EA earnings beat expectations but weak outlook drive shares 12% lower 📉

6:31 pm 1 February 2023

Shares of Electronic Arts (EA.US) are losing more than 12% today as, despite strong fourth-quarter results, the gaming giant  reported a disappointing outlook for the current quarter due to a six-week delay in the release of the highly anticipated game Star Wars Jedi: Survivor.

Revenues: $1.88 billion, 5.1% y/y growth

Earnings per share: $0.73, 217% increase y/y

The company expects Q1 2023 (excluding deferred sales from online purchases) bookings of $1.68 billion to $1.78 billion. Analysts according to Bloomberg had forecast $2.22 billion. The company's higher revenue and profit results were mainly due to a strong 'EA Sports' portfolio with an emphasis on Fifa games (World Cup 2022), where Fifa Mobile and Fifa Online 4 posted great results. 

FIFA 23 is poised to become the biggest title in the brand's history, having recorded record player engagement in Q3. Player engagement in FIFA Mobile tripled in Q4, with FIFA Online in Asia reaching its highest level of monthly active users in years. In addition, more than 10 million new players joined The Sims, with daily, weekly and monthly active users increasing by double digits year-over-year. Other new games also performed well, including NHL 23 and Need for Speed Unbound.

  • EA's game revenue (more than 33% of revenue) rose 1% year-on-year to $622 million. Revenue from game downloads rose 6% y/y, to $400 million. Merchandise revenue fell 8% y/y to $216 million.Gross margin increased 5.1% to 69.8% y/y while operating expenses declined quarter-on-quarter to $1.02 billion.
  • Live gaming services and other revenues (nearly 70% of revenues) rose 7.3% y/y to $1.25 billion. By platform, console revenues rose 1% y/y to $1.13 billion. PC revenue rose 16% y/y to $374 million. Revenues from the mobile platform increased 6% y/y to $277 million. GAAP operating income rose 183.3% y/y to $289 million. 
  • The company repurchased 2.6 million of its own shares in Q4, for $325 million, bringing its total shareholding to 10.2 million. EA has scheduled another $0.19 dividend for March 22, 2023, the ex-date will be March 1, 2023.

Company forecasts

For Q1 2023, the company expects revenues between $1.7 billion and $1.8 billion and much lower EPS in the range of $0.05 to $0.20 per share. For the full year 2023, EA estimates revenues in the vicinity of $7.25 to $7.35 billion and EPS. Prior to the postponement of Star Wars' release, it projected $7.65 billion to $7.85 billion.

EA Sports (EA.US) shares, D1 interval. The price fell below the SMA200 (red line) indicating possible weakness and a retest of the 61.8 Fibonacci retracement. Source: xStation5

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

Share:
Back

Join over 1 600 000 XTB Group Clients from around the world.