Stock News Update: Electronic Arts Inc. (NASDAQ: EA)

Electronic Arts Inc. (NASDAQ: EA) witnessed a loss of -1.46% in recent trading period with closing price of $97.23. The company’s last traded volume of 2139879 shares vs to an average volume of 3009.04K shares.  In the trailing 12 months period, return on assets ratio of the Company was 11.30% and return on equity ratio was 18.10% while its return on investment ratio was 14.80%.

Electronic Arts Inc. (EA) recently reported preliminary financial results for its second fiscal quarter ended September 30, 2019.

“It was an excellent second quarter for Electronic Arts. Our new EA SPORTS titles are thrilling core fans and bringing in new players, and our ongoing live services are growing with deeply-engaged communities,” stated CEO Andrew Wilson. “With new games like Star Wars Jedi: Fallen Order, Need for Speed, Plants vs. Zombies and more great content across our top franchises, we’re set to deliver a lot of fun and excitement to players this holiday season, and continue our momentum in this fiscal year.”

Selected Operating Highlights and Metrics

  • Digital net bookings* for the trailing twelve months was a record $3.883B, up 8% year-over-year and represents 78% of total net bookings.
  • The number of FIFA Ultimate Team™ exclusive players increased 22% year-over-year.
  • The number of Madden Ultimate Team™ exclusive players increased 19% year-over-year.
  • Apex Legends™ has had 70M players life to date.
  • The Sims™ 4 monthly average players are up over 40% year-over-year.

* Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games and mobile platform fees.

Selected Financial Highlights and Metrics

  • Net cash provided by operating activities was $37M for the quarter and $1.748B for the trailing twelve months.
  • EA repurchased 3.3M shares for $306M during the quarter, bringing the total to 12.9M shares for $1.204B during the trailing twelve months.

Impact of Certain Tax Matters

During the six months ended September 30, 2019, three separate tax events occurred:

  1. During the three months ended June 30, 2019, EA completed an internal transfer of some of its intellectual property rights to its Swiss subsidiary, where EA’s international business is headquartered;
  2. Also during the three months ended June 30, 2019, a decision by the Ninth Circuit Court of Appeals in Altera Corp. v. Commissioner regarding stock-based compensation expenses required EA to record a tax accrual; and
  3. During the three months ended September 30, 2019, Switzerland changed its income tax rates.

As a result of these events, EA has recognized an income tax benefit of $1.705B, or $5.74 of earnings per share, during the fiscal year ending March 31, 2020. EA recognized $1.080B, or $3.61 of earnings per share, of this income tax benefit during the three months ended June 30, 2019 and $625M, or $2.11 of earnings per share, during the three months ended September 30, 2019.

Business Outlook as of October 29, 2019

The following forward-looking statements reflect expectations as of October 29, 2019. Electronic Arts assumes no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this release and in EA’s yearly and quarterly SEC filings.

Fiscal Year 2020 Expectations – Ending March 31, 2020

Financial metrics:

  • Net revenue is predictable to be about $5.410B.
    • Change in deferred net revenue (online-enabled games) is predictable to be about $(130)M.
    • Mobile platform fees are predictable to be about $(155)M.
  • Net income is predictable to be about $2.841B, about $1.705B of which is related to the one-time income tax benefits discussed above.
  • Diluted earnings per share is predictable to be about $9.57, about $5.74 of which is related to the one-time income tax benefits discussed above.
  • Operating cash flow is predictable to be about $1.625B.
  • The Company estimates a share count of 297M for purposes of calculating fiscal year 2020 diluted earnings per share.

The Company has 298.11 million shares outstanding and 293.35 million shares were floated in market. The short ratio in the company’s stock is documented at 2.7 and the short float is around of 2.77%. The average true range of the stock is observed at 2.29 and the relative strength index of the stock is recorded at 52.51. Analyst recommendation for this stock stands at 2.2. The volatility in the previous week has experienced by 2.24% and observed of 2.25% in the previous month. 97.70% ownership is held by institutional investors while insiders hold ownership of 0.20%.

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