Image source: The Motley Fool.
DATE
Tuesday, July 29, 2025 at 12:00 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Andrew Wilson
Chief Financial Officer — Stuart Canfield
Need a quote from one of our analysts? Email [email protected]
TAKEAWAYS
Net Revenue: $1.92 billion for Q1 FY2026, up 15% year over year, driven by live services and new game launches
Operating Margin: 24% GAAP and 31% non-GAAP in Q1 fiscal year 2026, attributed to efficiency and the live services business model
Gross Profit: $1.35 billion gross profit for Q1 FY2026, up 18% from the prior year, supported by a continued shift toward higher-margin live services.
Cash Flow from Operations: Cash flow from operations was $750 million for Q1 FY2026, ascribed to operational performance and disciplined working capital management
Fiscal Year Revenue Guidance: Management raised full-year net revenue guidance to $7.8 billion based on current franchise strength.
Live Services Performance: "our live services continue to perform strongly across all our major franchises," Wilson said, highlighting Ultimate Team in FIFA and esports as growth drivers.
Battlefield Franchise: "Battlefield's performance since launch has been exceptional." Wilson said, emphasizing player engagement surpassing internal expectations.
Sims Franchise: The Sims was noted as a key contributor with a growing, highly engaged community supported by frequent content updates.
Margin Drivers: Canfield said margin expansion came from "favorable shift in revenue mix towards live services, as well as improved operational efficiencies across our global operations."
Skate Opportunity: Skate is described as "a new creator-driven platform" with ambitions to become "a meaningful contributor" to engagement and recurring revenue.
FC Strategy: "Our strategy focuses on continuing to deliver unparalleled authenticity and depth in our gameplay," Wilson stated, leveraging partnerships and live services to engage the football community.
Leadership Structure: Organizational changes are positioned as "an evolution rather than a shift in strategy." aiming to enhance agility and focus on major growth areas.
SUMMARY
Electronic Arts Inc. (EA 5.81%) reported a 15% year-over-year increase in GAAP net revenue and lifted full-year guidance, attributing gains to high-margin live services and successful new launches. Management stated cash flow from operations reached $750 million due to operational performance and working capital discipline. The company highlighted exceptional engagement in the Battlefield franchise, expanded its Sims and sports communities, and signaled Skate as an upcoming platform for incremental recurring revenue. Strategic emphasis included capital allocation through dividends and repurchases, and leveraging partnerships to boost engagement in its new football franchise. EA reaffirmed its approach to agility and long-term growth while introducing targeted leadership changes.
Wilson called out Ultimate Team and esports as expanding the reach of FIFA's live services franchise to new audiences.
Canfield indicated quarterly operational margin improvement primarily resulted from controlling discretionary expenditures and adopting scalable practices.
Management stated that creating new organizational roles is designed to capture upcoming growth opportunities and reinforce EA's leadership in the industry.
INDUSTRY GLOSSARY
Live Services: Ongoing, revenue-generating digital content and features that extend a game's lifecycle and drive engagement beyond the initial sale.
Ultimate Team: A proprietary mode in FIFA titles where users build teams using virtual cards, driving high recurring monetization and engagement.
Full Conference Call Transcript
Andrew Wilson: The quarter's results were driven by our diverse portfolio and robust execution. Our teams have delivered an outstanding Battlefield experience, with player engagement exceeding our expectations. In EA Sports, live services continue to drive growth, with FIFA and Madden exhibiting strong performance, and NHL showing positive momentum. Our focus on live services, seamless updates, and new content additions have deepened player engagement and extended the life cycle of our franchises. The Sims franchise remains a key contributor to our success, with an active and growing community. This passionate and engaged player base continues to explore and create in new ways, and our commitment to regular content updates keeps the franchise vibrant and fresh.
Moving on to our financials, I'll now turn the call over to Stuart to provide details on our performance and forward outlook.
Stuart Canfield: Thank you, Andrew. As Andrew highlighted, we had a strong start to the fiscal year, and I'm pleased to share our financial results for the first quarter of fiscal year 2026. For the quarter, net revenue was $1.92 billion, up 15% year over year, driven by strong live services performance and the successful launch of innovative titles. Our GAAP operating margin was 24%, and our non-GAAP operating margin was 31%, reflecting our continued focus on delivering efficient operations and the strength of our business model. Our gross profit was $1.35 billion, up 18% from the prior year, driven by the mix shift towards high-margin live services.
Our cash flow from operations in the quarter was $750 million, a significant increase due to strong operational performance and working capital management. Looking ahead, we remain focused on achieving our long-term growth objectives and delivering value to our shareholders. We are raising our full-year net revenue guidance to $7.8 billion, reflecting the strong performance and outlook for our key franchises. Additionally, we remain disciplined in our capital allocation strategy, with a commitment to returning value to our shareholders through dividends and share repurchases. Now, let's move to the Q&A portion of the call.
Operator: Thank you. [Operator Instructions] Our first question comes from the line of Alexia Quadrani from JPMorgan. Please go ahead.
Alexia Quadrani: Thank you. Just a couple of questions from me. First, on the live services, we've seen continuous growth there. Can you provide more color on what's driving that momentum, particularly for FIFA and your other sports franchises? And then secondly, any updates on Battlefield's performance since its launch?
Andrew Wilson: Thank you, Alexia. To address your first question, our live services continue to perform strongly across all our major franchises, driven by our focus on engaging and growing our player community. For FIFA specifically, our Ultimate Team mode continues to be a standout, offering players a dynamic and evolving experience with regular updates and content drops. This keeps engagement high across our global player network. Additionally, our FIFA esports initiatives have been successful, extending the reach of the franchise and bringing in new fans. As for our other sports franchises, Madden and NHL have both seen strong engagement, thanks in part to our updated content and compelling live service offerings that resonate with players.
Moving to your second question, Battlefield's performance since launch has been exceptional. We've seen strong player uptake and engagement, and the game is performing ahead of our expectations. The player community is enthusiastic, and our teams are committed to delivering regular updates and new content to sustain that engagement. Thank you for your questions, Alexia.
Operator: Our next question comes from the line of Matthew Thornton from Truist Securities.
Matthew Thornton: Thanks, good afternoon. From a margin perspective, I wonder if you could talk about the drivers of the expansion both year over year and quarter over quarter? And secondly, when you think about Skate, how should we think about the potential opportunity there relative to your other franchises, particularly in terms of engagement and financial contribution?
Stuart Canfield: Thanks for the question, Matthew. Regarding your first question, our margin expansion reflects both our operational efficiency and the strength of our live services model, which tend to carry higher margins compared to full game sales. Year over year, the expansion is largely driven by the favorable shift in revenue mix towards live services, as well as improved operational efficiencies across our global operations. Quarter over quarter, we saw improvements primarily from the ongoing managing of discretionary spending and continued focus on scalable, efficient operational practices. Your second question on Skate, we're incredibly excited about its potential. Skate represents not just a new game, but a new creator-driven platform that aligns with the current trend towards user-generated content and community-building.
We see the potential for significant engagement given the passionate Skate community and the broad appeal of skateboarding culture. Financially, while it's early, we're aiming for Skate to become a meaningful contributor to EA's overall portfolio, with live services providing opportunities for recurring revenue generation. Overall, our strategy is focused on long-term engagement, and the creative opportunities in Skate align well with that vision. Thanks for the questions, Matthew.
Operator: Our next question comes from the line of Mike Hickey from The Benchmark Company.
Mike Hickey: Hi. Thanks for taking my questions. Just two from me. First, on the upcoming launch of FC, given the soccer/football landscape's competitive dynamics, what can you share about your strategy to solidify and grow your position there? And second, with the changes in leadership at EA and the creation of new roles, how do you see this impacting your strategy, if at all?
Andrew Wilson: Great questions, Mike. On your first question related to FC, we are very optimistic about the future. Football is the world's most popular sport, and our FC title is advantaged by the foundation of FIFA's global fan base. Our strategy focuses on continuing to deliver unparalleled authenticity and depth in our gameplay, underpinned by our unique access to player data, partnerships with clubs, leagues, and the governing bodies of football. Furthermore, our live services will continue to connect and engage our community year-round, capitalizing on key football events and trends. Regarding the second question, as we refine our leadership structure at EA, the changes reflect an evolution rather than a shift in strategy.
The creation of new roles is designed to enhance our agility and focus on major growth opportunities, ensuring we remain at the forefront of the industry. With a deep bench of proven leaders, we're well-positioned to continue our creative and commercial success in the competitive interactive entertainment landscape. Thanks, Mike, for your questions.
Operator: There are no more questions in the queue at this time. I would like to turn the call back over to Andrew Wilson for any closing remarks.
Andrew Wilson: Thank you, operator, and thank you to everyone for joining us today. We appreciate your continued support and interest in Electronic Arts Inc. We are excited about the opportunities ahead and look forward to updating you on our progress in the coming quarters. Have a great afternoon, everyone.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.