One of the world’s largest and most successful video game publishers, EA (Electronic Arts Inc) forecasts a full-year adjusted revenue above estimates projected for it by WallStreet. Experts believe this is because the company has been riding on the broader surge in videogame sales as people shelter at home due to the worldwide pandemic.
Reuters reports that videogame sales in the US have surged in the last two months as the country was shut down by COVID-19 – sales in March managed to hit their highest in over a decade.
Analysts expect the extended stay-at-home orders to further boost sales and user engagement for videogames across all platforms.
Even with successful projections for the rest of the year, EA’s shares went down about 5% in extended trading.
“I think investors thought that shelter-in-place would trigger even more growth than they guided to,” says Wedbush analyst Michael Pachter.
“Expectations were too high, and the company is probably being a wee bit conservative.”
EA, like rivals Activision Blizzard Inc and Take-Two Interactive Software Inc, has a history of guiding conservatively at the beginning of the year.
Revenue from live services in the quarter was $832 million, up about 17% from a year ago, the company says. Currently, EA is earning a large chunk of its total sales from its live services, including in-game purchases and their ‘EA Access’ subscription-based online service, among other items.
“With more people staying at home, we have experienced, and are continuing to experience, heightened levels of engagement and live services net bookings growth to date”, EA says in a statement.
Leading titles published by EA include last year’s holiday launch Star Wars Jedi: Fallen Order, which has over 10-million players to date. Such titles still compete with rivals from Activision Blizzard and Take-Two Interactive.
The company forecast full-year adjusted revenue of $5.55-billion, beating analysts’ average estimate of $5.37-billion. On an adjusted basis, the company’s quarterly revenue fell to $1.21-billion from $1.36-billion, but edged past analysts’ estimates of $1.19-billion, according to IBES data from Refinitiv.
“The year-on-year decrease is driven by the massive launch of Apex Legends a year ago”, Blake Jorgensen, CFO at EA, says on a post-earnings call with analysts.
Net income jumped to $418-million, or $1.43 per share, in the fourth quarter ended March 31, from $209 million, or 69 cents per share, a year ago.
Edited by Luis Monzon
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