Electronic Arts Inc. (EA) on Thursday reported an increase in profit for the first quarter, reflecting continued strong digital revenues, with both earnings and revenues topping Wall Street estimates. However, shares of the company fell over 4 percent, after having detailed a weak outlook.
Redwood City, California-based Electronic Arts' first-quarter profit rose to $442 million or $1.32 per share from $335 million or $1.04 per share last year.
Excluding items, adjusted earnings for the quarter dropped to $49 million or $0.15 per share from $61 million or $0.19 per share a year ago. On average, twenty-one analysts polled by Thomson Reuters estimated earnings of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.
Electronic Arts' revenue for the first quarter inched down to $1.20 billion from $1.21 billion a year ago. Adjusted revenues declined to $693 million from $775 million. Twenty-one analysts had a consensus revenue estimate of $652 million for the quarter.
Digital revenues, or revenues generated from sales through internet, continued to increase on the strength of sports games like FIFA and Madden and represented more than half of EA's total revenues. Digital revenues for the quarter rose to $623 million from $536 million last year.
Monthly active users of EA's mobile games averaged more than 150 million in the quarter, the company said.
Commenting on the results, CEO Andrew Wilson said, "We have players engaging for longer periods in our live services, ongoing strength across our digital business and growing anticipation for our upcoming titles."
Gross margin for the first quarter improved to 86 percent from 70 percent last year.
Looking forward to the second quarter, the company expects adjusted earnings of about $0.40 per share on adjusted revenues of around $1.08 billion. Analysts currently expect earnings of $0.67 per share on revenues of $1.12 billion.
For the fiscal year 2016, EA now expects adjusted earnings of about $2.85 per share and adjusted revenues of $4.45 billion. Earlier, the company expected earnings of about $2.75 per share and revenues of $4.40 billion. Analysts currently expect earnings of $2.87 per share on revenues of $4.48 billion for 2016.
EA closed Thursday's trading at $72.30, up $0.12 or 0.17%, on the NYSE. The stock, however, dropped $3.20 or 4.43%, in after-hours trade.
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