Electronic Arts’ Revenues and Profits Up in Q1

Fresh off its $750 million acquisition of PopCap, Electronic Arts reported its fiscal first-quarter earnings today, exceeding analyst expectations.

The company recorded a profit of $221 million, or 66 cents a share, on revenues of $999 million, compared to the year earlier when it recorded a profit of $96 million on revenues of $815 million.

However, it is the company’s non-GAAP earnings that Wall Street analysts use to evaluate how the company is doing over time.

Excluding some items, EA’s non-GAAP loss totaled $123 million, or 37 cents a share, on sales of $524 million. Analysts surveyed by FactSet Research had expected EA to lose 40 cents a share on revenue of $508.6 million.

EA explains that revenue is lower year over year because the company went from producing six major titles to four. In addition, a year ago, it produced a game based on FIFA World Cup, which only comes around every four years. That title alone generated $100 million, which was non-recurring, said Eric Brown, EA’s CFO.

For the past couple of quarters, EA has been highlighting its digital efforts as it attempts to shift resources to developing more social and mobile games, and for the chance that the market would value it closer to Zynga, a budding Wall Street darling. [Update: Read more about the company's social games efforts from its conference call here.]

Digital platforms are expected to generate most of the industry’s growth over the next few years with less coming from the traditional console business. According to a snapshot of EA’s digital business released today, it is generating most of its revenue from downloadable content on consoles and smartphones.

Here’s how it breaks down:

  • Trailing 12 month non-GAAP digital revenue $854 million, up 35 percent year over year
  • First quarter fiscal 2012 non-GAAP digital revenue $209 million, up 11 percent year over year
  • Trailing 12 month console non-GAAP digital revenue increased 91 percent year over year
  • First quarter fiscal 2012 smartphone non-GAAP revenue up over 75 percent year over year

The company expects second-quarter revenues to total between $675 million and $725 million, with annual revenues of about $3.8 to $4 billion, which is up compared to the company’s previous guidance of $3.7 to $3.9 billion.

Other big news for the company is the resolution of the NFL lock-out, which could have threatened the company’s top-selling Madden franchise. Brown tells us that the game is hiting store shelves on Aug. 30, but that it has not changed or updated their guidance accordingly. Figures could update starting in the September quarter.


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