$924 million in revenue vs $888.8 million estimation, 50 cents for profits vs 42 cents estimation. After massive selloff of the stocks in January when EA (NASDAQ: EA) reported a disappointed earnings, the stock price goes beyond 70 dollar again. Just one week before EA release the earnings, the market witnessed a boom of ATVI which also reports a better than expected earnings both in revenue and profits. These two game giants act pretty same for the past several months and so do their earnings report of the two seasons.
What contributes to the better-than-expected revenue and profit is actually the good job of its “Star Wars” and sports franchises.
The videogame publisher Tuesday said it squeezed out more than a million additional sales of its “Star Wars Battlefront” console and PC game in the fourth quarter. As of the end of March, EA sold more than 14 million copies to retailers. It has expansion packs and a sequel on the way.
EA laid out its forecast for fiscal 2017. It expects full-year revenue on an adjusted basis to grow around 7% to about $4.9 billion, and per-share profit of $3.50. Under generally accepted accounting principles, it expects revenue to grow to $4.75 billion and per-share profit of $2.53. As for this point, EA’s strong guidance for next year is a strong convince for the market while everyone cut the guidance due to the concerns of US economy.
While EA is still struggling in the mobile games. Currently, mobile is critical to game publishers, particularly those that built their businesses on console and PC games. EA had the most downloaded mobile games in 2015 on Apple Inc.’s and Alphabet Inc.’s app stores in both the U.S. and world-wide, according to industry tracker App Annie.
Mobile is the videogame industry’s fastest-growing sector, slated to climb 37% over the next four years and reach $48 billion in annual revenue by 2020, according to Digi-Capital Inc., a mergers and acquisitions advisory firm.
ATVI in February paid $5.9 billion to acquire “Candy Crush Saga” maker King Digital Entertainment PLC. Activision Blizzard reported earnings last week that blew past Wall Street’s expectations, in part because of the addition of King and the rising tide of digital sales.
At EA, digital sales accounted for a record 55% of revenue, the company said. For the quarter, adjusted digital sales reached $712 million, up 18% from a year ago. The company’s “Ultimate Team” sports games, part of what EA calls live services, saw adjusted revenue up 26% from a year earlier -- 33% when adjusting for the stronger U.S. dollar.
What we can see here is those two transnational game giants are moving from the overcapacity PC games sector to mobile games business and their movements are pretty same which could probably make their earnings and profits similar.
“Without a doubt more and more people are finding the ease of buying things digitally no different than buying books, movies, music or whatever it might be,” The EA financial chief Mr. Jorgensen said.