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Electronic Arts’ Game Titles Keep Delivering

Posted on Tuesday, Nov 25th 2014

According to a research report by Newzoo, the global games market is expected to grow to more than $102.98 billion by 2017. The researcher projects that mobile device including phone and tablet games will report the highest revenue growth reporting annual revenues of $35 billion by 2017. Here is an interesting infographic showing the movement of the gaming industry, courtesy Venturebeat.com.

Electronic Arts’s Financials
Electronic Arts (Nasdaq: EA) delivered strong second quarter results, sending their stock soaring. For the recently ended quarter, EA saw revenues grow 17% over the year to $1.22 billion, ahead of the Street’s forecast of $1.16 billion. EPS of $0.73 was also significantly ahead of previous year’s $0.33 and the market’s consensus of $0.53 for the quarter.

By segment, digital revenues grew 30% over the year to $453 million and published and packaged revenues improved 11% to $767 million. During the quarter, net revenues for FIFA, Madden NFL, and Hockey Ultimate Team collectively grew an impressive 96% over the year.

Mobile continues to deliver strong results and during the quarter, EA reported more than 155 million average monthly active users. Mobile revenues grew 11% over the year to $115 million. Their mobile sports games usage grew over 250% over the year to more than 40 million monthly active users. EA has also been very successful on the new consoles and reported more than 1.9 billion hours of gameplay on console and PCs.

For the current quarter, EA projected revenues of $1.275 billion with an EPS of $0.90. The Street was modeling revenues of $1.29 billion with an EPS of $0.85. EA expects to end the year with revenue of $4.175 billion and EPS of $2.05, again ahead of the market’s forecast of revenues of $4.167 billion and EPS of $1.93.

EA’s Gaming Titles Deliver
Unlike other new-age gaming companies like Zynga, EA has been able to deliver strong performance due to their gaming titles. They are the leader in sports genre games, with FIFA and Madden NFL contributing to 67% of the total sports title sales worldwide last year. They have continued to add to these titles and early last quarter released Madden NFL 15. The game became the top selling game within a month and is now their most successful Madden title with over 89 million online gameplays, a 48% increase over the year. The game has already seen strong adoption on both Xbox One and Sony’s PlayStation 4.

They saw a similarly strong performance with FIFA 15, which broke launch records for the franchise within a week of release and reported more than 50% more players online compared to the game’s previous version. By the end of the quarter, Madden NFL 15 and FIFA 15 had the second and third position in the top 10 titles list.

EA is counting on strong game releases during the current quarter to deliver strong results for the holiday season. They recently released NBA Live 15, which boasts of improved visuals and new game play experiences. Earlier this month, EA also released the much anticipated Dragon Age: Inquisition. They plan to release the fifth extension for Battlefield 4 – Final Stand before the end of the quarter. However, they ended up delaying the launch of Battlefield Hardline till early next year. They will continue to build their mobile offering and are expecting to add free to play titles SimCity BuildIt and Peggle Blast.

EA’s stock is trading at $43.6 with market capitalization of $13.56 billion. It touched a 52-week high of $44.06 last week.

 

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