Market Overview

Electronic Arts Conference Call Summary

Electronic Arts (NASDAQ: EA) reported its first-quarter earnings Tuesday. Shares of the company are down 4.8 percent.

Below are some key takeaways from its conference call:

Growth and Performance:

• Around the world, more than 300 million registered players are engaging with the long-lasting entertainment provided by EA's Games and services today.
• In the last quarter gamers played more than 13.6 billion online sessions of EA Games for a total of nearly 2.4 billion hours played across console,
• To put that in context that's more than 3,000 years of game play every single day.
• On screens from six inches to 60 inches for sessions of two minutes to two hours or more, EA continues to deliver outstanding entertainment to players.
• Players also continue to get new and fresh experiences in live services for our top EA mobile games where we drew more than 140 million monthly active players in Q1.

Financials:

• Starting with our Q1 results, EA's non-GAAP net revenue was $775 million, which was 57 percent higher than prior-year's results and 11 percent above our guidance.
• Our non-GAAP digital net revenue for the quarter increased by 28 percent year-over-year to $482 million and accounted for more than 60 percent of this quarter's revenue.
• The trailing 12 month digital revenue was up 10 percent to a record $1.9 billion.
• Breaking down our digital revenues into its key components highlights the performances of each of these businesses.
• Extra content and free-to-play contributed $211 million, up 19 percent over the prior year, led by sustained momentum and approaching 90 percent growth in our Ultimate Team businesses.
• Mobile generated $120 million for the quarter, up 18 percent over the prior year.
• Smartphones and tablets continue to represent the majority of the revenue, accounting for $109 million or 90 percent of our total mobile revenue.
• Mobile generated $120 million for the quarter, up 18 percent over the prior year.
• Smartphones and tablets continue to represent the majority of the revenue, accounting for $109 million or 90 percent of our total mobile revenue.
• Going into a little more detail, we break out our mobile revenue into two streams.
• First, digital extra content and advertising revenues, which is also known as freemium and second, full game or one-time download revenues, also known as premium.
• In the quarter, $105 million or 87 percent of our mobile revenues.
• Premium full game downloads were $15 million down 43 percent compared with the prior year.
• Full game PC and console downloads represented $71 million, up nearly 90 percent over the prior year.
• Subscriptions, advertising and other digital revenue contributed $80 million, up 31 percent over the same period last year.
• Moving on to gross margin, our non-GAAP gross margin for the quarter was 70 percent, an increase from last year's 64 percent and better than our guidance of 67 percent.
• During Q1, we repurchased 1.4 million shares at a cost of $50 million. As a reminder, our $750 million stock buyback program was initiated in May and has a two year timeframe.
• Turning to Q2 guidance, GAAP net revenue is expected to be $965 million as compared to $695 million in the prior year.
• GAAP loss per share is expected to be $0.12 as compared to $0.89 loss per share in the prior year.
• Our non-GAAP net revenue for the quarter is expected to be $1.14 billion, a 10 percent increase over last year's $1.04 billion.
• We expect our total non-GAAP operating expenses to be $530 million.

Posted-In: Earnings News Guidance

 

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