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Electronic Arts is living well on live services. It didn’t have a major game launch during the first fiscal quarter that ended June 30, but it still beat analysts estimates for both revenues and earnings during this period.
The reasons have to do with ongoing revenue from existing games such as Battlefield 1, FIFA 17, Star Wars: Galaxy of Heroes, and The Sims (which saw a surge of players). The story isn’t so different from companies like Take-Two Interactive, which expects to have a good year even though it delayed its major release, Red Dead Redemption, until next year. Analyst Michael Pacther at Wedbush Securities said the results were in-line with expectations, with a slight upside to the earnings results.
“We have built strong momentum, and now we are accelerating into a year of tremendous innovation, where extraordinary new games, content-rich live services, and expanding global competitions will deliver more fun for our players and fuel growth for Electronic Arts,” said EA CEO Andrew Wilson in a statement.
Chief financial officer Blake Jorgensen echoed Wilson, saying that event-driven live services drove the quarter’s revenues. For instance, FIFA Ultimate Team is a feature of FIFA 17, EA’s hugely popular soccer game, and its total unique population grew 11 percent from a year ago. That means more people are playing the game, and that results in higher overall revenue from item purchases in the existing game.
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Meanwhile, the FIFA Mobile unique player base grew to 95 million, Battlefield 1’s population grew to 21 million in the quarter, and The Sims 4 on PC monthly active players grew 20 percent. NBA Live Mobile also grew to more than 70 million unique users. Each of these titles is growing due to ongoing live events, rather than brand new game launches.
Analysts expected EA to report adjusted profits of 27 cents a share on revenue of $768.5 million in the first fiscal quarter ended June 30. U.S. accounting rules require video game companies defer revenue from some online games, which is why the GAAP numbers aren’t as useful as the adjusted numbers. EA expected about $1.43 billion in GAAP revenue, up from $1.27 billion a year ago. Under GAAP, EA expected a profit of about $1.93 a share, up from $1.40 a year earlier. Actual GAAP results were $1.45 billion in GAAP revenue and 2.06 a share in earnings per share.
Mass Effect: Andromeda released at the end of March, but the bulk of its sales likely happened in the first fiscal quarter. The previous title, Mass Effect 3, sold an estimated 6 million copies. Andromeda scored a disappointing 73 out of 100 on review aggregator Metacritic, while its predecessor Mass Effect 3 scored much better at 89.
EA recently shook up its BioWare division, which made Mass Effect: Andromeda, as former lead Casey Hudson returned to replace Aaryn Flynn as general manager of the studio. EA didn’t mention Mass Effect: Andromeda revenue at all in its press release.
At the end of its fiscal year last quarter, EA said it expected fiscal 2018 revenue of about $5.1 billion and earnings per share of $3.57. That guidance is unchanged.
For the fall, EA has a big title coming on November 17: Star Wars Battlefront II.
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