FIFA 21
Courtesy of Electronic Arts
In reporting earnings Tuesday, Electronic Arts executives talked positively about the company’s forthcoming big games and sports franchises. The company also raised its financial outlook for the fiscal year.
For investors, it wasn’t enough. Shares of EA (ticker: EA) were down 5% in after hours trading Tuesday.
EA reported fiscal third-quarter net income of $211, which amounts to 72 cents a share, compared with a net profit of $346 million a year ago, or $1.18 a share. The consensus estimate was for earnings of 81 cents a share. Revenue rose to $1.67 billion from $1.59 billion in the year-ago period.
EA said fiscal third-quarter bookings rose to $2.4 billion from $2.02 billion a year ago. (Many videogame companies use non-GAAP net bookings as a supplemental figure to revenue because it captures sales in online-enabled games and units sold physically during a period.)
Analysts had expected bookings of $2.38 billion.
“We are raising our net bookings outlook for the full year on the strength we continue to see in our business,” COO and CFO Blake Jorgensen said. “Looking further ahead, even with the upside this year, we anticipate delivering growth in fiscal 2022, driven by the next Battlefield.”
Chief executive Andrew Wilson said in the earnings call that the next edition of Battlefield, one of EA’s marquee franchises, will launch in the calendar 2021 holiday season, and the company will announce details about the game in the spring. The CEO said EA has more than 35 games at various levels of production.
Wilson also discussed the strength of the company’s sports franchises, including FIFA Ultimate Team, which he said grew to six million daily active players in December. CFO Jorgensen said in the call that his team estimates sports videogames are roughly a $7 billion market on consoles and personal computers and has grown at about 13% a year since 2016. Jorgensen said that its sports franchises had engaged more than 230 million people over the past fiscal year.
For the fiscal fourth-quarter, EA said it is expecting a GAAP loss per share of 7 cents, which includes a 52 cent charge from a tax accounting change, and bookings of $1.38 billion. The company now expects full-year bookings of roughly $6.08 billion, which is roughly on par with analyst estimates of $5.99 billion. EA had previously issued guidance for bookings of $5.55 billion.
Citi analyst Jason Bazinet calculates that EA’s new guidance comes to 98 cents a share on an adjusted basis, while Wall Street analysts have been forecasting $1.01.
In a research note Tuesday night, Bazinet wrote that “given the recent strength in EA’s share price, we suspect investors may have been anticipating even better results in the quarter and an even more robust outlook. As such, heightened investor expectations may temper the market’s response to an otherwise solid set of results.”a
Electronic Arts closed the regular session with a 2.1% gain to $148.97. Shares of EA have gained 38% in the past year while the S&P 500 is up 19%.
Last year, EA outbid rival U.S. publisher Take-Two Interactive Software (TTWO) for U.K.-based Codemasters, a company known for its racing videogames. EA agreed to pay roughly $7.98 a share, which valued Codemasters at about $1.2 billion. EA expects the deal to close in the first calendar quarter of this year.
