Electronic Arts (EA), one of the world’s leading video game publishers, recently shared its latest quarterly earnings report, which fell short of expectations. The company attributed this underperformance primarily to the slower-than-anticipated start of two highly anticipated titles: Dragon Age: The Veilguard and EA Sports FC 25. These games, which were expected to be major contributors to EA’s revenue, failed to meet the company’s projections, leading to a revision in its financial outlook for the fiscal year.
The preliminary results, announced on January 22, revealed that EA Sports FC 25, which launched on September 27, experienced a slowdown in momentum. While the game started strong in the third fiscal quarter, its performance did not sustain through the end of the quarter. This was a significant disappointment for EA, as the EA Sports FC franchise has historically been a reliable source of revenue. The company classifies its football-related revenue under the category “Global Football,” distinguishing it from its “American Football” segment, which includes titles like Madden and College Football. Despite this, the underperformance of EA Sports FC 25 has raised concerns about the franchise’s ability to maintain its dominance in the sports gaming market.
Another major contributor to EA’s disappointing results was Dragon Age: The Veilguard, which launched on October 31. The game attracted only 1.5 million players during the October-December quarter, nearly 50% fewer than what EA had anticipated. This underwhelming reception has been a blow to the company, especially given the long-standing popularity of the Dragon Age series. The poor performance of the game has also had repercussions beyond the financial realm. BioWare, the EA-owned studio behind the Dragon Age series, recently laid off a portion of its staff as part of a broader realignment of its operations. This move has sparked concerns about the future of the studio and the potential impact on its ability to develop high-quality games moving forward.
In light of these challenges, EA has revised its financial outlook for the fiscal year ending in March. The company now expects net bookings to fall between $7 billion and $7.2 billion, down from its previous estimate of $7.4 billion to $7.7 billion. This downward revision reflects the struggles faced by its latest titles and the broader uncertainties in the gaming market. For the fourth fiscal quarter, which runs from January to March, EA projects net bookings to range between $1.4 billion and $1.6 billion, with net revenue estimates falling between $1.7 billion and $1.8 billion. The company also forecasted diluted earnings per share (EPS) to be between 65 cents and $1.00, with net income expected to range from $171 million to $263 million.
These projections fall short of Wall Street’s expectations. Analysts had anticipated EA to report GAAP EPS of $1.08 on $2.34 billion in revenue. However, EA reported non-GAAP results of diluted EPS of $1.11 on $2.2 billion in net bookings, which, while slightly better than expected, still underscores the challenges the company is facing. Despite these setbacks, EA’s leadership remains optimistic about the company’s long-term prospects. CEO Andrew Wilson highlighted the success of the EA Sports FC 25 Team of the Year event, which demonstrated the company’s ability to innovate and execute at scale. Wilson expressed confidence in EA’s ability to return to growth in the next fiscal year and beyond, citing the company’s pipeline of upcoming titles and its commitment to delivering iconic entertainment to players and fans worldwide.
In addition to its financial revisions, EA also announced plans to repurchase up to $1 billion of its stock through an accelerated share repurchase program. This move is part of a broader $5 billion authorization and is expected to bring the total stock repurchases to $2.5 billion within the first year. CFO Stuart Canfield emphasized that this initiative reflects the company’s confidence in its long-term strategy and its ability to balance investments in growth with capital returns. While this announcement may signal a shift in EA’s focus toward shareholder value, it also raises questions about the company’s priorities amid its current challenges. With the gaming industry continuing to evolve and compete at an unprecedented pace, EA will need to leverage its creative teams’ ability to adapt and innovate if it hopes to regain its footing and deliver on its promise of growth in the years to come.
