Electronic Arts Inc’s second-quarter revenue edged past analysts’ estimates and the videogame publisher raised its full-year revenue and profit forecast, indicating strong interest for its recently launched games.
“FIFA 17,” the newest version of EA’s top-selling soccer franchise, debuted at the end of September, while the company launched the highly anticipated “Battlefield 1” and “Titanfall 2” shooter games in October.
Those games will face competition from Activision Blizzard Inc’s “Call of Duty: Infinite Warfare” and Ubisoft Entertainment SA’s “Watch Dogs 2”, which will be released in time for the holiday-shopping season.
“We’ve always tended to be conservative this time of the year, but at the same time, more optimistic,” EA Chief Financial Officer Blake Jorgensen said in an interview.
While EA’s adjusted revenue forecast for the key holiday-shopping quarter was slightly below analysts’ estimates, Jorgensen said the current quarter would most likely generate the biggest cash flow in the company’s history.
EA’s shares initially fell more than 3 percent in extended trading on Tuesday after the company issued its results, before reversing course to trade up 6 percent at $82.50.
Wedbush Securities analyst Michael Pachter attributed the initial dip in EA’s shares to investors’ “complete confusion” over how to reconcile the company’s adjusted figures.
U.S. financial regulators have issued new guidelines saying that deferred revenue from games with online components should be accounted for over however long people play the games – typically six to nine months.
EA and other publishers typically used to adjust their quarterly revenue for the impact of such deferrals.
“The SEC isn’t doing investors any favors,” Pachter added.
EA edged up its full-year revenue forecast to $4.78 billion from $4.75 billion and adjusted revenue forecast to $4.93 billion from $4.90 billion.
It said it now expects to earn about $2.69 per share in the year ending March, up from its prior forecast of $2.56.
Still, EA’s adjusted revenue forecast of about $2.04 billion for the holiday-shopping quarter missed analysts’ estimates of $2.08 billion, according to Thomson Reuters I/B/E/S.
EA could be conservative with its forecast due to its rivals’ upcoming launches, Pachter said in a pre-earnings note.
The company’s adjusted revenue was $1.10 billion in the second quarter ended Sept. 30. Analysts were expecting $1.09 billion.
EA’s loss narrowed to $38 million in the quarter from $140 million a year earlier.
Up to Tuesday’s close, EA’s shares have risen 13.3 percent this year.