EA makes $186m Q3 loss despite rising digital revenue

Packaged sales fell 18%, but digital revenue now 67% of total earnings

Electronic Arts made a loss of $186 million in the third fiscal quarter, despite strong growth in its digital business.

In the quarter ended December 31, 2017, EA earned $1.16 billion in revenue, essentially flat year-on-year. Packaged Goods revenue declined 18 per cent to $380 million, but that was balanced by a 14 per cent rise in Digital revenue, which reached $780 million for the quarter.

In Q3, EA's digital revenue accounted for 67 per cent of the publisher's entire earnings.

However, EA still made a loss of $186 million, versus a loss of $1 million in Q3 last year. The company's big release for the quarter was Star Wars Battlefront II, which experienced a rocky launch due to a public backlash over its use of loot boxes.

The only data point EA offered with regard to Battlefront II was about its single-player campaign, which almost 70 per cent of all players tried, the company said.

The most encouraging performance was related to FIFA, the console community for which grew to 42 million players by the end of the calendar year. FIFA Mobile, which uses a free-to-play business model, added 26 million players in Q3 alone, while FIFA Ultimate Team's player base increased by 12 per cent between the launch of FIFA 18 in September and the end of the third quarter.

"Through the fourth quarter and fiscal 2019, we'll be launching games across five different genres, on three different platforms, and to players around the world," said EA CFO Blake Jorgensen. "We expect growth in full-game downloads, subscriptions, extra content, and in our mobile business."

For the year ending March 31, 2018, EA expects to earn $5.1 billion in revenue, and $1.015 billion in net in profit.

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Latest comments (1)

Klaus Preisinger Freelance Writing 4 years ago
Page 9:
total revenue in the first nine months up $200 million compared to last year.
q3 revenue same as last year.

Page 11:
$107 million more spent on income taxes, go figure.
$105 million more spent on "other liabilities".

page 13:
$717 millions in profits for FY17
page 14:
$566 millions (369+197) made from "Live Services", up 20% from last year.

When EA said that the Battlefront drama wouldn't matter, they definitely did not lie, this report is probably exactly where EA wants it to be and where it was in previous years also. That loss is not due to reduced income, it is due to something within total control of EA. For the entire year ending in March, EA seems to to be heading where they were the past years. Which means, if you took away all of the so-called live services (i.e. stuff YouTubers get angry about), the company may not have any net income, but still pay for all the bills. EA is fine and lootboxes are the profit.

On the flipside, should lootbox legislation come down hard, profits are mostly wiped, which in turn mostly wipes dividends, which might make stock owners susceptible for that rumored Microsoft buyout. $20 billion for 51% of the stock is not that much, considering that Microsoft has $138 billion burning a hole in their pockets. If they wanted, Microsoft could easily buy EA, Ubisoft and Take2, ending third party games as we know it and really enforce a shift to GamePass.
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