Soccer and War Games Drive Electronic Arts Inc. Sales Higher

By Joe Tenebruso Markets Fool.com

Image source: Electronic Arts.

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Electronic Arts (NASDAQ: EA) reported fiscal 2017 third-quarter financial results on Jan. 31. The video game maker saw its sales boosted by strong recent game releases, while improving margins helped to shrink losses.

Electronic Arts results: The raw numbers

Metric Q3 2017 Q3 2016 Year-Over-Year Change
Revenue $1.149 billion $1.070 billion 7%
Net loss ($1 million) ($45 million) N/A
Net loss per share ($0.00) ($0.14) N/A

Data source: Electronic Arts Q3 2017 earnings press release.

What happened with Electronic Arts this quarter?

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Revenue rose 7% year over year to $1.15 billion, driven by strong sales of Electronic Arts' FIFA, Battlefield, and Star Wars franchises.

Impressively, Electronic Arts said that its FIFA 17 soccer game was the best-selling console title in the world in 2016. Battlefield 1 is also off to a strong start, with a player base that's more than 50% larger than that of a previous version of the game in its comparable launch quarter. And Star Wars: Galaxy of Heroes is enjoying solid user engagement, with average gameplay time per player reaching a new high of 155 minutes per day in the third quarter.

Electronic Arts continues to transition toward higher-margin digital distribution of its games, with 60% of its third-quarter total net revenue coming from digital sales, compared to 53% in Q3 2016. That helped gross margin increase to 55.1%, up from 49% in the year-ago quarter.

All told, net loss narrowed to $1 million from $45 million in the prior-year quarter.

Moreover, Electronic Arts strengthened its cash generation, with net cash provided by operating activities coming in at a record $1.115 billion.

"For the first time ever, we generated over$1 billionin operating cash flow in a quarter," said CFOBlake Jorgensen in a press release. "This is a true testament to the innovation we built intoBattlefield 1andFIFA17and the continued strength of our digital live services."

Looking forward

Electronic Arts expects revenue of approximately$1.482 billion in the fourth quarter, with net income of $513 million, or $1.64 per share.

"With the top console games and most-downloaded mobile portfolio in the industry for Q3,Electronic Artsis growing, engaging and exciting a global community of players," said CEO Andrew Wilson. "We will continue to push the boundaries of play, with stunning new titles likeMass Effect: Andromeda, global competitive gaming tournaments and more amazing experiences coming in the year ahead."

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Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.