Electronic Arts Inc posted third-quarter adjusted revenue and profit that beat analysts’ average estimate, helped by strong sales of first-person shooter game Battlefield 1.
However, EA forecast current-quarter revenue slightly below Wall Street’s expectations. EA had expected to launch another game in the quarter, but said on Tuesday it pushed out the release of one of them, NBA Live, to later in the year. EA has long struggled with its basketball franchise, often cancelling or delaying the yearly title if it doesn’t think it can compete with the industry leading NBA 2K game.
The company’s shares were down 1.7 percent at $82 in extended trading on Tuesday.
“The fourth quarter for us is typically a very strong catalog quarter,” Chief Financial Officer Blake Jorgensen said in an interview. He expects EA to report strong digital sales for the period.
Sales at EA’s digital business rose 20.4 percent to $685 million in the third quarter ended Dec. 31 as players increasingly buy games online rather than physical copies at retail stores.
EA launched its highly anticipated Battlefield 1, as well as Titanfall 2 in October and released FIFA 17, the latest version of its top-selling soccer franchise, at the end of September.
The games lined up in a strong slate of holiday-quarter titles such as Activision Blizzard Inc’s Call of Duty: Infinite Warfare and Ubisoft Entertainment SA’s Watch Dogs 2. Titanfall 2 was released a week before Call of Duty: Infinite Warfare as a type of counterprogramming measure that may have depressed sales for EA’s title.
Still, EA’s revenue rose 7.4 percent to $1.15 billion. On an adjusted basis, revenue was $2.07 billion, edging past analysts’ average estimate of $2.05 billion, according to Thomson Reuters I/B/E/S.
The company’s net loss narrowed to $1 million from $45 million a year earlier. On a per share basis, EA broke even in the latest quarter, compared with a loss of 14 cents a year ago.
According to Thomson Reuters I/B/E/S, EA earned $2.58 per share on an adjusted basis, beating analysts’ estimates of $2.30.
Wedbush Securities analyst Michael Pachter said the results looked like “a solid beat,” but added the growth in mobile game revenue was weak.
“We’re not seeing the growth we expected,” he said.
EA has stopped reporting non-GAAP measures that adjust for deferred revenue, as it has done since fiscal 2008, to comply with stricter guidelines by the U.S. Securities and Exchange Commission
EA forecast current-quarter profit of $1.64 per share and adjusted revenue of $1.08 billion.
Analysts on average were expecting revenue of $1.11 billion.
EA has stopped reporting non-GAAP measures that adjust for deferred revenue, as it has done since fiscal 2008, to comply with stricter guidelines by the U.S. Securities and Exchange Commission.
U.S. financial regulators have issued guidelines requiring deferred revenue from games with online components to be accounted for over however long people play the games – typically six to nine months.
EA’s fourth quarter, which ends in March, will see the release of the Montreal developed Mass Effect: Andromeda.
With files from Financial Post