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EA sees profits rise on the back of strong packaged game sales
EA sees profits rise on the back of strong packaged game sales
July 22, 2014 | By Alex Wawro

July 22, 2014 | By Alex Wawro
More: Console/PC, Smartphone/Tablet, Business/Marketing

It's that time of year again: Electronic Arts has given its financial report for the fiscal quarter ending June 30, 2014, the first quarter of the company's 2015 fiscal year. This time around the company seems to be starting strong, reporting modest growth in both revenue and profits as sales of packaged goods rise to overtake digital for the first time in months.

In today's public earnings report [PDF] EA reported a total GAAP net revenue of $1.21 billion for the quarter, up roughly 28 percent from the $949 million in quarterly revenue it reported in the same quarter a year prior. Non-GAAP net revenue for the quarter hit $775 million, up from the $495 million reported by the company for the same period last year.

The lion's share of this quarter's revenue was driven by sales of packaged goods, which generated $678 million while digital sales accounted for $536 million. EA chose to flip that balance in reporting the split of its Non-GAAP revenue, attributing $293 million to sales of packaged goods and $482 million in sales of digital games and services.

The discrepancy between overall GAAP and non-GAAP revenue is due to EA's decision to change how it distributes $439 million in deferred revenue from online games in its non-GAAP report, and the lion's share of that deferred revenue was taken from the "physical goods" side of the balance sheet.

The company provides its own non-GAAP results -- which can be adjusted from the standardized GAAP numbers for a multitude of reasons laid out in a company's earnings report -- to better reflect its financial performance.

The (GAAP) ratio of digital to packaged game sales has flipped from the same quarter last year, when EA reported $467 million in packaged goods revenue and $482 million in digital revenue. That suggests that, at least for the past three months, EA has managed to drum up a good bit of business selling physical copies of games like the Xbox 360 version of Titanfall, 2014 FIFA World Cup Brazil and EA Sports UFC at retail.

The company also reported $335 million in profit for the quarter, up roughly 50 percent from the $222 million it reportedly brought in during the same period last year. It reported a non-GAAP profit of $61 million, much better than the $121 million loss it reported in its non-GAAP earnings report in the same quarter a year prior.

Looking ahead, EA expects to generate $965 million in revenue next quarter (which ends on September 30), or $1.2 billion in non-GAAP revenue thanks to some deferred revenue from earlier in the year.

The company expects to report $4.3 billion in revenue for the entire 2015 fiscal year on the back of what it hopes will be big launches for games like Dragon Age Inquisition and Battlefield Hardline. Both games have been delayed, with the former expected to launch November 18 while Battlefield Hardline is predicted to release in "early 2015." The company plans to report non-GAAP revenue of $4.1 billion for the year, due to changes in the way the company is deferring its revenue from online-enabled games throughout the year.

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