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EA’s Second Quarter 2014 Financial Report Includes NCAA Settlement
EA is reporting a strong second quarter 2014, with digital net revenues that have grown 22 percent from $314 million to $348 million during the same quarter last year (Non-GAAP). Packaged (retail) goods decreased from $744 million to $670 (10 percent).
Total revenue is approximately level by both GAAP and non-GAAP measures, decreasing from $1.08 billion to $1.04 billion by non-GAAP measures. Non-GAAP net income rose from $49 million to $105 million. GAAP income marks an improvement in net loss from $381 million during second quarter 2013 to $273 million in this quarter.
EA reports that $40 million went to the NCAA player likeness settlement. This sum is not included in the Non-GAAP accounting, as it’s considered a one-time expense. EA also continues to exclude “restructuring” (layoffs and studio closures) in its accounting, claiming that each of those events is separate and unlike the others.
Our Take
EA continues to streamline, even today putting a stop to the development of a free-to-play Command & Conquer title. Plants vs. Zombies 2, sports titles (and the related Ultimate Team in-game purchases), and other mobile titles like Simpsons Tapped Out all contributed to the strong quarter. I expect next quarter will be equally impressive with Battlefield 4, Need for Speed: Most Wanted, and next-gen sports titles bringing in big revenue.
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