I wrote for Naavik about EA and Square Enix’s latest quarterly earnings. Read the full article here.

Why I wrote about this

This was very much a business-as-usual news commentary piece. Square Enix reporting is always fun to read since the leadership is famously out there.

The gist of it

EA reported net bookings of $1.3 billion for the April–June quarter, down 3% year-on-year. Console and PC bookings declined, while mobile grew 15%, largely thanks to acquisitions completed in 2021 (Glu, Playdemic, Codemasters). Net revenue, however, grew 14% to $1.8 billion, with a healthy 25% operating margin.

About 70% of EA’s business is now live service–driven, which makes bookings a key signal. Even though revenue can lag due to deferred recognition of virtual currency sales, a bookings dip is still a dip. That said, with overall consumer spending in games reportedly down 13% year-on-year, EA may actually be outperforming the broader market. FIFA continues to do heavy lifting, and management remains confident, guiding for $7.6–$7.8 billion in full-year revenue.

Square Enix had a tougher quarter. Net sales declined 15% and operating income fell 17%, with margins holding roughly steady at just over 19%. The biggest drag was the HD Games segment, down 52% year-on-year due to weaker new releases compared to last year’s stronger lineup. Mobile & Browser revenue also fell. The bright spot was the MMO segment, up 22%, driven by Final Fantasy XIV’s continued strength.

Meanwhile, Square Enix is in transition. It recently divested its Western studios and IP (including Tomb Raider) to Embracer and reiterated plans to streamline operations for capital efficiency. At the same time, leadership continues to signal interest in blockchain and cloud gaming initiatives. Whether those bets pay off remains to be seen.

Key takeaways

EA

  • EA’s bookings were flat-to-down.
  • Sports franchises, especially FIFA, remain the backbone of EA’s performance.
  • Acquisitions materially boosted EA’s mobile growth.

Square Enix

  • Square Enix’s HD segment is volatile and hit-driven; FFXIV is currently carrying the torch.
  • Square Enix is restructuring aggressively, while publicly flirting with blockchain and cloud. It’s all about execution.