2 min read

Increased expenses dent EA's profits in third quarter

EA's revenue and net bookings rose year-over-year, but increased expenses (and a soft Battlefield 2042 launch) contributed to decreased profits.

Electronic Arts released its third-quarter financial results to investors today and the news--while not terrible--probably isn't what investors are hoping for. While the company did see year-over-year increases in revenue and net bookings, its net income shrank to $66 million. That's a 68.7 percent drop from the $211 million in profit from the same quarter last year.

EA's balance sheet shows that much of that decreased profit is driven by increased expenses, but it probably doesn't help that Battlefield 2042 did not have a strong launch last November. On a conference call with investors, CEO Andrew Wilson admitted that "some of the design choices we made also did not resonate with everyone in the community." 

He also attributed the technical issues with the game to the COVID-19 pandemic.

Still, EA's a big business, and Battlefield isn't the only driver of revenue, which rose 6.48 percent year-over-year from $1.673 billion to $1.789 billion. Meanwhile net bookings rose 7.375 percent from $2.4 million to $2.577 million from Q3 of last year.

CFO Blake Jorgenson also called attention to the trailing twelve months of net bookings, which were much higher than the same period in Q3 last year. That number rose 22 percent year-over-year from $5.95 billion to $7.25 billion.

So what hit EA's net income? Expenses slightly increased across the board for the company, but its R&D and amortization of intangibles drove the bulk of the $154 million increased spending. Amortization of intangibles is defined as expensing the costs of intangible assets like trademark or copyright over time.

EA also shared two notable numbers about how well its games are doing. Sci-fi battle royale game Apex Legends saw a 30 percent increase in monthly active users year-over-year, and players apparently spent 20 percent more time in EA games in full-year 2022 than in the same period last year.

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