Electronic Arts (EA) Offers Dim Outlook
Wednesday, February 01, 2022 6:54 PM



Electronic Arts (EA), developer and publisher of game software and video game consoles, provided bleak outlook for fourth quarter after its third quarter adjusted earnings came in above Street analysts’ expectations.

The company disclosed that it could sell more than two million units of Star Wars and produced 1.7 million lively subscribers.

Q3 Results

The Redwood City, California-based company suffered a net loss of $205 million or 62 cents loss per share compared to a net loss of $322 million or 97 cents a share in the year-ago quarter. On an adjusted basis, net income would have been $334 million, 70 percent higher than $196 million and earnings increased 68 percent to 99 cents a share from 59 cents a share in the year earlier quarter.

Total revenues rose slightly by 0.8 percent to $1.06 billion from $1.05 billion in the previous year quarter. But non-GAAP revenues increased 17 percent to $1.65 billion from $1.41 billion.

Wall Street analysts’ predicted Electronic Arts to deliver earnings of 93 cents a share on revenues of $1.61 billion.

Outlook

For the fourth quarter, the company is guiding adjusted earnings in the range of 10 – 20 cents a share on adjusted revenues of $925 - $975 million. GAAP earnings are projected in the range of $1.45 - $1.59 a share on revenues of $1.425 - $1.475 billion.

Our Take

There is no strong reason for the stock to move upward trajectory in the extended hours of trading despite Electronic Arts’ bleak outlook. The stock is having 52-week range of $16.23 - $26.13. The stock trading witnessed a volume of 10.79 million on January 31 compared to 3-month average volume of 7.1 million shares and closed higher than Monday closing price. One can wait for any fresh catalyst to emerge before entering the counter.


 

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