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How Should Investors Approach EA Stock Post Q3 Earnings Results?
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Electronic Arts (EA - Free Report) reported third-quarter fiscal 2025 earnings of $2.83 per share, which fell 4.4% year over year. Revenues decreased 6.38% year over year to $2.22 billion due to a decline in Live services and full-game revenues.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for earnings was pegged at $2.99 per share. The consensus mark for revenues was pinned at $2.29 billion.
Net bookings for the fiscal third quarter were $2.22 billion, down 6.4% year over year, but with minimal impact from FX.
Electronic Arts Inc. Price, Consensus and EPS Surprise
Full-game net bookings were $633 million, down 3% year over year, but with double-digit growth in weekly active users of American Football. Live services net bookings were $1.58 billion, down 8% year over year.
EA shares have dropped 17.1% in the year-to-date period, underperforming the Zacks Consumer Discretionary sector’s appreciation of 2.9% and the Zacks Gaming industry’s return of 0.1%. EA has been suffering from weakness in new-player acquisition and a drop in player engagement.
Quarter Details
EA’s full-game revenues (31.8% of total revenues) decreased 3.1% year over year to $599 million. Full-game download revenues increased 3% year over year to $431 million. Revenues from packaged goods plunged 18% year over year to $187 million.
Live services and other revenues (68.2% of total revenues) decreased 3.2% year over year to $1.28 billion.
Based on platforms, revenues from consoles decreased 1% year over year to $1.23 billion in the reported quarter. Revenues from PC & Other declined 7% year over year to $420 million. Revenues from the mobile platform decreased 7% year over year to $296 million.
EA's Operating Details
EA’s GAAP gross profit increased 0.8% from the year-ago quarter’s levels to $1.43 billion. Gross margin expanded 300 basis points (bps) on a year-over-year basis to 75.8%.
Operating expenses decreased 0.1% year over year to $1.05 billion. As a percentage of revenues, operating expenses expanded 170 bps on a year-over-year basis at 55.8%.
Operating income on a GAAP basis increased 3.3% year over year to $377 million. The operating margin contracted 130 bps year over year to 20% in the reported quarter.
EA’s Balance Sheet and Cash Flow
As of Dec. 31, 2024, EA had $3.16 billion in cash and short-term investments compared with $2.56 billion as of Sept. 30, 2024.
Net cash provided by operating activities was $1.176 billion for the quarter and $2.110 billion for the trailing 12 months.
EA repurchased 2.4 million shares for $375 million during the quarter under the stock repurchase program, bringing the total for the trailing 12 months to 10.1 million shares for $1.45 billion.
The company has declared a quarterly cash dividend of 19 cents per share of the company’s common stock. The dividend is payable on March 19, 2025, to stockholders of record as of the close of business on Feb. 26, 2025.
EA’s Q4 and FY25 Guidance
For fourth-quarter fiscal 2025, EA expects GAAP revenues between $1.682 billion and $1.832 billion and earnings per share in the range of 65 cents to $1.00. Net bookings are expected between $1.444 billion and $1.594 billion.
For fiscal 2025, EA expects revenues in the range of $7.25-$7.40 billion and earnings in the band of $3.9-$4.25 per share.
The company expects net bookings for fiscal 2025 between $7 billion and $7.15 billion.
Operating cash flow is estimated in the band of $1.8-$1.9 billion.
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How Should Investors Approach EA Stock Post Q3 Earnings Results?
Electronic Arts (EA - Free Report) reported third-quarter fiscal 2025 earnings of $2.83 per share, which fell 4.4% year over year. Revenues decreased 6.38% year over year to $2.22 billion due to a decline in Live services and full-game revenues.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for earnings was pegged at $2.99 per share. The consensus mark for revenues was pinned at $2.29 billion.
Net bookings for the fiscal third quarter were $2.22 billion, down 6.4% year over year, but with minimal impact from FX.
Electronic Arts Inc. Price, Consensus and EPS Surprise
Electronic Arts Inc. price-consensus-eps-surprise-chart | Electronic Arts Inc. Quote
Full-game net bookings were $633 million, down 3% year over year, but with double-digit growth in weekly active users of American Football. Live services net bookings were $1.58 billion, down 8% year over year.
EA shares have dropped 17.1% in the year-to-date period, underperforming the Zacks Consumer Discretionary sector’s appreciation of 2.9% and the Zacks Gaming industry’s return of 0.1%. EA has been suffering from weakness in new-player acquisition and a drop in player engagement.
Quarter Details
EA’s full-game revenues (31.8% of total revenues) decreased 3.1% year over year to $599 million. Full-game download revenues increased 3% year over year to $431 million. Revenues from packaged goods plunged 18% year over year to $187 million.
Live services and other revenues (68.2% of total revenues) decreased 3.2% year over year to $1.28 billion.
Based on platforms, revenues from consoles decreased 1% year over year to $1.23 billion in the reported quarter. Revenues from PC & Other declined 7% year over year to $420 million. Revenues from the mobile platform decreased 7% year over year to $296 million.
EA's Operating Details
EA’s GAAP gross profit increased 0.8% from the year-ago quarter’s levels to $1.43 billion. Gross margin expanded 300 basis points (bps) on a year-over-year basis to 75.8%.
Operating expenses decreased 0.1% year over year to $1.05 billion. As a percentage of revenues, operating expenses expanded 170 bps on a year-over-year basis at 55.8%.
Operating income on a GAAP basis increased 3.3% year over year to $377 million. The operating margin contracted 130 bps year over year to 20% in the reported quarter.
EA’s Balance Sheet and Cash Flow
As of Dec. 31, 2024, EA had $3.16 billion in cash and short-term investments compared with $2.56 billion as of Sept. 30, 2024.
Net cash provided by operating activities was $1.176 billion for the quarter and $2.110 billion for the trailing 12 months.
EA repurchased 2.4 million shares for $375 million during the quarter under the stock repurchase program, bringing the total for the trailing 12 months to 10.1 million shares for $1.45 billion.
The company has declared a quarterly cash dividend of 19 cents per share of the company’s common stock. The dividend is payable on March 19, 2025, to stockholders of record as of the close of business on Feb. 26, 2025.
EA’s Q4 and FY25 Guidance
For fourth-quarter fiscal 2025, EA expects GAAP revenues between $1.682 billion and $1.832 billion and earnings per share in the range of 65 cents to $1.00. Net bookings are expected between $1.444 billion and $1.594 billion.
For fiscal 2025, EA expects revenues in the range of $7.25-$7.40 billion and earnings in the band of $3.9-$4.25 per share.
The company expects net bookings for fiscal 2025 between $7 billion and $7.15 billion.
Operating cash flow is estimated in the band of $1.8-$1.9 billion.
Electronic Arts’ Zacks Rank & Stocks to Consider
EA currently carries a Zacks Rank #3 (Hold).
Amer Sports (AS - Free Report) , Six Flags Entertainment Corporation (FUN - Free Report) and Intercontinental Hotels Group (IHG - Free Report) are some better-ranked stocks that investors can consider in the broader sector. AS, FUN and IHG carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Amer Sports have gained 13.2% year to date. AS is set to report fourth-quarter 2024 results on Feb. 25.
Shares of Six Flags Entertainment Corporation have dropped 8.6% year to date. FUN is slated to report fourth-quarter 2024 results on Feb. 27.
Shares of Intercontinental Hotels Group have lost 8.2% year to date. IHG is set to report fourth-quarter 2024 results on Feb. 18.