Electronic Arts Inc. reported quarterly earnings that blew past
Wall Street's forecasts as digital sales surged. But the company's
guidance for the current quarter and full fiscal year came up short
of analysts' projections.
EA said net income for its fiscal fourth quarter rose to $395
million, or $1.19 a share, from $367 million, or $1.15 a share, a
year earlier. Revenue rose to $1.19 billion from $1.12 billion.
The latest generation of game consoles from Sony Corp. and
Microsoft Corp. contributed to bottom line, but EA continues to see
an increasing windfall from the sale of digital goods, which
include full-game downloads, add-on content called "DLC" and mobile
apps.
All revenue from online content is booked during the quarter
under generally accepted accounting rules. But when adjusting for
non-GAAP earnings, that revenue is spread out based on the
company's estimate of a game's lifetime.
When adjusting for that deferred revenue and other items, EA
reported per-share earnings of 39 cents a share for the quarter,
down from 48 cents a year earlier. Even so, that was well above the
25 cents a share analysts had expected. Revenue on a non-GAAP basis
came to $896 million, down from $914 million. That was ahead of the
$850.2 million expected by Wall Street.
Mobile revenue, largely purchases inside the apps, hit a record
$524 million. That accounts for the lion's share of the digital
revenue in the quarter.
EA expects mobile to continue to be a strong driver of growth in
fiscal 2016, along with the company's trusted stable of sports
games like "Madden" and the coming "Star Wars: Battlefront," due in
November.
But the company's outlook didn't meet up with what Wall Street
was expecting. For the fiscal first quarter ending in June, EA
projected adjusted earnings would break even on revenue of about
$640 million. Analysts, though, had penciled in profit of 19 cents
on revenue of $775 million.
In an interview, EA financial chief Blake Jorgensen attributed
the divide to a thinner slate of games than the company had
released at this point last year. "Analysts didn't have good idea
as to when we were going to ship" certain games, he said, citing
the release of "PGA Tour" as an example.
Wall Street took the EA's outlook in stride, focusing instead on
the results from the just-ended quarter. Shares finished New York
trading down 0.15% at $59.16, but surged 4.5% in after-hours
trading.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
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