Morningstar | EA Ends Fiscal 2019 on a Strong Note; Apex Legends Offsets the Weak Launch of Anthem
EA bounced back from a very disappointing fiscal third quarter to end fiscal 2019 on a positive note as the fiscal fourth-quarter top and bottom lines beat both consensus expectations and the company’s lowered guidance. The success of the surprise Apex Legends back in February appears to have offset the disappointing reception for Anthem which launched in the same month. While free-to-play Apex Legends appears to be holding its own against its older and more successful competitor, Fortnite, we remain cautious about the long-term competitiveness for the newer title as it has only been in the market for three months. We are maintaining our narrow moat rating and our fair value estimate of $108. With shares trading in 3-star territory, investors should wait for a pullback prior to investing.Net revenue of $1,238 million (down 22% year over year) and net bookings of $1,364 million (up 9% year over year) both came in well above guidance ($1,163 million and $1,170 million, respectively). Total revenue from consoles fell by 31% to $826 million but was in line with our $837 million estimate, as the failure of Anthem was offset by strong performance of Apex Legends and the sports titles including the Ultimate Team modes in both FIFA and Madden. Digital net bookings were up 14% year over year to $1,193 million, driven by growth in PC (up 67%) and console (10%) due in part to the success of Apex Legends. Mobile net bookings declined 23% year over year, as the company suffered from continued declines across its portfolio, particularly within Asia.
While the firm is testing out two new mobile titles for fiscal 2020, we still believe that launching a new mobile title has become increasing difficult as many of the top titles maintain their ranking for three or more years. One title that may be able to overcome that issue would be a mobile version of Apex Legends which EA is exploring. Even though Fortnite has outpaced the previous battle royale leader, PlayerUnknown’s Battlegrounds, on consoles and the PC, the mobile version of PUBG hit over 200 million users back in December and has become very popular across Asia. While Apex Legends would have an uphill battle against the mobile versions of PUBG and Fortnite, EA’s take on the battle royale has already carved out a place on consoles and PC against its entrenched competitors.
Electronic Arts develops, markets, publishes and distributes games, content and services that can be played and watched on a variety of platforms, including game consoles, personal computers, and mobile phones. The company markets and sells its games and services through digital distribution channels and through retail channels. Digitally, the company's console games and services can be purchased through third-party storefronts. In its games and services, the company utilizes brands that it either wholly own or license from others. The company develops and publishes games and services across genres. Within and alongside its games, the company provides live services, including in-game purchases, downloadable content, and esports.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.