Electronic Arts (EA) to Report Q3 Earnings: What's in Store?
Electronic Arts EA is set to report third-quarter fiscal 2023 results on Jan 31.
For third-quarter fiscal 2023, EA expects GAAP revenues between $1.825 billion and $1.925 billion and earnings in the range of 43-59 cents per share.
For the quarter, the Zacks Consensus Estimate for earnings has remained steady at $3.04 per share in the past 30 days. The figure indicates a 4.1% decline from the year-ago quarter’s reported figure.
The consensus mark for revenues, pegged at $2.5 billion, suggests a 3.1% decrease from the year-ago quarter’s reported figure.
The company’s earnings beat the Zacks Consensus Estimate once in the trailing four quarters and missed thrice, the average negative surprise being 3.76%.
Let’s see how things have shaped up for this announcement.
Electronic Arts Inc. Price and EPS Surprise
Electronic Arts Inc. price-eps-surprise | Electronic Arts Inc. Quote
Factors to Consider
Slow yet steady demand for EA’s digital and live services across its portfolio are expected to have reflected upon active user growth in the fiscal third quarter.
In the to-be-reported quarter, Electronic Arts celebrated a record-breaking launch of EA SPORTS FIFA 23 with more than 10.3 million players within the first week, signaling the biggest launch period in EA SPORTS FIFA franchise history.
Electronic Art released Need for Speed: Unbound, the street racing game and It Takes Two, winner of more than 90 awards including The Game Awards and DICE’s Game of the Year, on Nintendo Switch.
However, decline in active users post coronavirus lockdown due to resumption of work from office and outdoor entertainment are expected to have dented net bookings growth year over year in the to-be-reported quarter. Net bookings decreased 5.2% year over year to $1.75 billion in the fiscal second quarter.
The company expects net bookings to be between $2.425 and $2.525 billion in the fiscal third quarter of 2023. The Zacks Consensus Estimate for bookings is currently pegged at $2.49 billion, indicating a decline of 3.1% year over year.
EA's strength in Live Services in mobile game franchises, such as Battlefield 2042, It Takes Two, Madden Mobile, FIFA Mobile, Tetris, Star Wars: Galaxy of Heroes, The Lord of the Rings: The Return of the King are expected to have positively impacted the top line.
However, EA has been witnessing increased operating expenses for game development and marketing. The rising expenses are expected to have kept margins under pressure in the to-be-reported quarter.
The recent improvement in video game spending in the quarter is expected to have been reflecting in EA’s top-line growth. Per VentureBeat, which cited NPD data, consumer spending on video games remained unchanged in October, while increasing 3% and 2% year over year in November and December, respectively.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
EA has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Sell) currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this season.
MSCI MSCI has an Earnings ESP of +0.43% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
MSCI is scheduled to release its fourth-quarter 2022 results on Jan 31. The Zacks Consensus Estimate for MSCI’s earnings is pegged at $2.71 per share, suggesting an increase of 7.97% from the prior-year quarter’s reported figure.
Endava DAVA has an Earnings ESP of +1.97% and a Zacks Rank #3 at present.
Endava is set to report second-quarter fiscal 2023 results on Feb 15. The Zacks Consensus Estimate for DAVA’s earnings is pegged at 68 cents per share, suggesting an increase of 7.94% from the prior-year period’s reported figure.
Analog Devices ADI has an Earnings ESP of +2.99% and a Zacks Rank #3 at present.
Analog Devices is scheduled to release its first-quarter fiscal 2023 results on Feb 15. The Zacks Consensus Estimate for ADI’s earnings is pegged at $2.59 per share, suggesting an increase of 33.5% from the prior-year quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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