EA Loses $391 Million in Q2, Despite Madden, FIFA and Need for Speed Success

November 09, 2009 | By: IndustryGamers

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Electronic Arts has seen better days, but it continues to make moves to improve its business going forward. Today the company reported its second quarter fiscal results, revealing a $391 million net loss, up from a net loss of $310 million for the prior year. Sales for the quarter came to $788 million as compared with $894 million for the prior year. EA noted that it had a net revenue deferral of $359 million "related to certain online-enabled packaged goods and digital content."

The big news today, aside from the Playfish acquisition, is that along with its fiscal results EA has confirmed company-wide layoffs as part of a new cost reduction plan to be completed by March 31, 2010. Read this story for more on the plan.

As for EA's performance during the quarter, the company was actually the #1 publisher in North America and Europe fiscal year to date, with 21% segment share, which is up four points. In Q2, Madden NFL 10 was the #1 title in North America, and FIFA 10 was EA's strongest European title launch in its history, selling 4.5 million copies in week one alone. Need for Speed SHIFT also sold over 2.5 million copies in the quarter, following a 22 point increase in quality (as measured by Metacritic). The Beatles: Rock Band and NCAA Football 10 contributed to the bottom line as well.

Importantly, EA noted that digital non-GAAP net revenue reached an all time quarter high at $138 million (up 23 percent year-over-year). And on the mobile side, EA generated $50 million of non-GAAP net revenue in the quarter (up 9% year-over-year) and was the #1 publisher of games on the iPhone with seven of the top 10 games and #1 on Verizon with eight of the top 10 games.

"EA is performing well, with quality, sales and segment share up so far this year," said John Riccitiello, Chief Executive Officer. "We are making tough calls to cut cost in targeted areas and investing more in our biggest games and digital businesses."

"We met our second quarter expectations and delivered a record quarter for revenue," said Eric Brown, Chief Financial Officer. "Today we are announcing a significant cut in our operating expenses and the acquisition of a leader in social games, Playfish."

For the full fiscal year ending next March, EA is forecasting net revenues between $3.6 and $3.9 billion and a loss per share between $1.20 and $2.05. EA also noted that these fiscal expectations "do not reflect the financial impact of the acquisition of Playfish Limited, which is expected to be roughly neutral to non-GAAP expectations and increase GAAP loss per share by $0.15 to $0.25."