Electronic Arts (EA 1.06%), a leading developer and publisher of video games with major series in sports and entertainment gaming, reported results for its fiscal first quarter on July 29, 2025. The most notable headline from the release was a beat on both revenue and earnings per share, with $1.67 billion in GAAP net revenue and $0.79 in GAAP diluted EPS. This performance was above Wall Street estimates and management’s own guidance midpoint (GAAP). Yet, compared to the prior year, key profit metrics declined despite the company’s core franchises delivering strong quarters. Overall, the period reflected resilience in important titles.
| Metric | Q1 FY26(Three Months Ended June 30, 2025) | Q1 Estimate | Q1 FY25(Three Months Ended June 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| Diluted EPS | $0.79 | $0.75 | $1.04 | (24.0%) |
| Revenue | $1.67 billion | $1.49 billion | $1.66 billion | 0.7% |
| Revenue vs. Guidance Midpoint | $71 million above | |||
| Net Bookings | $1.30 billion | $1.26 billion | 3.2% | |
| Operating Income | $271 million | $364 million | (25.5%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.
Company Profile and Strategic Focus
Electronic Arts is known for its sports franchises such as EA SPORTS FC (football/soccer), Madden NFL (American football), and F1 (Formula One racing simulation), along with entertainment series like Apex Legends (battle royale shooter) and The Sims (life simulation platform). The company’s business model relies on both full-game sales and recurring live services revenue streams, like extra content, in-game purchases, and subscriptions. Live services accounted for 73% of the company’s total net revenue in FY2025.
The company’s recent strategy has centered on expanding its live services, leveraging key distribution partnerships with platform holders like Sony, Microsoft, Apple, and Google, investing in research and development for innovation (especially in artificial intelligence integration), and protecting its intellectual property portfolio. The success of these efforts relies not just on hit new game launches, but also on maintaining player engagement with its biggest franchises and growing through both console and mobile channels.
Quarter in Review: Performance, Segment Trends, and Noteworthy Changes
The first quarter saw “broad-based portfolio performance,” according to management, with GAAP revenue, net bookings, and GAAP earnings per share each coming in ahead of analyst consensus. Revenue (GAAP) came in at $1.67 billion, topping the estimate by $0.18 billion, and GAAP diluted earnings per share reached $0.79, ahead of the $0.75 forecast. Net bookings, a metric that measures the value of products and services sold digitally or physically during the period, were $1.30 billion, up 2.9% from the prior year.
Despite headline outperformance, the underlying picture is more mixed. Net income fell to $201 million. Net income declined 28% year over year. Operating income declined 26%. Driving this downturn was an increase in research and development expenses, which rose 6.2% year over year from FY2024 to FY2025. Management indicated rising costs were linked to ongoing investments in the upcoming Battlefield 6 release and broader product innovation for FY2026, but these expenses compressed GAAP operating margin to 16.2% (down from 21.9% previously).
Live services and other revenue declined from $1.41 billion in Q1 FY2025 to $1.38 billion. This is significant because live services and other represented 82.7% of Electronic Arts’ total GAAP net revenue. Full-game revenue rose 16% year over year, led by robust sales of EA SPORTS F1 25, which was helped by enhanced gameplay and direct integration with real-world Formula One media (such as “F1 The Movie”). FC Mobile set a record quarter in net bookings, helping cushion weaker performance elsewhere.
Console net revenue (GAAP) was $1.007 billion, while mobile revenue (GAAP) was flat at $0.29 billion. PC and other categories saw a 2% increase to $0.37 billion in net revenue (GAAP). The product mix shifted slightly, with 17% of GAAP net revenue coming from full-game sales (up from 15% in Q1 FY2025) and 83% from live services (down from 85% in Q1 FY2025).
Cash flow pressures were evident, as operating cash flow (GAAP) dropped to $17 million from $120 million in Q1 FY2025. Free cash flow was negative. The company maintained its capital return policy, repurchasing $375 million in shares (flat year over year) and paid out $48 million in dividends. The quarterly dividend stayed flat at $0.19 per share.
Business Overview and Key Success Factors
At its core, Electronic Arts builds, markets, and services games that reach hundreds of millions of players across consoles, PCs, and mobile devices. Live services and other was the largest source of revenue, including ongoing in-game content like Ultimate Team modes, downloadable expansions, and seasonal events that establish recurring revenue beyond the initial game sale. Live services and other contributed 82.7% of company revenue (GAAP). Sports game franchises, particularly EA SPORTS FC and Madden NFL, are central to its financial model, with annual updates and live events sustaining player engagement.
Distribution partnerships remain crucial to the company's ability to reach consumers, with direct sales to Sony and Microsoft making up 56% of net revenue in FY2025. The company’s investment in research and development reflects a focus on both technological upgrades and new content creation. Artificial intelligence research is highlighted in official communications as an area to improve player experience and drive future growth. Maintaining a strong intellectual property portfolio is also a key pillar, supporting the longevity and profitability of its main franchises.
Review of Notable Developments This Quarter
The quarter was notable for some standout performances in key franchises. EA SPORTS F1 25 (racing simulation) delivered strong year-over-year net bookings growth thanks to enhanced gameplay experience and real-world integration with “F1 The Movie.” FC Mobile (mobile football/soccer platform) set a record quarter for net bookings, reflecting successful live events and regional engagement strategies. Meanwhile, catalog titles and Apex Legends (battle royale shooter) contributed above expectations, according to management. However, it is important to note that the full-year FY2026 outlook anticipates a significant 40% decline in annual bookings for Apex Legends, pointing to concerns over franchise fatigue or market competition.
Research and development costs grew from $629 million in Q1 FY2025 to $706 million, up 12%. Gross margin was 83%, while operating margin compressed due to higher expenses associated with new title development and marketing. While gross margin (GAAP) remained high at 83%, Operating margin compressed due to higher marketing expenses related to upcoming launches, notably Battlefield 6.
The quarter did not include material one-time events, but the launch schedule for the year is a focus area. Electronic Arts’ full slate for fiscal 2026 is described by management as “the most exciting launch slate” in its history, including Battlefield 6 (first-person shooter) and Skate (action sports game), both expected to have large marketing pushes and ongoing live service components. Management reiterated its plan to return at least 80% of free cash flow to shareholders through stock buybacks and dividends through FY2027. The dividend was unchanged at $0.19 per share this quarter.
In the context of the broader video game sector, live services have experienced meaningful maturation and timing-related headwinds. Total live services revenue (GAAP) over the trailing twelve months ended Q1 FY2026 is now flat to slightly down, at $5.43 billion compared to $5.48 billion in the prior year.
Outlook and Investor Considerations
Management provided financial guidance for both the next quarter and the full fiscal year. For FY2026, Electronic Arts projects net bookings between $7.6 billion and $8.0 billion, up 3% to 8.8% from last year. Revenue guidance (GAAP) stands at $7.1 billion to $7.5 billion for FY2026, with expected annual GAAP diluted earnings per share ranging from $3.09 to $3.79 for FY2026. Operating cash flow is forecast at $2.2 billion to $2.4 billion for FY2026. For Q2 FY2026, expectations are for net bookings between $1.8 billion and $1.9 billion, GAAP net revenue of $1.75 billion to $1.85 billion for Q2 FY2026, and GAAP diluted earnings per share between $0.29 and $0.46 for Q2 FY2026. Management cautioned that GAAP operating expenses are set to rise again in Q2 FY2026, driven mainly by marketing for the upcoming launches, especially Battlefield 6.
Looking ahead, the company’s ongoing capital return plan and a robust content pipeline provide flexibility.
The quarterly dividend was held steady at $0.19 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
