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EA Q4 and FY 2020 Earnings Top Expectations as Live-Service Games Prove Immune to COVID-19

May 5
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Electronic Arts (NASDAQ:EA) have delivered their results for the quarter ending March 31, 2020, and it seems like the company has weathered the early onset of the COVID-19 pandemic well. Net revenue was up year-on-year and above expectations at $1.39 billion and net income was $418 million, up double from $209 million in Q4 2019. Earnings per share are $1.43, above the $1.20 per share financial analysts were predicting. For the full FY 2020, EA delivered total revenue of $5.54 billion and net income of $3.04 billion, well above the $1.02 billion in revenue they delivered in FY 2019. Despite the better-than-expected results, EA’s stock has still dropped over 6 percent in after-hours trading. Perhaps investors simply aren’t buying EA’s rosy FY 2021 outlook.

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New and Old Stars Score Big

As always, EA’s bedrock money makers, FIFA, Madden, and The Sims 4, continued to deliver. FIFA 20 has over 25 million players to date, and Madden NFL 20 is recording the highest player engagement numbers in the franchise’s storied history. Additionally, the ridiculously-resilient casual gaming favorite The Sims 4 continues to grow its playerbase quarter-by-quarter, further building on the 20 million player mark they achieved in Q3 2020.

But there are also some new stars on EA’s roster. As the publisher predicted, Star Wars Jedi: Fallen Order managed to surpass the 10-million-copies-sold mark in Q4 2020, and the recent release of new “May the 4th” content should provide a further boost in sales and engagement. Meanwhile, Apex Legends was the most-downloaded free-to-play game on consoles in the calendar year 2019. Of course, all these successful properties, with the exception of Star Wars Jedi, have been designed to generate a steady steam of live-service cash for EA.

EA Shakes Off COVID-19

While not exactly bragging about it, much like Microsoft, EA has admitted the COVID-19 will likely be of benefit to them and their lineup of long-tail live-service games. According to EA, they have “have experienced, and are continuing to experience, heightened levels of engagement and live services net bookings growth to date,” which isn’t exactly surprising. With most real-life events cancelled, a lot of sports fans are filling the gap with games like FIFA and Madden.

Of course, no company is completely immune to the challenges presented by COVID-19. All of EA’s global workforce are currently working from home, which could result in new games and DLC missing release dates, but so far, the company seems confident they can remain on track. Unlike other publishers, like Microsoft, Sony, and Ubisoft, EA has yet to announce or warn of any delays.

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Reliability in an Unreliable World

Electronic Arts is predicting revenue of $1.220 billion and net income of $270 million in Q1 2021, and revenue of $5.550 and net income of $978 million for the full FY 2021. In other words, despite the ongoing uncertainty in the world, EA expects their business to hold steady, and even increase over the next year.

EA can likely deliver a strong year by simply continuing to lean on FIFA, Madden, The Sims, and Star Wars, but it will be interesting to see what else they might be able to deliver this fiscal year. EA has said they’re focusing on new IP creation, with several new franchises currently “incubating” behind closed doors, and before the pandemic hit, they were planning to release 14 new titles in FY 2021. Of course, many of those may have been delayed.

What exactly EA is working on, and their plans for the upcoming Xbox Series X and PlayStation 5 consoles, remains a bit of a question mark. Here’s hoping the publisher’s big EA Play event scheduled for June provides a decent overview. In the meantime, EA CEO Andrew Wilson promises their loyal (and lucrative) current players will continue to be the focus…

We’re humbled to see people around the world connecting through our games during this unprecedented period. Our focus continues to be on everything we can do for our people, our players, and our communities. Thanks to the amazing dedication and determination of our teams at Electronic Arts, we’re able to deliver the games, experiences and content choices that our players are looking for during this challenging time.

Despite some investor uncertainty, Electronic Arts should continue to be a solid money-making machine at a time when people are desperately looking for reliability. Here’s hoping they don’t let the current world situation stifle their ambition and creativity, because if they also deliver some successful new IPs over the next year or two, they could come out of this mess stronger than they were before.

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