EA’s earnings send the Street into overdrive
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

EA’s earnings send the Street into overdrive

Most of the recent headlines concerning world-leading games developer and publisher Electronic Arts (EA) have focused on the fan outcry at the inclusion of “micro-transactions” in its latest Star Wars game. As a result, the company froze the offending service, and investors expected to see muted results in its latest earnings report. However, this should be a good lesson in learning to tune out media noise: EA outperformed analysts’ expectations for a revenue of $1.18 billion, and delivered $1.23 billion instead.

In the first month of 2018, EA’s share price is already nearly 20% up!

graph 0502 EA

SOURCE: Yahoo Finance

Wedbush Securities analyst Michael Pachter said: “Many thought guidance would be lowered, and guidance was raised. That means nothing is wrong, and people were overly focused on ‘Star Wars’.” It is particularly noteworthy that this higher guidance comes not just in spite of lower-than-hoped-for sales of Star Wars Battlefront 2, but also the suspension of micro-transactions within it. Clearly, the company has plenty of other things to get excited about.

One of those things is the upcoming UFC 3 – a video game that simulates “Mixed Martial Arts” – a sporting competition based around pitting professional fighters from a variety of styles in a cages and letting them duke it out, one-on-one. The sport has become wildly popular over the past two and a half decades, and Ultimate Fighting Championship (UFC) is the league that popularised it. Hence, EA’s UFC titles are an important franchise. By September last year, the first game in the series had sold 1.5 million copies, and the second, 1.3 million.

Discussing the aforementioned Star Wars title, chief financial officer Blake Jorgensen told reporters: “We sold fewer units than we thought in the quarter. We thought we would sell roughly eight million units, we sold just a little under one million units less than that. We will continue to sell ‘Star Wars’ just at a slower pace than we originally thought.

Another feather in EA’s cap in the last quarter was rising digital sales. The company’s digital downloading of video games effectively cuts out the middleman, letting it keep more profit. In the last quarter, digital sales were up by 14%.


Dominion holds Electronic Arts in its Global Trends Ecommerce Fund.

If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.