Q3 profit played nice, but the video game maker’s weak guidance sinks stock
Video-game maker Electronic Arts enjoyed a helping hand from Hans Solo and company, with its “Star Wars Battlefront” game helping turn in solid fiscal third-quarter earnings Thursday.
But investors paid more attention to EA’s outlook and revenue.
With the company predicting revenue and earnings below expectations in the current period, shares sank 7.1 percent to $64.80 in after hours trading.
CEO Andrew Wilson trumpeted “the stunning visuals and gameplay” of its “Star Wars Battlefront” title and noted strength from its football gadget game Madden NFL Mobile.
Last month, however, EA cut the price of “Star Wars Battlefront,” raising worries about weak demand.
Though the latest period included the holiday shopping season, the current quarter tends to be when gamers purchase extra goodies like expansion packs and virtual items with gift cards given as presents.
Overall in the period ended Dec. 31, EA reported an adjusted profit of $1.83 a share, besting the $1.81 expected by Wall Street analysts on average.
Adjusted revenue rose 26 percent to $1.803 billion, versus Wall Street’s estimate for $1.805 billion.
Looking forward, the company said its adjusted earnings would be about 40 cents a share in the current period on adjusted revenue of about $875 million. Analysts on average were predicting 50 cents and $915 million.
EA, like other video-game makers, focuses on adjusted numbers because U.S. accounting rules spread sales out over the lifetime of new content for a game.