Electronic Arts always lands on its feet

Published: 2025-05-07 09:40:45 ET EA

Published on 05/07/2025 at 09:40, updated on 05/07/2025 at 09:41

By Esteban Tesson

After a lackluster third quarter, the US software publisher ended FY 2025 on a high note, with a rebound in sales and a 2026 outlook that already has the markets salivating.

Electronic Arts, the American video game heavyweight, has published its Q4 results. Despite fairly low expectations, notably due to a slow start for FC 25, the studio exceeded forecasts and demonstrated its ability to react quickly. The enthusiasm surrounding Split Fiction, which sold 4 million copies in its launch quarter, also helped significantly. This was twice as many as expected.

As we recently pointed out, the business model for video game publishers is anything but linear. Meanwhile, EA seems to have found the recipe for success: iconic licenses, massive loyalty, and a solid base of microtransactions. Its EA Sports label has been the mainstay, even since the end of its partnership with FIFA. Madden NFL is living proof of this.

American football was also a growth driver over the quarter, with college football continuing to contribute to the ecosystem, said James Heaney, an analyst at Jefferies. More importantly, player counts for Madden NFL and College Football on console and PC are growing at double digits, and playtime jumped 68%. That's quite a performance for a college game relaunched in July 2024, eleven years after the legendary NCAA 14.

While microtransactions were down slightly (-2% year-on-year), the momentum around Split Fiction and sports licenses more than compensated.

During the conference, CEO Andrew Wilson was confident, forecasting revenue of between $7.6bn and $8bn for FY 2026, a high range that exceeds consensus expectations ($7.62bn). In terms of cash flow, EA anticipates free cash flow of between $1.975bn and $2.175bn, up 6% to 17%.

The CEO concluded: "We remain committed to a strong shareholder return program, with a goal of returning at least 80% of free cash flow through share repurchases and dividends through FY 2027."

However, to achieve this, several boxes will need to be ticked. First, the new editions of its cash cows FC, Madden NFL and College Football must be successful. Next, it must not miss the mark with the highly anticipated return of Battlefield, expected in fall 2025, with a presentation this summer. This slot has been cleared by the postponement of GTA 6 and will be closely watched. Finally, the launches of Star Wars: Zero Company and the highly anticipated Skate 4 could also play a key role.

James Heaney of Jefferies shares this optimism: "The rebound of FC, the momentum of American football, and the launch of Battlefield reinforce the thesis of more sustained growth for EA. If the schedule is confirmed, the company could see its operating margin climb to 34%, up from 30% this year, the strongest increase since 2021".

Esteban Tesson