On Wednesday, Electronic Arts (EA) adjusted its fiscal year bookings guidance downward, primarily attributing the cut to disappointing performance from its flagship products, especially the EA Sports FC soccer series. Following this announcement, the company witnessed a 7% decline in its share price during after-hours trading, a clear indication of how investors reacted to this stark warning about the company’s financial health.
For the third fiscal quarter ending December 31, EA now anticipates reporting net bookings around $2.215 billion, a significant dip from the earlier projection of $2.4 billion to $2.55 billion. Additionally, revenue for this quarter is expected to reach approximately $1.88 billion, translating to a diluted earnings per share of $1.11. This revised outlook has raised concerns about the company’s ability to maintain its previous growth trajectory, signaling deeper issues within its key franchises.
The heart of EA’s troubles seems to lie squarely with its once-dominant soccer franchise, which has not only lost its FIFA branding but may now be losing its grip on the gaming market. The shift to EA Sports FC initiated in 2022 did not yield the expected results, leaving the franchise struggling to capture former glory. Current projections now estimate net bookings for the entire fiscal year, ending in March, to fall between $7 billion and $7.15 billion, again falling short of the earlier guidance of $7.5 billion to $7.8 billion.
Historically, EA’s soccer franchise has been a powerhouse, boasting two consecutive years of double-digit growth in net bookings. However, the company detected a worrying trend during December’s fiscal quarter, suggesting an imminent decline in sales compared to the previous year. This drop has severe implications, especially as it coincides with a broader trend in live service content, which is also expected to fall short in fiscal 2025.
Moreover, the company’s other significant title, “Dragon Age,” has not fared well either. With only 1.5 million players during the last quarter, the game dramatically missed EA’s internal expectations by nearly 50%. This shortfall underscores a troubling reality that even high-quality gaming experiences, which EA claims to deliver, may not be enough to entice players in a fiercely competitive market.
The question now is whether EA can rebound from these setbacks. As CEO Andrew Wilson acknowledged, while the company is dedicated to providing top-tier games and experiences, the disheartening performances of both “EA Sports FC” and “Dragon Age” raise serious questions about the strategic direction of its game development initiatives. EA’s recent attempts to refresh the FC 25 with new content and enhancements were well-received, but translating that into sales remains a pressing challenge.
With EA’s third-quarter earnings call scheduled for February 4, the immense pressure is mounting for the company to reassure investors and demonstrate a clear plan for reversing this downward trend. As the landscape of the gaming industry evolves rapidly, with players shifting their allegiance and market dynamics constantly in flux, the future for EA’s key franchises hangs in the balance. The question is whether EA can pivot effectively to reclaim its standing in a market that seems increasingly unforgiving.
