What happened
Shares of Electronic Arts (EA +0.69%) increased 23.5% in value in the first six months of the year, according to data provided by S&P Global Market Intelligence. It was far worse at one point, with the stock initially falling in March along with the broader market as COVID-19 fears set in.
However, investors quickly gravitated to companies in a position to benefit from more people staying at home due to the coronavirus. EA saw strong engagement through April across its biggest titles, including Apex Legends, FIFA, and Madden.
Image source: Getty Images.
So what
EA reported net bookings of $5.2 billion for fiscal 2020 (which ended in March), an increase over $4.9 billion in fiscal 2019. The numbers for the March-ending quarter don't reflect the strong engagement trends across EA's titles. Live service revenue, including in-game sales, dropped 8% year over year, but management blamed that decrease on the tough comparison to the year-ago launch of Apex Legends. Excluding Apex, the rest of EA's titles saw an increase in live service spending.
For the full year, digital net bookings reached a record 78% of EA's business, with strong spending in FIFA and Madden Ultimate Team. EA also benefited from strong sales of Star Wars Jedi: Fallen Order, which now has more than 10 million unique players.
Now what
EA announced in late May a new agreement with the NFL to continue making simulation football games, as well as new experiences in mobile. This comes as Madden NFL 20 is coming off a record year in franchise history, with unique players up 30% year over year.
New consoles from Sony and Microsoft will launch this holiday, which has historically given video game stocks a lift. Other than sports titles, EA doesn't have anything on the slate this year, except for Star Wars: Squadrons.
Management expects GAAP net revenue to remain flat at $5.525 billion in fiscal 2021, compared to $5.537 billion in fiscal 2020. However, the next five years should include plenty of new content to drive growth. During the last call, CEO Andrew Wilson said, "I don't think we've ever had as robust a pipeline of content ahead of us as we have right now."
