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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from   to
Commission File No. 000-17948
ELECTRONIC ARTS INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2838567
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)

209 Redwood Shores Parkway
94065
Redwood City California
(Address of principal executive offices) (Zip Code)

( 650 ) 628-1500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class    Trading Symbol Name of Each Exchange on Which Registered

Common Stock, $0.01 par value    EA NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    ☑     No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes    ☑     No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Accelerated filer ☐

Non-accelerated filer ☐
Smaller reporting company ☐

Emerging growth company ☐
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐   No   ☑
As of January 29, 2026, there were 250,253,713 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.
1

Table of Contents

ELECTRONIC ARTS INC.
FORM 10-Q
FOR THE PERIOD ENDED DECEMBER 31, 2025
Table of Contents
 
    Page
Part I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of December 31, 2025 and March 31, 2025
3

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2025 and 2024
4

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2025 and 2024
5

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended December 31, 2025 and 2024
6

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2025 and 2024
7

Notes to Condensed Consolidated Financial Statements
8

Report of Independent Registered Public Accounting Firm
30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
31

Item 3. Quantitative and Qualitative Disclosures About Market Risk
45

Item 4. Controls and Procedures
47

Part II - OTHER INFORMATION

Item 1. Legal Proceedings
48

Item 1A. Risk Factors
48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
58

Item 3. Defaults Upon Senior Securities
58

Item 4. Mine Safety Disclosures
58

Item 5. Other Information
58

Item 6. Exhibits
58

Exhibit Index
59

Signature
60

2

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

ELECTRONIC ARTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
(In millions, except par value data) December 31, 2025 March 31, 2025 (a)

ASSETS
Current assets:
Cash and cash equivalents $ 2,784   $ 2,136  
Short-term investments 115   112  
Receivables, net 829   679  
Other current assets 380   349  
Total current assets 4,108   3,276  
Property and equipment, net 600   586  
Goodwill 5,388   5,376  
Acquisition-related intangibles, net 219   293  
Deferred income taxes, net 2,451   2,420  
Other assets 514   417  
TOTAL ASSETS $ 13,280   $ 12,368  

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued, and other current liabilities $ 1,546   $ 1,359  
Deferred net revenue (online-enabled games) 2,490   1,700  
Senior notes, current, net 400   400  
Total current liabilities 4,436   3,459  
Senior notes, net 1,485   1,484  
Income tax obligations 719   594  
Other liabilities 488   445  
Total liabilities 7,128   5,982  
Commitments and contingencies (See Note 11 )

Stockholders’ equity:

Common stock, $ 0.01 par value. 1,000 shares authorized; 250 and 252 shares issued and outstanding, respectively
3   3  
Additional paid-in capital 82   —  
Retained earnings 6,194   6,470  
Accumulated other comprehensive income (loss) ( 127 ) ( 87 )
Total stockholders’ equity 6,152   6,386  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 13,280   $ 12,368  

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
(a) Derived from audited Consolidated Financial Statements.
3

Table of Contents

ELECTRONIC ARTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) Three Months Ended
December 31, Nine Months Ended
December 31,
(In millions, except per share data) 2025 2024 2025 2024
Net revenue $ 1,901   $ 1,883   $ 5,411   $ 5,568  
Cost of revenue 498   456   1,220   1,175  
Gross profit 1,403   1,427   4,191   4,393  
Operating expenses:
Research and development 704   606   2,096   1,883  
Marketing and sales 356   251   874   728  
General and administrative 199   176   572   553  

Amortization and impairment of intangibles 17   16   51   50  
Restructuring —   1   —   54  
Total operating expenses 1,276   1,050   3,593   3,268  
Operating income 127   377   598   1,125  
Interest and other income (expense), net 4   28   3   73  
Income before provision for income taxes 131   405   601   1,198  
Provision for income taxes 43   112   175   331  
Net income $ 88   $ 293   $ 426   $ 867  
Earnings per share:
Basic $ 0.35   $ 1.12   $ 1.70   $ 3.28  
Diluted $ 0.35   $ 1.11   $ 1.68   $ 3.26  
Number of shares used in computation:
Basic 250   262   250   264  
Diluted 253   265   253   266  

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).

4

Table of Contents

ELECTRONIC ARTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) Three Months Ended
December 31, Nine Months Ended
December 31,
(In millions) 2025 2024 2025 2024
Net income $ 88   $ 293   $ 426   $ 867  
Other comprehensive income (loss), net of tax:
Net gains (losses) on available-for-sale securities —   ( 1 ) —   —  
Net gains (losses) on derivative instruments 27   90   ( 55 ) 34  
Foreign currency translation adjustments 2   ( 37 ) 15   ( 25 )
Total other comprehensive income (loss), net of tax 29   52   ( 40 ) 9  
Total comprehensive income $ 117   $ 345   $ 386   $ 876  

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
5

Table of Contents

ELECTRONIC ARTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)   Common Stock
Additional Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
(In millions, except share data in thousands) Shares Amount
Balances as of March 31, 2025
252,315   $ 3   $ —   $ 6,470   $ ( 87 ) $ 6,386  
Total comprehensive income —  —  —  201   ( 75 ) 126  
Stock-based compensation —  —  152   —  —  152  
Issuance of common stock 1,677   —  ( 158 ) —  —  ( 158 )
Common stock repurchases and excise tax ( 2,984 ) —  6   ( 382 ) —  ( 376 )
Cash dividends declared ($ 0.19 per common share)
—  —  —  ( 48 ) —  ( 48 )
Balances as of June 30, 2025 251,008   $ 3   $ —   $ 6,241   $ ( 162 ) $ 6,082  
Total comprehensive income —  —  —  137   6   143  
Stock-based compensation —  —  174   —  —  174  
Issuance of common stock 628   —  26   —  —  26  
Common stock repurchases and excise tax ( 2,292 ) —  ( 200 ) ( 177 ) —  ( 377 )
Cash dividends declared ($ 0.19 per common share)
—  —  —  ( 48 ) —  ( 48 )
Balances as of September 30, 2025 249,344   $ 3   $ —   $ 6,153   $ ( 156 ) $ 6,000  
Total comprehensive income —  —  —  88   29   117  
Stock-based compensation —  —  178   —  —  178  
Issuance of common stock 806   —  ( 97 ) —  —  ( 97 )
Common stock repurchases and excise tax —  —  1   —  —  1  
Cash dividends declared ($ 0.19 per common share)
—  —  —  ( 47 ) —  ( 47 )
Balances as of December 31, 2025 250,150   $ 3   $ 82   $ 6,194   $ ( 127 ) $ 6,152  

(Unaudited)   Common Stock
Additional Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
(In millions, except share data in thousands) Shares Amount
Balances as of March 31, 2024
266,415   $ 3   $ —   $ 7,582   $ ( 72 ) $ 7,513  
Total comprehensive income —  —  —  280   12   292  
Stock-based compensation —  —  143   —  —  143  
Issuance of common stock 1,565   —  ( 121 ) —  —  ( 121 )
Common stock repurchases and excise tax ( 2,847 ) —  ( 22 ) ( 355 ) —  ( 377 )
Cash dividends declared ($ 0.19 per common share)
—  —  —  ( 50 ) —  ( 50 )
Balances as of June 30, 2024 265,133   $ 3   $ —   $ 7,457   $ ( 60 ) $ 7,400  
Total comprehensive income —  —  —  294   ( 55 ) 239  
Stock-based compensation —  —  174   —  —  174  
Issuance of common stock 602   —  24   —  —  24  
Common stock repurchases and excise tax ( 2,587 ) —  ( 198 ) ( 180 ) —  ( 378 )
Cash dividends declared ($ 0.19 per common share)
—  —  —  ( 51 ) —  ( 51 )
Balances as of September 30, 2024 263,148   $ 3   $ —   $ 7,520   $ ( 115 ) $ 7,408  
Total comprehensive income —  —  —  293   52   345  
Stock-based compensation —  —  163   —  —  163  
Issuance of common stock 845   —  ( 77 ) —  —  ( 77 )
Common stock repurchases and excise tax ( 2,445 ) —  ( 86 ) ( 291 ) —  ( 377 )
Cash dividends declared ($ 0.19 per common share)
—  —  —  ( 50 ) —  ( 50 )
Balances as of December 31, 2024 261,548   $ 3   $ —   $ 7,472   $ ( 63 ) $ 7,412  

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
6

Table of Contents

ELECTRONIC ARTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Nine Months Ended
December 31,
(In millions) 2025 2024
OPERATING ACTIVITIES
Net income $ 426   $ 867  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, accretion and impairment 240   277  
Stock-based compensation 504   480  
Change in assets and liabilities:
Receivables, net ( 151 ) ( 179 )
Other assets ( 89 ) 21  
Accounts payable, accrued, and other liabilities 284   161  
Deferred income taxes, net ( 30 ) ( 89 )
Deferred net revenue (online-enabled games) 789   ( 8 )
Net cash provided by operating activities 1,973   1,530  
INVESTING ACTIVITIES
Capital expenditures ( 169 ) ( 167 )
Proceeds from maturities and sales of short-term investments 87   366  
Purchase of short-term and other investments ( 115 ) ( 376 )
Acquisitions, net of cash acquired ( 17 ) —  
Net cash used in investing activities ( 214 ) ( 177 )
FINANCING ACTIVITIES
Proceeds from issuance of common stock 45   43  
Cash dividends paid ( 143 ) ( 151 )
Cash paid to taxing authorities for shares withheld from employees ( 266 ) ( 211 )
Common stock repurchases and excise taxes paid
( 769 ) ( 1,133 )
Net cash used in financing activities ( 1,133 ) ( 1,452 )
Effect of foreign exchange on cash and cash equivalents 22   ( 25 )
Increase (decrease) in cash and cash equivalents 648   ( 124 )
Beginning cash and cash equivalents 2,136   2,900  
Ending cash and cash equivalents $ 2,784   $ 2,776  
Supplemental cash flow information:
Cash paid during the period for income taxes, net $ 145   $ 333  
Cash paid during the period for interest 28   28
Non-cash investing activities:
Change in accrued capital expenditures $ ( 9 ) $ ( 15 )
Non-cash financing activities:
Change in accrued excise taxes $ ( 17 ) $ ( 1 )

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
7

Table of Contents

ELECTRONIC ARTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1) DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Electronic Arts is a global leader in digital interactive entertainment. We develop, market, publish and deliver games, content and services that can be experienced on game consoles, PCs, and mobile devices. We create innovative games and experiences that deliver high-quality interactive entertainment and drive engagement across our global network of hundreds of millions of players. Through our live services offerings, we offer high-quality experiences designed to provide value to players and extend and enhance gameplay. These live services include extra content, subscription offerings and other revenue generated in addition to the sale of our full games. We are focusing on building games and experiences that grow the global online communities around our key franchises; deepening engagement through connecting interactive storytelling to key intellectual property; and harnessing our communities to grow in, around, and beyond our games.
Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of operations for the fiscal year ending March 31, 2026 contains 52 weeks and ends on March 28, 2026. Our results of operations for the fiscal year ended March 31, 2025 contained 52 weeks and ended on March 29, 2025. Our results of operations for the three and nine months ended December 31, 2025 contained 13 weeks and 39 weeks, respectively, and ended on December 27, 2025. Our results of operations for the three and nine months ended December 31, 2024 contained 13 weeks and 39 weeks, respectively, and ended on December 28, 2024. For simplicity of disclosure, all fiscal periods are referred to as ending on a calendar month end.
The Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting only of normal recurring accruals unless otherwise indicated) that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. The results of operations for the current interim periods are not necessarily indicative of results to be expected for the current year or any other period.
These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, as filed with the United States Securities and Exchange Commission (“SEC”) on May 13, 2025.
Proposed Merger
On September 28, 2025, we entered into a definitive agreement (the “Merger Agreement”) with Oak-Eagle AcquireCo, Inc. (“Parent”) and Oak-Eagle MergerCo, Inc., a wholly owned subsidiary of Parent (“Merger Sub”). Parent and Merger Sub are entities formed by an investor consortium comprised of The Public Investment Fund (“PIF”), private investment funds affiliated with Silver Lake Group, L.L.C. (“Silver Lake”), and private investment funds affiliated with Affinity Partners (“Affinity,” and, together with PIF and Silver Lake, the “Consortium”). Under the terms of the Merger Agreement, each share of our common stock (other than shares held by the Company, Parent or Merger Sub, and shares owned by stockholders who have properly exercised appraisal rights) will convert into the right to receive $ 210 per share in cash, without interest (the “Merger”).
The Merger is expected to close in the first quarter of fiscal 2027. At a special meeting of stockholders held on December 22, 2025, the Company’s stockholders approved the Merger Agreement and the transactions contemplated thereby. The Merger is still subject to other closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain other specified regulatory approvals, including other applicable U.S. and foreign antitrust approvals, approval by the Committee of Foreign Investment in the United States (“CFIUS”), and approval under foreign direct investment laws or regulations in certain jurisdictions, and the absence of legal restraints in specified jurisdictions prohibiting consummation of the Merger.

Parent has obtained equity and debt financing commitments for the purpose of financing the transactions contemplated by the Merger Agreement. PIF, certain private investment funds affiliated with Silver Lake and certain private investment funds affiliated with Affinity have severally committed to capitalize Parent at the closing of the Merger with equity financing for the transaction. Pursuant to a debt commitment letter, certain financing sources have committed to provide Parent with $ 20  billion of debt financing to fund in part, the transactions contemplated by the Merger Agreement. The Merger is not subject to a financing condition.

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The Company has made customary representations, warranties and covenants in the Merger Agreement, including covenants to use commercially reasonable efforts to conduct its business in the ordinary course during the period between the date of the Merger Agreement and the closing of the Merger.

The Company is subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, engage in discussions with third parties regarding alternative acquisition proposals and change its recommendation that stockholders vote in favor of the Merger. In the event the Company receives an unsolicited acquisition proposal from a third party that the Board determines in good faith constitutes or is reasonably likely to result in a Superior Proposal, the Company may engage in discussions with a third party that has made such a proposal.

The Merger Agreement contains certain termination provisions, including a termination fee of up to $ 1  billion payable by the Company under specified circumstances. We also expect to incur significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger.

If the Merger is completed, the Company’s common stock will be delisted from the NASDAQ Stock Market and deregistered under the Securities Exchange Act of 1934.

The foregoing description of the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement attached as Exhibit 2.1 to our Current Report on Form 8-K filed on September 29, 2025.

Change in Estimated Offering Period
The offering period is the period in which we offer to provide the future update rights and/or online hosting for the game and related extra content sold. Because the offering period is not an explicitly defined period, we must make an estimate of the offering period for the service-related performance obligations (i.e., future update rights and/or online hosting). For sales prior to July 1, 2025, revenue for service-related performance obligations related to our mobile free-to-play and PC and console free-to-play games was recognized generally over eight and twelve-month periods, respectively, beginning in the month of sale.
During the three months ended September 30, 2025, we completed our annual evaluation of the Estimated Offering Period, and as a result, for sales beginning July 1, 2025, the revenue that we recognize for service-related performance obligation related to our mobile free-to-play and PC and console free-to-play games is recognized generally over an eleven-month period beginning in the month of sale. During the three months ended December 31, 2025, this change to our Estimated Offering Period resulted in an estimated decrease in net revenue of $ 25  million and net income of $ 19  million, and a decrease of $ 0.08 diluted earnings per share. During the nine months ended December 31, 2025, this change to our Estimated Offering Period resulted in an estimated decrease in net revenue of $ 33  million and net income of $ 25  million, and a decrease of $ 0.10 diluted earnings per share.
Recently Issued Accounting Standard s
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures . The amendments further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for our annual report for fiscal year 2026. We expect to adopt the standard on a prospective basis, and the adoption is anticipated to result in expanded income tax disclosures within the Consolidated Financial Statements.
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In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires additional, disaggregated disclosure about certain income statement line items. This ASU is effective for our annual report for fiscal year 2028 and interim periods thereafter on a retrospective or prospective basis, with early adoption permitted. We are currently evaluating the timing of adoption and impact of this ASU on our disclosures within the Consolidated Financial Statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326) : Measurement of Credit Losses for Accounts Receivable and Contract Assets . This amendment introduces a practical expedient for the application of the current expected credit loss (“CECL”) model to current accounts receivable and contract assets. The amendment is effective beginning in the first quarter of fiscal year 2027 on a prospective basis, with early adoption permitted. We do not expect the adoption of this amendment to have a material impact on our Condensed Consolidated Financial Statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Improvements to Accounting for Internal-Use Software, which eliminates references to “project stages” and clarifies the criteria for when internal-use software costs should be capitalized. This ASU is effective beginning in the first quarter of fiscal year 2029 on a prospective, modified-prospective, or retrospective basis, with early adoption permitted. We are currently evaluating the timing of adoption and the impact of this ASU on our Condensed Consolidated Financial Statements and related disclosures.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815) - Hedge Accounting Improvements , which more closely aligns hedge accounting with the economics of an entity’s risk management activities. The ASU is effective beginning in the first quarter of fiscal year 2028, on a prospective basis, with early adoption permitted. We are currently evaluating the timing of adoption and impact of this ASU on our Condensed Consolidated Financial Statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) - Narrow-Scope Improvements , which clarifies current interim disclosure requirements and provides additional required interim disclosure guidance. The ASU is effective beginning in the first quarter of fiscal year 2029, on a retrospective or prospective basis, with early adoption permitted. We are currently evaluating the timing of adoption and impact of this amendment on our disclosures within the Condensed Consolidated Financial Statements.

(2) FAIR VALUE MEASUREMENTS
There are various valuation techniques used to estimate fair value, the primary one being the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability. We measure certain financial and nonfinancial assets and liabilities at fair value on a recurring and nonrecurring basis.
Fair Value Hierarchy
The three levels of inputs that may be used to measure fair value are as follows:
• Level 1 . Quoted prices in active markets for identical assets or liabilities.
• Level 2 . Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.
• Level 3 . Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.
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Assets and Liabilities Measured at Fair Value on a Recurring Basis
As of December 31, 2025 and March 31, 2025, our assets and liabilities that were measured and recorded at fair value on a recurring basis were as follows (in millions):
    Fair Value Measurements at Reporting Date Using   
  As of
December 31, 2025
Quoted Prices in
Active Markets 
for Identical
Financial
Instruments Significant
Other
Observable
Inputs Significant
Unobservable
Inputs Balance Sheet 
Classification
  (Level 1) (Level 2) (Level 3)
Assets
Bank and time deposits $ 33   $ 33   $ —   $ —   Cash equivalents
Money market funds 501   501   —   —   Cash equivalents
Available-for-sale securities:
Corporate bonds 49   —   49   —   Short-term investments
U.S. Treasury securities 26   26   —   —   Short-term investments
U.S. agency securities 2   —   2   —   Short-term investments

Foreign government securities 7   —   7   —   Short-term investments
Asset-backed securities 31   —   31   —   Short-term investments

Foreign currency derivatives 30   —   30   —   Other current assets and other assets
Deferred compensation plan assets (a)
47   47   —   —   Other assets
Total assets at fair value $ 726   $ 607   $ 119   $ —  
Liabilities
Foreign currency derivatives $ 57   $ —   $ 57   $ —   Accounts payable, accrued, and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)
47   47   —   —   Other liabilities
Total liabilities at fair value $ 104   $ 47   $ 57   $ —  

    Fair Value Measurements at Reporting Date Using  
  As of
March 31, 2025
Quoted Prices in
Active Markets for Identical
Financial Instruments Significant
Other
Observable
Inputs Significant
Unobservable
Inputs Balance Sheet 
Classification
  (Level 1) (Level 2) (Level 3)
Assets
Bank and time deposits $ 58   $ 58   $ —   $ —   Cash equivalents
Money market funds 904   904   —   —   Cash equivalents
Available-for-sale securities:
Corporate bonds 46   —   46   —   Short-term investments
U.S. Treasury securities 12   12   —   —   Short-term investments

Foreign government securities 4   —   4   —   Short-term investments
Asset-backed securities 50   —   50   —   Short-term investments

Foreign currency derivatives 28   —   28   —   Other current assets and other assets
Deferred compensation plan assets (a)
36   36   —   —   Other assets
Total assets at fair value $ 1,138   $ 1,010   $ 128   $ —  
Liabilities
Foreign currency derivatives $ 26   $ —   $ 26   $ —   Accounts payable, accrued, and other current liabilities and other liabilities
Deferred compensation plan liabilities (a)
36   36   —   —   Other liabilities
Total liabilities at fair value $ 62   $ 36   $ 26   $ —  

(a) The Deferred Compensation Plan consists of various mutual funds. See Note 15 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, for additional information regarding our Deferred Compensation Plan.
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(3) FINANCIAL INSTRUMENTS
Cash and Cash Equivalents
As of December 31, 2025 and March 31, 2025, our cash and cash equivalents were $ 2,784 million and $ 2,136 million, respectively. Cash equivalents were valued using quoted market prices or other readily available market information.
Short-Term Investments
Short-term investments consisted of the following as of December 31, 2025 and March 31, 2025 (in millions):
  As of December 31, 2025
As of March 31, 2025

  Cost or
Amortized
Cost Gross Unrealized Fair
Value Cost or
Amortized
Cost Gross Unrealized Fair
Value
  Gains Losses Gains Losses
Corporate bonds $ 49   $ —   $ —   $ 49   $ 46   $ —   $ —   $ 46  
U.S. Treasury securities 26   —   —   26   12   —   —   12  
U.S. agency securities 2   —   —   2   —   —   —   —  

Foreign government securities 7   —   —   7   4   —   —   4  
Asset-backed securities 31   —   —   31   50   —   —   50  

Short-term investments $ 115   $ —   $ —   $ 115   $ 112   $ —   $ —   $ 112  

The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of December 31, 2025 and March 31, 2025 (in millions):
  As of December 31, 2025
As of March 31, 2025

  Amortized
Cost Fair
Value Amortized
Cost Fair
Value
Short-term investments
Due within 1 year $ 48   $ 48   $ 46   $ 46  
Due 1 year through 5 years 66   66   63   63  
Due after 5 years 1   1   3   3  
Short-term investments $ 115   $ 115   $ 112   $ 112  

(4) DERIVATIVE FINANCIAL INSTRUMENTS
Assets or liabilities associated with our derivative instruments and hedging activities are recorded at fair value in other current assets/other assets, or accounts payable, accrued, and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting.
We transact business in various foreign currencies and have significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency forward contracts, generally with maturities of 18 months or less, to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in certain foreign currencies. Our cash flow risks are primarily related to fluctuations in the Euro, British pound sterling, Canadian dollar, Swedish krona, Australian dollar, Japanese yen, Chinese yuan, South Korean won, and Polish zloty. In addition, we utilize foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign-currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. The foreign currency forward contracts not designated as hedging instruments generally have a contractual term of approximately three months or less and are transacted near month-end. We do not use foreign currency forward contracts for speculative trading purposes.
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Cash Flow Hedging Activities
Certain of our forward contracts are designated and qualify as cash flow hedges. To qualify for hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at fair value in other current assets/other assets, or accounts payable, accrued, and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The gains or losses resulting from changes in the fair value of these hedges are initially reported, net of tax, as a component of accumulated other comprehensive income (loss) in stockholders’ equity. The gains or losses resulting from changes in the fair value of these hedges are subsequently reclassified into net revenue or research and development expenses, as appropriate, in the period when the forecasted transaction is recognized in our Condensed Consolidated Statements of Operations. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from accumulated other comprehensive income (loss) to interest and other income (expense), net, in our Condensed Consolidated Statements of Operations.
Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting designation are as follows (in millions):
As of December 31, 2025
As of March 31, 2025

Notional Amount Fair Value Notional Amount Fair Value
Asset Liability Asset Liability

Forward contracts to purchase $ 401   $ 11   $ —   $ 463   $ 4   $ 7  

Forward contracts to sell $ 1,778   $ 11   $ 46   $ 1,970   $ 20   $ 16  

The effects of cash flow hedge accounting in our Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2025 and 2024 are as follows (in millions):

Three Months Ended December 31, Nine Months Ended December 31,
2025 2024 2025 2024
Net revenue Research and development Net revenue Research and development Net revenue Research and development Net revenue Research and development
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded $ 1,901   $ 704   $ 1,883   $ 606   $ 5,411   $ 2,096   $ 5,568   $ 1,883  
Gains (losses) on foreign currency forward contracts designated as cash flow hedges $ ( 15 ) $ 1   $ 1   $ ( 2 ) $ ( 22 ) $ 3   $ 6   $ ( 5 )

Balance Sheet Hedging Activities
Our foreign currency forward contracts that are not designated as hedging instruments are accounted for as derivatives whereby the fair value of the contracts are reported as other current assets or accounts payable, accrued, and other current liabilities on our Condensed Consolidated Balance Sheets, and gains and losses resulting from changes in the fair value are reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign-currency-denominated monetary assets and liabilities, which are also reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations.
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Total gross notional amounts and fair values for currency derivatives that are not designated as hedging instruments are accounted for as follows (in millions):
As of December 31, 2025
As of March 31, 2025

Notional Amount Fair Value Notional Amount Fair Value
Asset Liability Asset Liability
Forward contracts to purchase $ 916   $ 8   $ —   $ 511   $ 1   $ 2  

Forward contracts to sell $ 1,101   $ —   $ 11   $ 582   $ 3   $ 1  

The effect of foreign currency forward contracts not designated as hedging instruments in our Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2025 and 2024 was as follows (in millions):
  Three Months Ended
December 31, Nine Months Ended
December 31,
  2025 2024 2025 2024
Interest and other income (expense), net
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of balance sheet hedges are recorded $ 4   $ 28   $ 3   $ 73  
Gains (losses) on foreign currency forward contracts not designated as hedging instruments $ 6   $ 40   $ ( 13 ) $ 44  

(5) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended December 31, 2025 and 2024 are as follows (in millions):
Unrealized Net Gains (Losses) on Available-for-Sale Securities Unrealized Net Gains (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total
Balances as of September 30, 2025 $ —   $ ( 71 ) $ ( 85 ) $ ( 156 )
Other comprehensive income (loss) before reclassifications —   13   2   15  
Amounts reclassified from accumulated other comprehensive income (loss) —   14   —   14  
Total other comprehensive income (loss), net of tax
—   27   2   29  
Balances as of December 31, 2025
$ —   $ ( 44 ) $ ( 83 ) $ ( 127 )

Unrealized Net Gains (Losses) on Available-for-Sale Securities Unrealized Net Gains (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total
Balances as of September 30, 2024 $ 1   $ ( 46 ) $ ( 70 ) $ ( 115 )
Other comprehensive income (loss) before reclassifications ( 1 ) 89   ( 37 ) 51  
Amounts reclassified from accumulated other comprehensive income (loss) —   1   —   1  
Total other comprehensive income (loss), net of tax
( 1 ) 90   ( 37 ) 52  
Balances as of December 31, 2024
$ —   $ 44   $ ( 107 ) $ ( 63 )

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The changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended December 31, 2025 and 2024 are as follows (in millions):
Unrealized Net Gains (Losses) on Available-for-Sale Securities Unrealized Net Gains (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total
Balances as of March 31, 2025
$ —   $ 11   $ ( 98 ) $ ( 87 )
Other comprehensive income (loss) before reclassifications —   ( 74 ) 15   ( 59 )
Amounts reclassified from accumulated other comprehensive income (loss) —   19   —   19  
Total other comprehensive income (loss), net of tax
—   ( 55 ) 15   ( 40 )
Balances as of December 31, 2025
$ —   $ ( 44 ) $ ( 83 ) $ ( 127 )

Unrealized Net Gains (Losses) on Available-for-Sale Securities Unrealized Net Gains (Losses) on Derivative Instruments Foreign Currency Translation Adjustments Total
Balances as of March 31, 2024
$ —   $ 10   $ ( 82 ) $ ( 72 )
Other comprehensive income (loss) before reclassifications —   35   ( 25 ) 10  
Amounts reclassified from accumulated other comprehensive income (loss) —   ( 1 ) —   ( 1 )
Total other comprehensive income (loss), net of tax
—   34   ( 25 ) 9  
Balances as of December 31, 2024
$ —   $ 44   $ ( 107 ) $ ( 63 )

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the three and nine months ended December 31, 2025 and 2024 were as follows (in millions):
  Amount Reclassified From Accumulated Other Comprehensive Income (Loss)
Three Months Ended December 31, Nine Months Ended December 31,
Statement of Operations Classification 2025 2024 2025 2024

(Gains) losses on foreign currency forward contracts designated as cash flow hedges
Net revenue $ 15   $ ( 1 ) $ 22   $ ( 6 )
Research and development ( 1 ) 2   ( 3 ) 5  

Total net (gain) loss reclassified, net of tax $ 14   $ 1   $ 19   $ ( 1 )

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(6) GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET
The changes in the carrying amount of goodwill for the nine months ended December 31, 2025 are as follows (in millions):
As of
March 31, 2025
Activity Effects of Foreign Currency Translation As of
December 31, 2025

Goodwill $ 5,744   $ 9   $ 3   $ 5,756  
Accumulated impairment ( 368 ) —  —  ( 368 )
Total $ 5,376   $ 9   $ 3   $ 5,388  

During the nine months ended December 31, 2025, we completed one acquisition that was not material to our Condensed Consolidated Financial Statements.
Acquisition-related intangibles consisted of the following (in millions):
  As of December 31, 2025
As of March 31, 2025

  Gross
Carrying
Amount Accumulated
Amortization Acquisition-
Related
Intangibles, Net Gross
Carrying
Amount Accumulated
Amortization Acquisition-
Related
Intangibles, Net

Developed and core technology $ 938   $ ( 835 ) $ 103   $ 933   $ ( 790 ) $ 143  
Trade names and trademarks 501   ( 385 ) 116   501   ( 351 ) 150  
Registered user base and other intangibles 56   ( 56 ) —   56   ( 56 ) —  

Total $ 1,495   $ ( 1,276 ) $ 219   $ 1,490   $ ( 1,197 ) $ 293  

Amortization of intangibles for the three and nine months ended December 31, 2025 and 2024 are classified in the Condensed Consolidated Statements of Operations as follows (in millions):
Three Months Ended
December 31, Nine Months Ended
December 31,
2025 2024 2025 2024
Cost of revenue $ 9   $ 10   $ 28   $ 30  
Operating expenses 17   16   51   50  
Total $ 26   $ 26   $ 79   $ 80  

During the three and nine months ended December 31, 2025 and 2024, there were no impairment charges recorded for acquisition-related intangible assets.
Acquisition-related intangible assets are generally amortized using the straight-line method over the lesser of their estimated useful lives or the agreement terms, currently ranging from 2 to 7 years. As of December 31, 2025 and March 31, 2025, the weighted-average remaining useful life for acquisition-related intangible assets was approximately 2.6 years and 3.2 years, respectively.
As of December 31, 2025, future amortization of finite-lived acquisition-related intangibles that will be recorded in the Condensed Consolidated Statements of Operations is estimated as follows (in millions):
Fiscal Year Ending March 31,  
2026 (remaining three months) $ 24  
2027 85  
2028 82  
2029 28  

Total $ 219  

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(7) ROYALTIES AND LICENSES
Our royalty expenses consist of payments to (1) content licensors, (2) independent software developers, and (3) co-publishing and/or distribution affiliates. Content license royalties consist of payments made to sports organizations, movie studios, and others for our use of their trademarks, copyrights, personal publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related to our games. Co-publishing and distribution royalties are payments made to third parties for the delivery of products.
During the three and nine months ended December 31, 2025 and 2024, we did not recognize any material losses or impairment charges on royalty-based commitments.
The current and long-term portions of prepaid royalties and minimum guaranteed royalty-related assets, included in other current assets and other assets, consisted of (in millions):
As of
December 31, 2025
As of
March 31, 2025

Other current assets $ 39   $ 55  
Other assets 20   23  
Royalty-related assets $ 59   $ 78  

At any given time, depending on the timing of our payments to our content licensors, independent software developers, co-publishing, and/or distribution affiliates, we classify any recognized unpaid royalty amounts due to these parties as accrued liabilities. The current and long-term portions of accrued royalties, included in accrued and other current liabilities and other liabilities, consisted of (in millions):

As of
December 31, 2025
As of
March 31, 2025

Accounts payable, accrued, and other current liabilities $ 272   $ 226  
Other liabilities 22   9  
Royalty-related liabilities $ 294   $ 235  

As of December 31, 2025, we were committed to pay approximately $ 2,135 million to content licensors, independent software developers, and co-publishing and/or distribution affiliates, but performance remained with the counterparty (i.e., delivery of the product or content or other factors) and such commitments were therefore not recorded in our Condensed Consolidated Financial Statements. See Note 11 for further information on our developer and licensor commitments.

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(8) BALANCE SHEET DETAILS
Property and Equipment, Net
Property and equipment, net, as of December 31, 2025 and March 31, 2025 consisted of (in millions):
As of
December 31, 2025
As of
March 31, 2025

Computer, equipment and software $ 1,078   $ 1,033  
Buildings 393   379  
Leasehold improvements 238   229  
Equipment, furniture and fixtures, and other 115   109  
Land 66   66  
Construction in progress 39   21  
1,929   1,837  
Less: accumulated depreciation ( 1,329 ) ( 1,251 )
Property and equipment, net $ 600   $ 586  

Depreciation expense associated with property and equipment was $ 53 million and $ 158 million for the three and nine months ended December 31, 2025, respectively.
Depreciation expense associated with property and equipment was $ 51 million and $ 153 million for the three and nine months ended December 31, 2024, respectively.
Accounts Payable, Accrued, and Other Current Liabilities
Accounts payable, accrued, and other current liabilities as of December 31, 2025 and March 31, 2025 consisted of (in millions):
As of
December 31, 2025
As of
March 31, 2025

Accounts payable $ 76   $ 105  
Accrued compensation and benefits 479   486  
Accrued royalties 272   226  

Deferred net revenue (other) 127   94  
Operating lease liabilities 65   67  

Other accrued expenses 366   297  
Sales returns and price protection reserves 161   84  
Accounts payable, accrued, and other current liabilities $ 1,546   $ 1,359  

Deferred net revenue (other) includes the deferral of licensing arrangements, subscription revenue, and other revenue for which revenue recognition criteria has not been met.
Deferred net revenue
Deferred net revenue as of December 31, 2025 and March 31, 2025 consisted of (in millions):
As of
December 31, 2025
As of
March 31, 2025

Deferred net revenue (online-enabled games) $ 2,490   $ 1,700  
Deferred net revenue (other) 127   94  
Deferred net revenue (noncurrent) 67   72  
Total deferred net revenue $ 2,684   $ 1,866  

During the nine months ended December 31, 2025 and 2024, we recognized $ 1,755 million and $ 1,847 million of net revenue, respectively, that were included in the deferred net revenue balance at the beginning of the period.
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Remaining Performance Obligations
As of December 31, 2025, revenue allocated to remaining performance obligations consists of our deferred net revenue balance of $ 2,684 million and amounts to be invoiced in future periods of $ 31  million, of which $ 16  million are expected to be recognized as revenue over the next 12 months, and the remainder thereafter. These balances exclude any estimates for future variable consideration as we have elected the optional exemption to exclude sales-based royalty revenue.

(9) INCOME TAXES
On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (“OBBB”) which extended or modified certain corporate tax provisions under the 2017 Tax Cuts and Jobs Act (“TCJA”). The OBBB modified certain business deductions, including allowing for immediate expensing of U.S. research & development expenditures, effective in our current fiscal year. The OBBB also modified various international tax provisions which were set to change or expire after 2025 under the TCJA. Such modifications, including U.S. taxation of profits derived from foreign operations and associated foreign tax credit limitations, are effective in our fiscal year 2027. The changes resulting from the tax provisions of OBBB are not expected to have a material impact on our results of operations.

The European Union and other countries, including Switzerland, have enacted, or have committed to enact global minimum taxes, commonly referred to as Pillar II, as proposed by the Organization for Economic Cooperation and Development (“OECD”), effective with our fiscal year 2025. Pillar II in the relevant countries where we operate did not have a material impact on our tax provision for the three or nine months ended December 31, 2025. On January 5, 2026, the OECD published details of a side-by-side package for the Pillar II global minimum tax rules. The package includes an extension of the transitional safe harbor and new permanent safe harbor rules, including the exemption of U.S.-parented multinationals from certain Pillar II global minimum taxes effective in our fiscal year 2027. We do not expect the package to have material impact on our financial results and will continue to monitor legislative updates in our operating jurisdictions.

The provision for income taxes for the three and nine months ended December 31, 2025 is based on our projected annual effective tax rate for fiscal year 2026, adjusted for specific items that are required to be recognized in the period in which they are incurred. Our effective tax rate for the three and nine months ended December 31, 2025 was 33 percent and 29 percent, respectively, as compared to 28 percent for the same periods in prior year. The increase in the three and nine months effective tax rates year-over-year is primarily due to Pillar II global minimum tax impacts, partially offset by a net periodic tax benefit from higher excess stock-based compensation.

We are subject to income tax examinations in various jurisdictions with respect to fiscal years after 2015. The timing and potential resolution of income tax examinations is highly uncertain. While we continue to measure our uncertain tax positions, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued. It is reasonably possible that material reduction of unrecognized tax benefits may occur within the next 12 months, which would impact our effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements and tax interpretations.

(10) FINANCING ARRANGEMENTS
Senior Notes
In February 2021, we issued $ 750 million aggregate principal amount of 1.85 % Senior Notes due February 15, 2031 (the “2031 Notes”) and $ 750 million aggregate principal amount of 2.95 % Senior Notes due February 15, 2051 (the “2051 Notes”). Our proceeds were $ 1,478  million, net of discount of $ 6  million and issuance costs of $ 16  million. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2031 Notes and the 2051 Notes using the effective interest rate method. The effective interest rate is 1.98 % for the 2031 Notes and 3.04 % for the 2051 Notes. Interest is payable semiannually in arrears, on February 15 and August 15 of each year.
In February 2016, we issued $ 400 million aggregate principal amount of 4.80 % Senior Notes due March 1, 2026 (the “2026 Notes”). Our proceeds were $ 395 million, net of discount of $ 1 million and issuance costs of $ 4 million. Both the discount and issuance costs are being amortized to interest expense over the term of the 2026 Notes using the effective interest rate method. The effective interest rate was 4.97 %. Interest is payable semiannually in arrears, on March 1 and September 1 of each year.
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The carrying and fair values of the Senior Notes are as follows (in millions):

   
As of
December 31, 2025
As of
March 31, 2025

Senior Notes:
4.80 % Senior Notes due 2026
$ 400   $ 400  
1.85 % Senior Notes due 2031
750   750  
2.95 % Senior Notes due 2051
750   750  
Total principal amount $ 1,900   $ 1,900  
Unaccreted discount ( 4 ) ( 5 )
Unamortized debt issuance costs ( 11 ) ( 11 )
Net carrying value of Senior Notes $ 1,885   $ 1,884  

Fair value of Senior Notes (Level 2) $ 1,824   $ 1,511  

As of December 31, 2025, the remaining life of the 2026 Notes, 2031 Notes and 2051 Notes is approximately 0.2 years, 5.1 years, and 25.2 years, respectively.
The Senior Notes are senior unsecured obligations and rank equally with all our other existing and future unsubordinated obligations and any indebtedness that we may incur from time to time under our Credit Facility.
The 2026 Notes, 2031 Notes and 2051 Notes are redeemable at our option at any time prior to December 1, 2025, November 15, 2030, and August 15, 2050, respectively, subject to a make-whole premium. After such dates, we may redeem each such series of Notes, respectively, at a redemption price equal to 100 % of the aggregate principal amount plus accrued and unpaid interest. In addition, upon the occurrence of a change of control repurchase event, the holders of each such series of Notes may require us to repurchase all or a portion of these Notes, at a price equal to 101 % of their principal amount, plus accrued and unpaid interest to the date of repurchase. Each such series of Notes also include covenants that limit our ability to incur liens on assets and to enter into sale and leaseback transactions, subject to certain allowances.
Subsequent to December 31, 2025, we redeemed all of the $ 400  million outstanding aggregate principal amount of the 2026 Notes, without premium or penalty, plus accrued and unpaid interest.
Credit Facility
On March 22, 2023, we entered into a $ 500  million unsecured revolving credit facility (the “Credit Facility") with a syndicate of banks. The Credit Facility terminates on March 22, 2028 unless the maturity is extended in accordance with its terms. The Credit Facility contains an option to arrange with existing lenders and/or new lenders to provide up to an aggregate of $ 500  million in additional commitments for revolving loans. Proceeds of loans made under the Credit Facility may be used for general corporate purposes.
The loans denominated in U.S. dollars bear interest, at our option, at the base rate plus an applicable spread or at a forward-looking term rate based upon the secured overnight financing rate plus a credit spread adjustment of 0.10 % per annum (the “Adjusted Term SOFR Rate”) plus an applicable spread, in each case with such spread based on our debt credit ratings. We are also obligated to pay other customary fees for a credit facility of this size and type. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period in the case of loans bearing interest at the Adjusted Term SOFR Rate. Principal, together with all accrued and unpaid interest, is due and payable on the maturity date, as such date may be extended in connection with the extension option. We may prepay the loans and terminate the commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions.

The Credit Facility contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur subsidiary indebtedness, grant liens, and dispose of all or substantially all assets, in each case subject to customary exceptions for a credit facility of this size and type. We are also required to maintain compliance with a debt to EBITDA ratio. As of December 31, 2025, we were in compliance with the debt to EBITDA ratio.
The Credit Facility contains customary events of default, including among others, non-payment defaults, covenant defaults, cross-defaults to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults and a change of control
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default, in each case, subject to customary exceptions for a credit facility of this size and type. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Facility and an increase in the applicable interest rate.
As of December 31, 2025, no amounts were outstanding under the Credit Facility. $ 2 million of debt issuance costs that were paid in connection with obtaining this credit facility are being amortized to interest expense over the 5-year term of the Credit Facility.
Interest Expense
The following table summarizes our interest expense recognized for the three and nine months ended December 31, 2025 and 2024 that is included in interest and other income (expense), net on our Condensed Consolidated Statements of Operations (in millions):
Three Months Ended
December 31, Nine Months Ended
December 31,
2025 2024 2025 2024

Amortization of debt issuance costs $ —   $ —   $ ( 1 ) $ ( 1 )
Coupon interest expense ( 14 ) ( 14 ) ( 42 ) ( 42 )

Other interest expense —   ( 1 ) —   ( 1 )
Total interest expense $ ( 14 ) $ ( 15 ) $ ( 43 ) $ ( 44 )

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(11) COMMITMENTS AND CONTINGENCIES
Development, Sports Organizations and Other Content Licenses: Payments and Commitments
The products we produce in our studios are designed and created by our employee designers, artists, software programmers and by non-employee software developers (“independent artists” or “third-party developers”). We typically advance development funds to the independent artists and third-party developers during development of our games, usually in installment payments made upon the completion of specified development milestones. Contractually, these payments are generally considered advances against subsequent royalties on the sales of the products. These terms are set forth in written agreements entered into with the independent artists and third-party developers. In addition, we have certain sports organizations and other content license contracts that contain minimum guarantee payments and marketing commitments to promote the games we publish that may not be dependent on any deliverables.
These developer and content license commitments represent the sum of the cash payments for flat fees, minimum guaranteed payments, and service payments. The majority of these commitments are conditional upon performance by the counterparty. These payments and any related marketing and development commitments are included in the table below.
The following table summarizes our minimum contractual obligations as of December 31, 2025 (in millions):
Fiscal Years Ending March 31,
2026
(Remaining
Total three mos.) 2027 2028 2029 2030 2031 Thereafter
Unrecognized commitments
Developer/licensor commitments $ 2,135   $ 106   $ 367   $ 427   $ 412   $ 415   $ 369   $ 39  
Marketing commitments 1,325   67   318   304   211   227   187   11  
Senior Notes interest 628   6   36   36   36   36   36   442  
Operating lease imputed interest 61   4   13   11   9   7   6   11  
Operating leases not yet commenced (a)
23   —   1   2   2   2   2   14  
Other purchase obligations 309   28   110   104   53   10   4   —  
Total unrecognized commitments 4,481   211   845   884   723   697   604   517  

Recognized commitments
Senior Notes principal and interest 1,920   420   —   —   —   —   750   750  
Operating leases 357   16   63   56   38   32   34   118  

Total recognized commitments 2,277   436   63   56   38   32   784   868  

Total Commitments $ 6,758   $ 647   $ 908   $ 940   $ 761   $ 729   $ 1,388   $ 1,385  

(a) As of December 31, 2025, we have entered into an office lease that is expected to commence in the fourth quarter of fiscal year 2026, with aggregate future lease payments of approximately $ 23 million and a lease term of 10 years.
The unrecognized amounts represented in the table above reflect our minimum cash obligations for the respective fiscal years, but do not necessarily represent the periods in which they will be recognized and expensed in our Condensed Consolidated Financial Statements. In addition, the amounts in the table above are presented based on the dates the amounts are contractually due as of December 31, 2025; however, certain payment obligations may be accelerated depending on the performance of our operating results.
In addition to the amounts included in the table above, as of December 31, 2025, we had a net liability for unrecognized tax benefits and related interest totaling $ 690  million. While it is reasonably possible that material reduction of unrecognized tax benefits may occur within the next 12 months, the actual amount could vary significantly depending on the ultimate timing and nature of any settlements and tax interpretations.

Legal Proceedings
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We are subject to claims and litigation arising in the ordinary course of business. We do not believe that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on our Condensed Consolidated Financial Statements.

(12)   STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM
Valuation Assumptions
We recognize compensation cost for stock-based awards to employees based on the awards’ estimated grant-date fair value using a straight-line approach over the service period for which such awards are expected to vest. We account for forfeitures as they occur.
The estimation of the fair value of market-based restricted stock units, stock options and Employee Stock Purchase Plan (“ESPP”) purchase rights is affected by assumptions regarding subjective and complex variables. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. We estimate the fair value of our stock-based awards as follows:
• Restricted Stock Units and Performance-Based Restricted Stock Units . The fair value of restricted stock units and performance-based restricted stock units (other than market-based restricted stock units) is determined based on the quoted market price of our common stock on the date of grant.
• Market-Based Restricted Stock Units . Market-based restricted stock units consist of grants of performance-based restricted stock units to certain members of executive management that vest contingent upon the achievement of pre-determined market and service conditions (referred to herein as “market-based restricted stock units”). The fair value of our market-based restricted stock units is estimated using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient.
• Stock Options and ESPP . The fair value of stock options and stock purchase rights granted pursuant to our equity incentive plans and our 2000 Employee Stock Purchase Plan, as amended, respectively, is estimated using the Black-Scholes valuation model based on the multiple-award valuation method. Key assumptions of the Black-Scholes valuation model are the risk-free interest rate, expected volatility, expected term and expected dividends. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option. Expected volatility is based on a combination of historical stock price volatility and implied volatility of publicly-traded options on our common stock. An expected term is estimated based on historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior.
There were an insignificant number of stock options granted during the three and nine months ended December 31, 2025 and 2024.

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Stock Options
The following table summarizes our stock option activity for the nine months ended December 31, 2025:
Options
(in thousands) Weighted-
Average
Exercise Prices Weighted-
Average
Remaining
Contractual
Term  (in years) Aggregate
Intrinsic Value
(in millions)
Outstanding as of March 31, 2025
6   $ 63.51  

Granted 1   157.55  
Exercised ( 4 ) 98.74  
Forfeited, cancelled or expired —   —  
Outstanding as of December 31, 2025
3   $ 56.22   2.35 $ 0.5  
Vested and expected to vest 3   $ 56.22   2.35 $ 0.5  
Exercisable as of December 31, 2025
3   $ 56.22   2.35 $ 0.5  

The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price as of December 31, 2025, which would have been received by the option holders had all the option holders exercised their options as of that date. We issue new common stock from our authorized shares upon the exercise of stock options.
Restricted Stock Units
The following table summarizes our restricted stock units activity for the nine months ended December 31, 2025:
Restricted
Stock Units
(in thousands) Weighted-
Average Grant
Date Fair Values
Outstanding as of March 31, 2025
7,549   $ 133.90  

Granted 3,726   152.50  
Vested ( 4,041 ) 133.52  
Forfeited or cancelled ( 473 ) 138.39  
Outstanding as of December 31, 2025
6,761   $ 144.06  

Performance-Based Restricted Stock Units
Our performance-based restricted stock units vest upon the achievement of pre-determined performance-based milestones, including, but not limited to, management reporting milestones of net bookings and operating income metrics, as well as service conditions. If these performance-based milestones are not met but service conditions are met, the performance-based restricted stock units will not vest, in which case any compensation expense we have recognized to date will be reversed. Generally, the measurement periods of our performance-based restricted stock units are 3 years, with awards vesting after each annual measurement period or cliff-vesting after the completion of the total aggregate measurement period.
Each quarter, we update our assessment of the probability that the performance milestones will be achieved. We amortize the fair values of performance-based restricted stock units over the requisite service period. The performance-based restricted stock units contain threshold, target and maximum milestones for each performance-based milestone. The number of shares of common stock to be issued at vesting will range from zero to 200 percent of the target number of performance-based restricted stock units attributable to each performance-based milestone based on the company’s performance as compared to these threshold, target and maximum performance-based milestones. Each performance-based milestone is weighted evenly and the number of shares that vest based on each performance-based milestone is independent from the other.
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The following table summarizes our performance-based restricted stock unit activity, presented with the maximum number of shares that could potentially vest, for the nine months ended December 31, 2025:
Performance-
Based Restricted
Stock Units
(in thousands) Weighted-
Average Grant
Date Fair Value
Outstanding as of March 31, 2025
1,004   $ 134.60  
Granted 813   151.10  
Vested ( 266 ) 150.23  
Forfeited or cancelled ( 480 ) 137.75  
Outstanding as of December 31, 2025
1,071   $ 141.84  

Market-Based Restricted Stock Units
Our market-based restricted stock units vest contingent upon the achievement of pre-determined market and service conditions. If these market conditions are not met but service conditions are met, the market-based restricted stock units will not vest; however, any compensation expense we have recognized to date will not be reversed. The number of shares of common stock to be issued at vesting for these awards are based on our total stockholder return (“TSR”) relative to the performance of either companies in the Nasdaq-100 (for awards granted in fiscal years 2023 and 2024) or the S&P 500 Index (for awards granted in fiscal year 2025 and going forward) (“Relative TSR”) and on absolute TSR performance measured against pre-established goals, which started in fiscal year 2025 (“Absolute TSR”), each over a three-year period. Payout with respect to the Relative TSR component ranges from zero to 200 percent of the target number of Relative TSR units granted, and payout with respect to the Absolute TSR component ranges from zero to 75 percent of the target number of the underlying base award (which is comprised of Performance-Based Restricted Stock Units and Relative TSR units). These awards cliff-vest after the completion of the three-year measurement period, contingent on the achievement of both market and service conditions.
We amortize the fair values of market-based restricted stock units over the requisite service period.
The following table summarizes our market-based restricted stock unit activity, presented with the maximum number of shares that could potentially vest, for the nine months ended December 31, 2025:
Market-Based
Restricted  Stock
Units
(in thousands) Weighted-
Average  Grant
Date Fair Value
Outstanding as of March 31, 2025
637   $ 115.43  
Granted 367   103.73  
Vested ( 34 ) 150.48  
Forfeited or cancelled ( 80 ) 176.70  
Outstanding as of December 31, 2025
890   $ 103.80  

Stock-Based Compensation Expense
The following table summarizes stock-based compensation expense resulting from stock options, restricted stock units, market-based restricted stock units, performance-based restricted stock units, and the ESPP purchase rights included in our Condensed Consolidated Statements of Operations (in millions):
  Three Months Ended
December 31, Nine Months Ended
December 31,
  2025 2024 2025 2024
Cost of revenue $ 3   $ 3   $ 9   $ 11  
Research and development 127   119   360   342  
Marketing and sales 16   14   43   42  
General and administrative 32   27   92   85  
Stock-based compensation expense $ 178   $ 163   $ 504   $ 480  

During the three and nine months ended December 31, 2025, we recognized $ 15 million and $ 50 million, respectively, of deferred income tax benefit related to our stock-based compensation expense. During the three and nine months ended
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December 31, 2024, we recognized $ 27 million and $ 69 million, respectively, of deferred income tax benefit related to our stock-based compensation expense.
As of December 31, 2025, our total unrecognized compensation cost related to stock options, restricted stock units, market-based restricted stock units, and performance-based restricted stock units was $ 875 million and is expected to be recognized over a weighted-average service period of 1.8 years. Of the $ 875 million of unrecognized compensation cost, $ 812 million relates to restricted stock units, $ 39 million relates to performance-based restricted stock units, $ 24 million relates to market-based restricted stock units.
Stock Repurchase Program
In August 2022, our Board of Directors authorized a program to repurchase up to $ 2.6  billion of our common stock. This program was terminated on May 8, 2024.
In May 2024, the Company’s Audit Committee, upon delegation from the Company’s Board of Directors, authorized a program to repurchase up to $ 5.0  billion of our common stock. This program superseded and replaced the August 2022 program and expires on May 9, 2027. Under this program, we may purchase stock in the open market or through privately negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. We are not obligated to repurchase a specific number of shares of our common stock under this program and it may be modified, suspended or discontinued at any time. During the second quarter of fiscal year 2026, we suspended repurchase activity under this program in contemplation of the Merger detailed in Note 1 — Description of Business and Basis of Presentation .
The following table summarizes total shares repurchased during the three and nine months ended December 31, 2025 and 2024:
August 2022 Program May 2024 Program Total
(In millions) Shares Amount (a)
Shares Amount (a)
Shares Amount
Three months ended December 31, 2025
—   $ —   —   $ —   —   $ —  
Nine months ended December 31, 2025
—   $ —   5.3   $ 750   5.3   $ 750  
Three months ended December 31, 2024
—   $ —   2.4   $ 375   2.4   $ 375  
Nine months ended December 31, 2024
1.2   $ 152   6.7   $ 973   7.9   $ 1,125  
(a) Amount excludes excise taxes. Accrued excise taxes are included in accounts payable, accrued, and other current liabilities and additional paid-in capital on the Condensed Consolidated Balance Sheets.

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(13) EARNINGS PER SHARE
The following table summarizes the computations of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS is computed as net income divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans including stock options, restricted stock units, market-based restricted stock units, performance-based restricted stock units, and ESPP purchase rights using the treasury stock method.
  Three Months Ended
December 31, Nine Months Ended
December 31,
(In millions, except per share amounts) 2025 2024 2025 2024
Net income $ 88   $ 293   $ 426   $ 867  
Shares used to compute earnings per share:
Weighted-average common stock outstanding — basic 250   262   250   264  
Dilutive potential common shares related to stock award plans 3   3   3   2  
Weighted-average common stock outstanding — diluted 253   265   253   266  
Earnings per share:
Basic $ 0.35   $ 1.12   $ 1.70   $ 3.28  
Diluted $ 0.35   $ 1.11   $ 1.68   $ 3.26  

Certain restricted stock units, market-based restricted stock units and performance-based restricted stock units were excluded from the treasury stock method computation of diluted shares as their inclusion would have had an antidilutive effect. For both the three and nine months ended December 31, 2025 and 2024, one million such shares were excluded.

(14) SEGMENT AND REVENUE INFORMATION
Our reporting segment is based upon: our internal organizational structure; the manner in which our operations are managed; the criteria used by our Chief Executive Officer, our Chief Operating Decision Maker (“CODM”), to evaluate segment performance; the availability of separate financial information; and overall materiality considerations. As of December 31, 2025, we have one reportable segment, which represents our only operating segment. Our CODM makes decisions on resource allocation and assesses performance of the business based on our consolidated results, including net income.
The measure of segment assets are reported on the Condensed Consolidated Balance Sheets as total assets.

Information about our single reportable segment net revenue, net income, and significant segment expenses for the three and nine months ended December 31, 2025 and 2024 is presented below (in millions):
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Three Months Ended
December 31, Nine Months Ended
December 31,
2025 2024 2025 2024
Net revenue $ 1,901   $ 1,883   $ 5,411   $ 5,568  
Less:
Cost of revenue (1)
486   443   1,183   1,134  
Research and development (1)
577   487   1,736   1,541  
Marketing and sales (1)
340   237   831   686  
General and administrative (1)
140   150   453   464  
Acquisition-related expenses (2)
53   26   106   80  
Restructuring and related charges —   —   —   58  
Stock-based compensation 178   163   504   480  
Interest and other (income) expenses, net ( 4 ) ( 28 ) ( 3 ) ( 73 )
Provision for income taxes 43   112   175   331  
Net income $ 88   $ 293   $ 426   $ 867  
(1) Excludes amounts related to acquisition-related expenses, restructuring and related charges, and stock-based compensation, which are presented separately in the table above.
(2) Includes (i) amortization and impairment of intangibles, and (ii) fees and other direct expenses related to the Merger described in Note 1 , which are recorded within General and administrative expenses in the Condensed Consolidated Statements of Operations.

Information about our total net revenue by timing of recognition for the three and nine months ended December 31, 2025 and 2024 is presented below (in millions):

Three Months Ended
December 31, Nine Months Ended
December 31,
2025 2024 2025 2024
Net revenue by timing of recognition
Revenue recognized at a point in time $ 634   $ 747   $ 1,884   $ 2,036  
Revenue recognized over time 1,267   1,136   3,527   3,532  
Net revenue $ 1,901   $ 1,883   $ 5,411   $ 5,568  

Generally, performance obligations that are recognized upfront upon transfer of control are classified as revenue recognized at a point in time, while performance obligations that are recognized over either the period in which we offer to provide future update rights and/or online hosting for the game and related extra content sold (“Estimated Offering Period”), contractual term or subscription period as the services are provided are classified as revenue recognized over time.
Revenue recognized at a point in time includes revenue allocated to the software license performance obligation. This also includes a portion of revenue from the licensing of software to third-parties.
Revenue recognized over time includes service revenue allocated to the future update rights and the online hosting performance obligations. This also includes sales of extra content associated with our online-hosted services such as our Ultimate Team game mode, revenue allocated to the future update rights from licensing of software to third-parties, subscription services, and revenue recognized from third parties that publish games and services under a license to certain of our intellectual property assets.

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Information about our total net revenue by composition for the three and nine months ended December 31, 2025 and 2024 is presented below (in millions):
Three Months Ended
December 31, Nine Months Ended
December 31,
2025 2024 2025 2024
Net revenue by composition
Full game downloads $ 546   $ 446   $ 1,180   $ 1,111  
Packaged goods 86   153   359   454  
Full game 632   599   1,539   1,565  

Live services and other
1,269   1,284   3,872   4,003  
Net revenue $ 1,901   $ 1,883   $ 5,411   $ 5,568  

Full game net revenue includes full game downloads and packaged goods. Full game downloads primarily include revenue from digital sales of full games on console, PC, and certain licensing revenue. Packaged goods primarily include revenue from full games that are sold physically through distribution arrangements, mass market retailers, and specialty stores.
Live services and other net revenue primarily includes revenue from sales of extra content for console, PC, and mobile games, certain licensing revenue, subscriptions, and advertising.
Information about our total net revenue by platform for the three and nine months ended December 31, 2025 and 2024 is presented below (in millions):
Three Months Ended
December 31, Nine Months Ended
December 31,
  2025 2024 2025 2024
Platform net revenue
Console $ 1,182   $ 1,215   $ 3,401   $ 3,594  
PC and other 465   392   1,191   1,121  
Mobile 254   276   819   853  
Net revenue $ 1,901   $ 1,883   $ 5,411   $ 5,568  

Information about our operations in North America and internationally for the three and nine months ended December 31, 2025 and 2024 is presented below (in millions):
Three Months Ended
December 31, Nine Months Ended
December 31,
  2025 2024 2025 2024
Net revenue from unaffiliated customers
North America $ 764   $ 781   $ 2,176   $ 2,296  
International 1,137   1,102   3,235   3,272  
Net revenue $ 1,901   $ 1,883   $ 5,411   $ 5,568  

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Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Electronic Arts Inc.:
Results of Review of Interim Financial Information
We have reviewed the condensed consolidated balance sheet of Electronic Arts Inc. and subsidiaries (the Company) as of December 27, 2025, the related condensed consolidated statements of operations, comprehensive income, and stockholders’ equity for the three-month and nine-month periods ended December 27, 2025 and December 28, 2024, the related condensed consolidated statements of cash flows for the nine-month periods ended December 27, 2025 and December 28, 2024, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of March 29, 2025, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 13, 2025, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 29, 2025 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG LLP
Santa Clara, California
February 3, 2026

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We use words such as “anticipate”, “believe”, “expect”, “intend”, “estimate”, “plan”, “predict”, “seek”, “goal”, “will”, “may”, “likely”, “should”, “could”, “continue”, “potential” (and the negative of any of these terms), “future” and similar expressions to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our business, projections of markets relevant to our business, the Merger (as defined herein), uncertain events and assumptions and other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements consist of, among other things, statements related to our business, operations and financial results, industry prospects, our future financial performance, and our business plans and objectives, and may include certain assumptions that underlie the forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that might cause or contribute to such differences include those discussed in Part II, Item 1A of this Quarterly Report under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended March 31, 2025. We assume no obligation to revise or update any forward-looking statement for any reason, except as required by law.

OVERVIEW
The following overview is a high-level discussion of our operating results, as well as some of the trends and drivers that affect our business. Management believes that an understanding of these trends and drivers provides important context for our results for the three months ended December 31, 2025, as well as our future prospects. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this Form 10-Q, including in the remainder of “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” “Risk Factors,” and the Condensed Consolidated Financial Statements and related Notes. Additional information can be found in the “Business” section of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 as filed with the SEC on May 13, 2025 and in other documents we have filed with the SEC.
Proposed Merger

On September 28, 2025, we entered into a Merger Agreement pursuant to and subject to the terms and conditions of which we will be acquired by the Consortium. For further details on this proposed transaction, see Note 1 of the Condensed Consolidated Financial Statements and "Part II—Item 1A. Risk Factors" contained elsewhere in this Form 10-Q.

About Electronic Arts
Electronic Arts is a global leader in digital interactive entertainment. We develop, market, publish and deliver games, content and services that can be experienced on game consoles, PCs, and mobile devices. We create innovative games and experiences that deliver high-quality interactive entertainment and drive engagement across our global network of hundreds of millions of players. Through our live services offerings, we offer high-quality experiences designed to provide value to players and extend and enhance gameplay. These live services include extra content, subscription offerings and other revenue generated in addition to the sale of our full games. We are focusing on building games and experiences that grow the global online communities around our key franchises; deepening engagement through connecting interactive storytelling to key intellectual property; and harnessing our communities to grow in, around, and beyond our games.
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Financial Results
Our key financial results for our fiscal quarter ended December 31, 2025 were as follows:
• Total net revenue was $1,901 million, up 1 percent year-over-year.
• Live services and other net revenue was $1,269 million, down 1 percent year-over-year.
• Gross margin was 73.8 percent, down 2 percentage points year-over-year.
• Operating expenses were $1,276 million, up 22 percent year-over-year.
• Operating income was $127 million, down 66 percent year-over-year.
• Net income was $88 million with diluted earnings per share of $0.35.
• Net cash provided by operating activities was $1,826 million, up 55 percent year-over-year.
• Total cash, cash equivalents and short-term investments were $2,899 million.
• We returned $47 million to stockholders through our quarterly cash dividend program.
Trends in Our Business
Live Services Business. We offer our players high-quality experiences designed to provide value to players and to extend and enhance gameplay. These live services include extra content, subscription offerings and other revenue generated in addition to the sale of our full games and free-to-play games. Our net revenue attributable to live services and other was $5,330 million, $5,449 million, and $5,603 million for the trailing twelve months ended December 31, 2025, 2024, and 2023, respectively, and we expect that live services net revenue will continue to be material to our business. Within live services and other, net revenue attributable to extra content was $4,116 million, $4,379 million, and $4,436 million for the trailing twelve months ended December 31, 2025, 2024, and 2023, respectively. Growth in live services net revenue, including extra content may not be linear due to the competitive landscape, consumer buying patterns, and other factors. Our most popular live services are the extra content in the Ultimate Team mode associated with our sports franchises. Ultimate Team allows players to collect current and former players in order to build and compete as a personalized team. Live services net revenue generated from extra content purchased within Ultimate Team , a substantial portion of which was derived from FC Ultimate Team , is material to our business.
Digital Delivery of Games. In our industry, players increasingly purchase games digitally as opposed to purchasing physical discs. While this trend, as applied to our business, may not be linear due to a mix of products during a fiscal year, consumer buying patterns and other factors, over time we expect players to continue to purchase a higher proportion of our games digitally. As a result, we expect net revenue attributable to digital full game downloads to increase over time and net revenue attributable to sales of packaged goods to decrease.
Our net revenue attributable to digital full game downloads was $1,478 million, $1,343 million, and $1,262 million during fiscal years 2025, 2024, and 2023, respectively; while our net revenue attributable to packaged goods sales was $524 million, $672 million, and $675 million in fiscal years 2025, 2024, and 2023, respectively. In addition, as measured based on total units sold on Microsoft’s Xbox One and Xbox Series X and Sony’s PlayStation 4 and 5 rather than by net revenue, we estimate that 78 percent, 73 percent, and 68 percent of our total units sold during fiscal years 2025, 2024, and 2023, were sold digitally. Digital full game units are based on sales information provided by Microsoft and Sony; packaged goods units sold through are estimated by obtaining data from significant retail and distribution partners in North America, Europe and Asia, and applying internal sales estimates with respect to retail partners from which we do not obtain data. We believe that these percentages are reasonable estimates of the proportion of our games that are digitally downloaded in relation to our total number of units sold for the applicable period of measurement.
Increases in consumer adoption of digital purchase of games combined with increases in our live services revenue generally results in expansion of our gross margin, as costs associated with selling a game digitally are generally less than selling the same game through traditional retail and distribution channels.
Increased Competition. Competition in our business is intense. Our competitors range from established interactive entertainment companies to emerging start-ups. In addition, we compete with large, diversified companies that have strengthened their interactive entertainment capabilities. Our competitors have access to certain resources such as larger budgets, tools, technologies, or IP portfolios that can lead to greater consumer success and shift player time and engagement away from our products and services. In addition, our leading position within the interactive entertainment industry makes us a prime target for recruiting our executives, as well as key creative and technical talent, resulting in retention challenges and increased cost to retain and incentivize our key people.

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Concentration of Sales Among the Most Popular Games . In our industry, we see a large portion of games sales concentrated on the most popular titles. Similarly, a significant portion of our revenue has been derived from games based on a few popular titles, such as EA SPORTS FC, EA SPORTS College Football, EA SPORTS Madden NFL, Apex Legends , Battlefield, and The Sims. In particular, we have historically derived a significant portion of our net revenue from our global football franchise, the annualized version of which is consistently one of the best-selling games in the marketplace.

Net Bookings . In order to improve transparency into our business, we disclose an operating performance metric, net bookings. Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.
The following is a calculation of our total net bookings for the periods presented:
Three Months Ended
December 31, Nine Months Ended
December 31,
(In millions)
2025 2024 2025 2024
Net revenue $ 1,901  $ 1,883  $ 5,411  $ 5,568 
Change in deferred net revenue (online-enabled games) 1,145  332  751  (12)
Net bookings $ 3,046  $ 2,215  $ 6,162  $ 5,556 

Net bookings were $3,046 million for the three months ended December 31, 2025, primarily driven by sales related to our global football, Battlefield, and American football franchises . Net bookings increased $831 million, or 38 percent, as compared to the three months ended December 31, 2024, primarily due to the release of Battlefield 6 and a year-over-year increase in sales from our global football franchise, partially offset by a decrease in sales from the prior year release of Dragon Age: The Veilguard. Live services and other net bookings were $1,904 million for the three months ended December 31, 2025, and increased $322 million, or 20 percent, as compared to the three months ended December 31, 2024. The increase in live services and other net bookings was primarily due to increased sales of extra content from Ultimate Team within our global football franchise and from Battlefield 6, partially offset by decreased sales of extra content from Ultimate Team within EA SPORTS College Football and The Sims 4. Full game net bookings were $1,142 million for the three months ended December 31, 2025, and increased $509 million, or 80 percent, as compared to the three months ended December 31, 2024, primarily due to the release of Battlefield 6, partially offset by the prior year release of Dragon Age: The Veilguard and a year-over-year decline in EA SPORTS FC.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenue and expenses during the reporting periods. The policies discussed below are considered by management to be critical because they are not only important to the portrayal of our financial condition and results of operations, but also because application and interpretation of these policies requires both management judgment and estimates of matters that are inherently uncertain and unknown. As a result, actual results may differ materially from our estimates.
Revenue Recognition
We derive revenue principally from sales of our games, and related extra content and services that can be experienced on game consoles, PCs, and mobile devices. Our product and service offerings include, but are not limited to, the following:
• full games with both online and offline functionality (“Games with Services”), which generally includes (1) the initial game delivered digitally or via physical disc at the time of sale and typically provide access to offline core game content (“software license”); (2) updates on a when-and-if-available basis, such as software patches or updates, and/or additional free content to be delivered in the future (“future update rights”); and (3) a hosted connection for online playability (“online hosting”);
• full games with online-only functionality which require an Internet connection to access all gameplay and functionality (“Online-Hosted Service Games”);
• extra content related to Games with Services and Online-Hosted Service Games which provides access to additional in-game content;
• subscriptions, such as EA Play and EA Play Pro, that generally offer access to a selection of full games, in-game content, online services and other benefits typically for a recurring monthly or annual fee; and
• licensing to third parties to distribute and host our games and content.
We evaluate and recognize revenue by:
• identifying the contract(s) with the customer;
• identifying the performance obligations in the contract;
• determining the transaction price;
• allocating the transaction price to performance obligations in the contract; and
• recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (i.e., “transfer of control”).
Certain of our full game and/or extra content are sold to resellers with a contingency that the full game and/or extra content cannot be resold prior to a specific date (“Street Date Contingency”). We recognize revenue for transactions that have a Street Date Contingency when the Street Date Contingency is removed and the full game and/or extra content can be resold by the reseller. For digital full game and/or extra content downloads sold to customers, we recognize revenue when the full game and/or extra content is made available for download to the customer.
Online-Enabled Games
Games with Services. Our sales of Games with Services are evaluated to determine whether the software license, future update rights and the online hosting are distinct and separable. Sales of Games with Services are generally determined to have three distinct performance obligations: software license, future update rights, and the online hosting.
Since we do not sell the performance obligations on a stand-alone basis, we consider market conditions and other observable inputs to estimate the stand-alone selling price for each performance obligation. For Games with Services, generally 75 percent of the sales price is allocated to the software license performance obligation and recognized at a point in time when control of the license has been transferred to the customer. The remaining 25 percent is allocated to the future update rights and the online hosting performance obligations and recognized ratably as the service is provided (over the Estimated Offering Period).
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Online-Hosted Service Games. Sales of our Online-Hosted Service Games are determined to have one distinct performance obligation: the online hosting service. We recognize revenue from these arrangements ratably as the service is provided (over the Estimated Offering Period).
Extra Content. Revenue received from sales of downloadable content are derived primarily from the sale of virtual currencies and digital in-game content that are designed to extend and enhance players’ game experience. Sales of extra content are accounted for in a manner consistent with the treatment for our Games with Services and Online-Hosted Service Games as discussed above, depending upon whether or not the extra content has offline functionality. That is, if the extra content has offline functionality, then the extra content is accounted for similarly to Games with Services (generally determined to have three distinct performance obligations: software license, future update rights, and the online hosting). If the extra content does not have offline functionality, then the extra content is determined to have one distinct performance obligation: the online-hosted service.
Subscriptions
Sales of our subscriptions are determined to have one performance obligation: the online hosting. We recognize revenue from these arrangements ratably over the subscription term as the performance obligation is satisfied.
Licensing Revenue
We utilize third-party licensees to distribute and host our games and content in accordance with license agreements, for which the licensees typically pay us a fixed minimum guarantee and/or sales-based royalties. These arrangements typically include multiple performance obligations, such as a time-based license of software and future update rights. We recognize as revenue a portion of the minimum guarantee when we transfer control of the license of software (generally upon commercial launch) and the remaining portion ratably over the contractual term in which we provide the licensee with future update rights. Any sales-based royalties are generally recognized as the related sales occur by the licensee.
Significant Judgments around Revenue Arrangements
Identifying performance obligations. Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, (i.e., the customer can benefit from the goods or services either on its own or together with other resources that are readily available), and are distinct in the context of the contract (i.e., it is separately identifiable from other goods or services in the contract). To the extent a contract includes multiple promises, we must apply judgment to determine whether those promises are separate and distinct performance obligations. If these criteria are not met, the promises are accounted for as a combined performance obligation.
Determining the transaction price. The transaction price is determined based on the consideration that we will be entitled to receive in exchange for transferring our goods and services to the customer. Determining the transaction price often requires judgment, based on an assessment of contractual terms and business practices. It further includes review of variable consideration such as discounts, sales returns, price protection, and rebates, which is estimated at the time of the transaction. In addition, the transaction price does not include an estimate of the variable consideration related to sales-based royalties. Sales-based royalties are recognized as the sales occur.
Allocating the transaction price. Allocating the transaction price requires that we determine an estimate of the relative stand-alone selling price for each distinct performance obligation. Determining the relative stand-alone selling price is inherently subjective, especially in situations where we do not sell the performance obligation on a stand-alone basis (which occurs in the majority of our transactions). In those situations, we determine the relative stand-alone selling price based on various observable inputs using all information that is reasonably available. Examples of observable inputs and information include: historical internal pricing data, cost plus margin analysis, pre-release versus post-release costs, and pricing data from competitors to the extent the data is available. The results of our analysis resulted in a specific percentage of the transaction price being allocated to each performance obligation.
Determining the Estimated Offering Period. The offering period is the period in which we offer to provide the future update rights and/or online hosting for the game and related extra content sold. Because the offering period is not an explicitly defined period, we must make an estimate of the offering period for the service-related performance obligations (i.e., future update rights and/or online hosting). Determining the Estimated Offering Period is inherently subjective and is subject to regular revision. Generally, we consider the average period of time customers are online when estimating the offering period. We also consider the estimated period of time between the date a game unit is sold to a reseller and the date the reseller sells the game
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unit to the customer (i.e., time in channel). Based on these two factors, we then consider the method of distribution. For example, games and extra content sold at retail would have a composite offering period equal to the online gameplay period plus time in channel as opposed to digitally-distributed games and extra content which are delivered immediately via digital download and therefore, the offering period is estimated to be only the online gameplay period.
Additionally, we consider results from prior analyses, known and expected online gameplay trends, as well as disclosed service periods for competitors’ games in determining the Estimated Offering Period for future sales. We believe this provides a reasonable depiction of the transfer of future update rights and online hosting to our customers, as it is the best representation of the time period during which our games and extra content are experienced. We recognize revenue for future update rights and online hosting performance obligations ratably on a straight-line basis over this period as there is a consistent pattern of delivery for these performance obligations. Revenue for service-related performance obligations for digitally-distributed games and extra content is recognized over an estimated eight-month period beginning in the month of sale, and revenue for service-related performance obligations for games and extra content sold through retail is recognized over an estimated ten-month period beginning in the month of sale. Prior to July 1, 2025, revenue for service-related performance obligations related to our mobile free-to-play and PC and console free-to-play games was recognized generally over eight and twelve-month periods, respectively, beginning in the month of sale.
During the three months ended September 30, 2025, we completed our annual evaluation of the Estimated Offering Period, and as a result, for sales beginning July 1, 2025, the revenue that we recognize for service-related performance obligation related to our mobile free-to-play and PC and console free-to-play games is recognized generally over an eleven-month period beginning in the month of sale. This change in Estimated Offering Period did not impact the amount of net bookings or the operating cash flows that we report. We expect that this change will move the recognition of approximately $74 million in net revenue from fiscal year 2026 into fiscal year 2027. During the three months ended December 31, 2025 this change to our Estimated Offering Period resulted in an estimated decrease in net revenue of $25 million and net income of $19 million, and a decrease of $0.08 diluted earnings per share. During the nine months ended December 31, 2025 this change to our Estimated Offering Period resulted in an estimated decrease in net revenue of $33 million and net income of $25 million, and a decrease of $0.10 diluted earnings per share.
Principal Agent Considerations
We evaluate sales to end customers of our full games and related content via third-party storefronts, including digital storefronts such as Microsoft’s Xbox Store, Sony’s PlayStation Store, Apple App Store, and Google Play Store, in order to determine whether or not we are acting as the principal in the sale to the end customer, which we consider in determining if revenue should be reported gross or net of fees retained by the third-party storefront. An entity is the principal if it controls a good or service before it is transferred to the end customer. Key indicators that we evaluate in determining gross versus net treatment include but are not limited to the following:
• the underlying contract terms and conditions between the various parties to the transaction;
• which party is primarily responsible for fulfilling the promise to provide the specified good or service to the end customer;
• which party has discretion in establishing the price for the specified good or service; and
• which party has title risk before the specified good or service has been transferred to the end customer.
Based on an evaluation of the above indicators, except as discussed below, we have determined that generally the third party is considered the principal to end customers for the sale of our full games and related content. We therefore report revenue related to these arrangements net of the fees retained by the storefront. However, for sales arrangements via Apple App Store and Google Play Store, EA is considered the principal to the end customer and thus, we report revenue on a gross basis and mobile platform fees are reported within cost of revenue.
Income Taxes
We recognize deferred tax assets and liabilities for both (1) the expected impact of differences between the financial statement amount and the tax basis of assets and liabilities and (2) the expected future tax benefit to be derived from tax losses and tax credit carryforwards. We do not recognize any deferred taxes related to the U.S. taxes on foreign earnings as we recognize these taxes as a period cost.
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We record a valuation allowance against deferred tax assets when it is considered more likely than not that all or a portion of our deferred tax assets will not be realized. In making this determination, we are required to give significant weight to evidence that can be objectively verified. It is generally difficult to conclude that a valuation allowance is not needed when there is significant negative evidence, such as cumulative losses in recent years. Forecasts of future taxable income are considered to be less objective than past results. Therefore, cumulative losses weigh heavily in the overall assessment.
In addition to considering forecasts of future taxable income, we are also required to evaluate and quantify other possible sources of taxable income in order to assess the realization of our deferred tax assets, namely the reversal of existing deferred tax liabilities, the carryback of losses and credits as allowed under current tax law, and the implementation of tax planning strategies. Evaluating and quantifying these amounts involves significant judgments. Each source of income must be evaluated based on all positive and negative evidence and this evaluation may involve assumptions about future activity. Certain taxable temporary differences that are not expected to reverse during the carry forward periods permitted by tax law cannot be considered as a source of future taxable income that may be available to realize the benefit of deferred tax assets.
Every quarter, we perform a realizability analysis to evaluate whether it is more likely than not that all or a portion of our deferred tax assets will not be realized. Our Swiss deferred tax asset realizability analysis relies upon future Swiss taxable income, and considers all available sources of Swiss income based on positive and negative evidence. We give more weight to evidence that can be objectively verified. However, estimating future Swiss taxable income requires judgment, specifically related to assumptions about expected growth rates of future Swiss taxable income, which are based primarily on third party market and industry growth data. Actual results that differ materially from those estimates could have a material impact on our valuation allowance assessment. Swiss interest rates have an impact on the valuation allowance and are based on published Swiss guidance, which generally occurs in the fourth quarter of our fiscal year. Any significant changes to such interest rates could result in a material impact to the valuation allowance and to our Condensed Consolidated Financial Statements. We have adjusted our valuation allowance for changes in the published interest rates in the past and we may do so again in the future. Switzerland has a seven-year carryforward period and does not permit the carry back of losses. Actions we take in connection with acquisitions could also impact the utilization of our Swiss deferred tax asset.
As part of the process of preparing our Condensed Consolidated Financial Statements, we are required to estimate our income taxes in each jurisdiction in which we operate prior to the completion and filing of tax returns for such periods. This process requires estimating both our geographic mix of income and our uncertain tax positions in each jurisdiction where we operate. These estimates require us to make judgments about the likely application of the tax law to our situation, as well as with respect to other matters, such as anticipating the positions that we will take on tax returns prior to preparing the returns and the outcomes of disputes with tax authorities. The ultimate resolution of these issues may take extended periods of time due to examinations by tax authorities and statutes of limitations. In addition, changes in our business, including acquisitions, changes in our international corporate structure, changes in the geographic location of business functions or assets, changes in the geographic mix and amount of income, as well as changes in our agreements with tax authorities, valuation allowances, applicable accounting rules, applicable tax laws and regulations, rulings and interpretations thereof, developments in tax audit and other matters, and variations in the estimated and actual level of annual pre-tax income can affect the overall effective tax rate.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
The information under the subheading “Other Recently Issued Accounting Standards” in Note 1 — Description of Business and Basis of Presentation to the Condensed Consolidated Financial Statements in this Form 10-Q is incorporated by reference into this Item 2.

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RESULTS OF OPERATIONS
Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of operations for the fiscal year ending March 31, 2026 contains 52 weeks and ends on March 28, 2026. Our results of operations for the fiscal year ended March 31, 2025 contained 52 weeks and ended on March 29, 2025. Our results of operations for the three and nine months ended December 31, 2025 contained 13 weeks and 39 weeks, respectively, and ended on December 27, 2025. Our results of operations for the three and nine months ended December 31, 2024 contained 13 weeks and 39 weeks, respectively, and ended on December 28, 2024. For simplicity of disclosure, all fiscal periods are referred to as ending on a calendar month end.

Net Revenue
Net revenue consists of sales generated from (1) full games sold as digital downloads or as packaged goods and designed for play on game consoles and PCs, (2) live services which primarily includes sales of extra content for console, PC, and mobile games, (3) subscriptions that generally offer access to a selection of full games, in-game content, online services and other benefits, and (4) licensing our games to third parties to distribute and host our games and content.
Net Revenue Quarterly Analysis
Net Revenue
Net revenue for the three months ended December 31, 2025 was $1,901 million, primarily driven by sales related to our global football, Battlefield, and American football franchises. Net revenue for the three months ended December 31, 2025 increased $18 million as compared to the three months ended December 31, 2024. This increase was driven by a $264 million increase in net revenue primarily due to the release of Battlefield 6 , partially offset by a $246 million decrease in net revenue primarily due to the prior year release of Dragon Age: The Veilguard, our American football and global football franchises, and decreased sales of extra content for Apex Legends.

Net Revenue by Composition
Our net revenue by composition for the three months ended December 31, 2025 and 2024 was as follows (in millions):
Three Months Ended December 31,
2025 2024 $ Change % Change
Net revenue:
Full game downloads $ 546  $ 446  $ 100  22  %
Packaged goods 86  153  (67) (44) %
Full game $ 632  $ 599  $ 33  6  %

Live services and other $ 1,269  $ 1,284  $ (15) (1) %
Total net revenue $ 1,901  $ 1,883  $ 18  1  %

Full Game Net Revenue
Full game net revenue includes full game downloads and packaged goods. Full game downloads primarily include revenue from digital sales of full games on console, PC, and certain licensing revenue. Packaged goods primarily include revenue from full games that are sold physically through distribution arrangements, mass market retailers, and specialty stores.
For the three months ended December 31, 2025, full game net revenue was $632 million, primarily driven by EA SPORTS FC 26, Battlefield 6, and EA SPORTS Madden NFL 26. Full game net revenue for the three months ended December 31, 2025 increased $33 million, or 6 percent, as compared to the three months ended December 31, 2024, primarily due to the release of Battlefield 6 , partially offset by the prior year release of Dragon Age: The Veilguard and year-over-year declines in EA SPORTS FC and EA SPORTS College Football.

Live Services and Other Net Revenue
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Live services and other net revenue primarily includes revenue from sales of extra content for console, PC, and mobile games, certain licensing revenue, subscriptions, and advertising.
For the three months ended December 31, 2025, live services and other net revenue was $1,269 million, primarily driven by sales of extra content for our global football, American football, and The Sims franchises . Live services and other net revenue for the three months ended December 31, 2025 decreased $15 million, or 1 percent, as compared to the three months ended December 31, 2024. This decrease was primarily driven by decreased sales of extra content for Apex Legends and The Sims 4 , partially offset by sales of extra content from Battlefield 6.

Net Revenue Year-to-Date Analysis
Net Revenue
Net revenue for the nine months ended December 31, 2025 was $5,411 million, primarily driven by sales related to our global football, American football, and The Sims franchises. Net revenue for the nine months ended December 31, 2025 decreased $157 million as compared to the nine months ended December 31, 2024. This decrease was driven by a $523 million decrease in net revenue primarily due to sales of extra content for Apex Legends, a decrease in net revenue from our American football and global football franchises, and the prior year release of Dragon Age: The Veilguard, partially offset by a $366 million increase in net revenue primarily driven by the release of Battlefield 6.

Net Revenue by Composition
Our net revenue by composition for the nine months ended December 31, 2025 and 2024 was as follows (in millions):
Nine Months Ended December 31,
2025 2024 $ Change % Change
Net revenue:
Full game downloads $ 1,180  $ 1,111  $ 69  6  %
Packaged goods 359  454  (95) (21) %
Full game $ 1,539  $ 1,565  $ (26) (2) %

Live services and other $ 3,872  $ 4,003  $ (131) (3) %
Total net revenue $ 5,411  $ 5,568  $ (157) (3) %

Full Game Net Revenue
For the nine months ended December 31, 2025, full game net revenue was $1,539 million, primarily driven by EA SPORTS FC 26, Battlefield 6, EA SPORTS FC 25, EA SPORTS Madden NFL 26, and EA SPORTS College Football 26. Full game net revenue for the nine months ended December 31, 2025 decreased $26 million, or 2 percent, as compared to the nine months ended December 31, 2024, primarily due to year-over-year declines in EA SPORTS College Football and EA SPORTS FC, partially offset by the release of Battlefield 6 .

Live Services and Other Net Revenue
For the nine months ended December 31, 2025, live services and other net revenue was $3,872 million, primarily driven by sales of extra content for our global football, American football, and The Sims franchises . Live services and other net revenue for the nine months ended December 31, 2025 decreased $131 million, or 3 percent, as compared to the nine months ended December 31, 2024. This decrease was primarily driven by decreased sales of extra content for Apex Legends and Ultimate Team within EA SPORTS Madden NFL, partially offset by an increase in net revenue primarily due to sales of extra content from Ultimate Team within EA SPORTS College Football.

Cost of Revenue Quarterly Analysis

Cost of revenue consists of (1) certain royalty expenses for sports organizations, movie studios, independent software developers, and others (2) mobile platform fees associated with our mobile revenue (for transactions in which we are acting as
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the principal in the sale to the end customer), (3) data center, bandwidth and server costs associated with hosting our online games and websites, (4) inventory costs, including manufacturing royalties, (5) payment processing fees, (6) amortization and impairments of certain intangible assets, and (7) personnel-related costs.

Cost of revenue for the three months ended December 31, 2025 and 2024 was as follows (in millions):
December 31,
2025 % of Net Revenue December 31,
2024 % of Net Revenue % Change Change as a % of Net Revenue
$ 498  26  % $ 456  24  % 9  % 2  %

Cost of Revenue
Cost of revenue increased by $42 million, and cost of revenue as a percentage of total net revenue increased by 2 percent during the three months ended December 31, 2025, as compared to the three months ended December 31, 2024. This increase was primarily due to higher online hosting fees, primarily driven by the release of Battlefield 6, and a net increase in royalty costs primarily due to impacts from foreign exchange.

Cost of Revenue Year-to-Date Analysis

Cost of revenue for the nine months ended December 31, 2025 and 2024 was as follows (in millions):
December 31,
2025 % of Net Revenue December 31,
2024 % of Net Revenue % Change Change as a % of Net Revenue
$ 1,220  23  % $ 1,175  21  % 4  % 1  %

Cost of Revenue
Cost of revenue increased by $45 million during the nine months ended December 31, 2025, as compared to the nine months ended December 31, 2024, primarily due to a net increase in royalty costs driven by the mix of sales from royalty-bearing titles and impacts from foreign exchange. This increase was partially offset by a decrease in product-related costs primarily due to our American football and global football franchises, partially offset by Battlefield 6 .

Research and Development
Research and development expenses consist of expenses incurred by our production studios for personnel-related costs, related overhead costs, external third-party development costs, contracted services, and depreciation. Research and development expenses for our online products include expenses incurred by our studios consisting of direct development and related overhead costs in connection with the development and production of our online games. Research and development expenses also include expenses associated with our digital platform, software licenses and maintenance, and management overhead.
Research and development expenses for the three and nine months ended December 31, 2025 and 2024 were as follows (in millions):
December 31,
2025 % of Net
Revenue December 31,
2024 % of Net
Revenue $ Change % Change
Three months ended $ 704  37  % $ 606  32  % $ 98  16  %
Nine months ended $ 2,096  39  % $ 1,883  34  % $ 213  11  %

Research and development expenses increased by $98 million, or 16 percent, during the three months ended December 31, 2025, as compared to the three months ended December 31, 2024. This increase was primarily due to a $61 million increase in personnel-related costs driven by an increase in variable compensation, and related expenses as part of our continued investment in our studios, a $12 million increase in digital infrastructure costs, and an $8 million increase in studio-related contracted services.

Research and development expenses increased by $213 million, or 11 percent, during the nine months ended December 31, 2025, as compared to the nine months ended December 31, 2024. This increase was primarily due to a $113 million increase in personnel-related costs as part of our continued investment in our studios, and an increase in variable compensation, a $44 million increase in studio-related contracted services, and a $39 million increase in digital infrastructure costs.
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Marketing and Sales
Marketing and sales expenses consist of advertising, marketing and promotional expenses, personnel-related costs, and related overhead costs.
Marketing and sales expenses for the three and nine months ended December 31, 2025 and 2024 were as follows (in millions):
December 31,
2025 % of Net
Revenue December 31,
2024 % of Net
Revenue $ Change % Change
Three months ended $ 356  19  % $ 251  13  % $ 105  42  %
Nine months ended $ 874  16  % $ 728  13  % $ 146  20  %

Marketing and sales expenses increased by $105 million, or 42 percent, during the three months ended December 31, 2025, as compared to the three months ended December 31, 2024. This increase was primarily due to higher advertising and marketing spending related to the release of Battlefield 6 , partially offset by a decrease in advertising and marketing spending for the prior year release of Dragon Age: The Veilguard.

Marketing and sales expenses increased by $146 million, or 20 percent, during the nine months ended December 31, 2025, as compared to the nine months ended December 31, 2024. This increase was primarily due to higher advertising and marketing spending related to release of Battlefield 6 , partially offset by a decrease in advertising and marketing spending for Apex Legends and the prior year release of Dragon Age: The Veilguard .

General and Administrative
General and administrative expenses consist of personnel and related expenses of executive and administrative staff, corporate functions such as finance, legal, human resources, and information technology (“IT”), related overhead costs, fees for professional services, and allowances for doubtful accounts.
General and administrative expenses for the three and nine months ended December 31, 2025 and 2024 were as follows (in millions):
December 31,
2025 % of Net
Revenue December 31,
2024 % of Net
Revenue $ Change % Change
Three months ended $ 199  10  % $ 176  9  % $ 23  13  %
Nine months ended $ 572  11  % $ 553  10  % $ 19  3  %

General and administrative expenses increased by $23 million, or 13 percent, during the three months ended December 31, 2025, as compared to the three months ended December 31, 2024. This increase was primarily due to $27 million of fees and other direct expenses related to the Merger described in Note 1 , partially offset by a $6 million decrease in IT related costs.

General and administrative expenses increased by $19 million, or 3 percent, during the nine months ended December 31, 2025, as compared to the nine months ended December 31, 2024. This increase was primarily due to $27 million of fees and other direct expenses related to the Merger, partially offset by a $6 million decrease in contracted services.

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Income Taxes
On July 4, 2025, the United States enacted OBBB which extended or modified certain corporate tax provisions under the 2017 TCJA. The changes resulting from the tax provisions of OBBB are not expected to have a material impact on our results of operations.

Provision for income taxes for the three and nine months ended December 31, 2025 and 2024 were as follows (in millions):
December 31, 2025 Effective Tax Rate December 31, 2024 Effective Tax Rate $ Change
Three months ended $ 43  33  % $ 112  28  % $ (69)
Nine months ended $ 175  29  % $ 331  28  % $ (156)

The provision for income taxes for the three and nine months ended December 31, 2025 is based on our projected annual effective tax rate for fiscal year 2026, adjusted for specific items that are required to be recognized in the period in which they are incurred. The increase in the three and nine months effective tax rate year-over-year is primarily due to Pillar II global minimum tax impacts, partially offset by a net periodic tax benefit from higher excess stock-based compensation.

LIQUIDITY AND CAPITAL RESOURCES
(In millions) As of
December 31, 2025
As of
March 31, 2025

Increase/(Decrease)
Cash and cash equivalents $ 2,784  $ 2,136  $ 648 
Short-term investments 115  112  3 
Total $ 2,899  $ 2,248  $ 651 
Percentage of total assets 22  % 18  %

  Nine Months Ended
December 31,  
(In millions) 2025 2024 Change
Net cash provided by operating activities $ 1,973  $ 1,530  $ 443 
Net cash used in investing activities (214) (177) (37)
Net cash used in financing activities (1,133) (1,452) 319 
Effect of foreign exchange on cash and cash equivalents 22  (25) 47 
Net increase (decrease) in cash and cash equivalents $ 648  $ (124) $ 772 

Changes in Cash Flow
Operating Activities. Net cash provided by operating activities increased by $443 million during the nine months ended December 31, 2025, as compared to the nine months ended December 31, 2024, primarily driven by higher cash collections from sales and lower cash payments for income taxes, partially offset by higher personnel-related payments, lower cash inflows from hedging activities, and higher marketing and advertising payments.
Investing Activities. Net cash used in investing activities increased by $37 million during the nine months ended December 31, 2025, as compared to the nine months ended December 31, 2024, primarily driven by lower proceeds from maturities and sales of short-term investments and acquisition-related payments, partially offset by reduced purchases of short-term and other investments.
Financing Activities. Net cash used in financing activities decreased by $319 million during the nine months ended December 31, 2025, as compared to the nine months ended December 31, 2024, primarily driven by a $364 million decrease in cash paid for common stock repurchases and related excise taxes, partially offset by a $55 million increase in cash paid to taxing authorities in connection with withholding taxes for stock-based compensation.
Short-term Investments
Due to our mix of fixed and variable rate securities, our short-term investment portfolio is susceptible to changes in short-term interest rates. As of December 31, 2025, our short-term investments had net unrealized gains of less than $1 million or less than
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1 percent of total short-term investments. From time to time, we may liquidate some or all of our short-term investments to fund operational needs or other activities, such as capital expenditures, business acquisitions or debt repayment obligations.
Senior Notes
In February 2021, we issued $750 million aggregate principal amount of the 2031 Notes and $750 million aggregate principal amount of the 2051 Notes. The effective interest rate is 1.98% for the 2031 Notes and 3.04% for the 2051 Notes. Interest is payable semiannually in arrears, on February 15 and August 15 of each year.
See Note 10 — Financing Arrangements to the Condensed Consolidated Financial Statements in this Form 10-Q as it relates to our Senior Notes, which is incorporated by reference into this Item 2.
Credit Facility
On March 22, 2023, we entered into a $500 million unsecured revolving credit facility (the "Credit Facility") with a syndicate of banks. The Credit Facility terminates on March 22, 2028 unless the maturity is extended in accordance with its terms. As of December 31, 2025 , no amounts were outstanding. The Credit Facility contains an option to arrange with existing lenders and/or new lenders to provide up to an aggregate of $500 million in additional commitments for revolving loans. Proceeds of loans made under the Credit Facility may be used for general corporate purposes. See Note 10 — Financing Arrangements to the Condensed Consolidated Financial Statements in this Form 10-Q as it relates to our Credit Facility, which is incorporated by reference into this Item 2.
Financial Condition
Our material cash requirements, including commitments for capital expenditure, as of December 31, 2025 are set forth in our Note 11 — Commitments and Contingencies to the Condensed Consolidated Financial Statements in this Form 10-Q, which is incorporated by reference into this Item 2. We believe that our cash, cash equivalents, short-term investments, cash generated from operations and available financing facilities will be sufficient to meet these material cash requirements, which include licensing intellectual property from sports organizations and players associations used in our EA SPORTS titles and third-party content, debt repayment obligations, and to fund our operating requirements for the next 12 months and beyond. Our operating requirements include working capital requirements, capital expenditures, our capital return programs, and potentially, future acquisitions or strategic investments. We may choose at any time to raise additional capital to repay debt, strengthen our financial position, facilitate expansion, repurchase our stock, pursue strategic acquisitions and investments, and/or to take advantage of business opportunities as they arise. There can be no assurance, however, that such additional capital will be available to us on favorable terms, if at all, or that it will not result in substantial dilution to our existing stockholders.

During the nine months ended December 31, 2025, we returned $893 million to stockholders through our capital return programs, which include repurchasing 5.3 million shares for approximately $750 million and paying $143 million through our quarterly cash dividend program.

Our foreign subsidiaries are generally subject to U.S. tax, and to the extent earnings from these subsidiaries can be repatriated without a material tax cost, such earnings will not be indefinitely reinvested. As of December 31, 2025, approximately $1,075 million of our cash and cash equivalents were domiciled in foreign tax jurisdictions. All of our foreign cash is available for repatriation without a material tax cost.

We have a “shelf” registration statement on Form S-3 on file with the SEC. This shelf registration statement, which includes a base prospectus, allows us at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in a prospectus supplement accompanying the base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes, which may include funding for working capital, financing capital expenditures, research and development, marketing and distribution efforts, and if opportunities arise, for acquisitions or strategic alliances. Pending such uses, we may invest the net proceeds in interest-bearing securities. In addition, we may conduct concurrent or other financings at any time.

Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties including, but not limited to, customer demand and acceptance of our products, our ability to collect our accounts receivable as they become due, successfully achieving our product release schedules and attaining our forecasted sales objectives, economic conditions in the United States and abroad, the impact of acquisitions and other strategic transactions in which we may engage, the impact of competition, the seasonal and cyclical nature of our business and operating results, and the other risks described in the “ Risk Factors ” section, included in Part II, Item 1A of this report.

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As of December 31, 2025, we did not have any off-balance sheet arrangements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
MARKET RISK
We are exposed to various market risks, including changes in foreign currency exchange rates, interest rates and market prices, which have experienced significant volatility. Market risk is the potential loss arising from changes in market rates and market prices. We employ established policies and practices to manage these risks. Foreign currency forward contracts are used to hedge anticipated exposures or mitigate some existing exposures subject to foreign exchange risk as discussed below. While we do not hedge our short-term investment portfolio, we protect our short-term investment portfolio against different market risks, including interest rate risk as discussed below. Our cash and cash equivalents portfolio consists of highly liquid investments with insignificant interest rate risk and original or remaining maturities of three months or less at the time of purchase. We do not enter into derivatives or other financial instruments for speculative trading purposes and do not hedge our market price risk relating to marketable equity securities, if any.
Foreign Currency Exchange Risk
Foreign Currency Exchange Rates. International sales are a fundamental part of our business, and the strengthening of the U.S. dollar (particularly relative to the Euro, British pound sterling, Australian dollar, Japanese yen, Chinese yuan, South Korean won and Polish zloty) has a negative impact on our reported international net revenue, but a positive impact on our reported international operating expenses (particularly the Swedish krona and the Canadian dollar) because these amounts are translated at lower rates as compared to periods in which the U.S. dollar is weaker. While we use foreign currency hedging contracts to mitigate some foreign currency exchange risk, these activities are limited in the protection that they provide us and can themselves result in losses.
Cash Flow Hedging Activities. We hedge a portion of our foreign currency risk related to forecasted foreign currency-denominated sales and expense transactions by purchasing foreign currency forward contracts that generally have maturities of 18 months or less. These transactions are designated and qualify as cash flow hedges. Our hedging programs are designed to reduce, but do not entirely eliminate, the impact of currency exchange rate movements in net revenue and research and development expenses.
Balance Sheet Hedging Activities . We use foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. These foreign currency forward contracts generally have a contractual term of three months or less and are transacted near month-end.
We believe the counterparties to our foreign currency forward contracts are creditworthy multinational commercial banks. While we believe the risk of counterparty nonperformance is not material, a sustained decline in the financial stability of financial institutions as a result of disruption in the financial markets could affect our ability to secure creditworthy counterparties for our foreign currency hedging programs.
Notwithstanding our efforts to mitigate some foreign currency exchange risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. As of December 31, 2025, a hypothetical adverse foreign currency exchange rate movement of 10 percent or 20 percent would have resulted in potential declines in the fair value on our foreign currency forward contracts used in cash flow hedging of $221 million or $442 million, respectively. As of December 31, 2025, a hypothetical adverse foreign currency exchange rate movement of 10 percent or 20 percent would have resulted in potential losses in the Condensed Consolidated Statements of Operations on our foreign currency forward contracts used in balance sheet hedging of $203 million or $406 million, respectively. This sensitivity analysis assumes an adverse shift of all foreign currency exchange rates; however, all foreign currency exchange rates do not always move in the same manner and actual results may differ materially. See Note 4 — Derivative Financial Instruments to the Condensed Consolidated Financial Statements in this Form 10-Q as it relates to our derivative financial instruments, which is incorporated by reference into this Item 3.
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Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our short-term investment portfolio. We manage our interest rate risk by maintaining an investment portfolio generally consisting of debt instruments of high credit quality and relatively short maturities. However, because short-term investments mature relatively quickly and, if reinvested, are invested at the then-current market rates, interest income on a portfolio consisting of short-term investments is subject to market fluctuations to a greater extent than a portfolio of longer term investments. Additionally, the contractual terms of the investments do not permit the issuer to call, prepay or otherwise settle the investments at prices less than the stated par value. Our investments are held for purposes other than trading. We do not use derivative financial instruments in our short-term investment portfolio.
As of December 31, 2025, our short-term investments were classified as available-for-sale securities and, consequently, were recorded at fair value with changes in fair value, including unrealized gains and unrealized losses not related to credit losses, reported as a separate component of accumulated other comprehensive income (loss), net of tax, in stockholders’ equity.
Notwithstanding our efforts to manage interest rate risks, there can be no assurance that we will be adequately protected against risks associated with interest rate fluctuations. Changes in interest rates affect the fair value of our short-term investment portfolio. To provide a meaningful assessment of the interest rate risk associated with our short-term investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the portfolio assuming a 150 basis point parallel shift in the yield curve. As of December 31, 2025, a hypothetical 150 basis point increase in interest rates would have resulted in a $1 million, or 1 percent decrease in the fair market value of our short-term investments.

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Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures, believe that as of the end of the period covered by this report, our disclosure controls and procedures were effective in providing the requisite reasonable assurance that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding the required disclosure.
Changes in internal control over financial reporting
There has been no change in our internal controls over financial reporting identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that occurred during the fiscal quarter ended December 31, 2025 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Limitations on effectiveness of disclosure controls
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. These limitations include the possibility of human error, the circumvention or overriding of the controls and procedures and reasonable resource constraints. In addition, because we have designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, our system of controls may not achieve its desired purpose under all possible future conditions. Accordingly, our disclosure controls and procedures provide reasonable assurance, but not absolute assurance, of achieving their objectives.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings
Refer to Note 11 of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for disclosures regarding our legal proceedings.

Item 1A. Risk Factors
Our business is subject to many risks and uncertainties, which may affect our future financial performance. In the past, we have experienced certain of the events and circumstances described below, which adversely impacted our business and financial performance. If any of the events or circumstances described below occur, our business or financial performance could be harmed, our actual results could differ materially from our expectations and the market value of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe could be material that may harm our business or financial performance.
MERGER RISKS
If our proposed Merger does not close, or is delayed, we may experience financial and operational disruptions. In addition our stock price may decline if the Merger is perceived as uncertain to close.

On September 28, 2025, we entered into a Merger Agreement to be acquired by an investor Consortium comprised of the Public Investment Fund, private investment funds affiliated with Silver Lake Group, L.L.C., and private investment funds affiliated with Affinity Partners. The closing of the Merger is subject to the satisfaction or waiver of certain conditions, many of which are not within our full control. We currently expect that the Merger will be completed in the first quarter of fiscal year 2027. However, we may be unable to obtain and satisfy, or experience delays in obtaining and satisfying, required regulatory approvals and other closing conditions. In addition, both we and the Consortium may terminate the Merger Agreement for reasons specified therein. The announcement and pendency of the Merger could adversely affect our business and stock price, including if the Merger does not close or is delayed, for reasons including the following:

• Uncertainty about the effect of the Merger may impair our ability to attract, retain, and motivate key personnel, and could cause customers, suppliers, financial counterparties, and others to seek to change existing business relationships with us.

• The Merger Agreement restricts us, without the consent of the Consortium, from making certain acquisitions and investments, from accessing the debt and capital markets, and from taking other specified actions until closing of the Merger or the termination of the Merger Agreement. These restrictions may prevent us from pursuing otherwise attractive business opportunities and taking other actions with respect to our business that we may consider advantageous.

• Our costs of accessing funds in the debt and capital markets may be higher than before execution of the Merger Agreement as a result of actions that could be taken by ratings agencies after announcement of the transaction.

• We have incurred, and will continue to incur, significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger. Many of the fees and costs will be payable by us even if the Merger is not completed. In addition, we may be required to pay a termination fee of up to $1.0 billion to the Consortium and reimburse certain out-of-pocket expenses if the Merger Agreement is terminated for certain specified reasons.

• The Merger may not occur on the expected timeline because of a delay in receiving required regulatory approvals or other reasons. Any delay or inability to close the Merger may cause the market price of our common stock to decline.

Lawsuits have been or may be filed against us and the members of our Board of Directors arising out of the proposed Merger, which may delay or prevent the proposed Merger or otherwise negatively affect our business and operations.

Putative stockholder complaints, including stockholder class action complaints, and other complaints have been or in the future may be filed against us, our Board of Directors and others in connection with the transactions contemplated by the Merger Agreement. Certain complaints asserted in connection with the transaction contemplated by the Merger Agreement have been mooted, however, the outcome of any additional litigation is uncertain, and we may not be successful in defending against any such future claims. Lawsuits that have been or may be filed against us, our Board of Directors or others could delay or prevent
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the Merger from being completed, divert the attention of our management and employees away from our day-to-day business, and otherwise adversely affect our business, results of operations, and financial condition. If the Merger is not consummated for any reason, litigation could be filed in connection with the failure to consummate the Merger.