A Look Back at Video Game Developer Earnings

Over the last few weeks, the biggest three developers on the market released their quarterly results. Which of them did the best and which will have the most problems going forward?

May 15, 2014 at 1:05PM

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Earnings season is starting to die down, which means now isn't a bad time to take a look back at how the big video game developers did this past quarter. Let's start with the weirdest report, which belonged to Electronic Arts (NASDAQ:EA). The company had a so-so fourth quarter and full fiscal year, with net revenue and gross profit for the year coming in lower than the year before. On the other hand, mobile revenue hit a record high of $460 million this year, and the company was emphatic that its digital distribution would be ramped up going forward.

But the weird part was its lack of details regarding Titanfall, the company's big exclusive game for Microsoft's Xbox One. The game was released back in March, a full two months before EA's earnings report, but the company gave no details about sales numbers besides a reference to an old NPD report. That report said Titanfall was the best-selling game in March with 925,000 units sold, but the fact that EA hasn't released updated numbers leaves investors scratching their heads. The lack of information about what was supposed to be the company's big new-console generation debut probably isn't a good thing, and investors need to be ready for EA to break some bad news.

Next up is Activision Blizzard (NASDAQ:ATVI), which had a very good-looking first quarter, especially in its digital segment. The company beat estimates on both EPS and revenue thanks in large part to impressive digital sales, which accounted for 68% of its $772 million in non-GAAP revenue. On top of that, Activision upped its full-year guidance, which seems warranted -- if it's already doing this well this early in the year, just imagine how it'll do once it has released its big new game Destiny. Investors should definitely be pro-Activision.

Last but certainly not least is Take-Two (NASDAQ:TTWO), which, shocking nobody, had a strong fiscal 2014 thanks to Grand Theft Auto 5. But without a Grand Theft Auto 6 on the way, Take-Two won't experience the same sort of growth anytime soon. Analysts knew that going into the company's earnings report on Wednesday and, to be fair, were pleasantly surprised by better-than-expected sales that beat estimates by about $30 million and earnings that beat estimates by $0.11 in Take-Two's fourth quarter. But without a clear path ahead and not much perceived strength in the company's pipeline, investors may want to be careful about diving too deeply into Take-Two at this point.

Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Activision Blizzard. It recommends Take-Two Interactive and owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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