I hardly follow EA anymore, but noticed the rise...

 

Electronic Arts stock rises after revenue tops consensus estimates

Published: July 31, 2019 6:57 a.m. ET 

Videogame company gets boost from income-tax benefits

Chesnot EA said it will recognize a $1.7 billion tax benefit in fiscal 2020

By MAXA. CHERNEY

Electronic Arts Inc. shares rose almost 6% in premarket trade Wednesday, after the company beat expectations for sales and recognized a $1.7 billion on-paper tax benefit.

The videogame company reported fiscal first-quarter net income of $1.42 billion, or $4.75 a share, compared with $293 million, or 95 cents a share, in the year-ago period. Revenue rose to $1.21 billion from $1.14 billion in the year-ago period.

Due to three events during the quarter — one of which was a Ninth Circuit Courts of Appeals decision on stock-based compensation — EA said it will recognize a $1.7 billion tax benefit, or $5.61 a share during fiscal 2020. It said it will recognize $1.08 billion in the fiscal first quarter and the remaining $620 million after a referendum altering Swiss tax rates is enacted.

EA reported net bookings of $743 million, versus $749 million in the year-ago period. Bookings are a common financial figure used by videogame companies that take into account both physical and digital sales. Bookings are not a part of U.S. generally accepted accounting principals.

Analysts surveyed by FactSet had estimated adjusted earnings of a penny a share on bookings of $721 million.

For the fiscal second quarter, analysts model adjusted earnings of 90 cents a share on bookings of $1.24 billion.

“We had a strong start to [fiscal 2020], bringing rich new experiences to our growing communities for ‘Apex Legends,’ EA Sports, ‘The Sims’ and more,” Chief Executive Andrew Wilson said in a statement. “From great new games to live services with longevity, subscriptions on more platforms and competitive gaming for more franchises, we’re pushing to lead with innovation, quality and choice for our players.”

EA said it expects second-quarter earnings of $2.60 a share on net bookings of $1.23 billion. The company said its second-quarter estimate includes $2.08 a share of income tax benefits.

For fiscal 2020, EA said it expects earnings of $9.22 a share on net bookings of $5.1 billion. Of the $9.22 a share, EA said that $5.61 would be due to income tax benefits.

Electronic Arts EA, +6.69%  stock has gained 12.2% this year, with the S&P 500 index SPX, +0.04%  rising 20.5%.