Electronic Arts reported strong earnings today for the third-fiscal quarter ended December 31 as it relied on proven franchises for its all-important holiday-selling season.
EA also confirmed that it will ship a Battlefield game in the fiscal year ending March 31, 2022. Michael Pachter, an analyst at Wedbush Securities, said that EA beat expectations and raised full-year guidance.
The publisher didn’t have a brand new blockbuster game available during the quarter, and so it relied on titles such as Apex Legends’ Season 7 and FIFA 21 and its Ultimate Team mode. Like other video game companies, EA enjoyed a surge in users during the pandemic, and they are more engaged with games than they have been in the past.
During the quarter, EA launched FIFA 21, Medal of Honor: Above and Beyond for VR, Need for Speed: Hot Pursuit Remastered, and NHL 21. EA also launched FIFA 21 and Madden NFL 21 on the PlayStation 5 and Xbox Series X/S during the quarter.
FIFA Ultimate Team had a record of nearly 6 million daily active players in December. Apex Legends had 30% growth in new players, year-over-year. And The Sims 4 has had more than 33 million players to date and reached record daily, weekly, and monthly average players in December.
Today, EA announced it will launch a college football game again this year for the first time since 2013. It won’t have the likenesses of college football athletes, but at least EA will be able to complement its NFL Madden game for the first time in years with another football title.
“We’re bringing great entertainment to hundreds of millions of people all over the world,” said CEO Andrew Wilson in a statement. “Our amazing teams continue to deliver exceptional, high-quality experiences as more players connect with their friends and engage deeply with our games. With our expansion plans for EA Sports, strong catalog of owned IP, leading live services, and ability to span every platform, we are growing to reach an even larger audience.”
One of the key questions is when EA will launch expected titles such as Apex Legends Mobile and the next Battlefield to headline a stronger slate of new releases, even as it deals with new competition in sports and Star Wars, said Colin Sebastian, an analyst at R.W. Baird in a research note.
On a GAAP basis, EA reported net income of 72 cents a share on revenue of $1.67 billion in the third-fiscal quarter ended December 31, compared with net income of $1.18 a share on revenue of $1.59 billion for the same period a year earlier.
Analysts expected EA to report earnings per share of $2.95 on revenues of $2.39 billion in the third-fiscal quarter, compared to EPS of $2.52 a share on revenues of $1.59 billion a year earlier. Pachter said that EA beat expectations by 20 cents a share and raised its guidance for the next quarter by 25 cents a share. But in after-hours trading, EA’s stock price is down 5% to $142.59 a share.
In the fiscal year ended March 31, 2022, EA is expected to have new titles such as the Battlefield game. EA is in the middle of buying Codemasters, the maker of racing games such as Dirt, for $1.2 billion.
“We delivered another strong quarter, driven by live services outperformance in Ultimate Team and Apex Legends,” said chief operating officer and chief financial officer Blake Jorgensen in a statement. “We are raising our net bookings outlook for the full year on the strength we continue to see in our business. Looking further ahead, even with the upside this year, we anticipate delivering growth in fiscal 2022, driven by the next Battlefield.”
EA said its net bookings for the 2020 calendar year was $5.96 billion, up 8% from a year earlier. Over the past fiscal year, EA Sports franchises have engaged more than 230 million people.
Net cash provided by operating activities was $1.124 billion for the quarter and a record $2.061 billion for the trailing twelve months. EA repurchased 2.5 million shares for $326 million during the quarter, bringing the total for the last twelve months to 5.9 million shares for $695 million.
For the fiscal year ending March 31, EA said net revenue is expected to be approximately $5.6 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $475 million. Net income is expected to be $742 million. Diluted earnings per share is expected to be approximately $2.54. Operating cash flow is expected to be $1.85 billion. Net bookings is expected to be $6.075 billion.
For the fourth fiscal quarter ending March 31, EA expects net revenue is expected to be $1.317 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $58 million. Net loss is expected to be $19 million; this forecast includes the impact of an incremental tax accounting charge of $152 million.
Loss per share is expected to be approximately 7 cents, which includes 52 cents per share from the tax accounting charge.
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