Fiscal results for Q1 2014 show big gains on mobile, free-to-play and digital
Electronic Arts has revealed its financial results for Q1 FY14, showing the company has beat earnings forecasts.
This is a quarter of firsts, with digital accounting for over three-quarters of non-GAAP revenue, and the publisher naming Apple as its biggest retailer.
EA gave most of the credit for the good report to continued sales of Battlefield 3 and FIFA 2013, strong growth in digital revenue, and a cost saving program that has cut losses at the expense of numerous developer jobs.
Net GAAP revenue of $949 million beat initial guidance of $875 million, while non-GAAP revenue came in at $495 million as compared to guidance of $450 million.
This produced a GAAP net income of $222 million that was measured as a $121 million loss by non-GAAP.
It should be noted that the company has deferred a good bit of the expenses this quarter forward in an effort to keep costs flat over the year.
“Our results also reflect the phasing of expenses out of Q1 into future quarters,” said interim executive chairmain Larry Probst.
“We realise this is just one quarter and there is a lot of work in front of us, but we think this is a solid step toward our ambitious goal of holding expenses flat in a console transition year.”
While it might have been expected that the earnings call would focus on this console transition, the biggest news is that digital games and services now account for most of EA's income.
Digital sales now accounts for 76 per cent of non-GAAP revenue at $378 million, a growth of 17 per cent year-over-year.
The largest portion of digital sales is DLC and free-to-play, which accounts for 35 per cent of digital revenue and earned $177 million for the publisher this quarter.
EA's mobile business contributed 30 per cent of digital revenue, pulling in $103 million this quarter - a gain of 30 per cent from last year.
“As both Larry and mentioned, our quarter was notable for the high percentage of revenue attributable to digital games and services,” said COO Peter Moore.
“To that end, Apple was EA's biggest retail partner measured by sales, and that is a first.”
While it might be a first, it's part of a larger trend the company is trying to make the most of.
While PC continues to be the biggest platform for digital sales, mobile sales grew 73 per cent year-over-year.
EA also announced a deal with TenCent that would bring FIFA Online 3 to China, echoing a similar deal with Nexon for the game's Korean release.
On the console front, Moore repeated the claims made by Ubisoft that the Xbox One was selling faster in pre-order than the Xbox 360, and said that PlayStation believes the PS4 would be their biggest hardware launch ever.