Video game company Electronic Arts (EA) revealed Tuesday (May 7) that its full-year bookings were forecast to be below Wall Street estimates. The whole gaming industry experienced a massive crunch due to economic woes and a slowdown since the pandemic.
The company recently cut 5% of its workforce as part of its restructuring plan, which also included reducing office space.
VentureBeat reported that the company's weaker-than-expected performance came on the same day as Microsoft's announcement that it would close several studios for similar concerns.
EA's Bookings by the Numbers
According to LSEG data, the company forecasts its bookings for fiscal year 2025 between $7.3 billion and $7.7 billion, below analysts' average estimate of $7.76 billion.
For example, the company's fourth-quarter bookings were estimated at $1.67 billion, around $100 million short of its $1.77 billion target. Share-wise, EA earned $1.37 per share during the quarter, also lower than the estimated $1.52
New games like its Star Wars releases were credited for not making it as bad as it is, but Third Bridge analyst Joe Burnetto said that EA should take advantage of the Disney franchise to assure its long-term growth.
EA is also targeting bookings in the range of $1.15 billion to $1.25 billion, which is also way below Wall Street estimates of $1.44 billion.
Reuters reported that EA's shares went down 2.5% in extended trading.
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Gaming Firms Plan Spending Cuts
Aside from EA, multiple companies in the gaming industry have been coping with gamers reining in their game spending due to a high inflation rate.
As a result, larger players like Sony and Rockstar Games' mother firm, Take-Two Interactive, have been forced to cut spending in recent months to weather the economic storm and the dearth in game demand.
New York University (NYU) Stern School of Business lecturer Joost Van Dreunen said that while issuing buybacks would help temporarily offset some of the negative outlook affecting game publishers like EA, they should be "working toward an upswing once the next console generation presents itself."
EA also authorized a $5-billion stock buyback plan over three years.
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