Electronic Arts (EA) Up 9.4% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Electronic Arts (EA) has shown strong performance in its recent earnings report, with significant year-over-year growth in earnings and revenues, driven by recovery in live services and full game revenues [2][3]. Financial Performance - EA reported Q2 fiscal 2025 earnings of $2.15 per share, a 47.3% increase year over year, with revenues rising 5.8% to $2.02 billion [2]. - Net bookings for the fiscal second quarter reached $2.07 billion, up 14.2% year over year, largely due to the positive reception of EA SPORTS College Football 25 [3]. - Full-game net bookings were $832 million, reflecting a 20% increase year over year, while live services net bookings rose 10% to $1.25 billion [4]. Revenue Breakdown - Full-game revenues accounted for 35.4% of total revenues, increasing 15.3% year over year to $716 million, with full-game download revenues up 37% to $475 million [5]. - Live services and other revenues, making up 64.6% of total revenues, increased 1.2% year over year to $1.3 billion [6]. - Console revenues grew 16% year over year to $1.37 billion, while revenues from PC & Other and mobile platforms declined by 14% and 5%, respectively [6]. Operating Metrics - GAAP gross profit increased 7.6% year over year to $156 billion, with a gross margin of 77.5% [7]. - Operating income on a GAAP basis rose 1.9% year over year to $384 million, with an operating margin of 19% [8]. Balance Sheet and Cash Flow - As of October 30, 2024, EA had $2.5 billion in cash and short-term investments, down from $2.76 billion as of June 30, 2024 [9]. - The company repurchased 2.6 million shares for $375 million during the quarter, totaling 10.2 million shares for $1.4 billion over the trailing 12 months [9]. Dividend and Guidance - EA declared a quarterly cash dividend of 19 cents per share, payable on December 18, 2024 [10]. - For Q3 fiscal 2025, EA expects revenues between $1.875 billion and $2.025 billion and earnings per share in the range of 85 cents to $1.02 [11]. - For fiscal 2025, EA anticipates revenues of $7.4 billion to $7.7 billion and net bookings between $7.5 billion and $7.8 billion [12]. Market Sentiment - Estimates for EA have trended downward over the past month, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [14][16].