Electronic Arts Remains Focused on Game Quality

The recent holiday season was a particularly good quarter for game title publisher Electronic Arts (Nasdaq: EA). The company reported strong financial results, thus sending their stock soaring to 7-year high levels. EA plans to continue to deliver such growth through a line-up of additional game titles scheduled for the year.

EA’s Financials

EA’s third quarter revenues grew 39% over the year to $1.43 billion, ahead of the Street’s forecast of $1.29 billion. EPS of $1.22 was also ahead of the market’s forecast of $0.92 for the quarter. This was the seventh consecutive quarter that the company surpassed market expectations. The company attributed their stellar performance to their “ongoing digital transformation”, strong offerings, and continued focus on managing costs better.

By segment, digital revenues grew 49% over the year to $517 million. Within digital revenues, freemium and extra content revenues improved 47% to $314 million. Mobile revenues increased 13% to $139 million and revenues from game downloads on PCs and consoles increased 22% to $140 million. Published and packaged revenues fell 52% to $735 million.

During the quarter, Net revenues for FIFA, Madden NFL, and Hockey Ultimate Team collectively grew 82% over the year. The company saw more than 160 million monthly active users on their mobile titles. The mobile versions of Madden NFL Mobile and FIFA 15 Ultimate Team together brought in 45% more monthly active players through the quarter compared with the previous year.

Calendar year-to-date, they remained the leading publisher on PlayStation 4 and Xbox One consoles with their popular game titles that include Dragon Age: Inquisition, Titanfall, FIFA, NHL, and Madden NFL versions.

For the current quarter, EA projected revenues of $830 million with an EPS of $0.22. The market was looking for the quarter’s revenues at $911.64 million and an EPS of $0.26. EA expects to end the year with revenues of $4.175 billion-$4.253 billion and an EPS of $2.05-$2.35 in comparison with the market’s forecast of revenues of $4.2 billion and an EPS of $2.05.

EA’s Game Releases

EA’s strong performance is clearly due to their game title line-up. The last quarter saw Dragon Age: Inquisition rise to more than 200 Game of the Year lists globally. The game was released in November and became the most successful launch in gaming history. Since its release, over 113 million hours have been spent on the game by gamers.

FIFA also saw significant user engagement as they recorded over 6 million people playing FIFA games every week across the world. FIFA15 was the leading title in Europe and a top 10 title in the US. Madden NFL mobile is also seeing strong growth. The game had its biggest day in franchise history on Christmas day. It was the fourth the top grossing game in the US Apple App Store.

Their current year line-up also remains impressive. This year, they plan to release Star Wars: Battlefront for the holiday season of 2015. Other releases expected this year include Mass Effect 4, Battlefield Hardline, and Need for Speed. The year will also see the release of two games whose releases have been delayed from the previous year – PGA Tour and Sims 4 Expansion packs.

EA’s 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 gameplay experiences. They will 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.

Overall, EA is ensuring that their games remain attractive to the users. They are offering innovative sports-focused games such as FIFA, NFL, PGA Tour to improve user engagement. Across the PC, console, and mobile platforms, they are offering live services so as to improve engagement. All of these efforts are helping their stock grow.

EA’s stock is trading at $57.39 with market capitalization of $17.79 billion. It touched a 7-year high of $57.90 earlier this week.