EA Beats In FQ2 With Non-GAAP Revenue of $1.04B And EPS Of $0.33, Raises Earnings Guidance

Electronic Arts had non-GAAP revenue of $1.04 billion in its fiscal second quarter (2014), and non-GAAP earnings per share of $0.33. The street had expected Electronic Arts to earn $0.12 (non-GAAP), on, again, non-GAAP revenue of $978 million.

The beat has sent Electronic Arts up almost 4% in after hours trading. Electronic Arts also raised its annual non-GAAP EPS guidance to $1.25 from $1.20. That’s a mild upgrade, but one that is welcome.

Electronic Arts is a very cyclical business. In its first fiscal quarter of 2014, it had non-GAAP revenue of $495 million, which was considered a beat. The market current expects Electronic Arts to post non-GAAP revenue of $1.8 billion in its fiscal third quarter, a period that includes the holiday sales cycle.

The company expects non-GAAP revenue of $1.65 billion in the next quarter. The gap between street expectations and stated guidance is quite large. Investors are therefore expecting the company to best its guidance by a firm margin.

Mobile, as with everyone, is a key part of Electronic Arts content strategy. For its fiscal second quarter, the company reported non-GAAP net revenue of $105 million. However, that figure is a mere 19 percent improvement on its year-ago quarter.

Moving past the endless non-GAAP numbers, here are the bare-bones figures for Electronic Art’s quarter:

• GAAP net revenue: $695 million
• GAAP net loss: $273 million
• GAAP EPS loss: $0.89

The company ended the quarter with $1.4 billion in cash and equivalents.

The question for Electronic Arts is now plain: Can the company best its own (non-GAAP) revenue guidance in its fiscal third quarter? If it fails to, it will dramatically fall short of investor expectations and will suffer a strong correction. We’ll know in about three months.

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