Electronic Arts Reports Q2 Earnings, FY23 Revenue Forecast Cut

Key Financial Highlights

Electronic Arts Inc. (EA) reported its financial results for the second quarter of fiscal year 2023 (Q2 FY23), which ended on September 30, 2022. The company's net revenue decreased by 5% year-over-year to $1.71 billion, falling short of analysts' expectations of $1.78 billion.

EA's net income also declined by 31% to $264 million, or $0.68 per diluted share, compared to $382 million, or $1.01 per diluted share, in Q2 FY22.

Segment Performance

The company's Live Services segment, which includes popular franchises such as FIFA, Madden NFL, and Apex Legends, generated $1.23 billion in net revenue, a 2% year-over-year increase. This growth was primarily driven by the continued success of FIFA 23 and Apex Legends.

However, EA's Mobile segment faced challenges, with net revenue decreasing by 17% to $392 million. This decline was attributed to lower player spending in certain mobile games and the discontinuation of some titles.

Outlook for Fiscal Year 2023

EA revised its revenue forecast for fiscal year 2023 due to lower-than-expected player engagement in some of its new releases and a challenging macroeconomic environment. The company now expects net revenue to be between $7.45 billion and $7.65 billion, down from its previous guidance of $7.9 billion to $8.1 billion.

Despite the revenue adjustment, EA remains optimistic about its long-term prospects. The company cited its strong lineup of upcoming games, including Star Wars Jedi: Survivor and EA Sports FC, as well as its continued focus on expanding its live services offerings.

Analyst Commentary

Analysts were mixed in their reactions to EA's Q2 earnings report. Some analysts expressed concerns about the revenue decline and the lower FY23 revenue forecast, while others remained positive about the company's long-term growth potential.

Brian Nowak, an analyst at Morgan Stanley, acknowledged the challenges facing EA but maintained a bullish stance on the stock. "We believe EA is taking the right steps to address near-term weakness and position itself for long-term growth," he wrote in a research note.

Conclusion

Electronic Arts' Q2 FY23 earnings report highlighted both challenges and opportunities for the company. While the revenue decline and lowered FY23 forecast raised some concerns, EA's strong live services performance and upcoming game releases suggest that the company remains well-positioned for the future.