Why Did the Share Price of Electronic Arts Rise on May 11?



Impressive fiscal 4Q16 results

On May 11, 2016, Electronic Arts (EA) announced its fiscal 4Q16 and 2016 results. Electronic Arts declared revenues of $924 million in 4Q16, easily beating analyst estimates of $886.4 million. Non-GAAP (generally accepted accounting principles) earnings per share (or EPS) totaled $0.50 in fiscal 4Q16, compared to $0.39 in fiscal 4Q15.

EA’s shares rose by 7.7% in after-market trading to $73.38, following better-than-expected earnings. The increase in revenue was mainly driven by growing digital revenues and impressive sales of Star Wars: Battlefront. In fiscal 2016, EA sold over 14 million units of the game.

Shares of EA’s peers Take-Two Interactive Software (TTWO), Activision (ATVI), and Zynga (ZNGA) rose by 1%, 1.9%, and 0.40%, respectively, on May 11, 2016.

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Digital revenues rise 18.3% in fiscal 4Q16

Non-GAAP digital revenues accounted for 77% of total revenues and rose by 18.3% YoY (year-over-year) to $712 million in fiscal 4Q16. Revenues from Electronic Arts and other business segments fell by 27.9% to $212 million.

Revenues from full game downloads rose by 18% YoY to $134 million and EA’s revenue from mobile games also rose by 15% YoY to $173 million, driven by Star Wars: Galaxy of Heroes and Madden NFL.

EA’s revenues from advertising, subscriptions, and other segments also rose by 4% YoY to $95 million. Revenues driven by FIFA Ultimate Team extra content revenues rose by 26% to $310 million in 4Q16.

EA and Activision account for 1.2% of the Technology Select Sector SPDR ETF (XLK).


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