EA blows away Wall Street's earnings expectations

Electronic Arts reported earnings today that made a mockery out of Wall Street’s expectations for the second fiscal quarter that ended Sept. 30.

The publisher reported an earnings per share (EPS) of 73 cents compared to estimates of 53 cents. Non-GAAP revenues for the quarter were $1.22 billion versus Wall Street estimates of $1.16 billion. That compared to net income of 33 cents a share on revenue of $1.04 billion a year ago. In after-hours trading, EA’s stock price is up 2 percent to $38.35 a share.

The Titanfall and EA Sports publisher is on a roll, and this is a sign that the overall video game business is also in good shape.

“Electronic Arts continues to put our players first, delivering new experiences, innovation and new ways to play,” said chief executive Andrew Wilson in a statement. “It was an excellent second quarter, with strong new titles, deep player engagement in our live services and ongoing digital growth driving continued momentum.”

“By emphasizing player engagement and our digital live services, we’ve grown revenue, expanded gross margins and delivered EPS well above prior year and our guidance,” said chief financial officer Blake Jorgensen in a statement. “We are raising our annual non-GAAP net revenue guidance by $75 million to $4.175 billion and annual non-GAAP diluted EPS by $0.20 to $2.05.”

EA launched big games such as The Sims 4 and its mainstay sports titles, Madden NFL 15, FIFA 15, and NHL 15, in the quarter. In the second fiscal quarter, players logged more than 1.9 billion hours playing EA games on consoles and the PC.

The giant publisher saw great success on mobile this quarter. The monthly active user count for EA’s mobile offerings was 155 million. EA Sports games averaged more than 40 million monthly active users in the quarter, up 250 percent from a year ago, thanks to Madden NFL Mobile and FIFA 15 Ultimate Team Mobile. Players have logged more than 89 million games of Madden NFL 15, up 48 percent from a year ago.

The Sims 4 was a disappointment, as it received a rating of 70 out of 100 on Metacritic, a review score aggregator, compared to 86 for The Sims 3. EA also didn’t have one of its usual games. Sports game fans suffered a blow last year when EA cancelled NCAA Football 15 due to lawsuits from ex-players and the NCAA’s decision not to renew its license with the veteran publisher.

Before the earnings came out, Adam Krejlik, an analyst at Eilers Research, wrote that he believed the poor showing of The Sims 4 would be offset by strong demand for the sports games. A huge slice of EA’s earnings come from digital revenues, which includes downloadable content for The Sims 4 and the sports titles.

In the near future, EA launches Dragon Age: Inquisition on Nov. 18. EA postponed the launch of Battlefield Hardline, which takes the combat series into cops-and-robbers fighting, until March 17. EA is also expected to launch Star Wars: Battlefront in 2015, according to Sterne Agee analyst Arvind Bhatia.

EA offered guidance for the third fiscal quarter ending Dec. 31. The company expects to report non-GAAP earnings per share of 90 cents (GAAP 41 cents) and revenue of $1.275 billion (GAAP $1.1 billion).

For the fiscal year ending March 31, 2015, EA expects non-GAAP revenue to be $4.175 billion ($4.375 billion GAAP) and non-GAAP earnings to be $2.05 a share (GAAP $2.06).

EA now has $2.3 billion in cash, cash equivalents, and short-term investments, compared to $1.4 billion a year ago. EA’s market capitalization is now $11.7 billion.