Sector: Communication Services | Focus: Interactive Home Entertainment
HQ: Redwood City, California
Financial Risks
EA faces market risks from fluctuating foreign currency exchange rates, interest rates, and market prices. International sales expose the company to currency risk, which can negatively impact reported revenue and operating expenses. Interest rate volatility affects short-term investment portfolio value. Competition, product development delays, and dependence on third-party platforms (consoles, stores) also pose risks. The company is subject to complex regulations, including data privacy and taxation, with uncertain interpretations and enforcement. Potential legal challenges and security breaches are also significant risks.
Financial Upside
EA's live services, including extra content and subscriptions, are a significant revenue driver, with potential for continued growth. Digital game sales are increasing, potentially offsetting declines in packaged goods sales. Re-occurring revenue streams from established franchises (e.g., EA SPORTS FC) and existing titles provide some predictability. The company's stock repurchase programs and cash dividends represent capital returns to shareholders. The company expects sufficient liquidity to meet its financial obligations.
