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Video game publisher Electronic Arts reported earnings that exceeded Wall Street targets today as it chronicled its first holiday selling season under new chief executive Andrew Wilson. But revenues fell short of expectations due to weaker sales of games for older Xbox 360 and PlayStation 3 consoles.

EA, one of the largest U.S. game publishers in a multibillion dollar industry, reported third-fiscal quarter non-GAAP earnings per share of $1.26 on revenue of $1.57 billion, compared with 57 cents on revenue of $1.18 billion a year ago.

Analysts expected to report non-GAAP revenues of $1.65 billion and earnings per share of $1.23. Analysts and investors viewed the results as a bellwether for sales of new Xbox One and PlayStation 4 consoles.

“EA’s third quarter marked an exciting start to a new generation of games, and we are proud to have been the No. 1 publisher on next-generation consoles in December, with millions of gamers across the globe playing EA titles on the PlayStation 4 and Xbox One,” said Wilson in a statement. “In addition to consoles, our mobile games, digital downloads,and live services are growing year-over-year as we continue to deliver exciting new experiences to gamers around the world.”


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EA is lowering its full-year fiscal results guidance to $3.91 billion, but it’s raising its earnings estimates to $1.30 per share for the year. For the fourth fiscal quarter ending March 31, EA expects non-GAAP revenues of $800 million and earnings of 9 cents a share.

The company said it was the No. 1 publisher on the Sony PlayStation 4 and on the Microsoft Xbox One. Top EA sellers were Battlefield 4, Madden NFL 25, FIFA 14, and Need for Speed Rivals.

EA also said that in December, FIFA 14 and Battlefield 4 were two of the top three best-selling titles on all platforms in the Western world, and FIFA 14 was the No. 1 title in Europe.

FIFA 14Before the earnings came out, Arvind Bhatia, an analyst at the firm Sterne Agee, estimated that EA was on track to meet both quarterly earnings targets and full-year fiscal year targets as well.

Bhatia believes that Titanfall, a mech shooter game coming out on March 11 from EA and developer Respawn Entertainment, has had strong preorders and will drive results in the next quarter. He noted that NPD physical retail sales data isn’t a good predictor of EA results because 40 percent of EA’s revenue now comes from digital sources, such as its Origin online store or mobile in-app purchases. But even so, NPD sales for EA looked good in December.

Meanwhile, Colin Sebastian of RW Baird wrote before the earnings came out that the coming quarters are important in terms of Xbox One and PlayStation 4 sales, which are coming off a strong fourth calendar quarter. And that impacts companies like EA.

Adam Krejcik of Eilers Research wrote before the earnings came out that there had been worry that EA would miss its targets and cut its full-year guidance because of a challenging retail sector and technical issues with Battlefield. He still expected EA to match guidance and consensus targets, with strong growth in both physical retail and digital game sales.

He noted that the hardware sales for the PlayStation 4 (4.2 million units shipped in) and the Xbox One (3.9 million units shipped in) were strong, and that the total by the end of the first calendar quarter should exceed 10 million units.

Before the earnings were out, Michael Pachter, an analyst at Wedbush Securities, wrote, “After a difficult start to the quarter, we expect EA to limp to guidance due to Battlefield 4’s staying power and the positive impact of the next-generation console launches.” He expected revenue of $1.675 billion and earnings per share of $1.23. He said that Madden NFL 25 and FIFA 14 also saw a lift from the next-generation console sales. Digital revenues are expected to be close to $1 billion in the quarter.

For the full year, he expects non-GAAP revenue of $4.0 billion and earnings per share of $1.25. He noted, “EA has the lineup to deliver revenue and EPS growth for at least the next two years.”

In the coming year, EA will launch titles such as UFC, FIFA World Cup, Dragon Age: Insurrection, and another shooter. And in fiscal year 2016, he expects Battlefield to return along with Mirror’s Edge 2 and Star Wars titles under license from Disney.

Meanwhile, third fiscal quarter digital net revenue increased by 27 percent year-over-year to $517 million. Trailing twelve-month digital net revenue was a record $1.86 billion.

EA’s mobile and handheld digital net revenue generated $125 million in the quarter, up 26 percent from a year ago. The Simpsons Tapped Out generated over $130 million in digital net revenue through Q3 fiscal 14.

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