EA Q1 FY14: Moore prepped for "spectacular" next-gen

News by Stephany Nunneley-Jackson Former News Editor

Published on July 23, 2013

EA has announced its financial results for first fiscal quarter ended June 30, 2013 and reports digital net revenue hit $482 million compared to $342 million year-over-year.

EA Q1 FY14 highlights

The Simpsons: Tapped Out recorded its highest revenue quarter in Q1 since launching in August 2012. More game updates in the works.

EA’s mobile and handheld digital revenue grew 30% year-over-year driven by The Simpsons, FIFA Online 3 in Asia, and Real Racing 3.

Pricing strategy currently being worked on for next-gen; but pricing is usually set by retail.

Real Racing 3 has generated more than 45 million downloads, and has averaged over 2 million DAU since March. New courses and features in the works.

Battlefield 3 Premium community continues to grow with over 4 million members to date.

Battlefield 4 pre-orders are stacking up "well against Battlefield 3."

FIFA 13 digital net revenue was up 92% versus FIFA 12 in Q1 FY 2013. FIFA Ultimate Team growth continued strong.

FIFA Online 3 digital grew 88% in Q1 compared FIFA Online 2. Was the #1 online sports game in Korea based on revenue and traffic.

Tencent will be publishing FIFA Online 3 in China. The online soccer game was published in Korea by Nexon.

EA’s Origin platform has over 50 million user installs, including 22 million mobile users.

Apple was EA's biggest retail partner measured by sales - a first, per Peter Moore.

Mobile is growing like "gangbusters," and continues to be "a growth sector," especially The Sims free-to-play, and the firm believes PopCap's Plants vs Zombies 2 will be a hit.

Earnings flat, digital soars

EA executive chairman Larry Probst said on the call to investors this evening the strong digital sales reported were attributed to Battlefield online offerings and the firm's mobile games sector. $177 million was contributed through free-to-play and DLC via PC and consoles.

EA is bullish on its commitment to digital and mobile, noting that it would continue plans laid by former CEO John Riccitiello.

Full game downloads on PC contributed $37 million, up 12% thanks to Battlefield 3 and The Sims 3.

All content, subscription and free-to-play on SWTOR was up over last year, and the subscription based business was down 25% as more switched to free-to-play.

Packaged goods came in at $452 million compared with $592 million for the same quarter year-over-year.

Total revenue reported was $949 million, down from $955 million yoy.

“EA had a solid quarter driven by continued digital growth and disciplined cost management,” said executive chairman Larry Probst. “We are also executing on a clear set of goals for leadership on mobile, PC, current and next generation consoles.”

“EA delivered first quarter EPS above our guidance through a combination of revenue growth, phasing of expenses, and cost control,” said CFO Blake Jorgensen.

“We are reaffirming our annual non-GAAP guidance of $4 billion net revenue and $1.20 earnings per share.”

The firm's fiscal year 2014 expectations for the period ending March 31, 2014 are for revenue to hit $3.5 billion, and for Q2 FY14 the firm expects net revenue of $625 million.

Packaged goods for next-gen will drive sales for Q3 FY14 and into the remainder of the year, the firm expects.

The plans for current and next-gen

EA said there is "strong consumer demand" for next-gen and called the systems "spectacular".

"Our job as a publisher is to provide an easy way to transition from current to next-gen. FIFA 14 and Madden NFL 25 will be available at launch for both consoles," said COO Peter Moore. "Our goal is to make 'moving day' easy. We could not be happier with the quality of the games our teams are creating.

"EA had a spectacular showing at E3, and won a slew of honors. This is a hit-driven industry and we have a line-up of proven blockbusters and new IP. We will give them all the marketing and sales support they deserve."

In an interview, EA Labels boss Frank Gibeau said the publisher hadn't repeated its mistake of last generation by pouring money into an untried engine; both Frostbite and Ignite are good to go, so its research and development spending will remain flat during the transition.

The firm expects sports titles for both gen-3 and gen-4 to be down while the console transition takes hold with a "small" percentage of revenue to be gleaned from gen-4 for the full fiscal year. New business models will be introduced with some gen-4 titles, but more on that will be announced at another time.

Clarity on the digital plan for Battlefield 4 will be announced "soon", according to EA Labels president Frank Gibeau, who also noted softness on current and next-gen sports pre-orders due to the upcoming console cycle, but the softness doesn't apply to Battlefield 4 - and pre-orders are stacking up "well against Battlefield 3."

More pre-orders will come in late, Moore added, once consumers can be assured they can get a console at retail.

Tencent will be publishing FIFA Online in China, with more announcements on the partnership to be announced. Peter Moore described the deal as follows: "World's biggest game, world's biggest publisher, world's biggest market."

PopCap's free-to-play title Plants vs Zombies 2 will release on iOS and is currently enjoying a "soft release" in New Zealand and Australia. The game is still on track for the release during the current quarter.

All quotes were pulled from a live call to investors and were paraphrased. Exact quotes will be added tomorrow after the call is transcribed.

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