EA raises guidance off "excellent" Q2

The second fiscal quarter is historically the quietest stretch for Electronic Arts, but the three months ended September 30 gave the publisher reason for optimism heading into the crucial holiday season. The company today released its second quarter results, beating its net income guidance and showing strong growth in its EA Sports Ultimate Team efforts.

"Q2 was an excellent quarter for Electronic Arts, led by breakthrough new EA Sports titles engaging players across console and mobile," CEO Andrew Wilson said. "We are in an outstanding position for the quarter ahead, with two of the highest-rated games of this console generation in Battlefield 1 and Titanfall 2, global competitive gaming tournaments underway, and our first virtual reality experiences coming soon. Across all platforms, this holiday season will be a fantastic time to play."

While Battlefield 1 and Titanfall 2 launched after the second quarter, EA used the report to tout the games' early achievements. For Battlefield 1, the company said the total player base during the first week of release nearly doubled that of 2013's Battlefield 4. As for Titanfall 2, which just launched last Friday, the company said dozens of press outlets had given review scores the equivalent of a 90 out of 100 or above.

As for the releases actually covered by EA's second quarter results, they would include EA Sports mainstays Madden 17 and FIFA 17. The company said "20% more players were engaged" in FIFA 17 during its first week than in the first week of FIFA 16, but made no mention of specific performance for Madden. However, the EA Sports Ultimate Team game modes appear to be healthy, as EA said Ultimate Team's net sales between the FIFA, Madden, and NHL series are up 15% year-over-year on a trailing 12-month basis.

For the second quarter, EA reported net revenues of $898 million, up 10% from last year, but short of the $915 million it had given as guidance. However, the company's net loss for the quarter of $38 million was a significant improvement on the previous second quarter's net loss of $140 million, and better than the projected $51 million net loss.

EA gave the early performance of FIFA 17 and the holiday slate of releases as reason enough to adjust its full-year expectations, with the company now expecting net revenue for the year ending March 31, 2017 to be $4.775 billion, up from $4.75 billion. Net income for the year is also projected to reach $848 million, compared to the previous guidance of $809 million.

Update: On the earnings call, EA CFO Blake Jorgensen addressed the early feedback on Battlefield 1 and Titanfall 2, noting that it's too early to update any sales projections but that there's "incredible excitement" around both and the company is "very optimistic" not just for this holiday season but for the longer term. Citing the fact that "quite a few players" were still playing Battlefield 4 years after it released, Jorgensen said he expects similar long-term interest in both titles. More generally, looking at EA's business, Jorgensen is also encouraged by the opportunity that this generation's consoles and the mid-cycle upgrades affords a big publisher like EA since the console installed base is already up 33% in the West compared to the previous generation, he said.

Interestingly, when asked about one of EA's big upcoming titles, Mass Effect: Andromeda, Jorgensen effectively said that EA is not afraid to push the title back yet again (it was originally scheduled for 2016 but is now loosely slated for Q4, which ends next March). While that shouldn't be read as a sign of trouble - Jorgensen said Mass Effect is "tracking extremely well" - it appears EA wants to be 100% sure that the game does not need any additional time before it commits more fully to a release date.

Additional reporting by James Brightman