Why Did Electronic Arts (EA) Stock Close Up 8% Today?

Video game publisher Electronic Arts (NASDAQ:EA) enjoyed a strong jump in share price after beating fiscal Q4 earnings expectations. EA stock gained nearly 8% on rising revenue.

Electronic Arts (EA) logo on a wall
Source: Rick Neves / Shutterstock.com

In an otherwise brutal earnings season, EA managed to surprise investors with relatively strong Q4 and full-year 2022 financial results. Indeed, for EA’s fiscal fourth quarter, ended March 31, the company reported earnings per share of 80 cents. This represents more than 200% year-over-year growth, but is actually a bit behind consensus estimates of $1.04.

The company behind Madden NFL and Battlefield also reported Q4 revenue of $1.83 billion. This represents a 35.6% increase from last year, coming in ahead of a predicted $1.76 billion.

EA reported YOY growth in nearly all its revenue streams. This includes increased sales in its PC, console and mobile platform offerings.

CFO Chris Suh commented on EA’s success this quarter.

We finished the year with another strong quarter of revenue and profit growth, driven by our live services business which was 85% of our net bookings in Q4. We have a strong foundation of deeply engaged players, rich IP and a resilient business model, which we will continue to invest in to deliver growth in FY23 and beyond.

The earnings results weren’t purely celebratory, however. EA also offered its sales forecast for the current quarter, ending June 30. The company expects adjusted revenue between $1.2 billion and $1.25 billion, well below analysts’ expected $1.45 billion.

EA Stock Rises Despite Cancelled FIFA Partnership, Weaker Guidance

EA revealed it is ending its nearly 30-year licensing agreement with FIFA. FIFA has long held out as one of the most popular annual video game releases. Indeed, the global sensation has earned more than $20 billion in revenue over three decades. FIFA 23 will mark the final iteration of the franchise.

The axed partnership comes with a slew of implications for EA’s soccer simulator. This includes, perhaps most prominently, a name change to EA Sports. It will also likely have to change in-game names of some clubs and related mascots and arenas. Fortunately, EA has already made licensing agreements with scores of other major clubs and leagues such that the transition to a FIFA-less soccer game should be relatively smooth.

In an earnings season filled with sometimes catastrophic disappointments, EA has clearly managed to instill investors with confidence in its gaming ecosystem, reflected in its jump in share price today.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines


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