Electronic Arts (EA) Beats EPS Estimates but Faces Setback as Revenues Miss and Guidance Falls Short
In their recent earnings report for Q3 ending December 31, 2023, Electronic Arts (EA) experienced a mixed performance. While the company surpassed expectations on earnings per share (EPS), posting $1.07 compared to the estimated $0.88, it faced challenges as revenues fell short and guidance for Q4 FY24 landed below consensus estimates.
Despite beating EPS estimates by a significant margin, the 1% year-over-year revenue growth to $2.37 billion missed the estimated $2.4 billion. Looking ahead, EA's guidance for Q4 anticipates EPS between $0.20 and $0.68, below the $0.70 consensus estimate, with net revenue expected within the range of $1.625 billion to $1.925 billion, falling short of the $1.83 billion estimates.
The performance led to a decline in shares during after-hours trading following the report. Despite challenges, strong performances from key franchises contributed to a 7% year-over-year net bookings growth for EA SPORTS FC, and live services and other net bookings reached a record $1.712 billion, growing by 3% compared to the previous year.
While facing setbacks in revenue and guidance, EA remains committed to shareholder returns, having repurchased 2.5 million shares for $325 million during the quarter and declaring a quarterly cash dividend of $0.19 per share.
CEO Andrew Wilson emphasized the company's focus on growing its biggest franchises and providing innovative games and experiences for global communities. CFO Stuart Canfield highlighted prioritized investments in significant growth opportunities while navigating challenges. As EA addresses the mixed results, the strategy involves continuous innovation and reliance on live services for recurring revenue streams.