Electronic Arts Loss Narrows, Beats View; Lifts FY Outlook

(RTTNews) - Electronic Arts Inc. (EA) Tuesday said its second-quarter loss narrowed from a year ago, driven largely by revenue growth and cost management, with both earnings and revenue topping Wall Street expectations.

Moving ahead, the video-game maker lifted its earnings forecast for the full year, as it counts on the new next-generation consoles to work in its favor during the holiday season.

Redwood City, California-based Electronic Arts' second-quarter loss narrowed to $273 million or $0.89 per share from $381 million or $1.21 per share in the same period last year.

Excluding items such as deferred revenues, the company reported an adjusted earnings of $0.33 per share, compared to $0.15 per share last year. On average, 24 analysts polled by Thomson Reuters expected earnings of $0.12 per share for the quarter.

Electronic Arts revenue for the second quarter dropped to $695 million from $711 million last year. Revenues, excluding changes in deferred revenues, slipped to $1.04 billion from $1.08 billion last year, however, trounced analysts' estimate of $976.10 million for the quarter.

Digital revenues, which include sales of product over web, rose 39 percent to $450 million, driven by titles like "FIFA," "Plants vs. Zombies" and "Real Racing 3."

Commenting on the results, Chief Executive Andrew Wilson said, "EA's strong second quarter was driven by great title launches, continued digital growth, and financial discipline. While we have made good progress in the first half of the year, we remain focused on executing our FY14 plan and delivering a full slate of amazing games and services to players on current and next-generation consoles, mobile, and PC."

Like all game developers, EA too is struggling to keep up with change in consumer preferences, as more and more gamers are now unwilling to buy expensive video-games and have switched over to low-ticket mobile and web social games. Video game makers have since started focusing on development of web-based games. Consequently, EA has reduced its packaged titles for consoles, while investing more resources towards the web.

However, the gaming industry expects the demand for games to improve after the launch of Sony's latest PlayStation 4 and Microsoft's (MSFT) Xbox One during the holiday season.

Looking forward to the third quarter, the company expects a loss of $1.42 per share, with adjusted earnings of about $1.22 per share. The company sees revenues of about $775 million and adjusted revenues of about $1.65 billion. Analysts currently expects earnings of $1.32 per share on revenues of $1.75 billion for the quarter.

For the fiscal 2014, the company lifted its adjusted earnings guidance to $1.25 per share from $1.20 per share. However, EA continues to see revenues of about $3.55 billion and adjusted revenues of about $4.00 billion. Analysts currently expect the company to report full-year earnings of $1.22 per share on revenues of $4.02 billion.

EA closed Tuesday's trading at $24.13, down $0.70 or 2.82%, on the NYSE. The stock, however, gained $0.82 or 3.40% in after-hours trade.