Electronic Arts Posts Better-Than-Expected Q4 Earnings, Revenues

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Source: Electronic Arts

The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.

EA (NASDAQ:EA) delivered sharply higher-than-expected revenues and earnings for Q4. The company delivered EPS of 48 cents compared to our estimate of 10 cents, the consensus estimate of 11 cents, and guidance of 10 cents. Revenues were higher than we expected, and gross margin sharply higher, as the EPS upside came primarily from cost control and a better mix of digital revenues.

EA provided initial guidance for FY:15, expecting $1.85 in EPS on revenues of $4.1 billion. The company’s revenue guidance reflects $300 million in digital revenue growth, $200 million in packaged goods sales declines, and flat operating expenses. We expect some upside to guidance, as we believe that packaged goods may be closer to flat for the year.

We believe EA has the lineup to deliver solid revenue and EPS growth in its out year. With the return of Battlefield and Need for Speed, EA is positioned to deliver significant revenue growth in FY:16. We expect digital revenues to grow by at least $200 million per year and believe that EA can grow its overall revenues by $400 million next year. Assuming it keeps its costs in check, the company should be able to deliver 50 cents or more in EPS growth in FY:16.

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