Electronic Arts predicts sales below estimates as gaming craze cools

An Electronic Arts office is shown in Los Angeles, California, U.S., July 27, 2020. REUTERS/Mike Blake

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Aug 2 (Reuters) – Electronic Arts Inc (EA.O) forecast quarterly adjusted sales below estimates on Tuesday as the easing of COVID-19 restrictions tempers the gaming rage seen at the height of the pandemic by opening from other ways of entertainment.

Rival Activision Blizzard (ATVI.O) also had a disappointing second quarter, while Sony Group Corp (6758.T) cut its full-year profit forecast after its PlayStation business flopped.

U.S. consumer spending on video games fell 11% in June and is expected to fall 8.7% in 2022 on growing recession concerns, supply issues and a leaner roster outings, according to analytics firm NPD. https://bit.ly/3Spdwwr

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The gaming industry is considered by some to be “recession-resistant” as it offers a relatively cheaper source of entertainment, but EA chief financial officer Chris Suh said the company is not “completely shelter”.

“There are parts of the business that I think are doing better and parts of the business that are doing maybe a little worse than we would have expected just a few months ago.”

The video game maker behind “Apex Legends” is forecasting adjusted second-quarter sales of $1.73 billion to $1.78 billion, versus an analyst estimate of $1.87 billion, according to Refinitiv data.

Suh also said a stronger US dollar would impact the third and fourth quarters.

Adjusted sales of $1.3 billion in the first quarter were lower than a year ago, but still exceeded estimates thanks to the popular “FIFA” franchise and the recent launch of “F1”.

“In all honesty, it’s impossible to expect the same growth momentum, but now begins the period where we’ll see if EA has managed to capitalize on its good years and access to abundant capital to grow. insulate you from what’s to come,” said Joost Van Dreunen, a lecturer at New York University’s Stern School of Business.

Shares of the company, which also reaffirmed its full-year adjusted sales guidance, rose 1% to $130.50 after the bell.

Excluding items, EA earned 47 cents per share, compared to 28 cents for Street.

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Reporting by Tiyashi Datta in Bengaluru; Editing by Devika Syamnath

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Sallie R. Loera