Video game publisher Electronic Arts (NASDAQ:EA) reported Q2 CY2024 results topping analysts' expectations, with revenue down 13.7% year on year to $1.66 billion. On the other hand, the company's full-year revenue guidance of $7.3 billion at the midpoint came in 2.8% below analysts' estimates. It made a GAAP profit of $1.04 per share, down from its profit of $1.47 per share in the same quarter last year.
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Electronic Arts (EA) Q2 CY2024 Highlights:
- Revenue: $1.66 billion vs analyst estimates of $1.58 billion (5.3% beat)
- EPS: $1.04 vs analyst estimates of $0.88 (18.2% beat)
- The company reconfirmed its revenue guidance for the full year of $7.3 billion at the midpoint
- EPS (GAAP) Guidance for the full year is $3.67 at the midpoint, missing analysts' estimates by 8.1%
- Gross Margin (GAAP): 84.2%, up from 80.9% in the same quarter last year
- Free Cash Flow of $53 million, down 90% from the previous quarter
- Market Capitalization: $39.29 billion
“EA delivered a strong start to FY25, beating net bookings guidance as we continue to execute across our business,” said Andrew Wilson, CEO of EA.
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Video Gaming
Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
Sales Growth
Electronic Arts's revenue growth over the last three years has been unremarkable, averaging 10.1% annually. This quarter, Electronic Arts beat analysts' estimates but reported a year on year revenue decline of 13.7%.
Ahead of the earnings results, analysts were projecting sales to grow 1.2% over the next 12 months.
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Key Takeaways from Electronic Arts's Q2 Results
We enjoyed seeing Electronic Arts exceed analysts' revenue expectations this quarter. On the other hand, its full-year revenue guidance missed analysts' expectations and its revenue growth was quite weak. Overall, this was a mixed quarter. The stock traded up 1.3% to $151 immediately following the results.
So should you invest in Electronic Arts right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.