Where to Watch Electronic Arts Q3 2018 Earnings Conference Call
Electronic Arts (EA -ii.75%) will written report its fiscal commencement-quarter earnings on July 27, and the keys to a skilful quarter will be the functioning of key games, peculiarly FIFA 17 and Battlefield 1, every bit well equally growth in alive services such as Ultimate Team.
Digital revenue growth
For fiscal 2017 ending in March, EA expanded gross margin to 73.2% as more gamers continued to purchase content digitally instead of buying game discs. Management expects gross margin to reach 74.ix% in fiscal 2018 with packaged appurtenances acquirement expected to refuse x% year over year, while sales of total game downloads are expected to grow x% to fifteen%.
FIFA 18 releases September 29, 2017. Paradigm SOURCE: ELECTRONIC ARTS.
Additionally, EA has been centering its game portfolio around "live services" -- online game modes that the company updates with new content to keep players connected and engaged. This reduces EA's dependence on new game sales as players find additional content that increases the replay value of a sure game. As management continues to focus on its alive service offerings, picket for digital acquirement as a percentage of total internet revenue to expand beyond its current 65% level, expanding margins in the process.
Key games
FIFA 17 has been one of the most pop sports titles with more 21 meg players joining the game in fiscal 2017. FIFA's Ultimate Team virtual carte du jour game has been very pop with players and should exist a fundamental correspondent to digital revenue operation for the quarter. The FIFA Ultimate Squad actor base grew 13% year over year in the fiscal 4th quarter, and net sales specifically from the virtual card game increased 23%.
Also, Battlefield 1 has been showing strong growth and should exist another primal game to watch. Through the end of financial 2017, more than xix million players joined Battlefield 1, which represents a fifty% increase over the previous installment in the series.
Finally, this will exist the kickoff full quarter since the March release of Mass Upshot: Andromeda, which was highly anticipated but got off to a rocky first afterward reports of several glitches in the game. The original Mass Effect trilogy was very pop and received great reviews. Andromeda, non so much. EA has been slowly rolling out software updates to fix the problems affecting Andromeda, so it will be interesting to see how well this game has sold.
Looking ahead
Other than games, investors should listen for any updates on the conference call with respect to EA'south plans for esports, which is emerging every bit a significant long-term growth opportunity for video game companies. During the fiscal fourth quarter briefing call, CEO Andrew Wilson said, "competitive gaming and esports will be a key growth vector for u.s. throughout fiscal 2018 every bit we aggrandize the means that fans can play and watch."
Ultimate Team serves as the "gateway" to esports for FIFA and Madden NFL, with FIFA 17 typically amid the summit 25 or and then games viewed on Twitch.tv, where gamers spectate other gamers. Later this year, EA volition boot off two championships for FIFA and Madden, and also launch the first Battlefield 1 contest. EA is lining up broadcast partnerships with major networks including ESPN and Univision, which should help grow the audience for these games.
What to look
For the fiscal beginning quarter, management is calling for non-GAAP net acquirement to grow 10% twelvemonth over twelvemonth to $750 million. All the same, whether information technology meets analysts' estimates volition likely have a bigger bear on on the curt-term direction of the stock price. Analysts are predicting non-GAAP net revenue to exist $768 million, with earnings per share estimated to exist $0.27.
Although analyst estimates are useful for serving equally a heads-up for what to expect, we don't desire to be suckered into Wall Street'south game of selling or buying EA stock based on whether it misses or beats expectations. What's far more important for Foolish investors is how EA is positioned for long-term growth based on its progress toward building its digital platform of live services across console, PC, and mobile, in improver to how its positioned for emerging growth opportunities similar esports.
Source: https://www.fool.com/investing/2017/07/25/what-to-watch-when-electronic-arts-reports-earning.aspx
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