EA reports smaller than expected loss
Electronic Arts today released financial results for the first quarter that ended on June 30 of this year. While the news is grim, there is somewhat of a silver lining for one of the world’s largest game publishers. First and foremost, changes in accounting rules for deferred revenue impacted sales for the quarter coupled with a seasonal slump in the industry during the three month period.
EA reported a loss of $234 million, or 72 cents per share, before adjustments in the April to June period, compared with a loss of $95 million, or 30 cents per share, in the same quarter a year earlier. During the quarter, the company recorded a net revenue deferral of $172 million related to online-enabled packaged goods games and digital content as compared with a net benefit of $195 million in the first quarter of the prior year.
Revenue for the quarter also fell 20 percent to $644 million from $804 million a year ago. Excluding restructuring charges and various adjustments, EA lost 2 cents per share in the latest quarter. The good news is that EA managed to beat “the street,” who expected the company to post a loss of around 13 cents a share.
Some other good news: adjusted revenue for the first quarter clocked in at $816 million, up an impressive 34 percent from last year - way above the $729.5 million range that analysts had predicted.
Highlights for the first quarter included doubling sales of Wii games thanks to EA Sports Active (which sold over 1.8 million copies), 3.7 million copies of The Sims 3, $50 million of non-GAAP revenue in the quarter from EA Mobile (up 14 percent), and EA Digital non-GAAP revenue of $124 million (up 38 percent year-over-year).
Looking ahead the company expects better days in the second quarter. Madden NFL 10, which will be available on August 14 for various platforms, should give EA a large boost in sales numbers. EA also plans to sell virtual items in The Sims 3, as well as subscription-based online games - though that particular space, save Ultima Online, hasn’t been a successful sector for EA over the years.
EA expects GAAP net revenue to be between $3.7 and $3.85 billion; non-GAAP net revenue of approximately $4.3 billion; a GAAP diluted loss per share between $0.85 and $1.35; and non-GAAP diluted earnings per share of approximately $1.00.
