Electronic Arts Inc. (NASDAQ:EA) reported third-quarter earnings on Tuesday, and EA stock is surging as a result. After closing below $119, EA opened this morning above $129 for a nearly 10% gain overnight.

EA reported a net loss of $186 million versus a net loss of $1 million a year ago. The EA earnings report did note, however, that the loss includes a $176 million tax expense due to the Tax Cuts and Jobs Act (about 57 cents per share).

While EA reported a per-share loss of 60 cents, its earnings — adjusted for one-time costs — were actually better than expected at approximately $2.22, beating out analyst expectations of $2.19. Right now, the market seems to be reacting to these adjusted earnings (and Q4 guidance).

EA announced a total net revenue of 1.16 billion for the quarter ending on Dec 31, 2017, up from 1.15 billion in the quarter that ended on the same date in 2016.

Perhaps unsurprisingly, EA’s digital net revenue is growing, up to $780 million from $685 million in the year before quarter. And packaged goods and other net revenue are shrinking, down to $380 million from $464 million.

The EA earnings release also noted that digital net bookings for the trailing 12 months were a record 3.375 billion, which is up 18% year-over-year and now represent 67% of EA’s total net bookings.

EA’s big story this quarter was the controversy surrounding Star Wars Battlefront II.

Bottom Line on EA Stock

Now that the dust has cleared, EA told the Wall Street Journal that Battlefront II has fallen short of expectations. The sequel game only sold about 9 million copies in the holiday quarter — 1 million fewer than expected. But the game did continue the digital trend seen elsewhere. 28% of the game’s sales were digital downloads versus 16% for the original Battlefront game.

As mentioned earlier, the market also appears to be responding to optimistic Q4 guidance from EA.

For the quarter ending on March 31, EA said it expects net revenue of $1.53 billion. Net income is expected to be approximately $579 million — up $765 million from this quarter. EA also told investors that it expects EPS of approximately $1.86 for 2018 Q4.

With EA stock now up a spry 21.5% for the year, it could become one of 2018’s premier highfliers.