EA reported adjusted earnings per share of 97 cents on revenue of $1.277 million. That compares to analyst expectations of adjust EPS of 80 cents on revenue of $1.23 billion. In after-hours trading, EA’s stock price was up 1.7% to $96 a share.
“It was an excellent second quarter for Electronic Arts. Our new EA Sports titles are thrilling core fans and bringing in new players, and our ongoing live services are growing with deeply-engaged communities,” said CEO Andrew Wilson, in a statement. “With new games like Star Wars Jedi: Fallen Order, Need for Speed, Plants vs. Zombies and more great content across our top franchises, we’re set to deliver a lot of fun and excitement to players this holiday season, and continue our momentum in this fiscal year.”
Before the earnings came out, analyst Colin Sebastian of Baird Equity Research said that he believed that the revenue trends for Apex Legends appeared better than the general sentiment suggested. He expected that FIFA 20 and Madden NFL 20 sales would help results in the quarter.
In fact, Apex Legends reached 70 million players in the quarter, EA said. Apex Legends developer Respawn Entertainment recently launched the third season of the free-to-play battle royale game, and that could help keep it competitive against rivals such as Fortnite.
Michael Pachter, analyst at Wedbush Securities, noted that EA raised its year-end earnings guidance in part because it bought back a lot of shares in the quarter.
EA launched Plants vs. Zombies: Battle for Neighborville (a multiplayer shooter) during the quarter. And on November 15, during EA’s third fiscal quarter, it’s launching the highly anticipated Star Wars Jedi: Fallen Order, which is coming out ahead of Star Wars: Rise of Skywalker.
Analysts had expected adjusted earnings of 86 cents a share and revenue of $1.25 billion.
“The strong results this quarter illustrate the power of our live services and our core franchises. Strength in Ultimate Team, The Sims 4 and FIFA Online drove live services performance above our expectations,” said Blake Jorgensen, EA chief financial officer, in a statement. “Looking ahead, we are doubling down on live services combined with our core franchises. We’re investing in games that people play for longer and engage with much more deeply. This focus will continue to drive growth and profitability for the company through the remainder of this year and beyond.”
Digital net bookings hit $3.88 billion for the past 12 months, up 8% from a year earlier, and it now represents 78% of total net bookings.
The number of FIFA Ultimate Team unique players increased 22% year-over-year. The number of Madden Ultimate Team unique players increased 19% year-over-year. And The Sims 4 monthly average players are up more than 40% year-over-year.
During the three months ended September 30, 2019, Switzerland changed its income tax rates. As a result, EA has recognized an income tax benefit of $1.705 billion, or $5.74 of earnings per share, during the fiscal year ending March 31, 2020. EA recognized $1.08 billion, or $3.61 of earnings per share, of this income tax benefit during the three months ended June 30, 2019 and $625 million, or $2.11 of earnings per share, during the three months ended September 30, 2019.
For the full year, EA said GAAP net revenue is expected to be $5.41 billion, while net income is expected to be $2.841 billion, with $1.705 billion of that related to the one-time income tax benefit. For the third fiscal quarter ending December 31, EA expects earnings per share of 92 cents on revenue of $1.51 billion.