Back to top

Image: Bigstock

Electronic Arts' (EA) Q3 Earnings and Revenues Increase Y/Y

Read MoreHide Full Article

Electronic Arts (EA - Free Report) reported third-quarter fiscal 2022 earnings of 23 cents per share, up 68% year over year.

Revenues increased 6.9% year over year to $1.79 billion, driven by strong performances by FIFA, Apex Legends, EA SPORTS global football franchise and Star Wars: Galaxy of Heroes.

The Zacks Consensus Estimate for earnings and revenues was pegged at $3.22 per share and $2.66 billion, respectively.

Net bookings increased 7.4% year over year to $2.58 billion, down from management’s guidance of $2.625 billion.

Electronic Arts Inc. Price, Consensus and EPS Surprise

 

Electronic Arts Inc. Price, Consensus and EPS Surprise

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

 

Quarter Details

EA’s full-game revenues (34.4% of total revenues) declined 14.7% year over year to $616 million. Full-game download revenues increased 15% year over year to $400 million. Revenues from packaged goods surged 42% year over year to $216 million.

Live services and other revenues (65.6% of total revenues) rose 23.3% year over year to $1.17 billion.

Based on platforms, revenues from consoles increased 4% year over year to $1.14 billion in the reported quarter. Revenues from PC & Other increased 15% year over year to $374 million. Revenues from the mobile platform increased 78% year over year to $277 million.

Apex Legends monthly active players were up 30% year over year.

Players spent approximately 20% more time on EA games in fiscal 2022 compared with the previous year’s levels.

Operating Details

EA’s GAAP gross profit rose 8% from the year-ago quarter’s levels to $1.16 billion. Gross margin expanded 70 basis points (bps) on a year-over-year basis to 64.7%.

Operating expenses increased 28.6% year over year to $1.06 billion. As a percentage of revenues, operating expenses increased from 49.1% in the year-ago quarter to 59% in the reported quarter.

Operating income on a GAAP basis declined 59.4% year over year to $102 million. Operating margin contracted 930 bps year over year to 5.7% in the reported quarter.

Balance Sheet and Cash Flow

As of Dec 31, 2021, EA had $3.02 billion in cash and short-term investments compared with $1.97 billion as of Sep 30, 2021.

Net cash provided by operating activities in the reported quarter was $1.53 billion against net cash provided in operating activities of $64 million in the previous quarter.

EA repurchased 2.4 million shares for $325 million in the reported quarter.

The company also declared a quarterly cash dividend of 17 cents per share. The dividend will be paid out on Mar 23, 2022, to shareholders of record as of the close of business on Mar 9, 2022.

Guidance

For fourth-quarter fiscal 2022, EA expects GAAP revenues of $1.759 billion and earnings of 46 cents per share. Net bookings are expected at $1.761 billion.

For fiscal 2022, EA expects revenues of $6.925 billion and earnings of $2.43 per share. The company reduced net bookings expectations for the year to $7.525 billion.

Operating cash flow is estimated to be $1.90 billion.

Zacks Rank & Stocks to Consider

EA currently carries a Zacks Rank #3 (Hold).

EA is down 7.7% in the past year against the Zacks Toys - Games - Hobbies industry’s decline of 12.3% and the Consumer Discretionary sector’s fall of 18.6%.

Some better-ranked stocks from the Zacks Consumer Discretionary sector are Cedar Fair (FUN - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Gildan Activewear (GIL - Free Report) and Fox (FOXA - Free Report) , each carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cedar Fun is all set to announce fourth-quarter 2021 results on Feb 16.

FUN is up 32.8% in the past year against the Zacks Leisure and Recreation Services industry’s decline of 1.5% and the Consumer Discretionary sector’s fall of 18.6%.

Gildan Activewear is set to announce fourth-quarter 2021 results on Feb 23.

GIL is up 56.9% in the past year against the Zacks Textile – Apparel industry’s decline of 1% and the Consumer Discretionary sector’s fall of 18.6.

Fox is all set to announce second-quarter fiscal 2022 results on Feb 9.

FOXA is up 26.9% in the past year against the Zacks Broadcast Radio and Television industry’s decline of 17.9% and the Consumer Discretionary sector’s fall of 18.6% in the past year.