EA beats expectations with $1.98 billion in Q3 revenue as live operations grow

Electronic Arts reported earnings that beat Wall Street’s expectations for the third fiscal quarter ended December 31, thanks to strong games like Star Wars Jedi: Fallen Order and live operations revenues from existing games.

Redwood City, California-based EA, a bellwether for video game companies, said its earnings per share were $2.52 a share on non-GAAP revenues (bookings) of $1.978 billion, as calculated by Wedbush analyst Michael Pachter. That compares to analyst expectations of adjusted EPS of $2.45 on revenue of $1.94 billion. In after-hours trading, EA’s stock price was down 6% at $105 a share. (So yes, it’s not really clear why the stock is falling).

For the fourth fiscal quarter, EA said its non-GAAP revenue (bookings) are expected to be $1.152 billion (down from $1.165 billion) and 93 cents a share (up from 88 cents a share).

In the prior second fiscal quarter ended September 30, EA reported adjusted earnings per share of 97 cents on revenue of $1.277 million.

“It was an excellent third quarter, with our new games and live services delighting more players around the world,” said EA CEO Andrew Wilson, in a statement. “Our amazing creative teams at Electronic Arts continue to deliver some of the most high-quality, innovative and engaging experiences and content to a growing global audience.”

Before the earnings came out, analyst Colin Sebastian of Baird Equity Research said in a note that the game industry faces the challenge of big game delays and a dip in sales as players postpone purchases until the new game consoles come out in the fall.

During the quarter, EA launched Plants vs. Zombies: Battle for Neighborville, Need for Speed: Heat and Star Wars Jedi: Fallen Order.

Welcome to Neighborville

Above: Welcome to Neighborville

Image Credit: EA

FIFA Ultimate Team matches were up nearly 40% year-over-year from launch through Q3. And during the quarter, The Sims 4 surpassed 20 million unique players worldwide life-to-date.

Digital net bookings hit $4.128 billion for the past 12 months, up 15% from a year earlier, and it now represents 77% of total net bookings. In the previous quarter, it was 78% of net bookings.

“Over the last twelve months, we have delivered record live services revenue, live services net bookings and operating cash flow,” said Blake Jorgensen, chief financial officer, in a statement. “Our broad-based business model reduces our dependence on individual titles and enables us to deliver financial results for our shareholders by providing a constant stream of high-quality entertainment for our players. We expect live services to continue to drive growth in fiscal 2021 and for growth to accelerate in fiscal 2022, led by a new Battlefield.”

For the full year, EA said GAAP net revenue is expected to be $5.475 billion, while net income is expected to be $2.93 billion, with $1.705 billion of that related to the one-time income tax benefit.

For the fourth fiscal quarter ending March 31, GAAP net revenue is expected to be approximately $1.325 billion, EA said. Net income is expected to be about $308 million, or $1.05 a share.

EA’s mobile division was weaker, with revenues down 6% from a year ago at $134 million. EA’s live services were up 27% at $993 million in the quarter.

In a call with analysts, Wilson said that Apex Legends revenues and users continue to grow. He also said Star Wars: Battlefront II revenues were better than expected in the quarter.

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