(Adds details on forecasts, upcoming game titles)
By Malathi Nayak
SAN FRANCISCO May 6 Video game publishers
Electronic Arts Inc and Activision Blizzard Inc
posted quarterly profit and revenue that beat expectations on
Tuesday, sparking a rally in their shares.
On Nasdaq, Electronic Arts rose 15 percent after closing at
$28.05, and Activision climbed 4 percent after closing at
Electronic Arts also said it will set aside $750 million for
a new share repurchase program.
The games publisher, known for its "FIFA" and "Madden"
games, recorded non-GAAP net revenue of $914 million in its
fiscal fourth quarter, down from $1.04 billion a year ago but
more than the $812.4 million that Wall Street had expected.
The Redwood City, California-based company posted non-GAAP
earnings of 48 cents a share, far exceeding analysts' forecast
of 11 cents.
"The real driver there was our digital business, which grew
much faster than anticipated and our titles are doing well on
the new consoles," EA Chief Financial Officer Blake Jorgensen
said in an interview. "We're the No. 1 publisher on both
Playstation4 and Xbox One."
Activision Blizzard said its income growth was driven by
robust digital sales of titles such as its personal computer
game "Diablo III: Reaper of Souls" and console games like "Call
"We're continuing to see margin expansion and the shift of
our revenues going to digital from retail," Activision Chief
Executive Bobby Kotick said in an interview.
Activision said non-GAAP revenue, adjusted for the deferral
of digital revenue and other items, dropped 4 percent to $772
million from $804 million a year ago. Digital sales set a new
record as it made up 68 percent of the total revenue, the Santa
Monica, California-based company said.
Non-GAAP income per share rose to 19 cents from 17 cents in
the year-ago period.
Wall Street analysts had estimated revenue of $688.3 million
and earnings per share of 10 cents, according to Thomson Reuters
Electronic Arts is on track to launch a fresh iteration of
its city-building "Sims" game later this year and a new
"Ultimate Fighting Challenge" title in June. The company expects
to see non-GAAP revenue of $4.1 billion and earnings per share
of $1.85 in the fiscal year ending March 2015.
For the first quarter ending June 30, it expects non-GAAP
revenue of $700 million and a loss of 5 cents per share. This
beat analysts' estimates of $632.7 million for revenue and a
loss of 23 cents per share.
Activision's upcoming releases include sci-fi game "Destiny"
and military-action shooter "Call of Duty: Advanced Warfare."
Potentially breaking industry records, the company intends
to shell out $500 million to develop and promote "Destiny,"
which will launch on Sept. 9, as it seeks to build the
"shooter" video game into its next multibillion-dollar
With a clearer view into its game pipeline, Activision
slightly raised its 2014 non-GAAP earnings per share forecast to
$1.27 from its previous forecast of $1.26. This fell short of
Wall Street analysts' earnings per share estimate of $1.29,
according to Thomson Reuters I/B/E/S.
(Reporting by Malathi Nayak; Editing by Chris Reese; Editing by
Richard Chang and Cynthia Osterman)