Electronic Arts’ Earnings Forecast Falls Short of Projections

(Bloomberg) -- Electronic Arts Inc. fell 3.1% in late trading after its profit forecast missed quarterly estimates, a sign the post-pandemic slowdown is taking a toll on the video-game giant.

• The company expects earnings of 55 cents a share in the fiscal first quarter, excluding some items, compared with a projection of 65 cents. Revenue, however, topped predictions.
• See more details.

Key Insights

• The first-quarter earnings miss is partly due to costs related to recent acquisitions, such as Glu Mobile, according to Chief Financial Officer Blake Jorgensen. The company also faces a tough year-over-year comparison because the gaming industry was booming in the early days of pandemic lockdowns. “Remember, last year’s Q1 was astronomical -- it was a huge quarter because of everyone staying at home,” he said in an interview. “This year, we are assuming it won’t be as strong.”
• Apex Legends helped fuel results in the just-completed quarter, which exceeded estimates for sales and profit. The battle-royale game has attracted more than 100 million players to date on consoles and personal computers. And a new version of Battlefield, another key franchise, is slated for release around the holidays -- with promotional trailers coming in June.
• Electronic Arts may continue to be acquisitive. “We are always looking for great mobile properties, great talent that could help us extend our skills in things like sports,” Jorgensen said. In May, EA bought baseball-game studio Metalhead Software, and in April it closed its acquisition of Glu Mobile, the mobile-gaming company. In February, Electronic Arts completed its purchase of Codemasters, known for its racing games.

Market Reaction

• The shares as low as $137 in late trading after the results were posted. They had been down 1.6% this year through Tuesday’s close.

Get More

• Read the statement.
• See analysts’ estimates.

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