The 10-second takeaway
For the quarter ended June 30 (Q1), Electronic Arts missed slightly on revenues and exceeded expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted and GAAP earnings per share shrank.
Gross margins expanded, operating margins dropped, net margins contracted.
Electronic Arts booked revenue of $491.0 million. The 19 analysts polled by S&P Capital IQ hoped for sales of $498.7 million on the same basis. GAAP reported sales were 4.4% lower than the prior-year quarter's $999.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at -$0.41. The 21 earnings estimates compiled by S&P Capital IQ averaged -$0.42 per share. GAAP EPS of $0.63 for Q1 were 4.5% lower than the prior-year quarter's $0.66 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 78.5%, 250 basis points better than the prior-year quarter. Operating margin was 23.2%, 150 basis points worse than the prior-year quarter. Net margin was 21.0%, 110 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $1.08 billion. On the bottom line, the average EPS estimate is $0.14.
Next year's average estimate for revenue is $4.27 billion. The average EPS estimate is $1.07.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 1,975 members out of 2,249 rating the stock outperform, and 274 members rating it underperform. Among 518 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 445 give Electronic Arts a green thumbs-up, and 73 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Electronic Arts is outperform, with an average price target of $19.51.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. 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.