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EA reaps big profits as digital sales trump physical

EA reaps big profits as digital sales trump physical

May 5, 2015 | By Alex Wawro

Electronic Arts has made a public accounting of its 2015 fiscal year, and the company seems to be doing better than expected after a strong fourth quarter fueled by digital game downloads and add-on content across both PC, console and mobile platforms.

In today's earnings report [PDF] EA reported a (Non-GAAP) profit of $806 million from net revenue of $4.32 billion for the fiscal year ending March 31, 2015, driven primarily by sales of games like Battlefield Hardline and Dragon Age: Inquisition.

That's an increase of roughly 20 percent in revenue over the $3.58 billion EA reported for the 12 months prior, and almost $10 million more than the $4.25 billion in revenue the company predicted it would drum up this year.

The jump in take-home profits is even greater year-over-year, up roughly 50 percent from the $534 million EA reported at the end of its prior fiscal year; during a call with investors, EA CFO Blake Jorgensen attributed this rise in profits in part to the company's efforts to reduce operating expenses.

The company also has an optimistic outlook for the financial year ahead after it beat market analyst expectations for its fiscal fourth quarter, which earned EA $395 million in profit from $896 million in revenue.

The lion's share was driven by sales of digital games and game goods, which netted EA $602 million in revenue for the quarter; by contrast, the company only reported $294 million in revenue from sales of packaged games and other retail goods during the same period. 

With 67 percent of its revenue coming from digital sales, EA's most recent quarter was fueled by the company's expanding efforts to sell games and DLC across mobile app stores and digital game platforms, including EA's own Origin platform. What's more, 40 percent of its digital revenue was generated by microtransactions for DLC and other in-game content.

Going forward, EA is feeling bullish enough to try and buy back up to $1 billion of its stock from company shareholders, and the company aims to earn $4.4 billion in (Non-GAAP) revenue in the fiscal year ahead.

A significant portion of that is likely expected to come from EA's slate of third- and fourth-quarter releases (outlined below), which include the launch of Star Wars Battlefront ahead of the release of a new Star Wars film later this year.

It's also interesting to note that EA appears to be making some tentative inquiries into VR game development; during a call with investors, CEO Andrew Wilson answered a question about whether the company was investigating any particular VR platform by saying "we are looking at any and all of these things, and have a few kinds of incubation efforts going on around the company."


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