Electronic Arts Tumbles After Results, Outlook Come Up Short


Not everyone is benefiting equally from surging video-game play during the pandemic.

Electronic Arts Inc., maker of the Madden NFL video games, tumbled in extended trading after reporting quarterly sales and a fiscal-year outlook that fell short of Wall Street estimates. But Take-Two Interactive Software Inc., a competitor, posted results that exceeded projections.

Shares of Electronic Arts slumped as much as 9.6% to $115.98 after fiscal second-quarter results came out. The stock had been up 19% this year through the close Thursday in New York.

Revenue in the fiscal second quarter totaled $2.35 billion, including adjustments, Electronic Arts said, missing analysts’ projections. While profit of 5 cents a share exceeded projections, the company’s estimates for the current quarter and year also missed analysts’ expectations.

As part of its announcement, Electronic Arts said it’s launching a new $2.6 billion share-repurchase program and its first quarterly dividend, at 17 cents a share.

Take-Two, buoyed by sales of the popular NBA 2k and Grand Theft video games, reported results that beat analysts’ estimates and issued an upbeat outlook for its fiscal year.

Revenue grew to $957.5 million in the second quarter ended Sept. 30, including adjustments, beating the $859 million average of analysts’ estimates. Adjusted earnings of $2 a share topped projections of $1.48.

Consumers Energized

“Look, tragic as it is, the pandemic certainly energized our consumers really starting in March,” Take-Two Chief Executive Officer Strauss Zelnick said in an interview. “But what you are seeing now is really a systemic shift in favor of interactive entertainment. Every trend has been accelerated. It is clear the world has started to return to normal in the last few months; if anything we saw further engagement with our titles.”

Shares of New York-based Take-Two rose as much as 3.2% to $174. The stock has advanced 38% this year.

New releases and free content updates for popular titles kept Take-Two customers on their consoles and handheld devices. The company boosted its guidance for the fiscal year ending in March and project results this quarter to beat Wall Street projections. For the current period, the company projects sales of $675 million to $725 million, compared with Wall Street estimates of $674 million. Profit will range from 75 cents and 85 cents, compared with analysts’ estimates of 70 cents.

As new consoles from Microsoft Corp. and Sony Corp. launch next week, game publishers are readying a slew of titles. Once new consoles come out, Take-Two expects that its NBA 2K21 will be the only sports title for them for about a month, Zelnick said.

Last week, Activision Blizzard Inc. issued a tepid forecast for its fourth quarter, suggesting that a surge in video-game play linked to the Covid-19 pandemic may be letting up.

©2020 Bloomberg L.P.

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