Electronic Arts reports profit miss, stock up on $1 bln buyback announcement

February 05, 2025 10:05 PM AEDT | By Investing

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Electronic Arts reports profit miss, stock up on $1 bln buyback announcement

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Investing.com -- Electronic Arts Inc (NASDAQ:EA) reported quarterly earnings below Wall Street estimates and issued a weaker-than-expected outlook for the fourth quarter. Though the stock was trading up around 2% in premarket trading Wednesday after a $1 billion share repurchase announcement.

The company posted earnings per share of $2.83 for the third quarter, missing analysts’ average estimate of $2.88. However, bookings for the quarter stood at $2.22 billion, slightly above expectations of $2.21 billion.

For the fourth quarter, EA projected earnings between $0.76 and $1.17 per share, well below the consensus estimate of $1.35. It also forecast bookings in the range of $1.44 billion to $1.59 billion, missing analysts’ expectations of $1.65 billion.

The company reaffirmed its full-year outlook but set the high end of its earnings and bookings guidance below consensus. EA said it expects fiscal 2025 earnings between $6.25 and $6.65 per share, compared with estimates of $6.69, and bookings between $7 billion and $7.15 billion, versus the consensus of $7.15 billion.

The outlook follows the company's recent cut to its annual bookings forecast, attributing the revision to sluggish in-game spending on "FC 25" and weaker-than-expected performance of its new Dragon Age release.

Bank of America (NYSE:BAC) analysts said the recent FC weakness was likely due to gameplay tuning issues, which reduced engagement among hardcore players and may have affected new player acquisition. While analysts see game design missteps as more easily fixable than structural challenges like market saturation, they note concerns that fewer FC 24 players upgraded to FC 25 and that the overall player base remained flat year-over-year, highlighting "the challenge in player acquisition."

"We think the burden is now on EA to demonstrate FC is still a consistent mid-single-digit grower long-term," analysts led by Omar Dessouky added.

EA announced a $1 billion accelerated stock repurchase plan. "As we build on this momentum across EA, we are confident in a return to growth in FY26 and beyond as we bring our next wave of iconic entertainment to players and fans worldwide," CEO Andrew Wilson said.

Pratyush Thakur contributed to this report.

This article first appeared in Investing.com

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