Strong Fiscal 4Q17 Results Drove Electronic Arts Stock
Shares rose 14.6% last week
Shares of Electronic Arts (EA) rose 14.6% last week. EA announced its fiscal 4Q17 results on May 9, 2017, and reported revenue of $1.5 billion, a rise of 16.7% YoY (year-over-year) compared to $1.3 billion in fiscal 4Q16. The stock rose over 8% after EA reported its fiscal 4Q17 revenue.
Analysts had expected EA to post revenue of $1.1 billion in fiscal 4Q17, which ended on March 31, 2017, with a low estimate of $1.07 billion and a high estimate of $1.12 billion. EA’s estimated EPS were $0.75, with a high estimate of $0.81 and a low estimate of $0.70. While EA beat analysts’ revenue estimate by 39.4%, it easily beat analysts’ EPS estimates by 141%.
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Focus on user engagement
Electronic Arts is aiming to build a robust mobile gaming portfolio with live services and content updates. In fiscal 4Q17, Battlefield 1 attracted over 19 million players, and FIFA 17 attracted over 21 million players by the end of fiscal 2017.
Another important game for EA is Star Wars: Galaxy of Heroes, for which the average play time per day rose to 162 minutes in fiscal 4Q17, compared to 155 minutes in fiscal 3Q17.
Gross profit estimated to reach 74.9% in fiscal 2018
Electronic Arts expects its gross margin to reach 74.9% by the end of fiscal 2018. In comparison, its gross margin was 73.2% in fiscal 2017, 69.2% in fiscal 2016, and 68.3% in fiscal 2015.
EA’s gross margin has steadily improved over the years compared to its level of 62.3% in fiscal 2014. In fiscal 4Q17, EA’s gross margin expanded 4 percentage points, primarily driven by product mix and digital revenue growth.