EA Shares Drop After Company Reports Preliminary Third Quarter Results

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EA Shares Drop After Company Reports Preliminary Third Quarter Results

Electronic Arts Inc. (EA) recently revealed that its live services net bookings are likely to experience a mid-single-digit decline in the third quarter of the fiscal year, primarily due to a slowdown in the Global Football franchise. The initial anticipation of growth in net bookings was revised as this key franchise faced a slowdown, resulting in the company lowering its revenue and earnings projections for the current quarter.

EA highlighted that its Dragon Age franchise saw lower engagement levels during the quarter than anticipated, with only about 1.5 million players, a significant drop from the company's initial expectations. This unexpected outcome prompted EA to provide adjusted financial results for the third quarter, with a revenue forecast of $1.883 billion, falling short of previous estimates, and earnings expected to be $1.11 per share, aligning with analyst projections. Despite these challenges, CEO Andrew Wilson remains optimistic about the company's long-term strategy and expects a return to growth in fiscal year 2026. EA plans to release its full financial results for the third quarter on February 4.

In response to the preliminary results, EA's stock price tumbled by 8.56% in after-hours trading, settling at $130.16 per share, indicating investor concerns over the revised financial outlook. The company also adjusted its net bookings forecast for the quarter and provided a range for the fiscal year 2025, emphasizing the need to address the underperformance in key franchises to drive future growth.