Electronic Arts Profit Beats Estimates on Madden, Dragon Age

Updated on

Electronic Arts Inc., the video-game company known for the Madden football franchise, reported fourth-quarter sales and earnings that beat analysts’ forecasts.

Profit amounted to 39 cents a share excluding items in the period ended March 31, the Redwood City, California-based company said Tuesday in a statement. Analysts were predicting 26 cents, the average of 20 estimates compiled by Bloomberg. The company earned 48 cents on that basis a year earlier.

Under Chief Executive Officer Andrew Wilson, who took over in September 2013, the company has worked to improve the quality of its games, in some cases delaying releases that weren’t ready. For the fourth quarter, Electronic Arts called out titles including Battlefield Hardline, Dragon Age: Inquisition, FIFA 15 and Madden NFL 15. Almost 200 million hours of Dragon Age have been played, the company said.

“It’s not one single product, it’s coming across the board in console, PC and mobile games,” Chief Financial Officer Blake Jorgensen said in a telephone interview.

Electronic Arts rose 3.8 percent to $61.40 in extended trading. The stock fell 0.3 percent to $59.16 at the close in New York. It is up 26 percent this year.

Sales, also reported on an adjusted basis, fell to $896 million from $914 million a year earlier. Revenue exceeded the $851.6 million average of analysts’ estimates. The company increased its stock buyback plan to $1 billion from $750 million through May, 2017.

Profit margins have more than doubled over the past two years, Jorgensen said, in part due to increased sales of more profitable mobile products. Sales of those games, such as The Simpsons: Tapped Out, rose 22 percent to $150 million in the quarter, he said.

In the current first quarter, Electronic Arts expects to break even on an adjusted basis. Sales will be $640 million on that basis, the company said. Analysts forecast profit of 19 cents a share and $774.3 million in sales.

Sales for the year may be impacted by weaker overseas revenue when adjusted for exchange rates, Jorgensen said. The company expects Star Wars Battlefront, which will be released in November, to sell more than 9 million units.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE