The 10-second takeaway
For the quarter ended Dec. 31 (Q3), Electronic Arts missed estimates on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue dropped significantly and GAAP loss per share dropped.
Margins grew across the board.
Electronic Arts logged revenue of $1.18 billion. The 23 analysts polled by S&P Capital IQ expected a top line of $1.29 billion on the same basis. GAAP reported sales were 13% lower than the prior-year quarter's $1.06 billion.
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 $0.57. The 24 earnings estimates compiled by S&P Capital IQ predicted $0.56 per share. GAAP EPS were -$0.15 for Q3 compared to -$0.62 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 53.5%, 550 basis points better than the prior-year quarter. Operating margin was -8.9%, 940 basis points better than the prior-year quarter. Net margin was -4.9%, 1,440 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $1.22 billion. On the bottom line, the average EPS estimate is $0.72.
Next year's average estimate for revenue is $4.07 billion. The average EPS estimate is $1.02.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 1,952 members out of 2,228 rating the stock outperform, and 276 members rating it underperform. Among 560 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 485 give Electronic Arts a green thumbs-up, and 75 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Electronic Arts is hold, with an average price target of $16.10.
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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 position in any of the stocks mentioned. 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