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Video game maker Electronic Arts broke out to new all time highs after $EA raised it's sales guidance despite announcing fiscal third-quarter earnings Tuesday. The stock traded up 10% to $131.01 Wednesday.

Battlefield 1 In the Name of the Tsar

Reaction > Electronic Arts NYSE: EA 

Jan 31 11:00 AM ET 130.66 +11.96 (+9.92%)

Earnings:

Adjusted earnings per share of $2.19, was in line with estimates, on adjusted sales of $1.97 billion, which were below consensus of $2.07 billion, for its fiscal third quarter. In the year-earlier quarter, EA earned an adjusted $2.58 a share on sales of $2.07 billion.

Under generally accepted accounting principles (GAAP), EA posted a loss of 60 cents a share, vs. break-even in the year-earlier period.

Key games for EA during the December quarter included Star Wars Battlefront 2, Madden NFL and FIFA.

Segments

Digital net bookings  rose 18 percent year-over-year, EA’s gross digital revenues (67.2% of revenues) increased 13.9% to $780 million due to Battlefield 1, Ultimate Team and Madden NFL 18 full game downloads.

Current EA sports titles include "Madden NFL 18," "FIFA 18," "NBA Live 18," "NHL 18," all built on the 'captures' or existing bases. Full game downloads revenues declined 15% to $143 million from the third quarter of fiscal 2017 but EA mobile games revenues increased 10% year over year to $161 million

Revenues from EA’s Packaging goods and Other segment (32.8% of total revenue) were down 18.1% to $380 million.

Revenues from Live services increased 29% to $476 million. This segment includes revenues from extra content and subscriptions, advertising, and others.

Live services net bookings were up 39% year over year to $787 million driven by Ultimate Team and The Sims 4.

Geographically,

  • North America (39% of total revenue) revenues declined 19% year over year to $452 million.
  • Internationally (61% of total revenue), revenues increased 20% from the year- ago quarter to $708 million.

"Star Wars Battlefront II, Battlefield," "Mass Effect" and The Sims and Need for Speed franchises all built their bases, strengthening their franchise values.

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Outlook

  • For the March quarter, EA expects adjusted revenue of $1.53 billion, compared with views for $1.19 billion for Q4 2018, well above the Street forecasts.
  • Guided for EPS of $1.86, way above the $1.08 per share analysts had been forecasting for Q4.

"Through the (current fiscal) fourth quarter and fiscal 2019, we'll be launching games across five different genres, on three different platforms, and to players around the world, We expect growth in full-game downloads, subscriptions, extra content, and in our mobile business." EA Chief Financial Officer Blake Jorgensen said in a statement.

Buy backs andTaxes

EA has also been reducing shares with buy backs, buying back 1.4 million shares of stock for $150 million in Q3. In the past twelve months, EA has spent $578 million buying back stock. $EA has $778 billion worth of shares left under its two-year $1.2 billion buyback program announced this May.

With corporate taxes coming down as well, it is expected shares should have tailwinds in the year ahead. While its revenue and earnings.

Cash Position

As of Dec 31, 2017, EA had $4.89 billion in cash and short-term investments compared with $4.36 billion as of Sep 30, 2017. Net cash provided by operating activities in the quarter came in at $849 million. 

Source: Electronic Arts, AlphaStreet

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