(Reuters) – Electronic Arts Inc forecast tepid second-quarter revenue growth on Thursday, overshadowing quarterly results that topped analysts’ estimates and sending its shares down 7 percent in extended trading.
FILE PHOTO: An Electronic Arts (EA) video game logo is seen at the Electronic Entertainment Expo, or E3, in Los Angeles, California, United States, June 17, 2015. REUTERS/Lucy Nicholson/File Photo
The company said it expected adjusted revenue of $1.16 billion for the current quarter, down slightly from a year earlier, when sales were driven by “Battlefield 1”.
The timing of the recognition of bookings in Asia as well as foreign exchange weighed on the company’s forecast, EA added.
Analysts on average had expected revenue of $1.23 billion, according to Thomson Reuters I/B/E/S.
“Expectations may have been higher for second-quarter guidance and the Street may have expected an increase in annual guidance but we understand EA is conservative early in the year,” Consumer Edge Research analyst Raymond Stochel said.
The rise in popularity of games from the “battle royale” genre such as “Fortnite” is posing challenges to established game publishers, including EA, and rivals Activision Blizzard Inc and Take Two Interactive Software Inc.
EA said it expected the launch of new games, including “Madden NFL” and “Battlefield V”, in the coming months to take on some of those challenges.
For the first quarter, the company said “The Sims 4” player base grew 35 percent and the “FIFA World Cup” update had over 15 million unique players.
Chief Financial Officer Blake Jorgensen told Reuters that though EA had only two weeks of the World Cup in its first quarter, user engagement with FIFA was “extremely” high and that should help “FIFA 19” when it is launched in September.
EA reported revenue of $749 million on an adjusted basis for the latest quarter ended June 30, beating analysts’ average estimate of $742.42 million.
Net income fell to $293 million, or 95 cents per share, from $644 million, or $2.06 per share, a year earlier.
Excluding items, the company earned 13 cents per share, according to Reuters’ calculation, topping analysts’ estimate of 6 cents per share.
Shares of the company have risen nearly 40 percent this year.
Reporting by Pushkala Aripaka in Bengaluru; Editing by Shounak Dasgupta and Anil D’Silva