Electronic Arts' Net Income Falls 28% in Q1 FY26

Electronic Arts Inc. (EA) reported its Q1 FY26 results, with net revenue reaching $1.671 billion, marking a 1% increase year-over-year. However, net income for the quarter was $201 million, a 28% decrease compared to the prior year's $280 million. The company's diluted earnings per share stood at $0.79, missing the analyst estimate of $0.1. Analyst revenue estimates were $1.234 billion, which the company surpassed.

Selected Operating Highlights

EA's Q1 performance exceeded expectations, driven by strong contributions across its portfolio. Net bookings for the quarter totaled $1.298 billion, surpassing the guidance range of $1.275 billion. Key performance drivers included EA SPORTS, Apex Legends, and catalog titles. Global Football demonstrated year-over-year growth in net bookings, notably setting a record quarter for FC Mobile net bookings. Additionally, EA SPORTS F1 25 achieved strong year-over-year net bookings growth, bolstered by an enhanced gameplay experience, including real-world integration with "F1 The Movie."

Management Outlook

CEO Andrew Wilson stated that the company had a strong start to FY26, outperforming expectations ahead of what is anticipated to be EA's most exciting launch slate. He highlighted efforts to deepen player engagement in EA SPORTS and preparations for upcoming titles such as Battlefield 6 and skate. CFO Stuart Canfield emphasized the resilience of live services and the breadth of the portfolio, which enabled the company to exceed the high end of its Q1 guidance. Both executives expressed confidence in the full-year guidance and long-term margin framework, citing strong fundamentals and a robust pipeline.

For fiscal year 2026, EA's outlook remains unchanged from May 6, 2025. The company expects net bookings to be approximately $7.600 billion to $8.000 billion, with net revenue projected between $7.100 billion and $7.500 billion. Net income is anticipated to range from $795 million to $974 million, and diluted earnings per share are expected to be between $3.09 and $3.79. The company also projects operating cash flow of approximately $2.200 billion to $2.400 billion. EA plans to return at least 80% of free cash flow through stock repurchases and dividends through fiscal year 2027.

For Q2 FY26, ending September 30, 2025, EA forecasts net bookings of approximately $1.800 billion to $1.900 billion and net revenue between $1.750 billion and $1.850 billion. The company anticipates net income to be in the range of $73 million to $117 million, with diluted earnings per share between $0.29 and $0.46. The growth in expenses for Q2 is largely attributed to marketing efforts related to upcoming launches, particularly Battlefield 6.