Video game publisher Electronic Arts Inc has revised its full-year guidance following Tuesday’s second-quarter earnings call.
Full-year net revenue is expected to range between US$7.55bn and US$7.75bn, revised down from US$7.6bn to US$7,8bn.
Net income is expected to be approximately $871mln to $934mln, which is up from previous guidance, while diluted earnings per share is expected to be approximately US$3.11 to US$3.34 compared to the previous range of US$2.79 to US$2.87.
Cost of revenue expectations have been slashed.
Just over 50% of EA’s sales are generated outside of the US, so a US$200mln forex headwind is expected due to the strength of the greenback.
EA reaffirmed its guidance for operating cash flow of US$1.6bn to $1.65bn, with capital expenditures of approximately US$200mln, resulting in a projected free cash flow of about US$1.4bn to US$1.45bn.
Second-quarter results
Tuesday’s earnings were a mixed result.
As expected, net bookings for the second quarter came to US$1.75bn, down 5% year on year.
Operating cash flow for the quarter was negative US$112mln, a 26% on a trailing 12-month basis.
EA repurchased 2.6mln shares for US$325mln during the quarter, bringing the total for the trailing twelve months to 10mln shares ($1.3bn).
EA declared a quarterly cash dividend of $0.19 per share payable on December 21.
Loot boxes: The mystery revenue maker
EA is known for headline video games IPs including FIFA, Battlefield, Madden NFL, Need for Speed and many others.
Well-established British studios such Codemasters and Criterion are subsidiaries of EA Games.
EA Games is also known for its controversial use of randomised in-game loot boxes, which have been accused of being a form of underage gambling.
Loot boxes are virtual items that can be purchased with money, granting players randomised items such as weapons upgrades, exclusive character models and other competitive advantages.
Exactly how much EA makes from loot boxes is unknown, but it is expected to be a large portion of revenues.
Game purchases only accounted for 31.6% of EA’s $US1.9bn new revenues, with the remainder comprising ‘live services and other’, of which loot boxes are included.