EA Earnings: Strong Star Wars Jedi Survivor Launch Heralds a New Core Franchise

Electronic Arts EA kicked off fiscal 2024 with a solid showing, as first-quarter bookings met and adjusted operating income came in ahead of FactSet consensus. EA benefited from strong core franchise growth as FIFA 23 drove increased engagement and Star Wars Jedi: Survivor built off the success of the original title. We are raising our fair value estimate to $150 from $142 due to improved margins and the launch of EA Sports FC, the rebranded version of FIFA.

Net bookings of $1.6 billion, up 16% year over year in constant currency, came in at the high end of the guidance range. Adjusted operating margin improved to 23% from 13% a year ago on higher bookings, the mix shift toward higher-margin nonmobile games, and cost controls.

Console net bookings increased by 41% to $901 million, driven by the strong Jedi launch and increased FIFA engagement. Due to the strong response, EA will port the game to the previous generation consoles, which should help expand the revenue tail for the game. Given the launch, we expect overall sales of the title to exceed the original installment, which sold over 10 million units. Unlike many large AAA games, Jedi Survivor does not include in-game microtransactions, limiting the revenue tail in some respects. However, EA could release an expansion or other downloadable content to add to the overall revenue for the game. We expect a third installment of the game is very likely, with a possible launch in fiscal 2026 or 2027.

Mobile bookings fell 4% to $331 million due to the shutdown of Apex Mobile. Excluding Apex Mobile, net booking improved by 5% in constant currency, driven by FIFA Mobile, which posted its strongest first quarter ever. Outside of FIFA, management appears positive about the new The Lord of the Rings mobile title.