Q2 Earnings Highlights: Electronic Arts (NASDAQ:EA) Vs The Rest Of The Video Gaming Stocks
As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the video gaming industry, including Electronic Arts (NASDAQ:EA) and its peers.
Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
The 4 video gaming stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 2.4% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
While some video gaming stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.5% since the latest earnings results.
Electronic Arts (NASDAQ:EA)
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Electronic Arts reported revenues of $1.66 billion, down 13.7% year on year. This print exceeded analysts’ expectations by 5.3%. Despite the top-line beat, it was still a weaker quarter for the company with full-year revenue guidance missing analysts’ expectations and slow revenue growth.
“EA delivered a strong start to FY25, beating net bookings guidance as we continue to execute across our business,” said Andrew Wilson, CEO of EA.
Electronic Arts pulled off the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 3.4% since reporting and currently trades at $40.18.
Is now the time to buy Electronic Arts? Access our full analysis of the earnings results here, it’s free.
Best Q2: Roblox (NYSE:RBLX)
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Roblox reported revenues of $893.5 million, up 31.3% year on year, outperforming analysts’ expectations by 1.2%. The business had a solid quarter with strong growth in its users and a decent beat of analysts’ user estimates.
Roblox achieved the fastest revenue growth among its peers. The company reported 79.5 million daily active users, up 21.4% year on year. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.4% since reporting. It currently trades at $40.18.
Is now the time to buy Roblox? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Skillz (NYSE:SKLZ)
Taking a new twist at video gaming, Skillz (NYSE:SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.
Skillz reported revenues of $25.3 million, down 37% year on year, falling short of analysts’ expectations by 4.3%. It was a disappointing quarter as it posted a decline in its users and a miss of analysts’ user estimates.
Skillz delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company reported 122,000 monthly active users, down 37.8% year on year. As expected, the stock is down 15.3% since the results and currently trades at $5.36.
Read our full analysis of Skillz’s results here.
Take-Two (NASDAQ:TTWO)
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Take-Two reported revenues of $1.34 billion, up 4.2% year on year. This number surpassed analysts’ expectations by 1.5%. Aside from that, it was a softer quarter as it produced slow revenue growth and full-year revenue guidance missing analysts’ expectations.
Take-Two delivered the highest full-year guidance raise among its peers. The stock is up 11.3% since reporting and currently trades at $154.50.
Read our full, actionable report on Take-Two here, it’s free.
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