson: Efficiency starts to really take place over the next one to three years, our expectation is that over a three to five year time horizon, we will be able to as part of a massive online communities and blockbuster storytelling build big a more immersive worlds that engage more more play is uniquely around the world and.
Andrew Wilson: We think about that on a three to five year time horizon, and perhaps on a five year plus time horizon.
Andrew Wilson: And perhaps on a five-year plus time horizon, we think about how we take all of those tools we create and offer those to the community at large so that we can actually get new and interesting and innovative and different types of game experiences. Again, not to replace what we do but to augment, enhance, extend, and expand the nature of what interactive entertainment can be, in much the way YouTube did for traditional film and television.
Andrew Wilson: Think about how do we take all of those tools, we create and offer those to the community at large so that we can actually get new and interesting and innovative and different types of game experiences again not to replace what we do with dual mint enhance extend expand the nature of what interactive entertainment can be in much the way you choose.
Andrew Wilson: Did to a traditional film and TV.
Andrew Wilson: One of the great advantages, of course, that we have is that we do have 40 years of data. And so as I think about efficiency over one to three years, expansion over three to five years, and transformation on a five-year time horizon, it's actually very plausible that with 40 years of owned data that we have to feed into these models, we actually may be able to accelerate that time frame. And I would tell you there was a real hunger amongst our developers to get to this as quickly as possible because, again, the holy grail for us is to build bigger, more innovative, more creative, more fun games more quickly so that we can entertain more people around the world on a global basis at a faster rate.
Andrew Wilson: One of the great advantages of course that we have is we do have 40 years of data and so as I think about efficiency of a one to three years expansion of a three to five years transformation on a five year time horizon. It is actually very plausible that with 40 years of owned data that we have to feed into these models, we actually may be able to accelerate that.
Andrew Wilson: Timeframe and I would tell you there was a real hunger amongst our developers to get through this as quickly as possible because again, the Holy Grail for us is to build bigger more innovative more creative more fun games more quickly. So that we can entertain more people around the world on a global basis.
Andrew Wilson: At a faster rate.
Speaker Change: Thank you.
Unknown Executive: Operator, we have time for one more.
Speaker Change: Operator, we have time.
Eric Sheridan: Thank you, sir. Our final question comes from the line of Eric Sheridan of Goldman Sachs. Please go ahead.
Speaker Change: Thank you Sir our.
Unknown Executive: Our final question comes on line of Eric Sheridan of Goldman Sachs. Please go ahead.
Eric Sheridan: Thanks so much for taking the questions. Maybe a two-parter, if I can ask Andrew, you know, from a big picture standpoint, if you take a step back, I'd love to get your take on two themes we continue to hear about across the gaming landscape. One, the market opportunity for more dynamic ad insertion across more traditional AAA games across different formats and how you think that might be a revenue opportunity over the medium to long term.
Eric Sheridan: Thanks, so much for taking the questions maybe two parter if I can Andrew.
Eric Sheridan: From a big picture standpoint, if you take a step back I'd love to get your take on two themes. We continue to hear about across the gaming landscape one the market opportunity for more dynamic AD insertion across more traditional AAA games across different formats, and how do you think that might be a revenue opportunity over the medium to long term and the second we've seen.
Eric Sheridan: And second, we've seen some fairly successful examples recently of IP adaptation out of the gaming landscape into the broader media landscape. What's your current thinking about that IP adaptation landscape going forward and what that might set as a market opportunity for EA? Thank you.
Eric Sheridan: Some fairly successful examples recently of IP adaptation out of the gaming landscape into the broader media landscape. What's your current thinking about that IP adaptation landscape going forward and what that might sit as a market opportunity for <unk>. Thank you.
Andrew Wilson: Let me start with the second part of your question, and then I'll move on to the first part of your question. Second, what you've heard from us for some time now is as we work with our global communities of players and we really listen to what they're looking for, what they hope to do is really interact and engage with their favorite IP, which, as it turns out, is the biggest IP in the world, many of which sit within our portfolio.
Andrew Wilson: Let me start with the second part of your question then I'll move into the first part of the question thinking about what you've heard from US for some time now is as we were.
Andrew Wilson: Work with our global communities of players and we really listen to what they're looking for what I hope to do is really interact and engage with their favorite IP, which as it turns out is the biggest IP in the world many of which sit within our portfolio. They wanted both play create watch and connect and so our expectation on a go forward.
Andrew Wilson: They want to both play, create, watch, and connect. And so our expectation on a go-forward basis is that even as we expand the definition of play and the types of things you can do in the context of these interactive worlds, that as we bring in more creation opportunities in these worlds, that in and of itself will also spawn more creation. Traditional, of course, is, well, do we make a movie, do we make a television show?
Andrew Wilson: What basis is that even as we expand the definition of play and the types of things you can do in the context of these interactive world that as we bring in more creation opportunity in these worlds that in and of itself will also spawn more watch what's traditionally of course is what do we make a movie do we make of Tel Aviv.
Andrew Wilson: And our expectation is that we will see more of that. But in addition to that, we expect that we'll see many, many billions of hours of content created by our communities, both in the context of what goes on inside the game and in the context of what goes on outside the game. And, of course, the most important part of that will be the ability for players to connect with each other in the context of play, creation, and watching.
Andrew Wilson: And show what our expectations that we will see more of that but in addition to that we expect it will see many many billions of hours of content created by our communities. Both in the context of what goes on inside the game and in the context of what goes on outside the game and of course, the most important part of that will be the.
Andrew Wilson: <unk>.
Andrew Wilson: <unk> to connect with each other in the context of play create and watch and so will we.
Andrew Wilson: And so while we look at what's going on in the industry right now, we see the fact that gaming IP is now manifesting itself inside of film and television and is topping those charts in addition to topping the interactive entertainment charts. Our expectation as we build out our portfolio is that we will get that benefit. That will be a tailwind for us.
Andrew Wilson: We look at what's going on in industry right now we see the fact that gaming IP is now manifesting inside of film and TV and as topping those jobs. In addition to topping the interactive entertainment charts, our expectations. We build out our portfolio is that we will get that benefit that will be a tailwind for us but in addition to that.
Andrew Wilson: But in addition to that, we're really thinking about how we engage our players across the expansion of play, inviting them to connect, expand, extend, and enhance the worlds that we create. The watch element that comes from that, we talked about billions of hours watched in FC alone. You should imagine that it is also across Madden and The Sims and Battlefield and Apex, but really built on a deep sense of social connection.
Andrew Wilson: We're really thinking about how we engage our players across the expansion of play inviting them to connect and expand and extend and enhance the worlds.
Andrew Wilson: We create the watch element that comes through that we talked about billions of hours watched in FC alone you should imagine that as that is also across Madden and the Sims and battlefield and apex.
Andrew Wilson: But really built on a deep sense of social connection and that's something that a company like US has a unique ability to deliver for our players that maybe hasnt been the case with traditional entertainment companies.
Andrew Wilson: And that's something that a company like us has a unique ability to deliver for our players that maybe hasn't been the case with traditional entertainment companies. To answer your question on advertising broadly, again, I think it's still early on that front, and we have looked over the course of our history to be very thoughtful about advertising in the context of our play experience. But again, as we think about the many, many billions of hours spent playing, creating, watching, and connecting, and where much of that engagement happens beyond the bounds of a traditional game experience, our expectation is that advertising has an opportunity to be a meaningful driver of growth for us.
Andrew Wilson: To answer your question on advertising broadly again, I think it's still early on that front.
Andrew Wilson: We have looked over the course of our history to be very very thoughtful about advertising in the context of that play experiences.
Andrew Wilson: But again as we think about the many many billions of hours spent both playing creating watching and connecting and where much of that engagement happens beyond the bounds of a traditional game experience. Our expectation is that advertising has an opportunity to be a meaningful driver of growth for us will be very thoughtful as we.
Andrew Wilson: We'll be very thoughtful as we move into that, but we have teams internally in the company right now looking at how we do very thoughtful implementations inside of our game experiences. But more importantly, as we start to build communities and harness the power of community beyond the bounds of our games, how do we think about advertising as a growth driver in those types of experiences?
Andrew Wilson: As we move into that but we have teams internally in the company right now looking at how do we do.
Andrew Wilson: Thoughtful implementations inside of our game experiences, but more important as we start to build community and harnessed the power of community beyond the bounds of our games, how do we think about advertising as a growth driver in those types of experiences.
Speaker Change: Thank you.
Andrew Wilson: Thank you. Okay, well, thank you all for being here. And thank you for the great questions. I want to extend my deepest appreciation to our teams for their passion, their hard work, and commitment to delivering an incredible year. To close, I'm extremely excited about what our future holds. I look forward to sharing more about our pipeline and longer-term strategy to drive growth at Investor Day in New York later in the year.
Speaker Change: Okay, well. Thank you all for being here and thank you for the great questions I want to extend my deepest appreciation to our teams for their passion hard work and commitment in delivering an incredible year to close I'm extremely excited about what our future holds I'll look forward and look forward to sharing more about our pipeline.
Andrew Wilson: And longer term strategy to drive growth at our Investor Day in New York later in the year.
Speaker Change: Thank you so much.
Speaker Change: Thank you.
Andrew Wilson: As today's meeting thank.
Speaker Change: Thank you all for joining and you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
Unknown Executive: Thank you. That concludes today's meeting. Thank you all for joining, and you may now disconnect.
Unknown Executive: [music].
Unknown Executive: Okay.
Unknown Executive: Yes.
Unknown Executive: [music].
Unknown Executive: Yes.
Unknown Executive: Okay.
Unknown Executive: Okay.
Unknown Executive: <unk>.
Unknown Executive: Okay.
Unknown Executive: [music].
Unknown Executive: Yes.
Unknown Executive: [music].
Unknown Executive: Yes.
Unknown Executive: [music].