Electronic Arts Q1 Profit Rises, Beats View; Shares Up 8%

(RTTNews) - Electronic Arts Inc. (EA) Tuesday reported an increase in profit for the first quarter, attributed mainly to strong growth in digital revenues and leverage on costs. On an adjusted basis, the company posted a smaller first quarter loss than what analysts' estimated, while revenues also trumped estimates. The company also reaffirmed its full-year 2014 guidance.

Following the announcement of results, the video-game maker's shares spiked by 8 percent in after hours trade on the New York Stock Exchange.

Redwood City, California-based Electronic Arts' first-quarter profit rose to $222 million or $0.71 per share from $201 million or $0.63 per share lat year.

Excluding items such as deferred revenues, the company reported an adjusted loss of $0.40 per share, compared to a loss of $0.41 per share last year. On average, 25 analysts polled by Thomson Reuters expected a loss of $0.60 per share for the quarter. Analysts' estimates typically exclude special items.

EA's revenues for the quarter dropped to $949 million from $955 million last year. However, revenues, excluding changes in deferred revenues, grew $495 million from $491 million last year. Analysts estimated revenues of $453.75 million for the quarter.

Like all game developers, EA too is struggling to keep up with change in consumer preferences, as more and more gamers are now unwilling to buy expensive video-games and have switched to low-ticket mobile and web social games. Video game makers have since started focusing on development of web-based games. Consequently, EA has reduced its packaged titles for consoles, while investing more resources towards the web.

Digital revenues, which includes sales of product over web, rose 41 percent to $482 million.

"EA had a solid quarter driven by continued digital growth and disciplined cost management," said Executive Chairman Larry Probst. "We are also executing on a clear set of goals for leadership on mobile, PC, current and next generation consoles."

However, the gaming industry expects the demand for games to improve after the launch of Sony's latest PlayStation 4 and Microsoft's (MSFT) Xbox One during the holiday season.

For the full year 2014, the company continues to see adjusted earnings of around $1.20 per share, revenues of about $3.50 billion and adjusted revenues of approximately $4.00 billion. Analysts currently estimate earnings of $1.20 per share and revenues of about $4.00 billion.

For the second quarter, the company sees loss of about $1.22 per share and adjusted earnings of about $0.12 per share. The company expects revenues of around $625 million and adjusted revenues of about $975 million. Analysts currently estimate earnings of $0.15 per share and revenues of $975.93 million for the quarter.

EA closed Tuesday's trading at $24.32, up $0.05 or 0.21%. The stock further gained $1.97 or 8.29% in after-hours trade.