- Company warns on revenue shortfall
- Football franchise weakness
- Dragon Age 50% below expectations
Electronic Arts (EA:NASDAQ) plummeted 15% in after-hours trading after the video game publisher slashed full year bookings guidance due to a surprise slowdown its EA Sports FC franchise in the fiscal third quarter.
If the drop holds, the shares are expected to open at around $120, wiping nearly $4 billion from the company’s market value.
EA said while its football franchise had clocked up two years of double-digit growth in net bookings, it started to see a slowdown during the December quarter, and it now expects a single-digit decline.
In 2023 EA’s almost 30 year partnership with world soccer body FIFA ended and the company rebranded the games as EA Sports FC.
Adding insult to injury the company also noted weakness in its role-playing game Dragon Age: The Veilguard, which engaged approximately 1.5 million players during the quarter, 50% below management’s expectations.
Net bookings include sales from physical game sales and revenue from online games.
CEO Andrew Wilson said: ‘This month, our teams delivered a comprehensive gameplay refresh in addition to our annual Team of the Year update in FC 25; positive player feedback and early results are encouraging.
‘We remain confident in our long-term strategy and expect a return to growth in FY26, as we execute against our pipeline.’
WHAT IS THE FINANCIAL IMPACT?
The California-based company expects net bookings for the year ending 31 March 2025 to be between $7 billion and $7.15 billion, down from $7.5 billion to $7.8 billion previously, undershooting analysts’ forecasts of $7.69 billion.
Wedbush Securities analyst Michael Patcher said: ‘The shortfall is mostly due to the introduction of College Football last summer, which was phenomenally successful, but likely caused some cannibalization of Madden NFL sales.’
The sudden shortfall against expectations could indicate a fall in customer engagement in the key football franchise or reflect increased competition in sports gaming.
