Electronic Arts (EA) Up 2.7% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Electronic Arts (EA) reported a decline in earnings and revenues for Q3 fiscal 2025, with a notable decrease in live services and full-game revenues, raising concerns about future performance leading up to the next earnings release [2][4][10]. Financial Performance - EA's Q3 fiscal 2025 earnings were $2.83 per share, down 4.4% year over year, while revenues decreased 6.38% to$ 2.22 billion [2][3]. - Net bookings for the quarter were $2.22 billion, reflecting a 6.4% year-over-year decline, with full-game net bookings at$ 633 million, down 3% [3][4]. - Full-game revenues accounted for 31.8% of total revenues, decreasing 3.1% to $599 million, while live services revenues, making up 68.2% of total revenues, fell 3.2% to$ 1.28 billion [4][6]. Revenue Breakdown - Revenues from consoles decreased 1% to $1.23 billion, while revenues from PC & Other and mobile platforms declined 7% to$ 420 million and $296 million, respectively [5][6]. - Full-game download revenues increased 3% year over year to$ 431 million, contrasting with a significant 18% drop in packaged goods revenues to $187 million [4][5]. Operating Metrics - EA's GAAP gross profit rose 0.8% to$ 1.43 billion, with a gross margin expansion of 300 basis points to 75.8% [6][7]. - Operating income increased 3.3% year over year to $377 million, although the operating margin contracted 130 basis points to 20% [7]. Cash Flow and Shareholder Returns - As of December 31, 2024, EA had$ 3.16 billion in cash and short-term investments, up from $2.56 billion as of September 30, 2024 [8]. - The company repurchased 2.4 million shares for$ 375 million during the quarter, totaling 10.1 million shares for $1.45 billion over the trailing 12 months [8]. Future Guidance - For Q4 fiscal 2025, EA expects revenues between$ 1.682 billion and $1.832 billion, with earnings per share projected between 65 cents and$ 1.00 [10]. - For the full fiscal year 2025, EA anticipates revenues in the range of $7.25 billion to$ 7.40 billion and earnings per share between $3.9 and$ 4.25 [10][11]. Market Sentiment - There has been a downward trend in estimates, with the consensus estimate shifting down by 15.96% [12]. - EA currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [14].