The difficult macroeconomic environment caught up to video game company Electronic Arts in its third quarter.
Electronic Arts reported net income of $204 million, up from $66 million in the year earlier period, and total net revenue of $1.88 billion, up from $1.79 billion in the year earlier period, but below expectations of many on Wall Street.
The company reported a decline in total net bookings for the past three months, reaching $2.3 billion, down from $2.6 billion in the year-earlier period. Net bookings for the trailing 12 months also declined to reach $7.1 billion, down 1 percent year-over-year. EA cited the performance of new games, as well as lower performance in the Apex game franchise coming in lower than anticipated.
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Electronic Arts has decided to cancel two games: Apex Legends Mobile and Battlefield Mobile, after the two did not meet expectations and after seeing a “softer” mobile market during their launches.
Electronic Arts lowered its annual net bookings forecast to between $7.07 billion and $7.17 billion, down from its previous forecast of $7.65 billion to $7.85 billion.
The company also pushed back the release of its new Star Wars Jedi: Survivor game to April 28, from the planned release in March. The delay comes as the company expects high demand around the release and wants to give its team an extra few weeks to “enhance performance stability, and most importantly, the player experience,” CEO Andrew Wilson said on the call.
Shares of Electronic Arts were falling 11 percent in after hours trading Tuesday.
“In Q3, EA delivered high-quality experiences, driving record engagement across some of our biggest franchises and growing our player network. While our teams delivered for our players, the current macro environment impacted Q3 results,” Wilson said. “As we navigate the short-term, we’re focused on building for the long-term and remain confident about our future. With amazing talent, proven IP and growing player network, EA is operating from a position of strength.”
“As market uncertainty mounted during the quarter, we took measures to protect underlying profitability,” said CFO Chris Suh. “We are prioritizing the player experience, directing investment to where it can have the most positive impact for our players and on growth.”
During the third quarter, the company said it reduced costs by more than $60 million “by moderating our hiring and prioritizing our variable spend.” The company said it is currently “taking strategic actions to evaluate our cost structure as we navigate through the current macro environment.”
This came after the second quarter earning’s call in which Wilson had said that the company had not yet seen any meaningful shift in consumer behavior, due to economic concerns, but that it was “hard to ignore all of the narrative around us” about the challenging macroeconomic environment.
Some of the quarter highlights came from the company’s big franchises, including FIFA 23, which is on pace to be the biggest title in franchise’s history, after it saw record engagement in Q3 during the World Cup, as well as The Sims, which added more than 10 million new players during the quarter, with daily active users, weekly active users and monthly active users all up double digits year-over-year.
