Electronic Arts Inc. (NASDAQ: EA) stock fell 6.6% on July 27th, 2018 (as of 12:55 PM GMT-4 ; Source: google finance) after the company significant fall in profits, though reported better than expected results for the first quarter 2019.
EA in the first quarter of FY 19 has reported 54% fall in the adjusted earnings per share to 26 cents, beating the analysts’ estimates for the adjusted earnings per share of 7 cents. The company had reported 22% fall in the adjusted revenue to $1.08 billion in the first quarter of FY 19, beating the analysts’ estimates for revenue of $743 million. EA’s digital revenues (84.2% of revenues) grew 8.9% to $957 million. Revenues from EA’s Packaging goods and other segment (15.8% of revenues) fell 68.4% to $180 million. Further segregating digital revenues, full game download revenues (10.2% of total revenues) fell 44% to $116 million. Revenues from Live services (53.6%) grew 22% to $610 million
Moreover, EA’s gross profit fell 29% from the year-ago quarter to $922 million. Gross margin was 81% as compared with 89% in the year-ago quarter. As of June 30, 2018, EA had $4.97 billion in cash and short-term investments as compared with $5.33 billion as of Mar 31, 2018. The net cash provided by operating activities was $120 million as compared with $615 million in the previous quarter. The company has repurchased 2.3 million shares for $300 million in the quarter. EA has $2.2 billion available under its current buyback program.
Additionally, Digital net bookings for the trailing twelve months was $3.550 billion, which is up 13% year-over-year and represents 69% of total net bookings. During the first quarter 2019, the company launched FIFA Mobile in China in the first quarter 2019, reaching #1 on the top downloads chart for iOS in China and showing best-in-class engagement on the WeChat platform.
For FY 19, EA expects expects GAAP revenues of $5.60 billion. The net bookings is expected to be of $5.55 billion. The company still expects earnings of $3.55 per share. Operating cash flow is estimated to be around $1.83 billion. Capex is expected to be $125 million, resulting in free cash flow of $1.7 billion. Net bookings is expected to be approximately $5.550 billion.
For the second quarter, EA expects GAAP revenues of $1.27 billion. Net bookings are expected to be $1.16 billion. Operating expense is expected to be $674 million, up 10% year over year. The company expects earnings of 48 cents per share for the quarter. Net bookings is expected to be approximately $1.160 billion.