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Why Electronic Arts Expects Revenue to Rise 5.3% in Fiscal 2018

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Mar. 7 2018, Updated 10:30 a.m. ET

EA expects GAAP revenue of $5.1 billion in fiscal 2018

Electronic Arts (EA) expects GAAP (generally accepted accounting principles) revenue of $5.1 billion in fiscal 2018, a YoY (year-over-year) rise of 5.3% to $4.84 billion in fiscal 2017, driven by an increase in revenue from Live Services. EA has estimated full-year GAAP EPS (earnings per share) at $3.25, which includes the $0.48 impact of tax reforms.

EA expects operating cash flow of $1.6 billion in fiscal 2018 with free cash flow of $1.8 billion. EA’s CFO Blake Jorgensen stated, “We are reaffirming our guidance for net bookings at $5.150 billion, but, owing to the strength of our lives services, we expect this to skew more digital than originally anticipated, increasing our profitability.”

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What do analysts expect from EA in fiscal 4Q18 and beyond?

Analysts expect EA’s revenue to rise 13% YoY from $1.1 billion in fiscal 4Q17 to $1.23 billion in fiscal 4Q18. Similarly, EA’s revenue is expected to rise 4.4% YoY to $5.16 billion in fiscal 2018 and 8.9% YoY to $5.62 billion in fiscal 2019. EA’s non-GAAP EPS (earnings per share) are estimated to rise 36.5% YoY to $1.16 in 4Q18, 8.7% YoY to $4.27 in fiscal 2018, and 17% YoY to $5.00 in fiscal 2019. EA’s EPS are estimated to rise at a CAGR (compound annual growth rate) of 11.3% over the next five years, compared to a growth rate of 15.4% in the last five years.

Revenue for peer gaming companies Activision Blizzard (ATVI), Take-Two Interactive (TTWO), Zynga (ZNGA), and NetEase (NTES) is expected to rise 11%, 19%, 2.3%, and 1.1%, respectively, in the next quarter.

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