Electronic Arts Inc. stock research
FY2025 Q1
Electronic Arts (EA) Gross Margin — Quarter Ended Jun 30, 2024
Revenue declined while gross profit decreased slightly, but cost of revenue fell more sharply, leading to an improved gross margin. Compared to both the prior quarter and the same quarter last year, the gross margin strengthened as cost of revenue decreased relative to revenue.
Gross margin takeaway
Quarter ended Jun 30, 2024 · FY2025 Q1
Revenue declined while gross profit decreased slightly, but cost of revenue fell more sharply, leading to an improved gross margin. Compared to both the prior quarter and the same quarter last year, the gross margin strengthened as cost of revenue decreased relative to revenue.
- The strongest observable margin driver is the reduction in cost of revenue, which declined more than the drop in revenue, thereby expanding the gross margin.
- Compared to the prior quarter, revenue and gross profit were lower, but cost of revenue was substantially lower, resulting in a higher gross margin. Versus the same quarter one year earlier, revenue and gross profit were also lower, yet the lower cost of revenue led to an improved gross margin.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
84.2%
Gross profit
$1.4B
Revenue
$1.7B
Cost of revenue
$263.0M
Quarter-over-quarter change
+4.2 pts
Year-over-year change
+3.3 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Sep 30, 2023 | $1.9B | $1.5B | $456.0M | 76.2% |
| Dec 31, 2023 | $1.9B | $1.4B | $529.0M | 72.8% |
| Mar 31, 2024 | $1.8B | $1.4B | $357.0M | 79.9% |
| Jun 30, 2024 | $1.7B | $1.4B | $263.0M | 84.2% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Mar 31, 2024
+4.2 pts
Year-over-year change
Jun 30, 2023
+3.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the reduction in cost of revenue, which declined more than the drop in revenue, thereby expanding the gross margin.
Compared to the prior quarter, revenue and gross profit were lower, but cost of revenue was substantially lower, resulting in a higher gross margin. Versus the same quarter one year earlier, revenue and gross profit were also lower, yet the lower cost of revenue led to an improved gross margin.
Monitor the sustainability of the lower cost of revenue, particularly royalty payments, which the filing notes decreased in cash terms.