drivers include FIFA

Electronic Arts Management Discusses Q2 broncosnflofficialproshop.com/Nike-Peyton-Manning-Jersey.html 2013 Von Miller Kids Jersey Results Welcome, and thank you for standing by. [ Instructions] Today’s conference is being recorded. If you have any objections, you may disconnect at this time. Now I will turn the meeting over to Mr. Rob Sison, Vice President of Investor Relations. Go ahead, you may begin.Thank you. Welcome to EA’s Fiscal 2013 Second Quarter Earnings Call. With me on the call today are John Riccitiello, our CEO; Blake Jorgensen, CFO; and Frank Gibeau, President of Labels. Peter Moore, our COO, will be joining us for the Q portion of the call. In addition, we have posted earnings slides to accompany our prepared remarks. Lastly, after the call, we will post our prepared remarks, an audio replay of this call and a transcript.This presentation and our comments include forward looking statements regarding future events and the future financial performance of the company. Actual events and results may differ materially from our expectations. We refer you to our most recent Form 10 Q for a discussion of risks that could cause actual results to differ materially from those discussed today. Electronic Arts makes these statements as of October 30, 2012, and disclaims any duty to update them.Throughout this call, we will discuss both GAAP and non GAAP financial measures. The comparable measures for certain non GAAP measures to be discussed are: for Q2, net revenue of $711 million; digital revenue of $320 million $324 million; gross margin of 37.4%; operating expenses of $630 million; and resulting loss per share of $1.21.During this call, unless otherwise stated, the financial metrics will be presented on a non GAAP basis. Our earnings release and the earnings slides provide a reconciliation of our GAAP to non GAAP measures. These non GAAP measures are not intended to be considered in isolation from, as a substitute for, or superior to our GAAP results. We encourage investors to consider all measures before making an investment decision. All comparisons made in the course of this call are against the same period in the prior year unless otherwise stated.Now I’ll turn the call over to John Riccitiello. John?Good afternoon. And for those calling in or listening in from the East Coast, we hope you and your families are safe.EA delivered a very strong performance in the second quarter of fiscal ’13. Our non GAAP revenue was $1.08 billion in the quarter, higher than a year ago despite a significant headwind from the declining packaged goods channel. Non GAAP diluted earnings per share was $0.05 above the midpoint of our guidance, making this our 11th straight quarter of meeting or beating guidance. And I’m proud to say that we are tracking towards another sharp increase in EPS in fiscal ’13.Our performance in Q2 was led by very strong sales of our EA SPORTS titles, Madden NFL 13 and FIFA Soccer 13, consistent strength on smartphones and tablets and the breakaway success of our iOS game, The Simpsons: Tapped Out. Medal of Honor Warfighter shipped last week and the highly anticipated Need for Speed Most Wanted launched today in North America. While we are very pleased with the demand indicators on Need for Speed, the Metal of Honor launch is coming in below our expectations. Blake and Frank will provide more detail on these.We also continue to see overall choppiness in the sector. Digital games and services are surging, mobile is scaling nicely and free to play is bringing in millions of new consumers. The growth in social network gaming has slowed and console packaged goods are declining, which is typical for console games this late in the cycle.Despite the volatility and headwinds, EA is performing well. We’ve focused our title count and managed costs. We have diversified our platform partners and business model so that EA is less vulnerable to weakness in a single channel, platform or business model. We got more big franchises than any other publisher, and in most of these, we’re performing very well.We are managing the ups and downs. Our Q1 and Q2 were better than expected. Our Q3 appears soft due mostly to Medal of Honor. We’re expecting a strong finish in Q4, driven by a powerful slate of titles. Taken together, we are updating our fiscal ’13 non GAAP EPS guidance to a range of $1 to $1.15, down $0.05 from our original guidance, which reflects the weakness in Q3 associated with Medal of Honor. At the midpoint, our guidance is to deliver over 25% non GAAP EPS growth and to beat the current street EPS estimate for our fiscal year.Next, I want to highlight our progress on 3 key strategies. By now, you will recognize these strategies as our mantra: brands, platform and talent. Our focus on brands centers on constantly improving the quality of our key franchises. We make fewer titles, but we make them bigger by making them better. We transformed the revenue model by adding digital content and services, which extends the relationship with consumers. This strategy is working for EA, and here is one key highlight to prove the point. Since we adopted the fewer, bigger, better brand approach in 2007, EA has delivered the 5 biggest revenue hits in our company’s entire history.Our platform strategy is about taking our brands into new fast growing digital channels and also building our own platform technology to facilitate growth from these platforms and on our own Origin service. We are building bridges to the next generation of games and technology. This strategy is delivering for us, and here’s a proof point: inclusive of our successes on Battlefield 3 Premium, EA is currently tied for first in digital revenue among western gaming companies. Over the past 5 years, we have consistently grown our digital revenues, averaging annual growth of nearly 40%.Our third strategic initiative is talent. We are evolving our core capabilities to better address both Von Miller Jersey the art and science of gaming. In addition to having the best creative talent in our studios, we are adding new DNA to build our engineering and analytic capabilities. We are building this capability to support network and platform technologies that will define the most profitable companies in years to come.To summarize, the game sector is in a volatile period of change and transition, awaiting new catalysts for even more rapid growth. EA is executing well in this environment and investing for strong growth in leadership in what comes next. Since the San Francisco Giants won the World Series, I’ll use a baseball analogy. EA doesn’t win every inning, but we put a lot of runs on the scoreboard, and we expect to finish the season at the top of the standings and to continue to do so for years to come.With that, I’ll turn it over to our new CFO, Blake Jorgensen.Thanks, John. Before I discuss the quarter, I’d like to make a few comments and observations about EA after my first 8 weeks on the job. First, I’m very excited to join this great company. The management team and all the people I’ve met are true leaders in the industry and extremely dedicated to developing and delivering world class entertainment to consumers around the world. I’m fully aligned with the strategy of the company and believe we need to continue our journey of focus on those products and activities that generate the greatest shareholder returns.I joined EA because the company is now in the middle of an exciting transformation to a truly digital business that will allow us to grow and improve our profitability over time. My focus at EA will be to help lead the company in improving our operating margins, increasing the return on capital and generating greater key greater free cash flow for investors.In conversations with investors and analysts, I’ll be direct and transparent, providing the information required to follow our business. I’ll help people understand the changes in the financial results as we move further into the digital business, and I’ll provide key metrics and guidance when they are appropriate for understanding our performance in future outlook. But I will stop providing metrics if they no longer provide useful information on our business performance. I look forward to working with each of you. And now let me turn to our business and quarterly performance.First, let me start with a brief review of the gaming sector for the quarter. We estimate that the worldwide video game sector grew in the high single digit percentages. We are encouraged the digital market continues to grow more than 20% over the prior year as the packaged goods market slows.In addition, the mobile business continues to expand, while the social network game gaming growth has slowed recently. For EA, both FIFA Soccer 13 and Madden NFL 13 debuted as the top 2 best selling titles for the western world in the month of September, and NHL 13 made the top 10 list.Additionally, we saw solid catalog performances from Battlefield 3 and the FIFA Soccer 12, as well as continued growth in our mobile business. Our Q2 non GAAP net revenue was $1.08 billion, which was in line with our revenue guidance and 4% higher than the same period last year, driven by our FIFA, Madden and NHL titles.EA’s Q2 non GAAP digital net revenue increased 45% year over year to $314 million, and for the trailing 12 months, exceeded $1.4 billion, representing a year over year growth of 59%. For the quarter, each digital revenue channel demonstrated more than 30% growth versus the prior year. For example, extra content and free to play were up 34%, led by Battlefield 3, SimCity Social and Mass Effect 3. Full game downloads were up 46% with continued strong demand for Battlefield 3. Mobile business alone was approximately $88 million, up 60% over the prior year. Smartphone and tablet revenue accounted for $66 million of this quarter’s revenue, growing at more than 120% year over year.The primary drivers include FIFA World Class Soccer in Japan and Bejeweled Blitz on a worldwide basis. The Simpsons: Tapped Out launched in mid August and has led top grossing applications in the Apple App Store for most of the month of October. Frank will provide more color on this business later.Subscriptions, advertising and other digital revenue grew 48%, driven by Star Wars: The Old Republic and other key properties. As mentioned on the last call, a free to play option for the Star Wars game will be available this quarter, and we will provide more insight regarding the results of this change in future calls.Also, the non GAAP revenue continues to exclude our Battlefield 3 Premium subscription service. $43 million of Battlefield 3 Premium sales were generated in the September Ryan Clady Kids Jersey quarter, bringing the total premium revenue from this year to approximately $80 million. As a reminder, we will recognize these sales as revenue in the fourth quarter when we release the fifth expansion pack entitled End Game.