Original Source: FD (FAIR DISCLOSURE) WIRE
. Larry Probst, Electronic Arts, Chairman . Tricia Gugler, Electronic Arts, Director IR . John Riccitiello, Electronic Arts, CEO . Warren Jenson, Electronic Arts, EVP, CFO, CAO . Bill Kreher, AG Edwards, Analyst . John Taylor, Arcadia, Analyst . Evan Wilson, Pacific Crest, Analyst . John McPeake, Prudential Equities Group, Analyst
. Frank Gibeau, Electronic Arts, EVP, GM North American Publishing
. Colin Sebastian, Lazard Capital Markets, Analyst . Justin Post, Merrill Lynch, Analyst . Shawn Milne, Oppenheimer, Analyst . Tony Gikas, Piper Jaffray, Analyst . Jeetil Patel, Deutsche Bank, Analyst
. Heath Terry, Credit Suisse, Analyst . Michael Savner, Banc of America, Analyst . Ben Schachter, UBS, Analyst . David Joseph, Morgan Stanley, Analyst . Dean Gianoukos, JPMorgan, Analyst . Edward Williams, BMO Capital Markets, Analyst . Edward Urban, Bear Stearns, Analyst . Mike Hickey, Janco Partners, Analyst
ERTS reported full-year revenue of $3.091b and 4Q07 revenue of $613m. 4Q07 GAAP diluted loss per share was $0.08 and non-GAAP diluted EPS was $0.06. Co. expects full-year GAAP revenue to be $3.1-3.4b, full-year GAAP diluted loss per to be between $0.77 and $0.23. Expected 1Q08 GAAP revenue is $300-360m and 1Q08 GAAP diluted loss per share is between $0.66 and $0.56.
A. Key Data From Call 1. Full-year revenue = $3.091b. 2. 4Q07 revenue = $613m. 3. 4Q07 GAAP diluted loss per share = $0.08. 4. 4Q07 Non-GAAP diluted EPS = $0.06. 5. 4Q07 GM = 61.7%. 6. 4Q07 inventory = $62m.
7. 4Q07 cash, short-term investments, and marketable securities =
$2.976b. 8. Expected full-year GAAP revenue = $3.1-3.4b. 9. Expected full-year GAAP diluted loss per = between $0.77and $0.23.
10. Expected full-year non-GAAP revenue = $3.6-3.8b. 11. Expected full-year non-GAAP diluted EPS = $0.90-1.20. 12. Expected 1Q08 GAAP revenue = $300-360m. 13. Expected 1Q08 GAAP diluted loss per share = between $0.66 and $0.56. 14. Expected 1Q08 non-GAAP revenue = $350-400m.
S1. 4Q07 Business Review (W.J.) 1. 4Q07 Highlights: 1. 4Q07 performance exceeded expectations both on top and bottom line. 2. Revenue was $613m vs. $641m, down 4%. 3. GAAP diluted loss per share was $0.08 vs. a loss of $0.05 in 4Q06. 4. Non-GAAP diluted EPS was $0.06 vs. $0.14. 5. During 4Q07, several titles stood out.
1. Successfully re-launched the Command & Conquer franchise with CnC 3 Tiberium Wars selling over 1m copies. 2. The Sims 2 Seasons sold over 1m copies, making it Co. fifth platinum Sims 2 expansion pack. 3. Shipped four re-titles in March: 1. Tiger Woods PGA Tour. 2. SSX. 3. Medal of Honor Vanguard. 4. Godfather BlackHand Edition. 4. While Co. still has a way to go, it now have six-re-titles at retail. 6. In North America, Co. was the Number 1 third party publisher for the month of March and Co. estimate Number 2 in Europe. 7. Def Jam Icon, Medal of Honor Vanguard, NBA Street, and Burnout Dominator each sold over 500,000 copies.
8. Catalog continued to perform well. 1. Need For Speed Carbon, Need For Speed Most Wanted, The Sims 2, and Madden O7 each sold over 0.5m copies. 2. Full-Year Results: 1. For the year, revenue was $3.091b, up 5% from a year ago. 2. Co.'s Top Four franchises were Need for Speed, The Sims, Madden, and FIFA all experiencing double-digit units and revenue growth YoverY. 1. The Sims franchise continues to thrive with 22m copies sold, both units and revenue were up a strong 49%. 3. For the year, Co. had 24 platinum titles, down from 27 a year ago. 4. Co.'s trailing 12-month segment share was roughly 20% in both North America and Europe, down roughly 2-3 point for the comparable period. 5. In sports, Co.'s business continues to grow with revenue up over 20%. 1. Madden '07 was the top selling title for the year with units and revenue up over 15%. 2. This year, Co. launched Madden on 11 platforms. 3. Co. soccer business had a banner year. 1. Co. sold over 13m games across soccer portfolio FIFA, FIFA World Cup, Champions League, and FIFA Street. 6. In online Co. grew digit revenue of 47% to $127m. 1. Club Pogo subscriptions has now passed 1.5m up 23% from last year. 2. Sold over 9m pieces of digital content. 3. Cell Phones: 1. Revenue reached $140m as Co. continued to expand in both North America and Europe. 2. In the first year of Co. acquisition, EA. Mobile delivered $40m of non-GAAP operating profit at a margin of 29%, well ahead of expectation.
3. On a GAAP basis, the acquisition of JAMDAT was accretive for
the year. 4. Over the last 12 months, Co. further strengthened its long-term position. 5. EA Partners signed agreements to bring Rock Band, Mercenaries 2, and Hellgate: London to consumers.
4. Acquisition: 1. ERTS acquired five companies: 1. Digital Illusions. 2. Mythic Entertainment. 3. Headgate Studios.
4. Phenomic. 5. SingShot. 2. In Asia, Co. announced an agreement with Neowiz to bring online games to market and have acquired 19% stake in this co.
S2. 4Q07 Financial Performance (W.J.) 1. 4Q07 Revenues: 1. Net revenue was $613m, down 4% from 4Q06, primarily due to the decline in sales from current-gen platforms. 2. Revenue was driven by:
1. Command & Conquer 3. 2. Need for Speed Carbon. 3. Def Jam Icon. 4. Sims 2 Seasons. 3. Absent the impact of FX, revenue would have been down 8%. 4. Co. released 27 SKUs in 4Q07 vs. 29 in 4Q06. 5. Console revenue what $298m, down 17% primarily due to: 1. Strength of last year's release of Black, Godfather, and Fight Night. 2. Decline in sales from current-gen platforms. 6. Next-generation revenue was $170m driven by:
1. Launch of the PS3 and Wii. 2. Growth in revenue from the 360. 7. Next-gen revenue was 57% of total console revenue. 2. Other Revenue: 1. In mobility, revenue was $105m, up 19%. 2. On mobile phones, revenue was an industry leading $36m. 1. Co. had four of the Top Ten games in North America and three of the Top Ten in the UK. 3. On handheld, revenue was $69m down $4m 4. NDS revenue of $27m was over [2X] that of last year driven by
Theme Park and The Sims. 5. Revenue from both the PSP and GBA were down YoverY. 6. PC revenue was $128m, up 23% driven by CnC 3 and the continued strength of The Sims franchise. 1. North America and Europe CnC was the Number 1 PC title for March.
7. Co-pub and distribution revenue was $45m, down $7m principally
due to last year's strength of Half Life 2. 8. Internet, licensing, advertising and other was $37m, flat to last year.
9. Co. launched pogo in Germany during 4Q07 and pogo is now a Top
Three casual game sight in the UK just six months of launch.
3. Revenue By Geographically: 1. North America revenue was $307m down $33m or 10%. 1. The increase in next-generation, cellular handsets, and subscription revenue did not offset decline from current
gen-platforms. 2. NBA Street, Def Jam Icon, and March Madness did not offset last year's performance of Fight Night, Godfather, and Black. 2. International revenue was $306m, up $5m or 2%.