Stuart Canfield
Executive Vice President & Chief Financial Officer at Electronic Arts
Thanks, Andrew and good afternoon, everyone.
For the third quarter, we delivered net bookings of $2.37 billion, up 1% year-over-year, or 2% in constant currency, and in line with our expectations. Strength in our live services business, particularly EA SPORTS FC Ultimate Team was partially offset by some softness in the full game. Live services net bookings grew to a record $1.71 billion in Q3, up 3% year-over-year, or up 5% in constant currency, exceeding our expectations, as we continue to drive healthy engagement and bring new players to our franchises.
Full game net bookings of $654 million was down 5% year-over-year or down 4% in constant currency, versus a high prior year comparable that included the World Cup event. On a trailing 12-month basis, total net bookings was up 8% year-over-year, with live services contributing $5.6 billion, or 73% demonstrating the resilience of this evergreen business model.
Building on the strong momentum from our launch at the end of Q2, EA SPORTS FC again exceeded expectations, as EA SPORTS FC Ultimate Team and FC Mobile delivered exceptional double-digit net bookings growth against a World Cup comparable in the prior year. Our global football business net bookings grew 7% year-over-year, as our teams continue to drive strong retention of our core player base through the FC brand transition. EA SPORTS Madden NFL also saw another strong quarter, with net bookings up 5% year-over-year, highlighted by strong engagement trends across full game, Ultimate Team, and Mobile.
Additional highlights from the third quarter included new releases of EA SPORTS UFC, NHL, and World Rally Championship, which contributed to further expanding the aggregate fandom and strength of our EA SPORTS community creating additional value-added services in one of the largest sports brands and platforms in the world.
In a highly competitive quarter, Apex Legends did not meet our expectations, as our teams continue to learn and iterate with each new season and event. In the past few weeks, our recent cross-over promotion showed promising early signals, delivering two of our highest net bookings days over the fiscal year. With Season 20 launching in February, our teams will deliver more innovation as we continue to build for the long-term. We remain committed to Apex Legends, a
Proven franchise with loyal fans, and we will continue to invest in opportunities to drive new growth points as we build and expand the franchise over time through engaging a broader base of players.
Moving to our GAAP results. We delivered net revenue of $1.95 billion, up 3% year-over year. As we continue to operate with focus and discipline, operating expenses were favorable to our expectations, also benefiting from some phasing of spend to Q4. On a year-over-year basis, operating expenses were up 3%, driven primarily by incremental marketing spend as we invested to support our titles and the EA SPORTS FC transition through the critical Holiday season.
Our GAAP earnings per share was $1.07, up 47% year over year. Operating cash flow in the quarter was $1.26 billion, up 13% year over year. On a trailing 12-month basis, free cash flow was a record $2.16 billion. And we returned $376 million to shareholders through dividends and our ongoing share repurchase program.
We are entering the final quarter of FY '24 well-positioned to deliver on our commitments for the fiscal year with our strong business performance year-to-date, our unrivaled portfolio of IP, and our consistent execution in our core live services business. Even in an incredibly competitive market, we are poised to deliver growth in net bookings consistent with what we outlined at the beginning of the year. At the same time, we are tracking to deliver higher levels of underlying profitability and record free cash flow. We remain deliberate and focused around the prioritization and allocation of resources across our teams and portfolio as we make progress against our long-term strategy to drive durable growth, strong cash flow and shareholder returns.
Turning to our Q4 outlook, I'd like to start by sharing a few key considerations. First, as a reminder, our Q4 net bookings is impacted by timing, including releases of our full game and content offerings in the prior year. Second, we expect moderated growth in our EA SPORTS FC franchise as we lap record prior year performance. For the full year, we now expect EA SPORTS FC net bookings to grow mid-to-high single digits, excluding FX. Third, we continue to take a measured approach to Apex Legends in its largest quarter of the year, as we introduce new modes of play and content offerings. And finally, we expect impact from FX to be minimal, as the benefit from more favorable currency exchange rates is offset by hedging gains from the prior year.
As a result, we expect net bookings of $1.625 billion to $1.925 billion, down 16% to down 1% year-over-year, including approximately 8 points of impact from the timing noted earlier. We expect GAAP net revenue of $1.625 billion to $1.925 billion and cost of revenue of $360 million to $410 million. We expect operating expenses of $1.125 billion to $1.205 billion, including a $70 million impairment charge of certain acquisition-related intangible assets. This results in GAAP earnings per share of $0.20 to $0.68 for the fourth quarter.
Before handing back to Andrew, I'd like to take a moment to share some early perspective on our multiyear growth objectives. EA is in an advantaged position to lead the future of interactive entertainment, with ongoing secular tailwinds and structural shifts within the industry further amplifying our strategy. Our long-term financial framework is founded upon creating value for our shareholders by accelerating growth, delivering forward operating leverage, and increasing cash flow. In executing on our strategy, we expect to scale operating leverage through the following growth levers. One, expanded player acquisition, engagement, and retention. Two, highly accretive digital and live services. Three, blockbuster new releases from our development pipeline,
Alongside compounding growth across our core franchises. And four, discipline and focus on aligning our cost structure to invest in support of our strategic growth opportunities.
As we look ahead to FY '25, and more specific guidance in our upcoming Q4 earnings call, I wanted to share some initial considerations. Assuming minimal impact to our results from FX, we expect low-single-digit net bookings growth, reflecting continued execution in our core businesses in a lighter release slate year. And excluding any impact from future share repurchases, we expect mid-to-high single digit growth in underlying profitability.
Looking beyond FY '25, over the next couple of years, we expect our net bookings growth to accelerate, bolstered by our portfolio of industry-leading IP. Compounding growth within our core sports franchises, new content and engaging experiences across our massive online communities, and iconic new releases like Battlefield, Sims and other in-development titles, provide the inflection point that fuels net bookings growth and increases underlying profitability. And we expect to continue to deliver meaningful operating leverage and drive increased cash flow conversion, even as we continue to invest to support our strategic objectives.
In summary, with our incredible talent, industry-leading IP and technology, global and growing communities of fans and our focus and discipline around our strategic objectives, we are confident in our ability to continue to deliver on our long-term growth commitments and drive value for our players and for our shareholders. I look forward to sharing more over the coming quarters.
Now, I'll hand it back to Andrew.
