Electronic Arts Tanks 3% as Q3 Earnings Miss Estimates

Shares of video game company Electronic Arts, Inc. (EA) declined 3% in Tuesday’s extended trading session, as the company’s earnings for the third fiscal quarter (ended December 31, 2021) came below Street’s expectations.

Earnings per share (EPS) for the quarter declined 68.1% from the previous year to $0.23. Also, it lagged the consensus estimate of $3.23.

Electronic Arts reported quarterly net bookings of $2.58 billion, up 7.4% from the same quarter last year. The growth was primarily supported by a 23.3% year-over-year increase in Live services and other revenues. However, the revenues missed the consensus estimate of $2.68 billion.

Outlook

For the fourth quarter, the company expects to post net revenues of about $1.76 billion. Further, it anticipates earnings of $0.46 per share.

For Fiscal Year 2022, the company anticipates net revenues of about $6.93 billion and net bookings of $7.525 billion. Electronic Arts expects to deliver EPS of $2.43. Operating cash flow is likely to be about $1.9 billion.

Executive Comments

The CEO of Electronic Arts, Andrew Wilson, said, “Our network of more than 540 million unique active accounts continues to expand, players are spending more time in our games, and with our amazing IP we are well-positioned for continued growth.”

CFO Blake Jorgensen said, “Our portfolio approach will enable us to deliver organic growth in the double digits this year, continue to deliver strong cash flow, and provides a strong foundation for growth as we look to the future.”

Stock Rating

Consensus among analysts is a Strong Buy based on 13 Buys and 3 Holds. The Electronic Arts stock forecast of $168.56 implies upside potential of 29.7% from current levels. Shares have declined 6.4% over the past year.

News Sentiment

News Sentiment for Electronic Arts is Very Positive based on 38 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 63%, and none have Bearish Sentiment, compared to a sector average of 37%.

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