Video game producer Electronic Arts (NASDAQ:EA) continues to benefit as people still have limited entertainment options. Many schools and colleges remain closed for in-person classes, so the younger generation that tends to play the company's games is spending more time near their game consoles and computer screens, which allows them to switch from a school task to engaging with a game almost instantaneously. 

That continued positive performance showed up last week when the company reported fiscal 2021 second-quarter earnings. One big takeaway from the report is that management felt so good about the company's current and future prospects that it initiated a new share buyback program and it announced plans to initiate a dividend for the first time in the company's history (more on this below).

Let's take a closer look at three other key takeaways from the company's second-quarter earnings report.

A screenshot from the Electronic Arts Fifa 21 video game shows soccer players in action.

A screenshot from the Electronic Arts game FIFA 21. Image source: Electronic Arts.

People are spending more time and money on games

The first takeaway is that engagement with the company's games continues to surge even though economies globally were starting to reopen following coronavirus-related shutdowns during the quarter. Net bookings for the trailing 12 months (TTM) were up by 8% year over year to $5.6 billion. Still, coronavirus cases are again surging in several areas and even though people have the option of going out to more places than during the initial lockdowns, those consumers are cautious in doing so.

The second takeaway came from management's forecast regarding Q3. On Oct. 9, EA launched a new version of its most popular game franchise, FIFA 21. Although the results from the sales will be included in its third-quarter report, management gave an update on how the two games it has launched so far in the third quarter are faring:

We started our third quarter by launching 2 new EA SPORTS games. When it went live globally on October 9, FIFA 21 already had a record number of players in the game through the early access benefit of our subscription. Our player metrics in FIFA 21 are strong, and FIFA Ultimate Team also continues to grow with matches in the mode up 30% year-over-year. NHL 21, which includes the fan-favorite NHL 94 Rewind has quickly become the most successful NHL game yet on current-gen consoles.

The final takeaway is that surging revenue has lead to a windfall in cash flow, and the company has decided to return some of that to shareholders. Electronic Arts announced a two-year, $2.6 billion stock buyback program. Additionally, the company will now start paying a quarterly dividend of $0.17 per share.

A young adult male playing video games on the computer.

Electronic Arts announced a new share buyback program. Image source: Getty Images.

Looking ahead 

Interestingly, the company did not change its revenue and earnings per share forecast for its fiscal year 2021 -- reiterating that it expects to bring in $5.63 billion in revenue and EPS of $3.15. Furthermore, the company expects growth to continue into fiscal 2022, as the Sony PlayStation 5 and Microsoft's Xbox Series X/S are coming to market this month.

The next-gen gaming consoles come at an opportune time for this consumer discretionary stock, as consumers are still spending tremendous amounts of time at home. Even though there have been positive developments for a coronavirus vaccine, it could still take six months to a year for large groups of the population to get vaccinated, once a vaccine is fully approved.

All the while, options for entertainment outside of people's homes might remain limited, thereby giving Electronic Arts more time to connect with gamers. And when the pandemic has run its course, the company will still generate interest from gamers because of its proven ability to create new and exciting titles. Things are looking good for Electronic Arts, and investors should consider adding it to their list of stocks to watch. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.