in Mobile Gaming

#EA: share rises as Q1 2013 report shows strength within #mobile

Video games developer and publisher, Electronic Arts reported a Q1 2013 non-GAAP loss of 41 cents per share, beating consensus expectations of a loss of 51 cents. However, the reported loss was wider than a loss of 37 cents per share in the year-ago quarter.Revenues (including deferred revenue of $464.0 million) declined 6.0% year over year to $491.0 million, slightly short of management guidance of $500.0 million. The shortfall was primarily due to continued weak performance from the Publishing and Other (30% of total revenue) segment, which was down 25.0% year over year in the quarter to $146.0 million. The EA share is currently up 6%.

Distribution (4% of total revenue) was also significantly weak, with revenues plunging 83% from the year-ago quarter to $21.0 million. However, continued strong performance from the Digital segment partially offset these weak results. Digital revenue (66% of total revenue) jumped 55.0% year over year to $324.0 million in the first quarter. EA launched 7 digital titles in the reported quarter. The growth in digital revenue was fuelled by a 34.0% year-over-year increase in revenue from mobile and other handheld devices. Smartphones and tablets revenue was up 86% year over year to $52.0 million. Subscriptions, advertising and other digital revenue grew 69% from the year-ago period, driven by Star Wars: The Old Republic. Moreover, revenue from extra-content and free-to-play games was up 87% from the year-ago quarter, driven by strong performance from PopCap, Battlefield 3, Mass Effect 3 and The Sims Social. Free-to-Play (17% of total revenue) was particularly strong with year-over-year revenues increasing 156.0% in the reported quarter.

Commenting on the outlook, EA expects non-GAAP revenues to be in the range of $1.05 billion to $1.10 billion for its Q2 2013. EA forecasts a profit for the upcoming quarter with earnings expected in the range of 7 cents to 12 cents on a non-GAAP basis. Operating expense is expected to be approximately $600.0 million for the quarter. For fiscal 2013, management lowered its revenue guidance. EA now expects non-GAAP revenue to be in the range of $4.10 billion to $4.25 billion (down from $4.30 billion) due to unfavorable foreign exchange rate and weak performance of Star Wars. Digital is expected to grow more than 20%, while much stronger growth is expected from mobile and free-to-play, slightly offset by weak social and challenging conditions in the packaged goods segment.

Conclusion: Mobile is the place to be. Go long G5 Entertainment and Glu Mobile!

Nordic Investor

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