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Electronic Arts Misses Where it Counts

By Seth Jayson – Updated Apr 10, 2017 at 1:23PM

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Just the facts, Fool.

Electronic Arts (Nasdaq: EA) reported earnings on May 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q4), Electronic Arts beat slightly on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue expanded. Non-GAAP earnings per share grew significantly. GAAP earnings per share contracted.

Gross margins increased, operating margins contracted, net margins shrank.

Revenue details
Electronic Arts reported revenue of $1.04 billion. The 23 analysts polled by S&P Capital IQ looked for revenue of $1.03 billion on the same basis. GAAP reported sales were 12% lower than the prior-year quarter's $1.37 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.55. The 25 earnings estimates compiled by S&P Capital IQ predicted $0.57 per share. Non-GAAP EPS of $0.55 for Q4 were 224% higher than the prior-year quarter's $0.17 per share. GAAP EPS of $1.05 for Q4 were 13% lower than the prior-year quarter's $1.21 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 74.4%, 90 basis points better than the prior-year quarter. Operating margin was 25.6%, 210 basis points worse than the prior-year quarter. Net margin was 26.7%, 250 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $512.2 million. On the bottom line, the average EPS estimate is -$0.38.

Next year's average estimate for revenue is $4.09 billion. The average EPS estimate is $1.12.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 1,936 members out of 2,225 rating the stock outperform, and 289 members rating it underperform. Among 548 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 471 give Electronic Arts a green thumbs-up, and 77 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 $18.81.

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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.

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Stocks Mentioned

Electronic Arts Inc. Stock Quote
Electronic Arts Inc.
EA
$123.20 (2.79%) $3.34

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