EA is to spend around $5 billion on a share buyback scheme to make its stockholders happy over the next three years, despite the fact that it recently laid off hundreds of employees.
The company recently laid off around 5% of its workforce, including cuts at Titanfall 2 and Apex Legends developer Respawn Entertainment, where an in-development Star Wars project was also apparently canceled.
Despite these cuts, EA’s latest financial statement for the 2023-24 fiscal year states that the company’s board has “authorized a new stock repurchase program of $5 billion over three years”.
If you’re not familiar with share buyback schemes, they’re essentially a method by which companies buy back their own shares, thereby increasing individual shareholders’ stakes in the company.
It gets more complicated than that, but in essence, share buyback schemes are a way for companies to spend money on keeping their shareholders happy rather than investing in new projects or allocating bonuses to employees.
In EA’s followup investor call, EA CFO Stuart Canfield says the buyback scheme will give “continued value” to shareholders, as well as “flexibility” in scaling.
He also says that he and EA expect $1.5 billion “to be returned” (i.e. to shareholders) in the next financial year, and that “returning capital to shareholders is an important priority for us”.
According to CEO Andrew Wilson, EA Sports also enjoyed the biggest year in its history this year, with eight EA Sports titles launching in the 2023-24 fiscal period, including the debut of FIFA replacement EA Sports FC.
That’s not all, either; Apex Legends has passed $3.4 billion in income, and The Sims 4 has passed the 85 million player mark, no doubt aided by its transition to a free-to-play title back in 2022. No wonder EA is planning to release “over 15 content updates over the coming year”.
With regards to generative AI, Wilson says that EA believes “more than 50% of [its] development process will be positively impacted” by the technology.
Wilson has spoken before about his appreciation for AI, but in this earnings call, he tells shareholders that there is “a real hunger” among EA’s studios to start working in the AI space. Hmm.
We’ll have to see what EA’s efforts in this field yield, as well as whether more studios at EA lose staff. Stay tuned for more.
