Electronic Arts 3Q15 Earnings in Review
EA Reported 3Q15 Earnings: Working towards Digital Transformation (Part 1 of 17)
Earnings review
On January 27, 2015, Electronic Arts (EA) reported its fiscal 3Q15 results. The company posted $1.43 billion in revenue and non-GAAP (generally accepted accounting principles) earnings per share, or EPS, of $1.22.
On a YoY (year-over-year) basis, EA’s third-quarter revenues grew 39% to $1.43 billion, beating Wall Street’s forecast $1.29 billion by $140 million. EPS, too, beat the market’s forecast $0.92 by 30 cents. This was the seventh consecutive quarter that the company exceeded market expectations.
To gain exposure to Electronic Arts, you can consider investing in the PowerShares QQQ Trust, Series 1 (QQQ) and the Sector SPDR Trust SBI Interest (XLK). EA makes up about 0.35% and 0.47% of these ETFs, respectively.
Operating performance and margins
Electronic Arts generates its revenues primarily from packaged goods and content in the digital space. In 3Q15, packaged goods contributed $735 million, an increase of 30% YoY.
Meanwhile, digital revenues contributed $693 million, an increase of 34% YoY. In the digital segment, revenue rose to the following levels:
game downloads – $140 million, or a 22% increase
subscriptions, advertisements, and other revenue – $100 million, or a 52% increase
extra content – $314 million, or a 47% increase
mobile – $139 million, or a 13% increase
For more on the company’s revenues, read Investing in Electronic Arts: A must-read business overview.
Top publisher on major gaming platforms
According to EA, in fiscal 2014 it was the world’s top publisher on Sony (SNE) PlayStation and Microsoft (MSFT) Xbox consoles. In 3Q15, Xbox One–PS4 revenue rose to $593 million, an increase of 51% YoY. Meanwhile, Xbox 360–PS3 revenue fell to $412 million, a decline of 42% YoY.
Geographically speaking, North America accounted for 42% of overall revenues, and international markets, 58%.
Browse this series on Market Realist: