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ELECTRONIC ARTS INC.

EA
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Business Summary

Electronic Arts is a global leader in digital interactive entertainment, developing, marketing, publishing, and delivering games, content, and services on game consoles, PCs, and mobile devices. The company operates in a market that is intensely competitive and changes rapidly as new products, business models, and distribution channels are introduced. The industry is characterized by rapid technological advances, and EA faces competition from established interactive entertainment companies, emerging start-ups, and large diversified companies with greater financial resources. Advances in technology and artificial intelligence have lowered barriers to creating new games, and EA expects new entrants to continue to emerge.

EA's primary competitors include companies that focus on developing products and services available on consoles, PCs, and/or mobile devices, as well as large, diversified companies that have strengthened their interactive entertainment capabilities. The company's competitive advantages include its creative talent, production capabilities, broad portfolio of owned and licensed IP, technological foundation, and a network of hundreds of millions of players. EA's direct sales to Sony and Microsoft represented approximately 39 percent and 16 percent of total net revenue, respectively, in fiscal year 2026 . Important competitive factors include the ability to attract creative and technical talent, game quality, innovation, brand recognition, and reputation.

EA generates revenue through the sale of full games (digital downloads and packaged goods), live services (extra content, subscriptions, and other revenue), and licensing. Live services and other net revenue represented 71 percent of total net revenue during fiscal year 2026 . The company's business model includes traditional single-game purchase, subscription offerings, and a free-to-play model. EA's players engage with products and services on consoles, PCs, and mobile devices, and the company distributes its products through partners such as Sony, Microsoft, Apple, Google, and third-party online stores like Steam.

EA's product portfolio spans diverse genres including sports, racing, first-person shooter, action, role-playing, and simulation. The EA SPORTS FC franchise is a key driver, with revenue from this franchise, as well as from the American football franchise, being material to the business. Live services net revenue generated from extra content purchased within Ultimate Team, a substantial portion of which was derived from FC Ultimate Team, is material to the business. Live services and other net revenue was $5,383 million for fiscal year 2026 , compared to $5,461 million in fiscal year 2025 and $5,547 million in fiscal year 2024 . Within live services, net revenue attributable to extra content was $4,091 million for fiscal year 2026 , $4,365 million for fiscal year 2025 , and $4,463 million for fiscal year 2024 . Full game net revenue was $2,148 million for fiscal year 2026 , driven by EA SPORTS FC 26, Battlefield 6, EA SPORTS Madden NFL 26, and EA SPORTS FC 25. Full game downloads net revenue was $1,708 million in fiscal year 2026 , up from $1,478 million in fiscal year 2025 and $1,343 million in fiscal year 2024 . Packaged goods net revenue was $440 million in fiscal year 2026 , down from $524 million in fiscal year 2025 and $672 million in fiscal year 2024 . Console net revenue was $4,694 million in fiscal year 2026 , PC and other net revenue was $1,746 million , and mobile net revenue was $1,091 million .

On September 28, 2025, EA entered into a Merger Agreement to be acquired by an investor Consortium comprised of the Public Investment Fund, private investment funds affiliated with Silver Lake Group, L.L.C., and private investment funds affiliated with Affinity Partners. Under the terms, each share of common stock will convert into the right to receive $210 per share in cash . The Merger Agreement contains a termination fee of up to $1.0 billion payable by the Company under specified circumstances . During fiscal year 2026, EA returned $941 million to stockholders through capital return programs , repurchasing 5.3 million shares for approximately $750 million and paying $191 million through its quarterly cash dividend program . The quarterly cash dividend was $0.19 per share of common stock in fiscal year 2026 . In May 2024, the Audit Committee authorized a new program to repurchase up to $5.0 billion of common stock , expiring on May 9, 2027. During the second quarter of fiscal year 2026, EA suspended repurchase activity under this program in contemplation of the Merger.

Total net revenue for fiscal year 2026 was $7,531 million , up 1 percent year-over-year from $7,463 million in fiscal year 2025 . Gross margin was 79 percent , flat year-over-year. Operating expenses were $4,785 million , up 9 percent year-over-year. Operating income was $1,162 million , down 24 percent year-over-year. Net income was $887 million with diluted earnings per share of $3.51 . Net cash provided by operating activities was $2,553 million , up 23 percent year-over-year. Total cash, cash equivalents and short-term investments were $2,980 million .

Business Outlook

EA is focusing on building games and experiences that grow the global online communities around its key franchises, deepening engagement through connecting interactive storytelling to key intellectual property, and harnessing its communities to grow in, around, and beyond its games. The company is investing in research and development to incorporate artificial intelligence into its products and services, expecting developments in AI to accelerate production and enable new experiences for players. EA also continues to invest in its live services offerings, including extra content, subscription offerings, and other revenue generated outside of full game sales, with live services and other net revenue representing 71 percent of total net revenue during fiscal year 2026 .

EA is focusing on expanding its global football and American football franchises, which include EA SPORTS College Football and EA SPORTS Madden NFL, as well as its iconic IP such as The Sims, Apex Legends, and Battlefield. The company's live services net revenue generated from extra content purchased within Ultimate Team, a substantial portion of which was derived from FC Ultimate Team, is material to the business. EA also has agreements with companies such as Tencent Holdings Limited, Nexon Co., Ltd, and Garena Online Private Limited to publish its mobile and PC free-to-play games in certain countries, representing a vector for geographic expansion.

Gross margin was 79 percent in fiscal year 2026 , flat year-over-year. Operating expenses increased 9 percent year-over-year to $4,785 million , driven by a $259 million increase in research and development expenses , a $166 million increase in marketing and sales expenses , and an $18 million increase in general and administrative expenses . The increase in research and development was primarily due to a $144 million increase in personnel-related costs , a $53 million increase in studio-related contracted services , and a $45 million increase in digital infrastructure costs . The increase in marketing and sales was primarily due to higher advertising and marketing spending related to the release of Battlefield 6. The increase in general and administrative was primarily due to $28 million of fees and other direct expenses related to the Merger .

EA employed approximately 14,600 people globally as of March 31, 2026 , with 71 percent located internationally . The company is investing in research and development to incorporate artificial intelligence into its products and services. EA's technological infrastructure is critical to its digital business, and the company engages in activities to limit the impact of abuse of its digital products and services, including monitoring games for evidence of exploitation and re-balancing game environments.

Research and development expenses were $2,828 million for fiscal year 2026 , representing 38 percent of net revenue. Capital expenditures were $230 million for fiscal year 2026 . During fiscal year 2026, EA returned $941 million to stockholders through capital return programs , including repurchasing 5.3 million shares for approximately $750 million and paying $191 million through its quarterly cash dividend program . The quarterly cash dividend was $0.19 per share of common stock in fiscal year 2026 . As of March 31, 2026, no amounts were outstanding under the $500 million unsecured revolving credit facility .

EA faces structural headwinds from intense competition, with competitors ranging from established interactive entertainment companies to emerging start-ups and large, diversified companies with greater financial resources. The company's business is subject to economic, market, public health, and geopolitical conditions beyond its control, including conflicts, inflation, slower growth, recession, and other macroeconomic conditions that could negatively impact discretionary consumer spending. The imposition of tariffs by the U.S. government on imported goods and any retaliatory tariffs from foreign governments could result in increased costs and uncertainty. International net revenue comprised 60 percent of total net revenue for fiscal year 2026 , exposing EA to foreign currency exchange rate fluctuations.

EA's business is subject to various and complex laws and regulations domestically and internationally, including those related to gaming, user privacy, data collection and retention, consumer protection, protection of minors, online safety, content, advertising, localization, information security, intellectual property, competition, sanctions, addressing climate change, taxation, and employment. Certain business models that utilize virtual items and virtual currency are subject to new laws or regulations or evolving interpretations that have limited or restricted the sale of products and services in certain territories. The company is also subject to risks related to the proposed Merger, including the inability to obtain required regulatory approvals, which could delay or prevent the Merger.

Risk Factors

The proposed Merger with the Consortium presents material risks, including a termination fee of up to $1.0 billion payable by EA under specified circumstances and the potential for financial and operational disruptions if the Merger does not close. EA's business is intensely competitive, and a significant portion of revenue historically has been derived from a few popular franchises, such as EA SPORTS FC, with live services net revenue from Ultimate Team being material. The company faces risks from security breaches and cyber threats, which have occurred in the past and are expected to continue. International net revenue comprised 60 percent of total net revenue for fiscal year 2026 , exposing EA to foreign currency exchange rate fluctuations, and a hypothetical adverse 10 percent movement in exchange rates would result in a $198 million decline in fair value of cash flow hedging contracts . Changes in tax rates or exposure to additional tax liabilities could adversely affect earnings, with unrecognized tax benefits of $677 million as of March 31, 2026 .

Management Priorities

Management's message emphasizes EA's position as a global leader in digital interactive entertainment, focusing on building games and experiences that grow global online communities around key franchises, deepening engagement through interactive storytelling, and harnessing communities to grow in, around, and beyond games. Key strategic priorities include investing in research and development to incorporate artificial intelligence into products and services, continuing to develop live services offerings, and executing on the proposed Merger with the Consortium. Management highlights that live services and other net revenue represented 71 percent of total net revenue during fiscal year 2026 , and that net bookings were $8,026 million for fiscal year 2026 , up 9 percent year-over-year. The filing notes that the Merger Agreement was approved by stockholders on December 22, 2025, and that the parties are working diligently to complete remaining regulatory reviews.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Distribution of Products and Services
  2. [2] Item 1, Business — Distribution of Products and Services
  3. [3] Item 1, Business — Overview
  4. [4] Item 7, MD&A — Results of Operations
  5. [5] Item 7, MD&A — Results of Operations
  6. [6] Item 7, MD&A — Results of Operations
  7. [7] Item 7, MD&A — Trends in Our Business
  8. [8] Item 7, MD&A — Trends in Our Business
  9. [9] Item 7, MD&A — Trends in Our Business
  10. [10] Item 7, MD&A — Results of Operations
  11. [11] Item 7, MD&A — Results of Operations
  12. [12] Item 7, MD&A — Results of Operations
  13. [13] Item 7, MD&A — Results of Operations
  14. [14] Item 7, MD&A — Results of Operations
  15. [15] Item 7, MD&A — Results of Operations
  16. [16] Item 7, MD&A — Results of Operations
  17. [17] Item 8, Note 17 — Segment and Revenue Information
  18. [18] Item 8, Note 17 — Segment and Revenue Information
  19. [19] Item 8, Note 17 — Segment and Revenue Information
  20. [20] Item 8, Note 1 — Description of Business and Basis of Presentation
  21. [21] Item 8, Note 1 — Description of Business and Basis of Presentation
  22. [22] Item 7, MD&A — Overview
  23. [23] Item 7, MD&A — Overview
  24. [24] Item 7, MD&A — Overview
  25. [25] Item 5, Market for Registrant's Common Equity
  26. [26] Item 5, Market for Registrant's Common Equity
  27. [27] Item 7, MD&A — Overview
  28. [28] Item 7, MD&A — Overview
  29. [29] Item 7, MD&A — Overview
  30. [30] Item 7, MD&A — Overview
  31. [31] Item 7, MD&A — Overview
  32. [32] Item 7, MD&A — Overview
  33. [33] Item 7, MD&A — Overview
  34. [34] Item 7, MD&A — Overview
  35. [35] Item 7, MD&A — Overview
  36. [36] Item 1, Business — Overview
  37. [37] Item 7, MD&A — Overview
  38. [38] Item 7, MD&A — Overview
  39. [39] Item 7, MD&A — Results of Operations
  40. [40] Item 7, MD&A — Results of Operations
  41. [41] Item 7, MD&A — Results of Operations
  42. [42] Item 7, MD&A — Results of Operations
  43. [43] Item 7, MD&A — Results of Operations
  44. [44] Item 7, MD&A — Results of Operations
  45. [45] Item 7, MD&A — Results of Operations
  46. [46] Item 1, Business — Human Capital
  47. [47] Item 1, Business — Human Capital
  48. [48] Item 7, MD&A — Results of Operations
  49. [49] Item 8, Consolidated Statements of Cash Flows
  50. [50] Item 7, MD&A — Overview
  51. [51] Item 7, MD&A — Overview
  52. [52] Item 7, MD&A — Overview
  53. [53] Item 5, Market for Registrant's Common Equity
  54. [54] Item 7, MD&A — Liquidity and Capital Resources
  55. [55] Item 1A, Risk Factors — Financial Risks
  56. [56] Item 8, Note 1 — Description of Business and Basis of Presentation
  57. [57] Item 1A, Risk Factors — Financial Risks
  58. [58] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  59. [59] Item 8, Note 10 — Income Taxes
  60. [60] Item 1, Business — Overview
  61. [61] Item 7, MD&A — Overview
  62. [62] Item 8, Consolidated Statements of Operations
  63. [63] Item 8, Consolidated Statements of Operations
  64. [64] Item 8, Consolidated Statements of Operations
  65. [65] Item 8, Consolidated Statements of Operations
  66. [66] Item 8, Consolidated Statements of Operations
  67. [67] Item 8, Consolidated Statements of Operations
  68. [68] Item 8, Consolidated Statements of Operations
  69. [69] Item 8, Consolidated Statements of Operations
  70. [70] Item 8, Consolidated Statements of Operations
  71. [71] Item 8, Consolidated Statements of Operations
  72. [72] Item 8, Consolidated Statements of Operations
  73. [73] Item 8, Consolidated Statements of Operations
  74. [74] Item 8, Consolidated Statements of Operations
  75. [75] Item 8, Consolidated Statements of Operations
  76. [76] Item 8, Consolidated Statements of Operations
  77. [77] Item 8, Consolidated Statements of Cash Flows
  78. [78] Item 8, Consolidated Statements of Cash Flows
  79. [79] Item 8, Consolidated Statements of Cash Flows
  80. [80] Item 7, MD&A — Liquidity and Capital Resources
  81. [81] Item 7, MD&A — Liquidity and Capital Resources
  82. [82] Item 7, MD&A — Results of Operations
  83. [83] Item 7, MD&A — Results of Operations
  84. [84] Item 8, Note 10 — Income Taxes
  85. [85] Item 7, MD&A — Results of Operations
  86. [86] Item 7, MD&A — Results of Operations
  87. [87] Item 8, Note 10 — Income Taxes
  88. [88] Item 8, Note 7 — Goodwill and Acquisition-Related Intangibles
  89. [89] Item 8, Note 8 — Royalties and Licenses
  90. [90] Item 8, Note 17 — Segment and Revenue Information
  91. [91] Item 8, Note 17 — Segment and Revenue Information

Analysis on 6/9/2026