EA's tepid forecast overshadows quarterly beat, shares slip
Last updated on: 31 January,2020 05:03 pm
The strong launch of "Star Wars Jedi: Fallen Order" during the crucial holiday season helped EA.
(Reuters) - Electronic Arts Inc forecast fourth-quarter adjusted revenue below analysts’ estimates, weighed down by the delayed launch of its basketball title “NBA Live”, while its “Apex Legends” battles “Fortnite” and “PUBG” to attract young gamers.
Shares of the Redwood, California-based company fell about 2% after the bell on Thursday.
EA is working with a partner in China to bring its battle-royale title “Apex Legends” to PC and mobile in the country, Chief Financial Officer Blake Jorgensen told Reuters.
Earlier in 2019, EA revealed plans to launch the title, which had attracted 70 million players as of October, in China and also on mobile.
“The biggest unknown is how long does it take to get approval in China,” Jorgensen added.
China, which stopped approving the monetization of new video game titles in March 2018, resumed processing applications in December that year, with a huge backlog of games awaiting approval.
The videogame publisher behind franchises like “FIFA” and “Battlefield” said it expects current-quarter adjusted revenue to be about $1.15 billion, below analysts’ expectations of $1.20 billion, according to IBES data from Refinitiv.
The tepid forecast comes at a time when the dominance of console-based game franchises, including rivals Activision Blizzard and Take-Two Interactive Software Inc, is being threatened by mobile-based, free-to-play games with engaging formats.
EA has pushed back the release of “NBA Live” last quarter to coincide with the launch of new gaming consoles from Microsoft and Sony at the end of 2020.
The strong launch of “Star Wars Jedi: Fallen Order” during the crucial holiday season helped the company beat third-quarter adjusted revenue estimates.
The title, released in November, climbed its way to become the second best-selling game of December, according to data from research firm NPD.
Revenue from live services, the largest chunk of its sales, rose 41% to $677 million. The company expects growth for this unit to accelerate in fiscal 2022, led by a new Battlefield title.
EA raised its full-year adjusted revenue forecast to $5.15 billion from $5.13 billion, but was below analysts’ expectations of $5.21 billion.
On an adjusted basis, the company’s revenue jumped 22.9% to $1.98 billion, beating the analysts’ expectation of $1.97 billion.
Net income for the third quarter ended Dec. 31 rose to $346 million, or $1.18 per share, from $262 million, 86 cents per share, a year earlier.