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How Should Investors Approach EA Stock Post Q3 Earnings Results?
EAElectronic Arts(EA) ZACKS·2025-02-05 14:56

Core Insights - Electronic Arts (EA) reported a decline in earnings and revenues for the third quarter of fiscal 2025, with earnings per share at 2.83,down4.42.83, down 4.4% year over year, and revenues at 2.22 billion, down 6.38% year over year due to decreased Live services and full-game revenues [1][2]. Financial Performance - The Zacks Consensus Estimate for earnings was 2.99pershare,whiletherevenueconsensuswas2.99 per share, while the revenue consensus was 2.29 billion [2]. - Net bookings for the fiscal third quarter were 2.22billion,reflectinga6.42.22 billion, reflecting a 6.4% year-over-year decline, with minimal impact from foreign exchange [2]. - Full-game net bookings were 633 million, down 3% year over year, while Live services net bookings were 1.58billion,down81.58 billion, down 8% year over year [3]. - Full-game revenues accounted for 31.8% of total revenues, decreasing 3.1% year over year to 599 million, with full-game download revenues increasing 3% to 431million,andrevenuesfrompackagedgoodsplunging18431 million, and revenues from packaged goods plunging 18% to 187 million [4]. - Live services and other revenues, making up 68.2% of total revenues, decreased 3.2% year over year to 1.28billion[4].−Revenuesfromconsolesdecreased11.28 billion [4]. - Revenues from consoles decreased 1% year over year to 1.23 billion, while revenues from PC & Other and mobile platforms declined 7% year over year to 420millionand420 million and 296 million, respectively [5]. Operating Metrics - EA's GAAP gross profit increased 0.8% year over year to 1.43billion,withagrossmarginexpansionof300basispointsto75.81.43 billion, with a gross margin expansion of 300 basis points to 75.8% [6]. - Operating expenses decreased 0.1% year over year to 1.05 billion, but as a percentage of revenues, they expanded 170 basis points to 55.8% [6]. - Operating income on a GAAP basis increased 3.3% year over year to 377million,althoughtheoperatingmargincontracted130basispointsto20377 million, although the operating margin contracted 130 basis points to 20% [7]. Balance Sheet and Cash Flow - As of December 31, 2024, EA had 3.16 billion in cash and short-term investments, up from 2.56billionasofSeptember30,2024[8].−Netcashprovidedbyoperatingactivitieswas2.56 billion as of September 30, 2024 [8]. - Net cash provided by operating activities was 1.176 billion for the quarter and 2.110billionforthetrailing12months[8].−EArepurchased2.4millionsharesfor2.110 billion for the trailing 12 months [8]. - EA repurchased 2.4 million shares for 375 million during the quarter, totaling 10.1 million shares for 1.45billionoverthetrailing12months[8].DividendandGuidance−Thecompanydeclaredaquarterlycashdividendof19centspershare,payableonMarch19,2025,tostockholdersofrecordasofFebruary26,2025[9].−Forthefourthquarteroffiscal2025,EAexpectsGAAPrevenuesbetween1.45 billion over the trailing 12 months [8]. Dividend and Guidance - The company declared a quarterly cash dividend of 19 cents per share, payable on March 19, 2025, to stockholders of record as of February 26, 2025 [9]. - For the fourth quarter of fiscal 2025, EA expects GAAP revenues between 1.682 billion and 1.832billion,withearningspershareintherangeof65centsto1.832 billion, with earnings per share in the range of 65 cents to 1.00 [11]. - For fiscal 2025, EA anticipates revenues between 7.25billionand7.25 billion and 7.40 billion, with earnings per share between 3.9and3.9 and 4.25 [11].