Investment Rating - The report maintains a "Buy" rating for Electronic Arts (EA) with a target price of $179.80 [5][13]. Core Insights - EA reported FY26Q1 net revenue of $1.67 billion, exceeding consensus expectations by 7.4% and showing a year-over-year increase of 0.7% [1][5]. - The net bookings revenue reached $1.3 billion, surpassing consensus expectations by 4% and reflecting a year-over-year growth of 2.9%, primarily driven by stable growth in core products like the global football and rugby series [1][5]. - Despite an increase in new game release investments leading to a decline in net profit margin by 4.9 percentage points to 12%, the company achieved a net profit of $201 million, exceeding expectations by 51.6% [1][5]. Financial Performance - FY26Q1 net bookings revenue was $1.3 billion, higher than the previous guidance of $1.23 billion, with game net bookings revenue at $214 million, up 27.4% year-over-year, driven by the new title "Split Fiction" [2]. - Real-time service net bookings revenue was $1.08 billion, down 0.9% year-over-year, mainly due to stable growth in the "FC" and rugby series, partially offset by a decline in "Apex Legends" [2]. - The core game series saw a modest single-digit year-over-year growth in "FC" series net bookings, with "FC Online" achieving double-digit growth and "FC Mobile" reaching a record high with over 50 million installations [2]. Upcoming Releases - EA released the first trailer for "Battlefield 6" on July 24, with over 7 million views by July 29, and the full game is expected to launch within FY26 on platforms including PS5, Xbox X|S, and PC [3]. - The core football game "FC 26" is anticipated to be released on September 26 across all platforms, including the Switch 2, focusing on enhancing player experience with competitive and realistic gameplay modes [3]. Earnings Forecast and Valuation - The report slightly lowers the FY26-28E net revenue estimates by 1%, 0.8%, and 0.8% to $7.19 billion, $8.11 billion, and $8.36 billion respectively, primarily due to pressure on net bookings revenue from the rugby series [4][11]. - The FY26-28E net profit estimates are also reduced by 4.7%, 2.3%, and 2.6% to $910 million, $1.38 billion, and $1.43 billion respectively, attributed to increased promotional costs for "Battlefield 6" [4][11]. - The valuation is based on a PE of 33 times for FY27, aligning with the average of comparable companies, resulting in a target price of $179.80, down from a previous estimate of $184.60 [4][13].

Investment Rating - The report maintains a "Buy" rating for Electronic Arts (EA) with a target price of $179.80 [1][11]. Core Insights - EA reported FY26Q1 net revenue of $1.67 billion, exceeding consensus expectations by 7.4% and showing a year-over-year increase of 0.7%. Net bookings reached $1.3 billion, surpassing expectations by 4% and reflecting a year-over-year growth of 2.9% [1]. - The growth is primarily driven by the strong performance of core products, particularly the global football and rugby series, while the decline in "Apex Legends" was less severe than anticipated. Despite increased investment in new game releases leading to a 4.9 percentage point drop in net profit margin to 12%, the company achieved a net profit of $201 million, exceeding expectations by 51.6% [1]. - EA plans to release "Battlefield 6" within FY26 and maintains its full-year guidance unchanged [1]. Summary by Sections Financial Performance - FY26Q1 net bookings were $1.3 billion, higher than the previous guidance of $1.23 billion. Game net bookings were $214 million, up 27.4% year-over-year, driven by the new title "Split Fiction" [1]. - Real-time service net bookings were $1.08 billion, down 0.9% year-over-year, impacted by the performance of "FC" and the rugby series, partially offset by the better-than-expected decline in "Apex Legends" [1]. - Key game series performance: 1. "FC" series net bookings showed single-digit growth year-over-year, with "FC Online" achieving double-digit growth and "FC Mobile" surpassing 50 million installations. 2. Rugby series net bookings maintained positive growth year-over-year, although a decline of 8% is expected in Q2 due to high base effects, with a recovery anticipated in H2. 3. "F1 25" launched in Q1, benefiting from the concurrent F1 movie release, resulting in a 27% year-over-year increase in net bookings [1]. Earnings Forecast and Valuation - The report slightly lowers FY26-28E net revenue estimates by 1%, 0.8%, and 0.8% to $7.19 billion, $8.11 billion, and $8.36 billion, respectively, primarily due to pressure on net bookings from the rugby series [3]. - FY26-28E net profit estimates are also reduced by 4.7%, 2.3%, and 2.6% to $911 million, $1.38 billion, and $1.43 billion, respectively, due to rising promotional costs for "Battlefield 6" [3]. - The valuation is switched to FY27, assigning a PE of 33x, consistent with peer averages, leading to a target price of $179.80, down from a previous estimate of $184.60 [3][11]. Upcoming Releases - The first trailer for "Battlefield 6" was released on July 24, with over 7 million views by July 29. The game is expected to launch within FY26 on PS5, Xbox XJS, and PC, with the highest historical investment in its development [2]. - The core football game "FC 26" is set to release on September 26 across all platforms, including Switch 2, focusing on enhancing player experience with competitive and realistic gameplay modes [2].

Core Viewpoint - The company has faced significant challenges in recent years, including strategic missteps and financial losses, but is now focusing on core gaming operations and self-developed projects to regain profitability, particularly through the launch of its key game, "Strinova" [1][3][31] Group 1: Company Background and Challenges - The company initially thrived by introducing popular mobile games to the domestic market but has struggled since 2020, experiencing continuous revenue decline and losses amounting to 2.5 billion yuan [1][5] - A strategic shift has occurred, with the company divesting from non-core businesses and refocusing on self-developed games, particularly "Strinova," which is seen as crucial for future profitability [3][10] Group 2: Game Development and Strategy - The company has divided its self-development efforts into two phases, with the first phase focusing on commercial projects like "Honor All-Stars," which generated over 1 billion yuan in revenue shortly after launch [6] - The second phase centers on "Strinova," a multi-platform game that has garnered significant attention due to its unique gameplay mechanics and design [8][10] Group 3: Financial Performance and Future Outlook - Recent financial reports indicate that losses have narrowed, with the company's leadership stating that achieving balance with "Strinova" is critical for future success [5][12] - The game is set to launch on multiple platforms in 2025, with expectations that it will drive significant revenue growth [12][21] Group 4: International Expansion and Market Strategy - The company is actively expanding into the Middle East, recognizing it as a key growth market due to its young population and increasing acceptance of gaming [14][15] - The company has adjusted its operational strategy for "Strinova," taking back control from Tencent to better align with user needs and preferences [16][18] Group 5: Existing Game Portfolio and Revenue Model - The company continues to leverage its existing portfolio, including long-standing titles like "Subway Surfers," which remains popular after over 11 years in the market [23][25] - Recent adjustments to the revenue-sharing model for new game releases aim to enhance financial stability and profitability [30]