Electronic Arts Delivers a Strong Q1 That’s in Line With Expectations

Published on July 31, 2012
by Tricia Duryee

Based on a strong portfolio across videogame consoles, social and mobile, Electronic Arts was able to deliver results that were in line with analyst expectations for its first quarter.

The videogame giant is also reconfirming its forecast for the year. Shares traded higher in afternoon trading, up 1.7 percent, or 18 cents, to $11.20 a share.

“It is a testament to the strength of the brand and the portfolio and platform,” said Ken Barker, EA’s interim CFO. “It’s not just one [brand], we are seeing growth in areas in like Battlefiled, and other areas we might be seeing weakness, but it is our diversity that is playing for us.”

For the quarter, EA reported non-GAAP net revenue of $491 million, which was below analyst expectations of $501 million. Non-GAAP diluted loss per share totaled 41 cents to beat expecations of 42 cents.

But Barker said non-GAAP net revenue was lower than expected because of revenue coming in from its Battlefield 3 premium service, which will now be recorded in the fourth quarter when consumers receive their final shipment of content. Barker said if that revenue were accounted for in the first quarter, it would have reported $528 million in revenue to easily beat expectations.

“That is high-margin and high-profit revenue,” he said. “We are really happy on this quarter and how it played out. We still have a long ways to go for the rest of the year, but our digital growth is doing really well.”

And, while EA may not have blown away expectations, it at least did not follow in the footsteps of its biggest social games competitor and report a big flop, like Zynga did last week.

One area that might not be a bright spot for the company is its huge investment in the massively multi-player online game, Star Wars: The Old Republic. In advance of the earnings release, the company announced that it would be shifting the game to a free-to-play model and away from a subscription model. Barker would not say how many subscribers the game attracted in the first quarter. At last count it had fallen to 1.3 million.

Other metrics:

  • Over the past twelve months, EA generated over $1.3 billion in non-GAAP digital net revenue, and approximately two-thirds of its non-GAAP net revenue in the first fiscal quarter was in digital.
  • FIFA Ultimate Team contributed over $30 million in net digital revenue in the first quarter.
  • EA’s games and services for mobile phones and tablets have generated a 37 percent year-over-year increase in digital net revenue.
  • This morning, EA announced that its new EVP and CFO will be Blake Jorgensen, who will join the company in early September 2012 to take over for Barker, who will continue on as chief accounting officer.
  • The company’s monthly active users in social games increased to 41 million, up from 32 million in the year-ago quarter.
  • When using GAAP accounting measures, the company said revenues totaled $955 million, down slightly from $999 million in the year-ago period. GAAP net income totaled $201 million, also down from the year-ago period when it reported profits of $221 million.
  • EA also announced that its Board of Directors has authorized a program to repurchase up to $500 million of EA’s common stock.
  • For the year, the company is expecting GAAP net revenue of $3.9 billion to $4.05 billion, and non-GAAP revenue of $4.10 billion to $4.25 billion.
  • For the full year, it is also expecting GAAP basic loss and diluted earnings per share of 17 cents to a profit of 5 cents. Non-GAAP results are expected to total between $1.05 and $1.20 a share.


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