EA stock rises on earnings as gaming pandemic boom slows
Yahoo Finance's Dan Howley breaks down the latest earnings for Electronic Arts as the company expects to create three Marvel video games and the overall industry begins to slow.
Video Transcript
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BRIAN SOZZI: All right, we're also watching Electronic Arts shares. They're on the move. The video game maker still confident that consumers will keep gaming despite economic headwinds. For more, our tech editor Dan Howley joins us. Dan, I think a lot of anticipation for Electronic Arts, I'm sure, ahead of the World Cup. They talked a little bit about this on the earnings call last night.
DAN HOWLEY: Yeah. They-- so let's just go over the numbers real quick. They had missed on earnings per share and revenue. And they had seen net bookings that were 1.75 billion, that's compared with 1.85 billion in the year ago quarter. That is to kind of be expected after this huge explosion that we saw in the gaming industry throughout the pandemic.
So there's going to be a drop. The bigger issue here, I think, for them is what they're expecting for the full fiscal year. And they've revised those numbers Downward. They think that they're going to get between 2.79 and 2.8 billion-- sorry, the expected revenue was supposed to be 7.6 billion to 7.8 billion. That's down 50 million from what they had previously said.
And then total bookings, they're expecting between 7.65 and 7.85 billion. That's down from the 7.9 and 8.1 billion. So they're expecting less spending. They're saying that that's a mix of things, including the currency headwinds as well as people may be pulling back.
They did, yes, with the World Cup-- they had their largest launch ever for "FIFA" as far as "FIFA 23" goes. They said they had 10.3 million players in its first week, which is absolutely huge. They also have other franchises that are continuing to play. There's "Apex Legends," people still like that.
They did have their latest "Battlefield" title come out, which was-- hoo, boy-- an absolute stinker. I mean, it just was not good. It was broken right out of the gate. And they're trying to fix that. And you feel bad for the developers that put time into that. But I mean, that's just not going anywhere.
And then going forward, they do have some titles coming out. They have "It Takes Two" coming out for the Nintendo Switch. That's more of like a friendly-- like my wife and I would play it. It's not something that's going to really drive sales.
They have a new "Need for Speed" game coming out in December, not going to be absolutely massive. They have a remake of the game "Dead Space," but that's coming in January. So there's some big games.
Then you start going into further into 2023, and there's more titles there. There's a new Star Wars game. That tends to do well for them. But there's nothing that I'm really seeing on their upcoming games that really just is going to knock my socks off. I think they're a company that, they're so heavily reliant on their sports section.
And look, people buy "Madden" every year. And I don't know why.
BRIAN SOZZI: It's a great game!
JULIE HYMAN: I'm just confused why the stock is up.
DAN HOWLEY: I think--
JULIE HYMAN: Because the numbers, eh-- they weren't that exciting.
BRIAN SOZZI: The global numbers seem to be pretty good.
JULIE HYMAN: Yeah, but the forecasts are kind of meh. I don't know.
DAN HOWLEY: I think it's that they're-- the mobile numbers aren't as bad as they could have been. Competition as far as games this holiday season is going to be kind of light. The big one coming out is the new "God of War" game. That's a PlayStation exclusive, though, so it's not going to hit on Xbox or anything anytime soon.
But you know it probably is having to do with the mobile aspect. And then it's not as bad as they thought it could be. But like I said, nothing really here that's going to knock my socks off as far as upcoming titles.
It's just-- Activision-Blizzard still has a lot. Take-Two still has-- I mean, look "Grand Theft Auto V" is 8 million years old, and it's still printing money for them.
BRAD SMITH: As you were running through the reception of some of those core titles, many of them being household names, I was looking at some data that came out yesterday. "Call of Duty Modern Warfare 2" has become the number one selling opening weekend ever in the franchise, $800 million through the first three days from its release on October 28.
With that in mind, what do we expect of this particular holiday season, as we were just breaking down where the consumers might be starting to pull back in some spending categories? Is that the same in gaming as well?
DAN HOWLEY: I think gaming, there's always talk about is it-- I mean, obviously everything, there's talk about is it recession-proof. I think with gaming in particular, the titles may be less apt to suffer, the actual game sales. They are $60 bucks, so maybe people won't be buying as often. But there are sales that are just bonkers now.
You wait a month after a title comes out. And it goes from $70 bucks to $20 bucks. So I mean, sure that means that the companies aren't doing as well on margin there, but it does mean that the sales are going through. And then the bigger thing is what they have to offer as far as online play. And then that's where your net bookings come in. And that'll start to really blow up for people.
I think for Activision Blizzard and "Call of Duty," that's another title that just prints money for them. And they're going to have their online game that's-- they have the multiplayer aspect going on. But then they're going to have modern-- "Warzone 2," which really blew up at the height of the pandemic, or at the onset of the pandemic. This is the sequel to that. I still play it every Friday. I get a couple of White Claws and play it with my friends.
BRIAN SOZZI: Wow.
DAN HOWLEY: I'm going to keep doing that.
BRAD SMITH: Yes.
DAN HOWLEY: So I'll be on there as well. But I think there are some titles that are going to continue to do well. Really, for a lot of companies, they look at the online games, and they say, this is a continuing revenue stream. They look at the single player games, and they say, it's not really going to do as well.
But then, honestly, on balance, you can look at some of these single player games and say, oh, they blew everyone else out of the water. So I'm looking at "God of War, Ragnarok," and thinking that could be one of those games.
BRIAN SOZZI: Link up with me on Xbox, Dan. We can play some "NBA Jam." I'm really good at that game.
DAN HOWLEY: Oh, baby. SNES?
BRIAN SOZZI: We're always on fire. That's what we do.
DAN HOWLEY: Ooh.
BRIAN SOZZI: Young man, gaming expert, Dan Howley.
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