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Electronic Arts (EA) to Report Q2 Earnings: What's in Store?
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Electronic Arts (EA - Free Report) is set to report second-quarter fiscal 2023 results on Nov 1.
For second-quarter fiscal 2023, EA expects GAAP revenues between $1.85 billion and $1.9 billion and earnings of 78-86 cents per share.
For the quarter, the Zacks Consensus Estimate for earnings has moved south by 0.7% to $1.34 per share in the past 30 days. The figure indicates a 19.76% decline from the year-ago quarter’s reported figure.
The consensus mark for revenues, pegged at $1.78 billion, suggests a 3.77% decrease from the year-ago quarter’s reported figure.
The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 8.23%.
Let’s see how things have shaped up for this announcement.
Steady demand for EA’s digital and live services across its portfolio are expected to have boosted active user growth in the first quarter.
In the fiscal second quarter, the company launched EA SPORTS FIFA 23 with HyperMotion2 technology featuring HyperMotion2 gameplay technology, with cross-play, innovations in fan-favorite modes including FIFA Ultimate Team, Career mode, VOLTA FOOTBALL, and both the men’s and women’s FIFA World Cups.
The company also announced new multi-year partnerships and in-game integrations, where fans can play with more than 19,000 players, 700 teams, 100 stadiums and 30 leagues across the global sport. These are expected to have boosted active user growth in the to-be-reported quarter.
The company also launched EA SPORTS F1 22, the official game of the 2022 FIA Formula One World Championship.
In the last reported quarter, net bookings exceeded the expected range of $1.20 to $1.25 billion but decreased 2.8% year over year to $1.29 billion.
However, a decline in active users post the coronavirus lockdown due to resumption of work from office and outdoor entertainment is expected to have dented net bookings growth year over year in the to-be-reported quarter.
The company expects net bookings to be between $1.725 and $1.775 billion in the fiscal second quarter of 2023. The Zacks Consensus Estimate for bookings is currently pegged at $1.80 billion, indicating a decline of 2.3% year over year.
EA's strength in Live Services in mobile game franchises such as Battlefield 2042, It Takes Two, Madden Mobile, FIFA Mobile, Tetris, Star Wars: Galaxy of Heroes, The Lord of the Rings: The Return of the King is expected to have positively impacted the top line.
In the fiscal first quarter, FIFA Online 4 hit a new high in engagement and FIFA Mobile delivered its biggest net bookings quarter ever.
However, EA has been witnessing increased operating expenses for game development and marketing. The rising expenses are expected to have kept margins under pressure in the to-be-reported quarter.
The decline in video game spending in the quarter is expected to have affected EA’s top-line growth. Per VentureBeat, which cited NPD data, consumer spending on video games was down 9%, 5% and 4% year over year in July, August and September, respectively.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increase the odds of an earnings beat. But that’s not the case here.
EA has an Earnings ESP of +0.13% and carries a Zacks Rank #4 (Sell) currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat an earnings in their upcoming releases:
Tencent Music Entertainment Group (TME - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank #2. TME shares have lost 44.3% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 35.7%.
Upstart (UPST - Free Report) has an Earnings ESP of +114.71% and a Zacks Rank #3. UPST shares have lost 84.3% in the year-to-date period compared with the Zacks Computers - IT Services industry’s decline of 34.2%.
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Electronic Arts (EA) to Report Q2 Earnings: What's in Store?
Electronic Arts (EA - Free Report) is set to report second-quarter fiscal 2023 results on Nov 1.
For second-quarter fiscal 2023, EA expects GAAP revenues between $1.85 billion and $1.9 billion and earnings of 78-86 cents per share.
For the quarter, the Zacks Consensus Estimate for earnings has moved south by 0.7% to $1.34 per share in the past 30 days. The figure indicates a 19.76% decline from the year-ago quarter’s reported figure.
The consensus mark for revenues, pegged at $1.78 billion, suggests a 3.77% decrease from the year-ago quarter’s reported figure.
The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 8.23%.
Let’s see how things have shaped up for this announcement.
Electronic Arts Inc. Price and EPS Surprise
Electronic Arts Inc. price-eps-surprise | Electronic Arts Inc. Quote
Factors to Consider
Steady demand for EA’s digital and live services across its portfolio are expected to have boosted active user growth in the first quarter.
In the fiscal second quarter, the company launched EA SPORTS FIFA 23 with HyperMotion2 technology featuring HyperMotion2 gameplay technology, with cross-play, innovations in fan-favorite modes including FIFA Ultimate Team, Career mode, VOLTA FOOTBALL, and both the men’s and women’s FIFA World Cups.
The company also announced new multi-year partnerships and in-game integrations, where fans can play with more than 19,000 players, 700 teams, 100 stadiums and 30 leagues across the global sport. These are expected to have boosted active user growth in the to-be-reported quarter.
The company also launched EA SPORTS F1 22, the official game of the 2022 FIA Formula One World Championship.
In the last reported quarter, net bookings exceeded the expected range of $1.20 to $1.25 billion but decreased 2.8% year over year to $1.29 billion.
However, a decline in active users post the coronavirus lockdown due to resumption of work from office and outdoor entertainment is expected to have dented net bookings growth year over year in the to-be-reported quarter.
The company expects net bookings to be between $1.725 and $1.775 billion in the fiscal second quarter of 2023. The Zacks Consensus Estimate for bookings is currently pegged at $1.80 billion, indicating a decline of 2.3% year over year.
EA's strength in Live Services in mobile game franchises such as Battlefield 2042, It Takes Two, Madden Mobile, FIFA Mobile, Tetris, Star Wars: Galaxy of Heroes, The Lord of the Rings: The Return of the King is expected to have positively impacted the top line.
In the fiscal first quarter, FIFA Online 4 hit a new high in engagement and FIFA Mobile delivered its biggest net bookings quarter ever.
However, EA has been witnessing increased operating expenses for game development and marketing. The rising expenses are expected to have kept margins under pressure in the to-be-reported quarter.
The decline in video game spending in the quarter is expected to have affected EA’s top-line growth. Per VentureBeat, which cited NPD data, consumer spending on video games was down 9%, 5% and 4% year over year in July, August and September, respectively.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increase the odds of an earnings beat. But that’s not the case here.
EA has an Earnings ESP of +0.13% and carries a Zacks Rank #4 (Sell) currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat an earnings in their upcoming releases:
ZoomInfo Technologies (ZI - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. ZI’s shares have lost 28.8% in the year-to-date period compared with the Zacks Computer - Integrated Systems industry’s decline of 7.4%.
Tencent Music Entertainment Group (TME - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank #2. TME shares have lost 44.3% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 35.7%.
Upstart (UPST - Free Report) has an Earnings ESP of +114.71% and a Zacks Rank #3. UPST shares have lost 84.3% in the year-to-date period compared with the Zacks Computers - IT Services industry’s decline of 34.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.