EA Results Lifted by Sports Games

Electronic Arts Inc. raised its earnings outlook for the second time in as many quarters as Wall Street and videogame players alike await the release of the company's potential blockbuster: "Star Wars Battlefront."

In reporting fiscal second-quarter results that shrank from a year earlier, EA beat a familiar path. The videogame giant nodded to strong digital operations as it topped Wall Street's forecast, and it elevated its own full-year outlook for revenue and profit.

EA partly attributed its new guidance to robust turnout for the free "beta" version of "Battlefront." More than 9.5 million people signed up to play a few levels ahead of the game's Nov. 17 release. That is as many people as EA has expected to buy the game.

"There's strength around Star Wars based on the excitement we saw in the beta," Chief Financial Officer Blake Jorgensen said in an interview. Still, he sounded a cautious note, saying "it's hard for us to judge what the real reaction is going to be" considering EA hasn't published a major Star Wars game in years.

Wall Street is used to EA routinely playing it safe and then nudging up its outlook. The company also boosted forecasts when it reported in July.

Despite the company's stock more than doubling in the past 52 weeks, several analysts this month raised their price targets even further. MKM Partners, for example, lifted its 12-month price target for EA to $82 from $73.

Shares of EA, which have nearly doubled over the past year, rose 1.2% to $77 in after-hours trading.

EA said it was excited not only for "Battlefront" but for strong sales of the PlayStation 4 and Xbox One consoles. EA now expects adjusted full-year revenue of $4.50 billion, up $50 million, and per-share profit of $3, up 15 cents. The company also issued third-quarter guidance above Wall Street expectations.

The second quarter featured a sports-heavy release cycle, including new installments of "Madden NFL," "FIFA" and "NBA Live." EA said average monthly players for the new games rose 30% from a year ago.

Demand for game add-ons, subscriptions and other digital goods continued to be a bright spot. EA said the biggest growth driver in the category was Ultimate Team, a mode within its sports titles that sells virtual currency. Adjusted digital revenue rose about 6% to $480 million.

EA, like other videogame makers, provides adjusted figures that spread sales out over the estimated life of the sold videogame.

On that basis, which EA and analysts prefer to use as a measure of the company's operating performance, revenue fell 6.1% to $1.15 billion but came in above the company's guidance for $1.075 billion. The company's digital sales growth was offset by a decline of 13% in packaged goods and other revenue.

Adjusted earnings, which also exclude certain one-time items, were 65 cents a share, topping the company's forecast for 40 cents.

Overall, under generally accepted accounting rules, in which companies defer some revenue for online-enabled games for as long as they plan to provide content for the title, Electronic Arts reported a loss of $140 million, or 45 cents a share, compared with a year-earlier profit of $3 million, or a penny a share, a year earlier. Revenue decreased 18% to $815 million.

By Sarah E. Needleman