As a result of this news, EA’s shares experienced a 4.75% drop in after-hours trading, with the stock price falling to $124.05. Interestingly, Microsoft also made an announcement on the same day about the closure of multiple studios, which raised similar concerns.
The layoffs in the gaming industry have been significant in recent months, reaching a level comparable to the 10,500 layoffs that occurred in 2023. Nintendo also reported missing earnings targets and forecasted a relatively weak year ahead.
One possible reason for these disappointing forecasts is that gamers have been cutting back on discretionary spending as they resume post-COVID activities like outdoor pursuits and traveling. EA had already implemented its own restructuring program earlier this year, resulting in a 5% reduction in its workforce.
Despite these challenges, Andrew Wilson, the CEO of EA, remains optimistic about the future. He stated that EA had delivered “bigger, bolder world-class entertainment” which engaged millions of players and fans. Wilson believes that the company’s strong momentum will continue with new experiences, starting with College Football in FY25, positioning them for accelerated growth in FY26 and beyond.
Stuart Canfield, CFO of EA, highlighted the success of EA Sports FC and Madden NFL in driving record cash flow and strong earnings growth for FY24. To demonstrate their confidence in the future, EA also announced an expanded stock repurchase program.
Looking ahead to fiscal year 2025, EA forecasts bookings of approximately $7.3 billion, falling short of expectations. Net income is expected to be in the range of $904 million to $1.085 billion.
In the fourth fiscal quarter, EA’s bookings were $1.67 billion, slightly missing estimates. For the first quarter, EA expects bookings between $1.15 billion and $1.25 billion, compared to estimates of $1.44 billion.
Despite these figures, EA delivered 11 titles and over 600 content updates in the past year, including successful non-annual sports titles and the rebrand of EA Sports FC. The global football franchise experienced significant growth in net bookings in FY24, and Madden saw record net bookings and double-digit growth in weekly average users for both Madden NFL 24 and Madden Mobile.
While EA’s forecasts may have fallen below expectations, the company remains committed to delivering exciting gaming experiences and expects to rebound in the coming years. It will be interesting to see how EA adapts to the changing landscape of the gaming industry and if they can regain the confidence of investors and gamers alike.
