Electronic Arts (EA) Q2 CY2025 Deep Dive: Sports Franchises Drive Engagement, But Margin Pressures Persist

Video game publisher Electronic Arts (NASDAQ:EA) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales were flat year on year at $1.67 billion. On the other hand, next quarter’s revenue guidance of $1.8 billion was less impressive, coming in 5.9% below analysts’ estimates. Its GAAP profit of $0.79 per share was 25.7% above analysts’ consensus estimates.

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StockStory’s Take

Electronic Arts’ second quarter results were met with a positive market reaction, with revenue and profit both surpassing Wall Street expectations. Management credited the performance to deepening engagement across its core sports franchises, notably Global Football (FC), Madden NFL, and the continued momentum of Apex Legends. CEO Andrew Wilson highlighted that “community events like Team of the Season and innovative integrations, such as live MLS matches in FC Mobile, drove player engagement and retention.” The company also benefited from strong catalog sales and new content, particularly within its live service portfolio.

Looking ahead, Electronic Arts’ guidance reflects cautious optimism as the company launches major titles including Battlefield 6, FC 26, and skate. Management pointed to increased marketing spend and a deliberate focus on community-driven content as central to their strategy. CFO Stuart Canfield noted that upcoming quarters will be impacted by the timing of major releases and a normalized demand curve for College Football, stating, “We are appropriately measured in our near-term assumptions, with key launches expected to drive engagement and growth in the back half of the year.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong execution in sports and live service titles, while acknowledging margin pressures from increased investment and shifting product mix.

• Sports titles engagement: EA’s Global Football franchise saw higher player participation, with FC Mobile achieving over 50 million installs and year-over-year daily active user growth. Live community events and cross-platform integration helped extend reach and deepen engagement.
• Apex Legends stabilization: The shooter franchise demonstrated improved player retention and satisfaction, attributed to new content and operational changes. The introduction of Legend Locker and popular new characters contributed to this turnaround, with management expecting continued momentum into the next season.
• Catalog and legacy IP strength: Titles like Star Wars Battlefront II and Split Fiction outperformed expectations, supporting full game net bookings growth. Management emphasized that catalog strength complemented the company’s ongoing live service revenue base.
• Operating margin compression: Higher operating expenses—primarily from increased personnel costs and marketing in anticipation of upcoming launches—pressured margins. Management stated these investments are necessary to support long-term growth and the successful release of marquee titles like Battlefield 6.
• Mobile and web store expansion: EA continued to localize mobile content and streamline offerings, as seen in the unification of Southeast Asia under a single SKU for FC Mobile. Adoption of web-based stores in key territories is expected to improve profitability over time.

Drivers of Future Performance

Management’s outlook for upcoming quarters is shaped by major releases, evolving player engagement strategies, and heightened investment in marketing and development.

• Heavy launch slate impact: The back half of the year will feature launches such as Battlefield 6 and FC 26, which management expects to drive engagement but also require significant upfront marketing and production costs.
• Live service and community focus: EA is prioritizing live service updates and community-centric content, aiming to sustain engagement across sports and shooter franchises. The company believes this approach will support durable revenue streams, though it may temporarily pressure operating margins.
• Competitive and economic headwinds: Management acknowledged risks from increased competition, especially around key launch windows, and noted ongoing operating expense increases. The company expects a normalization in College Football demand and is closely monitoring the impact of changes to mobile app store economics.

Catalysts in Upcoming Quarters

Looking forward, our analysts will closely monitor (1) the commercial performance and player adoption of Battlefield 6 and FC 26, (2) the ability of live service content updates to sustain engagement across major franchises, and (3) evidence that recent marketing and development investments translate into profitable growth. Additionally, we will watch for further updates on mobile monetization strategies and the impact of competitive dynamics in both sports and shooter genres.

Electronic Arts currently trades at $176.50, up from $147.76 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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