Electronic Arts Inc. (EA) saw its loss narrow to $38 million, or $0.13 a share for the quarter ended Sep. 30, 2016. In the previous year period, the company reported a loss of $140 million, or $0.45 a share.
Revenue during the quarter grew 10.18 percent to $898 million from $815 million in the previous year period. Gross margin for the quarter expanded 553 basis points over the previous year period to 55.35 percent. Operating margin for the quarter stood at negative 5.46 percent as compared to a negative 14.60 percent for the previous year period.
Operating loss for the quarter was $49 million, compared with an operating loss of $119 million in the previous year period.
"Q2 was an excellent quarter for Electronic Arts, led by breakthrough new EA SPORTS titles engaging players across console and mobile," said Chief Executive Officer Andrew Wilson. "We are in an outstanding position for the quarter ahead, with two of the highest-rated games of this console generation in Battlefield 1 and Titanfall 2, global competitive gaming tournaments underway, and our first virtual reality experiences coming soon. Across all platforms, this holiday season will be a fantastic time to play."
Electronic Arts expects revenue to be $4,775 million for fiscal year 2017. For fiscal year 2017, Electronic Arts forecasts net income to be $848 million. For fiscal year 2017, the company projects diluted earnings per share to be $2.69.
Operating cash flow remains negative
Electronic Arts Inc. has spent $139 million cash to meet operating activities during the first half as against cash outgo of $62 million in the last year period.
The company has spent $249 million cash to meet investing activities during the first six months as against cash outgo of $80 million in the last year period.
The company has spent $351 million cash to carry out financing activities during the first six months as against cash outgo of $307 million in the last year period.
Cash and cash equivalents stood at $1,746 million as on Sep. 30, 2016, up 9.26 percent or $148 million from $1,598 million on Sep. 30, 2015.
Working capital increases sharply
Electronic Arts Inc. has recorded an increase in the working capital over the last year. It stood at $2,210 million as at Sep. 30, 2016, up 97.15 percent or $1,089 million from $1,121 million on Sep. 30, 2015. Current ratio was at 2.08 as on Sep. 30, 2016, up from 1.44 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 22 days for the quarter from 35 days for the last year period. Days sales outstanding went down to 44 days for the quarter compared with 50 days for the same period last year.
Days inventory outstanding has decreased to 6 days for the quarter compared with 11 days for the previous year period. At the same time, days payable outstanding went up to 29 days for the quarter from 26 for the same period last year.
Debt increases substantially
Electronic Arts Inc. has witnessed an increase in total debt over the last one year. It stood at $990 million as on Sep. 30, 2016, up 134.60 percent or $568 million from $422 million on Sep. 30, 2015. Long-term debt stood at $990 million as on Sep. 30, 2016. Total debt was 14.36 percent of total assets as on Sep. 30, 2016, compared with 7.03 percent on Sep. 30, 2015. Debt to equity ratio was at 0.27 as on Sep. 30, 2016, up from 0.13 as on Sep. 30, 2015.
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