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Electronic Arts Earnings: What to Watch

A man plays Star Wars Battlefront II on opening day of the Electronic Entertainment Expo at the Los Angeles Convention Center in June.

REVENUE FORECAST: Adjusted revenue is expected to climb 7.2% to $1.18 billion, according to S&P Global Market Intelligence. EA has said it expects GAAP revenue of about $955 million, up 6.3% from a year ago.

WHAT TO WATCH:

--SMALLER FIFA WINDOW: This year’s installment of the soccer game FIFA, the company’s most lucrative franchise, was on sale two fewer days in the quarter compared with the 2016 edition. Analysts will be looking to see how much impact the difference had on sales compared with a year ago. The shorter quarter should be somewhat offset, though, by the return of “NBA Live,” a basketball series that had been dormant since 2015. Overall, analysts expect revenue from EA’s sports games to be flat or up slightly from a year ago.

--BIGGER APP APPETITE: Revenue from EA’s mobile games rose at least 18% from a year earlier to $170 million, estimates Sensor Tower Inc. The analytics firm collects in-game spending data from Alphabet Inc.’s and Apple Inc.’s app stores, and doesn’t collect any advertising revenue. Sensor Tower estimates revenue from “Madden NFL Football” rose 70% to $23.3 million, while EA’s most lucrative mobile game by far, “Star Wars: Galaxy of Heroes,” hauled in $45.3 million, a 33% increase. Those gains should help offset declines in “The Simpsons: Tapped Out” and “Real Racing 3,” Sensor Tower said.

--MARKETING STRETCH: Spending on marketing, while spread out more than in the past, is still highest in the second half of the year, finance chief Blake Jorgensen said on the company’s most recent earnings call. EA has been promoting its biggest anticipated blockbusters earlier, too, Mr. Jorgensen said. Still, EA likely hasn’t had to go hog wild promoting “Star Wars Battlefront II,” which is due out Nov. 17, since Disney Co. has a new Star Wars movie planned for December, according to Evan Wingren, an analyst at KeyBanc Capital Markets Inc. EA should benefit from a marketing halo effect, Mr. Wingren said.

--FUZZY OUTLOOK: Earlier this month, EA made a surprise announcement that it was indefinitely delaying the release of a Star Wars game planned for late fiscal 2019. Shares dipped 2.4% on the news but recovered. Also this month, EA said it planned to make changes to “Star Wars Battlefront II,” based on feedback from players who tested an early version. Both moves raised questions about EA’s in-game monetization strategy. Analysts will be listening on the earnings call for insight on the company’s plans for both games.


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