Electronic Arts (NASDAQ:EA) have delivered their results for the quarter ending June 30, 2021, and it seems the company’s 2022 fiscal year is off to a hot start. Net revenue for Q1 2022 was $1.55 billion, above the company’s guidance of $1.48 billion and the $1.39 billion brought in during the same period last year. Net income was $204 million, well above the $70 million EA was projecting, but a bit down compared to last year due to the artificial boost gaming got early on in the pandemic. EA’s healthy Q1 results have resulted in a solid 4 to 5 percent stock bump in after-hours trading.
Live Services and Traditional Releases – It Takes Two
EA’s success in Q1 was interesting, in that it didn’t just come from the usual suspects (sports, Apex Legends), but a combination of live services and traditional game releases. Apex Legends continued to grow during the quarter, reaching 13 million weekly active players (up from 12 million the previous quarter) and FIFA Ultimate Team matches were up 48 percent year-on-year. That’s all fine and good and expected, but according to EA, their Q1 beat was primarily driven by the release of two traditional releases with little-to-no live service elements…
We delivered a big beat this quarter, which was primarily driven by outperformance from two high quality new games — our Mass Effect Legendary Edition, and It Takes Two, the second title from our partnership with Hazelight Studios. It Takes Two launched at the very end of the prior quarter, and showed considerable strength through Q1 2021. Live services also performed better than expected, led by continued growth in Apex Legends.
At times in recent years, its seemed like EA no longer saw the value in non-live-service games, but this shows that when combined with steady earners like Apex, Madden, and FIFA, fun one-off products like It Takes Two and Mass Effect Legendary Edition can be the extra boost that puts them over the top. With games like Lost in Random and the recently-announced Dead Space remake on EA’s calendar, it seems they’ve taken this lesson to heart.
Outlook for FY 2022…and Beyond
The future looks bright for Electronic Arts, with the company foreseeing their biggest Q2 in history, with revenue expected to be $1.78 billion. This is largely due to the continued strength of Apex Legends and the fact that those with early access will be able to play FIFA 22 in Q2 this year (last year’s FIFA came out slightly later in October, and thus was entirely contained within Q3).
Of course, this year’s big blockbuster will be Battlefield 2042, which was finally unveiled in the months since EA’s last earnings report. All signs point to the game being a hit, as it’s trailers have attracted 210 million views, it was the most talked-about game coming out of this year’s E3, and has inspired “record-high sentiment” according to EA. The company has not adjusted their sales expectations for Battlefield 2042 upward yet, but they have raised their outlook for FY 2022 from $6.8 billion to $6.85 billion.
Perhaps most surprisingly, EA is already making bold proclamations about FY 2023, which they expect to deliver “growth in the mid-to-high single digits.” EA rarely sets their sights so far out, but recent acquisitions like racing-game-specialists Codemasters and mobile developer Playdemic has them confident that they can deliver a more robust lineup than in past years. Add the potentially-huge Apex Mobile, which should launch in most of the world (including the lucrative Chinese market) in 2023, and you have the recipe for a very strong year.
Electronic Arts’ live services are dependable as ever, but it seems they’re starting to envision how a more diverse lineup of games can benefit the company. One can’t live on Ultimate Team alone! Well, perhaps you can, but an EA that tries more things will be a more interesting, exciting, and potentially profitable, company.
The post EA Scores Big Q1 Beat with Apex, Mass Effect, It Takes Two; FY 2022 and 2023 Should be Big by Nathan Birch appeared first on Wccftech.
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