Electronic Arts just reported a new all-time record-breaking Q2 thanks to stronger-than-average game sales, downloads, and live services.
EA's Q2'22 was the best in its 39-year history. The company earned a whopping $1.851 billion in net bookings and a staggering $1.826 billion in net revenues. These numbers are tremendous on their own but are made even more impressive because of how close they are to each other.
What's the difference? Short answer: Net bookings includes deferrals, which are revenues from online games that have yet to be recognized (earnings from games with microtransactions like FIFA and Madden have to be carved up over specific periods due to GAAP laws). For most of the year, EA's net bookings are lower than revenues because it's subtracting deferrals. The deferrals are recognized later on in the year, usually during the Q3 periods, and help inflate these numbers.
So when net revenues and net bookings are so close, it's a better indicator of actual company success. For Q2'22, EA only recognized $25 million in deferrals (as opposed to the $727 million it recognized for Q3'21).
The reason behind the record-breaking earnings is simple: EA outperformed in all of its metrics. The company's physical and digital game sales are up, and live services are also up to a record $1 billion+ for a Q2 period.
In Q2'22, EA earned $372 million from full game downloads, $324 million from physical game purchases, and a staggering $1.155 billion from live services. Q3 is also set to be explosive thanks to FIFA 22 and Battlefield 2042, both of which are releasing in the period.
"EA delivered another strong quarter, primarily driven by our EA SPORTS titles and Apex Legends,"said CFO Blake Jorgensen.
"Based on our confidence in our franchises and live services, we are again raising guidance this quarter. We're positioned for a strong holiday season driven by our exciting Battlefield 2042 game, with growth drivers in place for this year, next year, and beyond."
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