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Investors tin can be hard to please sometimes. Electronic Arts' (EA 0.99%) stock brutal later on the company appear record metrics for its fiscal second quarter thank you to a alluvion of hitting content releases and surging need for at-dwelling house entertainment. The video game giant declined to boost its 2020 outlook, in a pause from peers like Activision Blizzard (ATVI 0.58%). Simply EA is still expecting a banner twelvemonth for sales and profits alee.
In a briefing phone call with investors, CEO Andrew Wilson and his squad explained the factors that accept them feeling confident about the business organisation heading into the crucial holiday shopping flavor. They too added context to that stable 2020 outlook. Let'southward wait at some highlights.
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Where things stand
We delivered eight new games and then far this year, and our network has grown to more than 330 million unique accounts as tens of millions of new players take joined to enjoy more of our astonishing games and content. EA Sports continues to be a leader in sports interactive entertainment. Madden NFL 20 was the most successful game in franchise history last year and now Madden NFL 21 already has nearly 30% more than players year over year from launch. Our FIFA franchise is engaging more 100 meg players globally.
-- Wilson
EA picked a practiced time to enhance its intellectual-property game, as the focus on dwelling house entertainment during the pandemic has given it a huge platform from which to launch its digital products. This list of hit releases is dominated by the sports franchises like FIFA and Madden, but EA notched wins beyond its PC and mobile channels, likewise.
Stepping back, cyberspace bookings, a mensurate of consumer sales, are upwards 8% to $five.half-dozen billion over the by 12 months. That's a slower expansion pace than Activision Blizzard has seen, in part because a few fundamental titles were delayed and pushed out of the fiscal second quarter. But EA is still pushing into record revenue territory.
Reaching $ii billion in annual cash flow
"The strength and dependability of our cash period has led us to start a new repurchase program this quarter and to initiate a dividend for the showtime time in the company's history," CFO Blake Jorgensen said.
Since its sales are tilting more toward subscription purchases, EA'southward cash period is a great indicator of the broader health of the business organization. That trend is decidedly positive, with operating greenbacks menstruum reaching $2.04 billion over the past year compared with $1.75 billion a twelvemonth earlier.
EA is dedicating some of that cash toward uppercase investments, only at that place was nevertheless plenty to push cash holdings up 24% this quarter. That potent financial position persuaded management to initiate a dividend payment while boosting its stock repurchase plans. Executives are aiming to evangelize $3 billion to shareholders over the side by side two years.
More growth is on the fashion
"We will proceed to reach more players beyond more platforms in Q3," Wilson said.
EA only affirmed its fiscal year outlook, and that cautious move persuaded investors to push the stock lower following the second-quarter report. Management said bookings will exist pressured slightly from several release delays that are pushing sales into early financial 2022 as development teams iron out any potential design problems. That forecast translates into an 11% net bookings increment this year, but EA isn't expecting a quick step backward in 2022.
Instead, management believes information technology tin keep the pace of new video game releases going so that EA boosts sales and profits again next year despite the comparison with pandemic-fueled growth in fiscal 2021. That flood of content is the best reason to expect even more cash returns adjacent yr.
Source: https://www.fool.com/investing/2020/11/24/why-electronic-arts-is-sending-3-billion-to-invest/