Electronic Arts forecasts annual bookings below estimates as gamers cut spending

08.05.2024

Electronic Arts, a prominent video game publisher, recently projected lower-than-expected full-year bookings, citing a general slowdown in spending within the gaming industry due to economic uncertainties. Consequently, the company’s shares experienced a 2.5% decline in after-hours trading.

In response, EA announced a new three-year stock buyback plan worth $5 billion to help mitigate short-term negative sentiment. However, industry expert Joost Van Dreunen from NYU’s Stern School of Business emphasized the importance for game publishers to anticipate an upturn in demand with the advent of the next console generation.

EA’s cautious outlook aligns with a broader trend in the gaming sector, as gamers scale back on discretionary spending amidst inflation concerns. Major players like Sony and Take-Two Interactive have implemented cost-cutting measures in response to economic uncertainties and declining game demand.

Earlier in February, EA initiated a restructuring plan that included a 5% reduction in its workforce and office space. The company’s fiscal year 2025 bookings are forecasted to range between $7.30 billion and $7.70 billion, falling short of analysts’ expectations.

In the fourth quarter, EA reported bookings of $1.67 billion, missing the estimated $1.77 billion. Analysts, however, remain optimistic about the company’s long-term prospects, citing strong development pipelines and anticipated contributions from new titles like “Star Wars Jedi: Survivor.”

Looking ahead, EA anticipates first-quarter bookings to range between $1.15 billion and $1.25 billion, lower than analysts’ estimates of $1.44 billion. Despite these challenges, the company remains resilient, earning $1.37 per share on an adjusted basis in the fourth quarter, albeit below the estimated $1.52 per share.