Electronic Arts on Tuesday predicted that its adjusted revenue for the year will be above Wall Street estimates, supported by the increase in video game sales as people stay at home during the Covid-19 pandemic.
Electronic Arts (EA) logo during a video game fair in Los Angeles. 6/17/2015. REUTERS / Lucy Nicholson
Analysts expect social isolation measures to further increase sales and user engagement in video games on all platforms.
However, EA shares were down about 3.5% in this session.
“I think investors thought the quarantine would cause even greater growth than expected,” said Michael Pachter, an analyst at Wedbush.
“Expectations were very high and the company is probably being a little conservative.”
EA, like rival Activision Blizzard and Take-Two Interactive Software, have a history of making conservative predictions at the start of the fiscal year.
First quarter revenue from continuing services was $ 832 million, up 17 percent from a year earlier, the company said.
EA receives a large portion of its sales from its ongoing services, which include in-game purchases and the “EA Access” subscription service, among other items.
“With more people staying at home, we continue to experience high levels of engagement and increased net service sales so far,” EA said in a statement.
On an adjusted basis, quarterly revenue fell from $ 1.36 billion to $ 1.21 billion, but exceeded analysts’ estimates of $ 1.19 billion, according to data from Refinitiv.
“The year-over-year drop is due to the robust launch of Apex Legends a year ago,” said Blake Jorgensen, vice president of finance, in a conference call with analysts.
Net income jumped to $ 418 million, or $ 1.43 per share in the quarter, from $ 209 million, or $ 0.69 per share, a year ago.
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