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Electronic Arts (EA) to Report Q4 Earnings: What's in Store?

Electronic Arts EA is set to report fourth-quarter fiscal 2023 results on May 9.

For fourth-quarter fiscal 2023, EA expects GAAP revenues between $1.7 billion and $1.8 billion and earnings in the range of 5-20 cents per share.

For the quarter, the Zacks Consensus Estimate for earnings has remained steady at $1.32 per share in the past 30 days. The figure indicates an 11.86% decline from the year-ago quarter’s reported figure.

The consensus mark for revenues, pegged at $1.73 billion, suggests a 1.2% 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 6.16%.

Let’s see how things have shaped up for this announcement.

Electronic Arts Inc. Price and EPS Surprise

Electronic Arts Inc. Price and EPS Surprise
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 is expected to have reflected upon active user growth in the fiscal fourth quarter.

In the to-be-reported quarter, Electronic Arts announced the release of Dead Space, the official remake of the sci-fi horror classic and EA SPORTS PGA TOUR, a series of golf video games. This video game launched with Road to the Masters, which brings tradition and unmatched stakes to the game, featuring Augusta National, challenges, tournaments and gear tied to the Masters.

EA and KOEI TECMO also released a new AAA Hunting Game Set, WILD HEARTS, which whisks players away on an epic adventure in fantasy medieval Japan. The players will battle with giant nature-infused Kemono beasts with the help of a sophisticated ancient technology known as, Karakuri.

Moreover, EA and Respawn Entertainment marked the fourth anniversary of Apex Legends by releasing sweeping updates and massive changes to the gameplay experience. The company introduced an expanded new player experience, overhauling how all Legends play with the new class system and rolled out the most requested mode, Team Deathmatch, for the first time.

However, decline in active users post the coronavirus lockdown due to resumption of work from office and outdoor entertainment is expected to have dented net bookings growth in the to-be-reported quarter. Net bookings for the third quarter of fiscal 2023 were $2.3 billion, down 9% or 5% in constant currency year over year.

The company expects net bookings to be between $1.675 billion and $1.775 billion in the fiscal fourth quarter of 2023. The Zacks Consensus Estimate for bookings is currently pegged at $1.72 billion, indicating a decline of 1.6% 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 and 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.

Sluggishness in video game spending in the quarter is expected to have reflected in EA’s top-line growth. Per VentureBeat, which cited NPD data and consumer spending on video games, declined by 5% in January, increased 6% in February followed by a decline of 5% in March, 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.

EA currently has an Earnings ESP of +2.08% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some stocks worth considering, as our model shows that these too have the right combination of elements to beat on earnings this season.

DigitalOcean DOCN has an Earnings ESP of +3.45% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DOCN is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting an increase from 7 cents per share reported in the prior-year quarter.

BILL Holdings, Inc. BILL has an Earnings ESP of +13.02% and a Zacks Rank #2 at present.

BILL Holdings is set to report third-quarter fiscal 2023 results on May 4. The Zacks Consensus Estimate for BILL’s earnings is pegged at 24 cents per share. The company incurred a loss of 8 cents per share in the year-ago quarter.

PayPal PYPL has an Earnings ESP of +2.15% and a Zacks Rank #3 at present.

PYPL is scheduled to report first-quarter 2023 results on May 8. The Zacks Consensus Estimate for PYPL’s earnings is pegged at $1.09 per share, suggesting an increase of 23.9% from the prior-year quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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