Earnings Call Transcript from EA's First Quarter of 2026
Electronic Arts Inc. (EA) has announced a strong start to its fiscal year 2026, with a 15% year-over-year increase in GAAP net revenue, reaching $1.92 billion. This growth is driven by several key factors, as outlined in the company's Q1 earnings call on July 29, 2025.
Live Services Revenue and Sports Titles Lead the Way
The largest source of income for EA continues to be live services, contributing over 82% of the company's revenue. This is primarily due to ongoing in-game content such as Ultimate Team modes, expansions, and seasonal events that create recurring revenue beyond initial sales. Successful new and updated sports titles, including EA SPORTS FC, Madden NFL, NHL, and EA SPORTS F1 25, have also shown strong engagement and delivered net bookings driven by enhanced gameplay and real-world integrations.
Growth in Full-Game Sales and Expansion of Franchises
In addition to live services, growth in full-game sales indicates continued demand for traditional premium titles. Notably, EA's strategy to maintain no planned price increases supports stable revenue. The company is also expanding franchises such as The Sims and Skate, with The Sims having a highly engaged community receiving frequent content updates, and Skate positioned as a new creator-driven platform expected to contribute meaningfully to engagement and recurring revenue.
Margin Expansion and Investment in AI and R&D
EA's strategy focuses on margin expansion from a favorable revenue mix shift toward higher-margin live services and improved operational efficiencies. This approach supported an 18% gross profit increase in Q1 FY2026 compared to the prior year. The company is also investing in research and development, with a focus on enhancing player experience, revitalizing franchises, and driving future growth through innovation.
Distribution Partnerships and Leadership in the Industry
Distribution partnerships with major platforms like Sony and Microsoft remain crucial in reaching consumers and accounted for a significant portion of net revenue in FY2025. To further reinforce its leadership in the industry, EA has announced the creation of new organizational roles to capture upcoming growth opportunities.
Upcoming Titles and Community Engagement
EA's upcoming title, FC, is advantaged by the foundation of FIFA's global fan base, with a strategy focusing on continuing to deliver unparalleled authenticity and depth in gameplay, underpinned by unique access to player data, partnerships with clubs, leagues, and the governing bodies of football. The Battlefield franchise has had exceptional performance since launch, with strong player uptake and engagement. The Sims franchise remains a key contributor to EA's success, with an active and growing community.
The strong performance of FIFA's Ultimate Team mode and FIFA esports initiatives are also contributing to the continuous growth of live services. EA is aiming for Skate, the new creator-driven platform, to become a meaningful contributor to engagement and recurring revenue. The company reported a 24% GAAP and 31% non-GAAP operating margin in Q1 FY2026, with a cash flow from operations of $750 million.
Revenue Guidance for FY2026
With these growth drivers in place, EA has raised its full-year net revenue guidance to $7.8 billion. The company expects net bookings growth of 3% to 8.8% for FY2026, reflecting a balanced momentum between live service engagement and traditional game releases.
In conclusion, Electronic Arts Inc. (EA) is off to a strong start in FY2026, with a 15% year-over-year increase in GAAP net revenue and a forecasted net bookings growth of 3% to 8.8% for the year. The company's focus on delivering unparalleled authenticity and depth in gameplay, leveraging partnerships and live services to engage communities, and investing in research and development is paying off, as evidenced by the success of its sports titles, The Sims, and Battlefield, among others. With the launch of FC and the continued growth of live services, EA is well-positioned for continued success in the gaming industry.
- The continuous growth of Electronic Arts Inc.'s (EA) live services is primarily attributed to ongoing in-game content, such as Ultimate Team modes, expansions, and seasonal events, which generate recurring revenue beyond initial sales.
- Not only is EA focusing on margin expansion from a favorable revenue mix shift toward higher-margin live services and improved operational efficiencies, but the company is also investing in research and development to enhance player experience, revitalize franchises, and drive future growth through innovation.
- EA's upcoming title, FC, has the advantage of leveraging the foundation of FIFA's global fan base and aims to deliver unparalleled authenticity and depth in gameplay through unique access to player data, partnerships with clubs, leagues, and football governing bodies.
