Download PDF

1. Company Snapshot

1.a. Company Description

Electronic Arts Inc.develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide.It develops and publishes games and services across various genres, such as sports, racing, first-person shooter, action, role-playing, and simulation primarily under the Battlefield, The Sims, Apex Legends, Need for Speed, and license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands.


The company licenses its games to third parties to distribute and host its games.It markets and sells its games and services through digital distribution and retail channels, as well as directly to mass market retailers, specialty stores, and distribution arrangements.Electronic Arts Inc.


was incorporated in 1982 and is headquartered in Redwood City, California.

Show Full description

1.b. Last Insights on EA

Electronic Arts' recent performance has been driven by several positive factors. The company's Q1 earnings beat estimates, with $0.25 per share, exceeding the Zacks Consensus Estimate of $0.1 per share. Revenue also increased 1% year-over-year. A potential $50-55 billion take-private deal with investors, including Silver Lake and Saudi Arabia's Public Investment Fund, has sparked optimism. Additionally, the upcoming launch of new games, such as "Battlefield 6", is generating excitement. AI integration is also expected to supercharge growth, with CEO Andrew Wilson citing efficiency, expansion, and transformation as key vectors.

1.c. Company Highlights

2. EA Delivers Strong Q1, Driven by EA SPORTS Success

Electronic Arts reported a robust first quarter, with net bookings reaching $1.3 billion, up 3% year-over-year, exceeding the high end of the company's guidance range. Net revenue was $1.67 billion, up 1%. Earnings per share (EPS) came in at $0.79, beating analyst estimates. Operating expenses were $1.12 billion, up 9%, driven by increased people costs and strategic investments. As Stuart Canfield noted, "In Q1, we delivered net bookings of $1.3 billion, up 3%, exceeding the high end of our guidance range."

Publication Date: Aug -02

📋 Highlights
  • Strong Financial Performance: Net bookings reached $1.3 billion, up 3% year-over-year, exceeding guidance.
  • EA SPORTS Growth: EA SPORTS FC Mobile saw record performance, with net bookings up year-over-year.
  • Operating Expenses Rise: Operating expenses increased 9% to $1.12 billion, driven by people costs and strategic investments.
  • Q2 Guidance: Net bookings expected to be $1.8-$1.9 billion, down 13%-9% year-over-year.
  • Live Services Growth: Excluding Apex, live services grew low single-digits, with a 2-point improvement in Apex performance.

Segment Performance

EA SPORTS continued to be a pillar of strength, with FC Mobile having a record quarter and net bookings up year-over-year. The integration of Apple's MLS Season Pass into FC Mobile was a highlight, bridging real-world football with interactive entertainment. American Football also showed promise, with the bundling of Madden and NCAA products together being successful. The company is expanding its approach to blockbuster storytelling and building bigger worlds and deeper character-driven experiences.

Guidance and Outlook

For Q2, EA expects net bookings to be $1.8 billion to $1.9 billion, down 13% to down 9%. The guidance assumes a 4-point headwind related to the phasing of EA SPORTS FC deluxe edition content. The company is entering the most exciting release cycle in EA's history, with highly anticipated launches including Battlefield 6 and continued innovation across EA SPORTS. Analysts estimate next year's revenue growth at 10.6%.

Valuation

EA's current valuation metrics are as follows: P/E Ratio at 37.84, P/B Ratio at 6.48, P/S Ratio at 5.28, EV/EBITDA at 21.88, Dividend Yield at 0.48%, Free Cash Flow Yield at 4.43%, ROIC at 11.06%, and ROE at 15.27%. The actual EPS of $0.79 is significantly higher than the estimated $0.1107, indicating a positive surprise. The stock's valuation multiples suggest that the market is pricing in a certain level of growth, which EA is working to deliver through its robust pipeline of new releases and continued innovation.

Pricing Strategy and Mobile Opportunity

Regarding full game pricing, EA is focused on delivering value to players, and pricing will be part of that strategy. The company is watching industry trends and will make decisions based on their community-centric approach. EA is also well-positioned to capitalize on the mobile opportunity, having delivered a strong College Football experience, and potentially exploring opportunities in college basketball. The company is leveraging web stores and bespoke funding mechanics in certain countries to drive profitability.

3. NewsRoom

Card image cap

Groupe la Francaise Raises Stock Holdings in Electronic Arts Inc. $EA

Dec -04

Source: defenseworld.net

Card image cap

TrueCar Investor Alert By The Former Attorney General Of Louisiana: Kahn Swick & Foti, LLC Investigates Adequacy of Price and Process in Proposed Sale of TrueCar, Inc. - TRUE

Dec -03

Source: prnewswire.com

Card image cap

LEGAL ALERT: Kaskela Law LLC Announces Investigation of Electronic Arts Inc. (EA) and Encourages EA Shareholders to Contact the Firm to Discuss Their Legal Rights and Options Before the Voting Deadline

Dec -03

Source: newsfilecorp.com

Card image cap

Saudi Fund to Own Almost All of Electronic Arts After Buyout

Dec -02

Source: wsj.com

Card image cap

Halper Sadeh LLC Encourages RPTX, THS, RMBI Shareholders to Contact the Firm to Discuss Their Rights

Nov -27

Source: globenewswire.com

Card image cap

Multi-Award Nominated Battlefield 6 Offers Special Free Trial of the Best-Selling First-Person Shooter of 2025

Nov -25

Source: businesswire.com

Card image cap

EA STOCKHOLDER NOTICE: Kaskela Law LLC Announces Investigation into Proposed Buyout of Electronic Arts Inc. (EA) Stockholders: Does $210.00 Per Share Shortchange Investors?

Nov -25

Source: businesswire.com

Card image cap

Johnson Fistel Investigates Potential Fiduciary Breaches in Electronic Arts $210/Share Go-Private Deal

Nov -19

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.00%)

6. Segments

Console, Mobile and PC Free-To-Download

Expected Growth: 5.0%

EA's F2P segment growth (5.0) driven by: increasing mobile gaming adoption, popularity of battle royale and live-service models, cross-platform play, and strategic acquisitions. Console and PC F2P growth fueled by gaming community expansion, esports, and subscription services like EA Play. Mobile gaming's accessibility and lower barriers to entry contribute to its growth.

7. Detailed Products

FIFA

A series of association football video games, where players can manage and play as their favorite teams and players.

Madden NFL

An American football video game series, where players can manage and play as their favorite NFL teams and players.

The Sims

A life simulation video game series, where players can create and control virtual characters and build their homes.

Battlefield

A first-person shooter video game series, where players can engage in large-scale battles and experience realistic warfare.

EA Sports UFC

A mixed martial arts video game series, where players can manage and play as their favorite UFC fighters.

Origin Access

A subscription-based service that provides access to a library of EA games, including popular titles and new releases.

Respawn Entertainment Games (Apex Legends, Titanfall)

A developer of first-person shooter games, including Apex Legends and Titanfall, where players can experience fast-paced action and competitive gameplay.

8. Electronic Arts Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Electronic Arts Inc. (EA) operates in the video game industry, where substitutes such as other game developers, streaming services, and alternative entertainment options exist. However, EA's strong brand portfolio, including popular franchises like FIFA, Madden NFL, and The Sims, reduces the threat of substitutes. Gamers often exhibit loyalty to specific game franchises, making it challenging for substitutes to gain significant traction.

Bargaining Power Of Customers

While gamers have some influence through social media and online forums, EA's diverse portfolio of games and strong brand recognition limit the bargaining power of individual customers. The company also engages with its community through various channels, fostering a sense of involvement and reducing the likelihood of customers demanding significant concessions.

Bargaining Power Of Suppliers

EA works with various suppliers, including game engine providers like Epic Games (Unreal Engine) and game development tool suppliers. However, EA's significant market share and revenue allow it to negotiate favorable terms with suppliers. The company's size and influence also enable it to switch suppliers if needed, further reducing supplier bargaining power.

Threat Of New Entrants

The video game industry has high barriers to entry, including significant development costs, complex game development processes, and established relationships between game developers and publishers. New entrants would need substantial resources and expertise to compete effectively with established players like EA.

Intensity Of Rivalry

The video game industry is highly competitive, with several major players, including Activision Blizzard, Take-Two Interactive, and Ubisoft. EA competes with these companies across various genres, including sports games, action games, and role-playing games. The intense rivalry drives innovation, marketing efforts, and strategic partnerships, making the competitive landscape challenging for EA.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.59%
Debt Cost 4.31%
Equity Weight 79.41%
Equity Cost 8.06%
WACC 7.29%
Leverage 25.93%

11. Quality Control: Electronic Arts Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Cisco

A-Score: 6.1/10

Value: 2.2

Growth: 4.1

Quality: 7.7

Yield: 5.0

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

View Full Report
Stock-Card
IBM

A-Score: 5.5/10

Value: 1.5

Growth: 3.0

Quality: 6.3

Yield: 6.0

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
QUALCOMM

A-Score: 5.3/10

Value: 3.4

Growth: 6.2

Quality: 8.1

Yield: 4.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
NetApp

A-Score: 5.2/10

Value: 3.4

Growth: 5.8

Quality: 7.2

Yield: 4.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

View Full Report
Stock-Card
Electronic Arts

A-Score: 5.1/10

Value: 0.9

Growth: 5.2

Quality: 7.8

Yield: 0.0

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

View Full Report
Stock-Card
Take-Two Interactive

A-Score: 4.6/10

Value: 6.2

Growth: 1.7

Quality: 2.4

Yield: 0.0

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

203.92$

Current Price

203.92$

Potential

-0.00%

Expected Cash-Flows