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EA sales dip as year ends

EA sales dip as year ends

Tue 06 May 2014 9:03pm GMT / 5:03pm EDT / 2:03pm PDT
BusinessPublishing

Titanfall sells 925,000 in US as new deal reached to publish future installments; Need for Speed taking a year off

Electronic Arts today announced its fourth quarter and fiscal year results, and even though they weren't all improvements, the publisher was upbeat about its performance. EA CEO Andrew Wilson noted that it was a "transformative year" for the company, while CFO Blake Jorgensen noted the market itself was undergoing some turmoil.

"While navigating through a year of tremendous change in the industry, which included a challenging console transition, we were able to exceed revenue guidance, lower our operating expenses, double operating cash flows, and invest in new products and services for the future," Jorgensen said.

For the three months ended March 31, EA posted sales of $1.12 billion, down 9 percent year-over-year. Net income was headed in the opposite direction, up 13 percent to $367 million. For the full fiscal year, total revenues were down 6 percent to $3.58 billion, while net income slid from $98 million to just $8 million using generally accepted accounting principles.

When excluding the impact of other factors (like restructuring charges, stock-based compensation, strategic investments, and a one-time $48 million charge for expected litigation settlement and license expenses due to the NCAA Football dispute), EA's fiscal year home stretch looks a bit worse, while the campaign as a whole looks better. On a non-GAAP basis, the company posted fourth quarter revenues down 12 percent to $914 million, with a net income down 10 percent to $152 million. For the full year, total non-GAAP revenues were up 6 percent to $4.02 billion, while net income more than doubled to $534 million.

EA singled out some highlights for the year, saying it is the best-selling publisher on the PlayStation 4 and Xbox One systems in the Western world. On top of that, EA claimed responsibility for 40 percent of the total PS4 and Xbox One software sales in the West. The company's digital strategy also continued apace, as the DLC-driven Ultimate Team modes in its various sports games brought in more than $380 million for the full fiscal year, and mobile revenues nearly hit $460 million.

Breaking down the numbers a little deeper, digital revenues accounted for $491 million of EA's GAAP sales for the fourth quarter. Of that, $91 million came from full game downloads, while $212 million was attributed to add-on content. The mobile and handheld business brought in another $117 million, while subscriptions, advertising, and other digital revenue combined for $71 million.

For the current fiscal year, EA expects to improve on both its revenues and the bottom line. Net revenues are forecast at $4.38 billion on a GAAP basis, or $4.1 billion on a non-GAAP basis. Meanwhile the company expects earnings per share around $2.37 (GAAP) or $1.85 (non-GAAP). EA has also announced a stock repurchase program that will see the company buy back up to $750 million of common stock by May of 2016.

In a post-earnings conference call, Wilson said EA would be trimming its release slate for the current fiscal year as well. The company already confirmed it would be dropping its NCAA football series, but Wilson said the company is also giving Need for Speed a year off. A new version of Need for Speed is in development at Ghost Games (developer of Need for Speed: Rivals), but the team is being given more time to produce an innovative title.

When asked about sales of Titanfall, EA executives said the industry-tracking NPD Group had it selling through 925,000 units at US retailers. Additionally, Wilson said EA had entered into a new publishing agreement with developer Respawn to bring new Titanfall experiences to players worldwide.

[UPDATE]: An EA representative reached out to specify that the company's decline in non-GAAP net revenue for the year was "primarily due to the recognition of over $120 million in Battlefield 3 Premium revenue in last year's Q4."

12 Comments

No doubt there are pressures from investors and things I don't understand but I think I agree.
Having a new game in a franchise every year dilutes it (for me anyway). Even Ubisoft have done it with Assassins Creed. I barely get hold of the new one when the next is already announced. It puts a superficial kind of pressure on me to finish it quickly lest I be left behind.
Perhaps it's an issue for me because it feels like these things are less a labour of love and more obviously a cash cow hen they get updated every year rather than giving us a new IP.

PS I know AAA games aren't a labour of love and it's all about the money when it comes down to it but some devs still manage to make you feel like they care. Even if their true reasons for "caring" turn out to be financially driven anyway, theres still some spark of "we did this because we love it (plus we're making a load of money, bonus)" amongst some devs.

Posted:2 months ago

#1

Morville O'Driscoll
Games Blogger & Journalist

1,491 1,257 0.8
Popular Comment
It's amazing, why does EA have to rape its franchises
Urgh. Can we not use the word rape like this please? It's not fun to see the word (ever!), but at least let's limit it to its proper context. Thanks. :)
Having a new game in a franchise every year dilutes it (for me anyway).
It's... An odd one, I think. For me, it's hard to say whether the "yearly entry" system dilutes the quality, or whether there's other factors which are at work, which aren't as obvious. The Lego games, for instance, are generally of a high quality, even though they're (relative to some other franchises) churned out. I think it may be more noticable with EA (and Activision, too), because the bar for quality is lower than some other publishers. For instance, the past 3 Need For Speed games have been of varying quality (lower than the old Most Wanted, I feel), yet only now are EA leaving the franchise to rest for a year.

Edited 1 times. Last edit by Morville O'Driscoll on 7th May 2014 1:11pm

Posted:2 months ago

#2

Andreas Gschwari
Senior Games Designer

555 607 1.1
Not to derail, but Morville, here is a definition of the word "rape" from the oxford dictionary:
Spoil or destroy (a place):
‘timber men doubt the government’s ability to ensure the forests are not raped’
In a sense the word's second meaning can be extrapolated and used in this context.

Posted:2 months ago

#3

Morville O'Driscoll
Games Blogger & Journalist

1,491 1,257 0.8
True. :) But do we need to continue it's use in gaming culture? Considering all sides, I personally think it's better to use a word that isn't quite as (possibly) off-putting to half the population. Perhaps my issue with it is the fact that the rainforest is (in the wider scheme of things) important, so it's use to shock is valuable, whereas its use in talking about video-games... less so.

Meh. Anyways, I, too, do not wish to derail, so will end here. :)

Edited 2 times. Last edit by Morville O'Driscoll on 7th May 2014 4:06pm

Posted:2 months ago

#4

Peter Moore
Chief Operating Officer

15 94 6.3
Popular Comment
This could be one of the more inappropriate posts I have seen from a so-called industry colleague. You, sir, undoubtedly keep your human resources department fully engaged...

Posted:2 months ago

#5

Dave Smeathers
Senior Software Engineer

2 8 4.0
Popular Comment
I know AAA games aren't a labour of love and it's all about the money
No, you're completely wrong. I think you might have a slightly skewed idea of what it's like to work at EA. Funnily enough it's not all hot tubs and money fights.

Posted:2 months ago

#6

Nicholas Pantazis
Senior Editor

1,011 1,407 1.4
Congrats EA (and you directly Peter) on the generally positive results. Lots of interesting things coming up for you. I'm excited to see how Dragon Age: Inquisition turns out in particular, and I'm very much enjoying Titanfall on PC. I'll be looking forward to seeing what you guys have to show at E3.

Posted:2 months ago

#7

Robert Ilott
Build & CM Engineer

20 31 1.6
We had the hot tub put in on our floor just after you went to Fireproof Dave ;)

Posted:2 months ago

#8

Paul Jace
Merchandiser

869 1,277 1.5
Titanfall has unsurprisingly been selling well(I play it almost nightly on my 360) so far but I'm curious about the new Respawn deal. I guess we'll have to wait until E3 to find out more.

Edited 1 times. Last edit by Paul Jace on 8th May 2014 12:29am

Posted:2 months ago

#9

James Brightman
Editor in Chief

221 248 1.1
Farhang, your comments are neither insightful, nor productive. We expect better discussion on GI.biz than this.

Posted:2 months ago

#10

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