Electronic Arts F2Q09 (Qtr End 9/30/08) Earnings Call Transcript

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2008-10-30 19:05:17.0

Tags: Revenue, Electronic Arts Inc., Call Transcript, Earnings, Operational Accounting, Finance, Seeking Alpha, Revenue, Electronic Arts Inc., Call Transcript, Earnings, Operational Accounting, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) We’ll take our first question from Doug Creutz with Cowen & Company.

Douglas Creutz - Cowen & Company

Thanks. If I could drill down on the guidance a little bit, you mention currency issues, presumably depress revenue, you’ve got some title push-backs which depress revenue, but you are leaving your non-GAAP revenue guidance I believe unchanged for the year. So presumably there is something offsetting that which is doing better than you expected and I guess could you just explain how that all fits together? Thanks.

Eric F. Brown

Thanks for the question. We are leaving the top end of the range unchanged at $5.0 billion to $5.3 billion and what we have is a mix change. We are doing better than we expected last quarter in terms of our distribution business. The discrete previously announced title slip of Harry Potter is a high margin title. That is pushed out into fiscal ’10, so all in there are puts and takes on the revenue line.

Specifically in regard to the change in the EPS, we called out Harry Potter, as previously announced. That’s $0.13. Foreign exchange is $0.12 with all of our profitability ahead of us in the back half of the fiscal year, and so those would be the primary drivers on the reduction of the guidance for EPS.

John S. Riccitiello

A little color on the top line is Rock Band in particular is doing better. FIFA looks like it is doing better. Dead Space has got off to a strong start, and sports is performing well. On the offset, you’ve got catalog, Saboteur, and a few other items, so hence the lack of change in the top line guidance.

Operator

We’ll go next to [Leo Choy] with Pacific Growth Equities.

Leo Choy - Pacific Growth Equities

Thanks for taking my questions. I’ve just got a question on sports -- last year you guys mentioned a slower start for the sports label and with some of the numbers coming out for Madden, I was wondering if that puts you back on track in terms of your target.

John S. Riccitiello

I believe you are referring to last year or last call, actually, where we had suggested that we had very weak pre-orders on our key titles. And as John Pleasants had mentioned during his commentary, the question that we had raised or Peter Moore had raised during the last call was something we were very concerned about at the time, which is we had low pre-orders, we had the expectation for higher quality and innovation, and we were unsure which was going to be the more important factor in determining how many units we would sell or how many dollars of revenue we would generate. And as we mentioned, the revenues have come in as expected, with each of our sequel titles collectively adding up to year-over-year growth, in line with our expectations. So by and by, I think we learned that quality wins.

 

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