EA’s Non-GAAP Figures: PC Beating Consoles

By John Walker on July 27th, 2011 at 10:18 am.

This is what profits look like. Mmmmm, profits.

EA did one of their financial phonecalls last night. I’m so glad I don’t have to do those, telling lots of people I don’t know that I spent all my money on gadgets and Chinese takeaway. But within their announcements that The Old Republic is out-pre-ordering even Battlefield 3, there was one even juicier tidbit of information. When measured by EA’s non-GAAP accounting methods, PC is making them more money than either console.

If you’re not familiar with the difference between GAAP and non-GAAP profits, then that’s another thing you and I have in common. But it seems to be that non-GAAP is the type of accounting that allows a bit more imagination, including “future value” of new contracts, potential, goodwill, and all that sort of rather speculative money. However, while this way of thinking can lead to the rather silly over-valuation of certain well known social networking companies, it’s also a measure often preferred by investors over the straight creases and carefully knotted ties of official GAAP methods. RPS is the sort of site that approves of the free-wheeling, daisy-twirling ways of non-GAAP monies, and so it is that we’re rather pleased to see the PC shining so brightly in those hippy fields.

EA’s Q1 FY12 Financial Results can be read here, if you can control yourself. And inside them they reveal that their “trailing twelve month non-GAAP digital revenue $854 million, up 34% year-over-year”, which sounds jolly good.

They also report that Portal 2 sold over two million copies in the first quarter, while Crysis 2 sold “approximately” (read: just under) three million so far. Oops – commenter thesisko points out that these are numbers shipped. Selling two million in their lifetimes are Dead Space 2 and Dragon Age 2. Which are nothing compared to FIFA 11 (including mobile nonsense) selling nearly 15 million copies, and Bad Company 2 shifting over nine million.

And then come the non-GAAP revenue figures. It’s all bloody confusing, really. But it breaks down to the 360 bringing in $152m, the PS3 coughing up $111m, and the PC ruling the roost with $154m. This breaks down to the PC and 360 both providing 29% of total non-GAAP revenue, while the PS3 offers 21%. The rest is made up by Wii (3%), PS2 (1%), mobile (11%), PSP (1%), DS (1%) and the mysterious “other” at 4%.

If you look at the more accountable accounting of the GAAP figures, the PC trails with $205m to the 360’s $345m and PS3’s $308m. But we’re not. Because we prefer the numbers where the PC is doing better. Especially since GAAP figures require the following of certain principles: regularity, consistency, sincerity, permanent with methods, non-compensatory, prudent, continuous, periodic, fully disclosed and with utmost good faith. Much more fun to think at least one of those isn’t being followed. (The real definition of EA’s non-GAAP ways are listed in the document.)

Whatever numbers you stare at, the reality is that the PC is doing extremely well. Not “quite well considering”, but actually ahead of consoles in EA’s mind.

It makes you wonder at the actions of certain other publishers who treat the PC as a second class platform, and quite how big a money-nose they’re so idiotically cutting off their ugly profit-faces.

Huge thanks to Mitch for the tip.

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78 Comments »

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  1. jon_hill987 says:

    “it seems to be that non-GAAP is the type of accounting that allows a bit more imagination”

    Isn’t that an oxymoron?

    • Alexander Norris says:

      Someone has never heard of creative accounting.

    • jon_hill987 says:

      Is that lying about how much money you are making so your investors don’t pull out?

    • Premium User Badge

      skalpadda says:

      Alternatively lying about how little money you’re making so you don’t have to pay so much taxes.

    • MrPyro says:

      Or both, depending on who you are talking to at the time.

    • icupnimpn2 says:

      Every company as large as EA and has been around for as long carries a whole bunch of slop in their financial sheets that has to do with the company’s structure, investment choices, previous losses… basically corporate crap that affects their profit on paper for tax purposes, but also muddies the waters when trying to compare performance between lines of business.

      This non-GAAP analysis is EA’s attempt to compare performance of the lines of business, freed up from all of that baggage. Clearly they see value in their PC line since they are making such aggressive moves vs Steam. EA wouldn’t burn bridges if they didn’t expect big payoffs.

    • MacGyvers_Mullet says:

      I’m a practicing accountant, and non-GAAP accounting simply means accounting that doesn’t conform to the US accounting standards. It’s never a good measure of a company’s performance because there’s no reliable way of knowing how figures for any kind of metric was calculated. GAAP isn’t perfect, but non-GAAP or non-IFRS information is next to worthless because there’s no way of determining how key financial figures were calculated.

  2. Alexander Norris says:

    I want to know what you Googled to get that header image, John.

    • Wunce says:

      “LOADS OF MONAAAAY”
      “money money money”
      or
      “DOSH, grab it while ya can lads”

    • Mr Ak says:

      Google? Oh, no. I think that’s John’s apartment. The hookers and cocaine have just been cropped.

    • John Walker says:

      I just lifted up my mattress and took the photo.

    • PiP999 says:

      @ Wunce:

      -“Give me some bloody money.”

      -*Slowmo* “Hang on a tick, I’m reloading! *End slowmo*

    • Premium User Badge

      Coccyx says:

      @pip I’m trying to heal you, not SHAG you!

    • Red_Avatar says:

      @John Walker So you finally admit it! You’re sharing a bed with Ross Atherton!!!
      (very old PCG joke in case anyone’s wondering)

      Makes me wonder, what happened to that good old chap?

    • Premium User Badge

      Man Raised by Puffins says:

      “Editorial & Internal Communication Manager” at Blizzard in gay Paree, apparently (so, basically another splitter).

  3. Phoshi says:

    but, but, PC gaming is dying! You can’t change that, I’m too used to it now, it’s been dying as long as I can remember!

    • Merus says:

      Don’t worry, we’ll always have ‘PCs are too hard to use’ and ‘PCs crash all the time’ and ‘I just want to sit down on the couch and play a game’ for our sketchy excuses to avoid PC games.

    • jon_hill987 says:

      And piracy, don’t forget piracy. Everyone knows that consolebox games can’t be pirated.

    • Schadenfreude says:

      The best thing I ever did was run a HDMI and Coaxial S/PDIF out of my PC to the TV and surround system. That and a wireless pad I’m sorted for ‘couch gaming’ in actual ‘HD'; not this upscaled nonsense.

      If you have the means to do it I recommend it heartily. Some games just work on the couch ya know? :D

    • skinlo says:

      No I don’t. At least not the games I play.

      If I wanted to play games on a sofa, I’d kill myself because I would know I have become weak.

    • Tusque D'Ivoire says:

      Just Cause 2 on a beamer, with audio cranked up all the way. Can’t ignore these explosions!

    • Magnetude says:

      Ah, Dirt 3 how’s it meant to be played. And it’s one of the rare gems that has splitscreen, which remains the only reason I buy any non-exclusive games on console at all (yeah, fuck you Splinter Cell Conviction).

    • Premium User Badge

      Monchberter says:

      Any game that feels more natural on an xbox 360 pad (read consolised RPGs such as Fallout New Vegas, driving games such as Dirt3) I play on my HTPC rather than my desktop which pretty much only sees Team Fortress 2 and other ‘proper’ FPS action along with the odd RTS.

      Valve said a while back they were looking at a ‘big screen mode’ for Steam that may or may not support a controller navigable Steam for all of us who want the laziness of the console set up but the power of the PC.

      More power to the once beige box in the corner!

    • D3xter says:

      I’m doing that already on a lot of games… I got both a TV and a beamer, using that Wireless 360 Pad.
      It’s pretty good for the games “meant” to play like that (mainly Platformers, some Racing games, a few Hack&Slash RPGs etc.), but I couldn’t bring myself to play things like FPS, Adventures, Strategy or anything of the likes like that xD

    • BeamSplashX says:

      I read “beamer” and keep thinking BMW. Surely the most stylish way to play your games.

  4. Premium User Badge

    TheApologist says:

    You can twirl my daisy any day, sailor.

  5. Davee says:

    My head spins from all these numbers, but does this means we have a valid PC > Console argument for now? At least a little bit? :)

  6. skinlo says:

    PC GAMING IS DYING DAMMIT!!

  7. pyjamarama says:

    One of the gripes I have when people report sales numbers they always lump all consoles together and then compare it with the PC, like the consoles were just one homogeneous platform. Each platform demands resources and we treat each platform separately the PC looks a lot better sometimes even is the number one.

    If you are wondering why Crysis 2 sold more than Portal 2. Portal 2 numbers don’t include Steam sales, because EA get’s nothing from that, and I see no reason why Crysis number doesn’t include all digital sales.

    • woodsey says:

      I agree. Typically the PC comes in last (not including digital sales usually) with the 360 first, but then when you look its still a significant portion and its never that far behind whatever’s in second place (typically the PS3).

  8. ANeM says:

    “It makes you wonder at the actions of certain other publishers who treat the PC as a second class platform, and quite how big a money-nose they’re so idiotically cutting off their ugly profit-faces.”

    Other Publishers? Did you forget that EA is the same publisher that put out Dead Space 2 on PC with horrible input lag that wasn’t fixed from the first game? or that Dead Space 2 was the same price on PC as the console editions, despite not needing to pay platform licensing fees. How about that publisher who didn’t bother mentioning until after the game released that the PC version of Dead Space 2 would not be receiving that fancy DLC chapter that the publisher had been flaunting for months, and in addition to that none of the promotional unlocks worked with the PC version either.

    Sorry guys, but EA is just as guilty as damn-near everyone else.

    • Thants says:

      Dead Space 2 does not have input lag (and the problem in the first one was easily solved). Yes, the Dead Space 2 that’s a great game. And very well optimized, it runs and looks better on my aging PC than just about anything else.

    • The Sentinel says:

      Sorry, Thants, but the Dead Space 1 lag problem was not “easily solved” for everyone. I’ve tried all the supposed solutions out there and none worked. Still like pulling the cursor through thick treacle..

    • woodsey says:

      Dead Space 2 has always been £30 on Steam from what I remember.

  9. Delphiki says:

    Mind is blown

    • Psico_Payaso says:

      all these…numbers… must…keep…reading…

      *pukes*

      *faints*

    • AngryBadger says:

      This really is mind blowing. As a platform we get treated like shit and still bring in more profit than the consoles. Imagine what the numbers would be if the PC was given the time and money it deserved. These numbers fly in the face of the constant doom and gloom predictions that we constantly hear about the future of PC game.

  10. Premium User Badge

    Jerricho says:

    PC GAMING IS DEA- Oh

  11. thesisko says:

    Slight mistype that makes a big difference:
    “Portal 2 sold in over two million units in the first quarter. On catalogue, Crysis 2® sold in approximately three million units life to date; Dead Space™ 2 and Dragon Age™ 2 have both sold in over two million units life to date.”

    Those are not final sales number, just the amount shipped.

    • arienette says:

      This is creative accounting, we have no room for your facts!

    • John Walker says:

      Much appreciated.

    • Jimbo says:

      You neglected to fix Dead Space 2 and Dragon Age 2 ^ which are also sold-in numbers.

      edit: Also FIFA 11 and Bad Company 2.

    • pH-unbalanced says:

      To be fair, these *are* EA’s sales numbers. For EA, shipped = sold, because they’re wholesalers, and these games have been sold to their customers (which are the retail stores). There’s nothing ‘creative’ about the numbers, it’s just that the appropriate sales measure for EA isn’t retail sales. (Because that’s not the sale that makes them money.)

  12. JackShandy says:

    I didn’t realise EA had anything to do with portal 2- I thought valve were independant. The more you know.

    • arienette says:

      They just publish in archaic physical formats, since Valve have no way to do that themselves. You know, in case you were implying EA were to blame for parts of the game you didn’t like or something.

    • Schadenfreude says:

      The publish all of the Valve games for retail; boxes and manuals and disc-pressing and whatnot. If you buy through Steam then EA have nothing to do with it.

      EDIT: Beaten to the punch. Cannot delete. Alas.

    • JackShandy says:

      Right, good to know. Thanks.

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      Carra says:

      Considering that the Steam version costs €50 and the retail box €38 & registers on steam I’m surprised to see Steam still sold a single copy.

    • JackShandy says:

      Man, your country must be crazy! How do you handle having currency count backwards? What happens when you get to 0 pounds, is that just the most money you can have at one time?

  13. Tusque D'Ivoire says:

    Frankly, I don’t really care about some of the big publishers affinity towards PC gaming. They can stay in their boxes and stations. I found most recent AAA titles utterly dissapointing.

    What i care about more are the experiences of the indie developers. Zeboyd Games’ realization on what they’ve been missing out on. Team Meats experiences with their console releases. That is what gives us what is now unending indie-fireworks this summer. (to name just a few: Terraria, Sanctum, Frozen Synapse, Dredmor, Cthulu, Fotonica, The Hundle 3)

  14. mbp says:

    Re: “Certain Other Publishers”

    Given that a “certain other publisher” includes Blizzard’s automatic money printing machine in its stable I would be very surprised if PC doesn’t rule the roost over there as well.

    • Eolirin says:

      WoW alone makes up around 30% of Activison’s revenue, so absolutely. Things are very different if you remove WoW though. But that’s roughly true of their console business as well; if Call of Duty suddenly took a Guitar Hero like turn, most of their console revenue would dry up over night.

  15. phenom_x8 says:

    By the way, another EA games was pulled out from steam which is Dragon Age 2!
    source : http://www.eurogamer.net/articles/2011-07-27-dragon-age-2-removed-from-steam

  16. RenegadeRed says:

    “Old Republic is out-pre-ordering even Battlefield 3.”

    “Old Republic breaks EA record for pre-orders.”

    Disperse. Nothing to see here. Just a boring WoW-clone in space with ugly graphics. Resume hating Bioware. Please continue to ignore all metrics of the game’s actual consumer demand in the real world.

    • Dawngreeter says:

      How is consumer demand in any way related to what the qualities of the product might be?

      Are Transformers a great movie franchise? Is heroin healthy? Do Pussycat Dolls make perform quality music?

    • RenegadeRed says:

      Never said the two were related at all, I’m simply disproving all the rampant RPS claims of “SWTOR WILL EPIC FAIL HARD, LOL.”

  17. westyfield says:

    Hello John I am from Financial Time
    we have fire Ian MCProfits so now you have job vacancy?
    Yes
    you can start monday.

  18. Joe Duck says:

    Ha! PCs are winning the console war! Our console rules! wait… what?

  19. Jimbo says:

    So, where is all that PC revenue coming from?

  20. Brutal Deluxe says:

    And to think, this is EA, famously hated by all PCers everywhere!

  21. Jac says:

    Lets not confuse revenue with profit. Whilst it’s great that pc revenue is a healthy slice of ea’s pie they might not actually make any money from it.

    I’d be far more interested in seeing a profit split between the categories.

  22. Shinryoma says:

    PC gaming is dead. That’s just because EA has World of Warcraft!

    No wait…

  23. Sergey Galyonkin says:

    Does PC revenue include social and Facebook games? Which, as everyone here knows, are NOT REAL GAEMS, DAMMIT!

  24. Jimbo says:

    If you look at all 5 quarters shown you get a slightly different picture:

    Non-GAAP
    360 1054m
    PS3 1228m
    PC 849m

    GAAP
    360 1400m
    PS3 1308m
    PC 874m

  25. Ginger Yellow says:

    Without digging through the report, I suspect the reason PC does so well out of non-GAAP accounting this quarter is that TOR pre-orders provide ongoing subscription revenue (maybe for 12 months?), while under GAAP they’d only get already booked subscription revenues (ie what the customers are contractually obliged to pay).

  26. nayon says:

    I’m not sure if their PC gaming sales will be so high if they ditch steam and go to Origin.

  27. Crainey says:

    Just looks to me like they’re trying to sweeten us PC gamers for their upcoming releases, said releases being The Old Republic and Battlefield 3. EA isn’t seen as the most PC friendly publisher and they’re currently removing games from Steam so they can make more money on them on their own platform so the way I see it showing figures like this is just to get us to think they care about PC again. I mean sure they forecast that The Old Republic is going to make them a bunch of money this year and PC is looking to pull in large amounts of money but what then? PC will fall behind again in their “non-GAAP” figures. Simply put they care about us whilst they’re making money off us but as soon as Battlefield 3 and The Old Republic are released they will be back to their usual selves.

  28. magnus says:

    This just the kind of fanboy bait CVG posts, but if it’s console fanboys on the receiving end I’m all for it.

  29. squirrel says:

    “The rest is made up by Wii (3%), PS2 (1%), mobile (11%), PSP (1%), DS (1%) and the mysterious “other” at 4%.”

    Just guess, but the “mysterious other” refers to other merchandise and media tie-in like novels, DVD; or even like, though less likely, arcade games?

  30. poop says:

    but but but if you put both consoles together it accounts for %60 of the market!!! THATS WHY WE GOTTA DO NOTHING BUT MAKE SHIT PORTS!!

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    Daiv says:

    I assume 4% “other” is a combination of revenues from the C64 and EA’s long-neglected hoop-and-stick department.

  32. pH-unbalanced says:

    The only non-GAAP part that looked to me like it might effect the relative *revenue* between platforms was the bit about spreading some of the sales price over the expected life of the game, to represent the money made from the online portion of the game. It would be interesting to see if the amount of money attributed to ‘online service fees’ was different by platform, and if the expected life of the online portion varied by platform. Basically, the longer you expect the game to last online, the more you’d move that revenue into the future, so it could make a difference.

  33. Ginger Yellow says:

    Some interesting, if depressing stuff in the presentation accompanying the results.

    They break down (non-GAAP) digital revenues by type. DLC and free-to-play make more money than any other type of revenue. Three times as much as full game downloads and 60% more than subs and ads combined.

    PC contributes just under half of all digital revenues, and is growing faster than mobile or consoles.

    In the quarter they came out, Fifa 11 and Madden 11 contributed a third of all EA’s revenues.

  34. gusone says:

    Join the Steam ‘EA Origin Boycott’ group. Fight the power. We are small now help us grow. Bring BF3 and other EA games back to Steam.

  35. MythArcana says:

    The PC beats the consoles every single time they release a new one. Now if we can only get the developers to make a game WORTHY of the PC shopper’s time and money.

  36. rocketman71 says:

    Second class platform?. We wish. To EA, Activision and Ubi we are eighth class.