EA is to spend round $5 billion on a share buyback scheme to make its stockholders completely satisfied over the subsequent three years, even though it not too long ago laid off lots of of staff.
The corporate not too long ago laid off round 5% of its workforce, together with cuts at Titanfall 2 and Apex Legends developer Respawn Leisure, the place an in-development Star Wars undertaking was additionally apparently canceled.
Regardless of these cuts, EA’s newest monetary assertion for the 2023-24 fiscal yr states that the corporate’s board has “approved a brand new inventory repurchase program of $5 billion over three years”.
Should you’re not aware of share buyback schemes, they’re primarily a way by which corporations purchase again their very own shares, thereby rising particular person shareholders’ stakes within the firm.
It will get extra difficult than that, however in essence, share buyback schemes are a method for corporations to spend cash on maintaining their shareholders completely satisfied fairly than investing in new tasks or allocating bonuses to staff.
In EA’s followup investor name, EA CFO Stuart Canfield says the buyback scheme will give “continued worth” to shareholders, in addition to “flexibility” in scaling.
He additionally says that he and EA count on $1.5 billion “to be returned” (i.e. to shareholders) within the subsequent monetary yr, and that “returning capital to shareholders is a vital precedence for us”.
In accordance with CEO Andrew Wilson, EA Sports activities additionally loved the most important yr in its historical past this yr, with eight EA Sports activities titles launching within the 2023-24 fiscal interval, together with the debut of FIFA substitute EA Sports activities FC.
That is not all, both; Apex Legends has handed $3.4 billion in revenue, and The Sims 4 has handed the 85 million participant mark, little question aided by its transition to a free-to-play title again in 2022. No surprise EA is planning to launch “over 15 content material updates over the approaching yr”.
With reference to generative AI, Wilson says that EA believes “greater than 50% of [its] growth course of might be positively impacted” by the know-how.
Wilson has spoken earlier than about his appreciation for AI, however on this earnings name, he tells shareholders that there’s “an actual starvation” amongst EA’s studios to start out working within the AI area. Hmm.
We’ll need to see what EA’s efforts on this subject yield, in addition to whether or not extra studios at EA lose employees. Keep tuned for extra.