Salem Radio Network News Tuesday, May 24, 2022

Business

Electronic Arts sees sales below estimates as pandemic boom fades

By Tiyashi Datta

(Reuters) -Electronic Arts Inc on Tuesday forecast first-quarter adjusted sales below estimates, as it braces for weaker sales of its video gaming titles in a post-lockdown world.

Earlier, the company said it would pull the plug on its popular video-game franchise, FIFA, as it was ending a decades old partnership with the world’s soccer governing body.

Responding to EA’s exit from FIFA deal, Chief Financial Officer Chris Suh said the company expects no near-term changes due to the end of the partnership.

“From a players standpoint, nothing changes in their ability to interact with the game in terms of the players, the teams, the leagues,” Suh told Reuters in an interview. “The only difference is the branding of the game switches from being FIFA to our own brand.”

The Redwood City, California-based company’s shares were down 1.3% in extended trading.

Video games sales hit a peak during the pandemic. However, as life returns to normal in a world beset with worries of inflation and the impact of the Ukraine war, demand is starting to taper off, forcing game publishers to revisit their outlooks.

Bigger rival Activision Blizzard Inc also missed estimates for first-quarter adjusted sales on April 25, hurt by low demand for its latest title, “Call of Duty: Vanguard”.

EA forecast current-quarter adjusted sales of between $1.20 billion and $1.25 billion, compared with analysts’ average expectations of $1.44 billion, according to Refinitiv IBES data.

For the fourth quarter ended March 31, adjusted sales stood at $1.75 billion, slightly below estimates of $1.78 billion.

However, live services revenue, which makes up most of EA’s sales, rose to $1.39 billion in the quarter from $1.1 billion a year earlier.

On an adjusted basis, the company earned $1.46 per share, compared with the estimates of $1.43 per share, according to Refinitiv data.

(Reporting by Tiyashi Datta in Bengaluru; Editing by Devika Syamnath and Anil D’Silva)

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