Electronic Arts reports disputable quarterly results

Is it time to buy EA shares?

Electronic Arts (EA) shares showed an 11.4 per cent increase since the beginning of the year, but declined by 15.5 per cent in the last quarter. Shares fell sharply last week after the company published its quarterly report and forecasts. The fall in Electronic Arts shares on November 9 was triggered by the news about Pfizer and BioNTech vaccine access, which gave hope of overcoming the pandemic and restrictions in offline entertainment (cinemas, entertainment centres) associated with it.

The return of Electronic Arts shares to growth over the last two days may indicate a reassessment of the first impression of the quarter's results and recognition of the company's growth prospects. Investors should take a closer look at the company's current position and forecasts.

Electronic Arts total revenue for the second quarter (ended 30 September) of $1.15 billion represents a 14.6% decline from $1.35 billion in the same quarter of 2019.

Live Services segment sales statistics for the last 12 months show an increase from last year's $3.36 billion to $3.9 billion.

The latest figures show a 30% increase in Madden and NFL 21, while the number of players on consoles and PCs in FIFA 20 is approaching 35 million. The CFO of Blake Jorgensen said: "We are producing more fan favourite games, expanding our leading Live Services and attracting more players on more platforms than ever before".

The company's move to an online subscription model has resulted in a record $2.04 billion in cash flow over the last 12 months.

The company will start paying quarterly dividends of $0.17 per share, which represents approximately 0.5% of the return on the current share price.

Electronic Arts has not changed its projections for fiscal 2021 (ending March), repeating that it expects to generate revenues of $5.63 billion and earnings per share of $3.15.

The revenue forecast for the third quarter (ending 31 December 2020) was $1.675 billion, with earnings per share at $0.61.

However, new Sony PlayStation 5 and Microsoft Xbox Series X S gaming consoles are entering the market this month, helping to boost overall sales in the gaming industry.