Sports and Social Titles Drive Electronic Arts to Beat Q2 Estimates

Electronic Arts reported a strong second quarter today, showing off its diversity across its traditional console business as well as its emerging mobile and social divisions.

In an interview, EA Chief Financial Officer Eric Brown said sales of its sports titles, including FIFA and Madden, are up 20 percent year over year, and its digital business — which includes downloadable console content, mobile and social — is up 30 percent year over year.

The digital business was driven by the launch of the Sims Social on Facebook, he said.

Electronic Arts has been determined to challenge the dominance of Zynga, which has been the darling of Wall Street as it marches closer to an IPO. This quarter, EA came close when the Sims ranked as the second-most popular game on Facebook, trailing Zynga’s CityVille.

Brown said they are finding that the game is monetizing similarly to other social games. Fewer than 5 percent of the players pay to play, but engagement is high. On average, players come back two to three times a day and play 15 minutes per session. In addition, many players are inviting their friends to join, rather than EA having to acquire new users through advertising.

The company’s revenues, excluding some items, totaled $1.034 billion, exceeding its guidance of up to $975 million. Adjusted earnings per share of five cents beat its forecast of losing as much as 13 cents per share. Analysts polled by FactSet on average expected EA to report a loss of four cents per share on revenue of $952.1 million.

On a GAAP basis, the company lost 89 cents a share on revenues of $3.9 billion.

The upcoming period will be particularly strong, given the holidays. EA’s big blockbuster title, Battlefield 3, has already presold nearly three million units, and the highly anticipated game Star Wars: The Old Republic goes on sale Dec. 20.

For its full fiscal year, EA is now expecting revenues to range between $4 billion and $4.2 billion, up from its previous guidance of $3.9 billion to $4.1 billion. Non-GAAP diluted earnings per share is expected to be approximately $0.75 to $0.90, as compared to previous guidance of $0.70 to $0.90.

Still, investors seemed to be mixed on the company’s results. In after-hours trading, the stock traded down about 60 cents, or 2.5 percent, to $23.90.


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