Please ensure Javascript is enabled for purposes of website accessibility

Electronic Arts Cuts Outlook

By Joe Tenebruso – Nov 2, 2018 at 10:08AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The "Battlefield V" delay will crimp the game maker's sales and profits in fiscal 2019.

Electronic Arts (EA 3.59%) reported second-quarter financial results on Oct. 30. The video game titan is enjoying strong sales of its bedrock sports franchises, but the delayed launch of a major title forced the company to cut its guidance for the full year.

Electronic Arts results: The raw numbers


Q2 2019

Q2 2018

Year-Over-Year Change

Net revenue

$1,286 million

$959 million


Net income

$255 million

($22 million)


Earnings per share




Data source: Electronic Arts Q2 2019 earnings release.

What happened with Electronic Arts this quarter?

Total net bookings -- essentially the amount of products and services Electronic Arts sold during the period -- rose 3.6% year over year, to $1.22 billion, besting EA's guidance by $62 million. The company chalked up the outperformance to strong sales of FIFA 19 and Madden NFL 19 game downloads and related content. 

Digital net bookings jumped 10%, to $637 million, in the second quarter and now account for 69% of EA's business on a trailing-12-month basis, up from 63% in the year-ago period. These gains were driven in part by a 6% increase in live services net bookings, to $328 million. The live services segment includes Electronic Arts' subscription services, as well as in-game transactions and esports revenue. 

Esports, or competitive gaming, continues to be a powerful growth driver for the video game industry, and Electronic Arts is a prime beneficiary of this global trend. More than 20 million players participated in EA's FIFA esports league, and viewership of the FIFA eWorld Cup Final increased fourfold compared to the previous year.

During a conference call with analysts, CEO Andrew Wilson highlighted some of the ways Electric Arts plans to profit from the esports craze:

Players who watch our esports content play more, return more frequently, and are choosing to invest more. With expanded competitive ecosystems and new experiences for our players this year, we see strong potential for continued growth, including increased revenue streams through sponsorships, licensing deals with esports leaders, and broadcast agreements including ESPN that continue to reach new audiences.

All told, EA's second-quarter operating income improved to $258 million -- compared to a loss of $41 million in the second quarter of fiscal 2018 -- due to a combination of higher sales, gross margin expansion, and lower operating costs. Net income, meanwhile, came in at $255 million, or $0.83 per share, compared to a net loss of $22 million, or $0.07 per share, in the prior-year period.

Looking forward

Despite these relatively solid results, Electronic Arts was forced to reduce its full-year guidance due to the delayed release of its popular shooter game, Battlefield V.

An image from Electronic Arts' new Battlefield V shooter game.

"Battlefield V" delays forced Electronic Arts to lower its financial targets. Image source: Electronic Arts.

The company now expects:

  • Net bookings of $5.2 billion, down from a previous estimate of $5.55 billion.
  • Net revenue of $5.15 billion, down from $5.6 billion.
  • Net income of $962 million vs. $1.108 billion.
  • Earnings per share of $3.11 vs. $3.55.
  • Operating cash flow of $1.65 billion vs. $1.825 billion.

For the third quarter, EA is guiding for net bookings of approximately $1.725 billion and net revenue of $1.375 billion. Management also forecasts net income of $188 million, or $0.61 per share.

Battlefield V is set to launch Nov. 20, about a month later than had been expected. The delay was previously announced. "On November 20, we will bring the community into a new Battlefield that has been designed from the ground up as a service. At launch, Battlefield V will be the deepest game we've ever made in the franchise, taking players into the unseen fronts, untold stories and intense combat of the world's greatest conflicts through bigger-than-ever multiplayer and gritty single-player War Stories," Wilson said during the conference call. "Then just about 2 weeks later, our Tides of War live service will begin a regular cadence of major content updates delivered to all Battlefield V players. Each chapter of the service will bring a new dimension to the experience, fundamentally changing how the game is played."

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Electronic Arts Inc. Stock Quote
Electronic Arts Inc.
$119.86 (3.59%) $4.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.