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Electronic Arts Shares Are Soaring After Reporting Unexpected Profits

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May 11, 2016, 4:05 AM ET
Visitors Attend The EXG Gaming Conference
A visitor passes an advertisement for the Sony Corp. Playstation version of the FIFA 15 soccer game, produced by Electronic Arts Inc. (EA), during the EGX gaming conference at Earls Court in London, U.K., on Thursday, Sept. 25, 2014. Sony Corp. will begin selling its PlayStation TV set-top box in the U.S. and Europe next month with almost 700 games available, including select Angry Birds, Borderlands, Lego and FIFA soccer titles. Photographer: Chris Ratcliffe/Bloomberg via Getty ImagesPhotograph by Bloomberg via Getty Images
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Video-game publisher Electronic Arts, known for titles such as “FIFA” and “Battlefield,” reported quarterly revenue and profit above analysts’ estimates, riding on the success of its “Star Wars Battlefront” game and new launches.

Shares of the company rose 6.8% to $68.85 in extended trading on Tuesday.

The company said its “Star Wars Battlefront” game, which was launched in November, sold more than 14 million units for the year ended March 31.

EA (EA) released three smaller games in the fourth quarter—”Plants vs Zombies: Garden Warfare 2,” martial arts game “EA Sports UFC 2” and its indie game “Unravel.”

Strong demand for its games helped push adjusted revenue to $924 million, a 3% rise from the year-earlier period.

Adjusted sales from its high-margin digital business rose 18.3% from a year earlier, accounting for 77% of its adjusted revenue.

Excluding items, EA earned 50 cents per share for the quarter ended March 31. Analysts expected a profit of 42 cents per share and revenue of $888.8 million, according to Thomson Reuters I/B/E/S.

 

However, the company forecast a surprise loss and projected revenue below analysts’ estimates for the first quarter, as it is expected to release only one title, “Mirror’s Edge Catalyst,” during the period.

“Normally, our first quarter is fairly quiet. This year it’s extraordinarily quiet,” Chief Financial Officer Blake Jorgensen said in an interview.

EA said on an adjusted basis, it expected revenue of about $640 million and a loss of about 5 cents per share for the current quarter.

Analysts were expecting a profit of 18 cents per share and revenue of $738.5 million.

EA also forecast revenue for its full year ending March slightly above estimates, bolstered by the launches of titles such as “Battlefield 1” and “Titanfall 2.”

Last week, the company unveiled a trailer of its “Battlefield 1” game, featuring battles at the height of World War I, that got more than a million likes on YouTube.

The games are slated to launch in EA’s third quarter, which Jorgensen said was “stacking up to be a super super large quarter.”

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