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Electronic Arts (EA) to Report Q4 Earnings: What's in Store?

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Electronic Arts (EA - Free Report) is set to report fourth-quarter fiscal 2021 results on May 11.

For the quarter, EA expects GAAP revenues of $1.317 billion. The Zacks Consensus Estimate for fourth-quarter fiscal 2021 revenues is pegged at $1.40 million, indicating growth of 15.02% year over year.

The company expects GAAP loss to be 7 cents per share for the to-be-reported quarter. EA had reported earnings of $1.43 per share in the year-ago quarter.

The consensus mark for earnings has moved up 1% to $1.04 per share over the past 30 days.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 364.4%.

Let’s see how things have shaped up prior to this announcement.

Electronic Arts Inc. Price and EPS Surprise

Electronic Arts Inc. Price and EPS Surprise

Electronic Arts Inc. price-eps-surprise | Electronic Arts Inc. Quote

Factors to Consider

EA’s focus on adding updates to its games that feature exciting content makes the platform attractive to users. Moreover, coronavirus-led social distancing norms are expected to have been a major growth driver in increasing the number of active users in the to-be-reported quarter.

Solid popularity of gaming franchises like The Sims 4 and Apex Legends is expected to have benefited EA’s net bookings in the to-be-reported quarter. Notably, the company expects net bookings to be $1.375 billion in the fiscal fourth quarter.

Moreover, net bookings are expected to have benefited from the launch of Apex Legends and Plants vs. Zombies: Battle for Neighborville Complete Edition on Nintendo Switch in the fiscal fourth quarter.

Additionally, EA SPORTS FIFA 21, Need for Speed Hot Pursuit Remastered and team-based multiplayer space shooter Star Wars: Squadrons are expected to have been major contributors to active user engagement in the to-be-reported quarter.

Strong popularity of two well-recognized EA Sports franchises, NHL and Madden NFL is expected to have contributed to top-line growth in the soon-to-be-reported quarter. The launch of Madden NFL 21 and EA SPORTS NHL 21 in the previous quarter are expected to boost user growth.

Moreover, strong video game spending in the quarter bodes well for EA’s results. Per Venturebeat, which cited NPD data, U.S. video game sales in January, February and March increased 42%, 35% and 18%, respectively.

Further, EA's strength in Live Services in mobile games such as Madden Mobile, FIFA Mobile and Star Wars: Galaxy of Heroes is expected to have positively impacted the top line.

However, this Zacks Rank #3 (Hold) company faces stiff competition from the likes of Take Two Interactive Software (TTWO - Free Report) , Nintendo (NTDOY - Free Report) , Zynga and Activision Blizzard (ATVI - Free Report) apart from Tencent and Epic Games.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nevertheless, EA’s strong portfolio of games is expected to have boosted active user base in the to-be-reported quarter.

Key Developments in Q4

On Feb 8, EA announced that the company has entered into a definitive agreement under which Electronic Arts will acquire Glu Mobile. Per the terms of the agreement, EA will acquire Glu for $2.1 billion in enterprise value. Glu stockholders will receive $12.50 in cash for each share of Glu stock, representing a 36% premium to Glu’s closing share price on Feb 5, 2021.

On Feb 18, EA announced the completion of its acquisition of U.K.-based racing game developer, Codemasters for 604 pence (over $8.37) in cash for each ordinary share of Codemasters with an implied enterprise value of $1.2 billion.

On Mar 11, EA announced that its EA Originals Label has inked a major deal with Silver Rain Games. Per the agreement, EA Originals will provide funding for the studio’s upcoming unannounced games, as well as guidance and support.

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