Electronic Arts 2026 Q1 Earnings Misses Targets as Net Income Falls 28%

Electronic Arts (EA) reported its fiscal 2026 Q1 earnings on Aug 01, 2025. Electronic Arts fell short of analyst expectations with a modest revenue increase, but facing a significant drop in net income. The company maintained its guidance, projecting net revenue between $7.1 billion and $7.5 billion for the fiscal year, with net bookings of $7.6 billion to $8 billion. The guidance remains unchanged, indicating confidence in upcoming launches despite a challenging quarter.

Revenue

Electronic Arts experienced a slight 0.7% increase in total revenue, reaching $1.67 billion in 2026 Q1 compared to $1.66 billion in 2025 Q1. The revenue composition included $289 million from full game sales, while full game downloads accounted for $233 million. Packaged goods revenue stood at $56 million, and live services and other segments contributed significantly with $1.38 billion. The net revenue matched the total revenue at $1.67 billion.

Earnings/Net Income

Electronic Arts saw a decline in earnings per share (EPS), which fell 23.8% to $0.80 from $1.05 year-over-year. The company's net income dropped sharply by 28.2%, landing at $201 million compared to $280 million in the previous year's quarter. These figures indicate a challenging quarter for EA's profitability.

Price Action

The stock price of Electronic Arts edged up 2.83% during the latest trading day. Over the past week, the stock climbed 3.56%, although it has decreased by 1.24% month-to-date. This fluctuation reflects the market's cautious optimism following the earnings report, with investors weighing the modest revenue increase against the significant drop in net income.

Post-Earnings Price Action Review

The strategy of buying EA shares when revenues fall short and holding for 30 days resulted in a 15.27% return, notably underperforming the benchmark return of 80.42%. Although the strategy experienced a maximum drawdown of 0.00%, it had a low Sharpe ratio of 0.12, indicative of minimal risk-adjusted returns. Volatility was recorded at 25.20%, suggesting substantial fluctuations during the holding period. Investors following this approach faced challenges in achieving competitive returns, highlighting the strategy's limitations compared to broader market performance.

CEO Commentary

Andrew Wilson, CEO of Electronic Arts, highlighted the strong performance driven by the success of EA SPORTS FC and Split Fiction, positioning the company for accelerated growth. He noted record net bookings in the EA SPORTS portfolio and expressed confidence in executing a deep pipeline of upcoming releases, including the highly anticipated Battlefield reveal. Wilson emphasized the company's commitment to delivering next-generation blockbuster entertainment and maintaining operational discipline while investing in future growth, reflecting an optimistic outlook for the fiscal year ahead.

Guidance

For fiscal year 2026, Electronic Arts expects net bookings to be approximately $7.600 billion to $8.000 billion, driven by the EA SPORTS portfolio, The Sims, and upcoming launches. The company projects net revenue between $7.100 billion and $7.500 billion, with diluted earnings per share anticipated to range from $3.09 to $3.79. Operating cash flow is expected to be approximately $2.200 billion to $2.400 billion, continuing the strong financial trajectory established in FY25.

Additional News

Electronic Arts (EA) announced the launch of "Battlefield 6," with its reveal trailer showcasing the iconic franchise's exciting future. Additionally, EA highlighted its commitment to accessibility, pledging to add 23 new accessibility patents and open-source more technology. The company also collaborated with Girls Who Code to celebrate a decade-long partnership aimed at reforming future STEAM education. These initiatives reflect EA's dedication to innovation and inclusivity, reinforcing its role as a leader in digital interactive entertainment. EA remains focused on delivering engaging experiences while fostering community growth and technological advancements.