Game publisher EA’s sales forecast tops estimates; shares rise

Earnings


Videogame publisher Electronic Arts‘ forecast fourth-quarter revenue above analysts’ estimates as it expects to gain from the launch of its mixed martial arts title, “UFC 3,” sending its shares up 6 percent in extended trading.

The third installment of the successful franchise is set to release later this week and is expected to make up for the underwhelming response to the “Star Wars” game, which was launched during the holiday season.

EA forecast revenue of $1.23 billion for the current quarter, topping Wall Street’s expectations of $1.18 billion.

“Many thought guidance would be lowered, and guidance was raised. That means nothing is wrong, and people were overly focused on ‘Star Wars’,” Wedbush Securities analyst Michael Pachter said.

The gaming community was outraged over the company’s pricing of in-game purchases for the “Star Wars Battlefront II” game, with many complaining that the option gave an unfair advantage to the well-heeled.

EA has temporarily disabled micro-transactions following the backlash, which may have dented the popularity of the title.

“We sold fewer units than we thought in the quarter. We thought we would sell roughly eight million units, we sold just a little under one million units less than that,” Chief Financial Officer Blake Jorgensen told Reuters.

The company had indicated in the past that it expected the game to replicate the success of the previous version that sold over 14 million units in the fiscal year 2016.

“We will continue to sell ‘Star Wars’ just at a slower pace than we originally thought,” Jorgensen said.

On an adjusted basis, revenue for the third quarter ended Dec. 31 was $1.97 billion. Analysts on average had expected $2.01 billion, according to Thomson Reuters I/B/E/S.

Net loss was $186 million, or 60 cents per share, in the quarter, compared with a loss of $1 million, or break-even per share, a year earlier. The latest quarter included an income tax related charge of $176 million.

Sales at EA’s high-margin digital business rose nearly 14 percent to $780 million as more gamers bought their titles online instead of purchasing physical copies from retail stores.



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