Earnings Results: Electronic Arts stock rises as outlook hiked following strong quarter
Electronic Arts Inc. shares rose in the extended session Wednesday after the videogame publisher raised its outlook for the year after revenue and bookings came in above Wall Street expectations.
shares rose 3.5% after hours, following a 0.5% decline to close at $139.50.
Calling the past quarter “the strongest second quarter in the history of Electronic Arts,” Chief Executive Andrew Wilson said the company was raising its annual guidance for the second time this year.
EA forecast earnings of about 2 cents a share on revenue of about $1.75 billion and bookings of $2.63 billion for the fiscal third quarter, and about $2.03 a share on revenue of about $6.93 billion and bookings of about $7.63 billion for the year.
“Remember, GAAP EPS is driven by GAAP revenue deferrals, which is a very large number in Q3,” Blake Jorgensen, EA chief financial officer, told analysts on the call. “We expect Q3 financial 2022 net bookings to be $2.625 billion, up over 9% on last year’s Q3 which, it should be noted, included last year’s launch of ‘FIFA 21’ and was the largest quarter ever for Q3 in the company’s history.”
Analysts estimate earnings of $3.24 a share on $1.99 billion in revenue and $2.73 billion in bookings for the third quarter, and earnings of $6.65 a share on revenue of $7.22 billion and bookings of $7.55 billion for the year.
The company reported fiscal second-quarter net income of $294 million, or $1.02 a share, compared with $185 million, or 63 cents a share, in the year-ago period.
Revenue rose to $1.83 billion from $1.15 billion in the year-ago quarter. Bookings, which account for deferred revenue, rose 27% to $7.08 billion over the trailing past 12 months, the company said. Net bookings for the quarter were $1.85 billion.
Analysts surveyed by FactSet had forecast earnings of $1.17 a share on revenue of $1.79 billion and net bookings of $1.76 billion.
Back in September, EA said that “Battlefield 2042” would be released worldwide on Nov. 19, a delay compared with its previously expected Oct. 22 release, but not as bad as “sometime in 2022,” as had been rumored.
Concerning questions on whether it is wise to release a game right before Black Friday, EA’s Jorgensen told analysts that in the past there were about five times the amount of games competing for attention as opposed to this year.
“We already know that many games have been postponed,” Jorgensen said. “And so the calendar is nowhere near as crowded with the need for discounting is nowhere near as high.”
Jorgensen also said that since more than 60% of the company’s games are being sold by digital download, that allows for more downloads to be sold.
“What that allows us to do is make short-term price changes if we need to,” Jorgensen said. “But we don’t have to cut big deals with retailers like we used to do historically. And I think that will bode well for us from an ability to sell through a lot of games as well as not have to discount those games dramatically.”
Shares of rival Activision Blizzard Inc.
had their worst day in 13 years Wednesday after the publisher said it was delaying the release of two highly anticipated games by an unspecified amount of time.
Release delays have become much more common in the industry given last year’s embarrassingly buggy release of the long awaited “Cyberpunk 2077” from CD Projekt SA