It has been about a month since the last earnings report for Electronic Arts (EA). Shares have added about 2.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Electronic Arts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Electronic Arts Q3 Earnings and Revenues Decline Year Over Year

Electronic Arts reported third-quarter fiscal 2025 earnings of $2.83 per share, which fell 4.4% year over year. Revenues decreased 6.38% year over year to $2.22 billion due to a decline in Live services and full-game revenues.

The Zacks Consensus Estimate for earnings was pegged at $2.99 per share. The consensus mark for revenues was pinned at $2.29 billion.

Net bookings for the fiscal third quarter were $2.22 billion, down 6.4% year over year, but with minimal impact from FX.

Full-game net bookings were $633 million, down 3% year over year, but with double-digit growth in weekly active users of American Football. Live services net bookings were $1.58 billion, down 8% year over year.

Quarter Details

EA’s full-game revenues (31.8% of total revenues) decreased 3.1% year over year to $599 million. Full-game download revenues increased 3% year over year to $431 million. Revenues from packaged goods plunged 18% year over year to $187 million.

Live services and other revenues (68.2% of total revenues) decreased 3.2% year over year to $1.28 billion.

Based on platforms, revenues from consoles decreased 1% year over year to $1.23 billion in the reported quarter. Revenues from PC & Other declined 7% year over year to $420 million. Revenues from the mobile platform decreased 7% year over year to $296 million.

EA's Operating Details

EA’s GAAP gross profit increased 0.8% from the year-ago quarter’s levels to $1.43 billion. Gross margin expanded 300 basis points (bps) on a year-over-year basis to 75.8%.

Operating expenses decreased 0.1% year over year to $1.05 billion. As a percentage of revenues, operating expenses expanded 170 bps on a year-over-year basis at 55.8%.

Operating income on a GAAP basis increased 3.3% year over year to $377 million. The operating margin contracted 130 bps year over year to 20% in the reported quarter.

EA’s Balance Sheet and Cash Flow

As of Dec. 31, 2024, EA had $3.16 billion in cash and short-term investments compared with $2.56 billion as of Sept. 30, 2024.

Net cash provided by operating activities was $1.176 billion for the quarter and $2.110 billion for the trailing 12 months.

EA repurchased 2.4 million shares for $375 million during the quarter under the stock repurchase program, bringing the total for the trailing 12 months to 10.1 million shares for $1.45 billion.

The company has declared a quarterly cash dividend of 19 cents per share of the company’s common stock. The dividend is payable on March 19, 2025, to stockholders of record as of the close of business on Feb. 26, 2025.

EA’s Q4 and FY25 Guidance

For fourth-quarter fiscal 2025, EA expects GAAP revenues between $1.682 billion and $1.832 billion and earnings per share in the range of 65 cents to $1.00. Net bookings are expected between $1.444 billion and $1.594 billion.

For fiscal 2025, EA expects revenues in the range of $7.25-$7.40 billion and earnings in the band of $3.9-$4.25 per share.

The company expects net bookings for fiscal 2025 between $7 billion and $7.15 billion.
Operating cash flow is estimated in the band of $1.8-$1.9 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -15.96% due to these changes.

VGM Scores

At this time, Electronic Arts has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Electronic Arts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Electronic Arts is part of the Zacks Gaming industry. Over the past month, Las Vegas Sands (LVS), a stock from the same industry, has gained 5.8%. The company reported its results for the quarter ended December 2024 more than a month ago.

Las Vegas Sands reported revenues of $2.9 billion in the last reported quarter, representing a year-over-year change of -0.7%. EPS of $0.54 for the same period compares with $0.57 a year ago.

For the current quarter, Las Vegas Sands is expected to post earnings of $0.61 per share, indicating a change of -18.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -2% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Las Vegas Sands. Also, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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