- Take-Two narrowed its loss on the eve of its biggest launch. The video-game publisher reported a second-quarter loss of $54 million, or 29 cents a share, compared with a loss of $133.9 million, or 73 cents a share, a year earlier, far better than the 86-cent loss analysts polled by FactSet expected, The Wall Street Journal reported.
- Revenue was the weak spot. Revenue fell to $1.5 billion from $1.77 billion a year earlier, missing expectations of $1.62 billion, while total net bookings fell 18% to $1.6 billion and recurrent consumer spending dropped 5%, accounting for 81% of total revenue. CNBC, citing LSEG, reported adjusted earnings of $1 a share and revenue of $1.60 billion against estimates of 94 cents and $1.58 billion; that $1.60 billion figure matches the company’s net bookings rather than its reported revenue.
- Guidance went up, but not to Wall Street’s level. Take-Two lifted its full-year revenue outlook by $80 million to $7.98 billion to $8.18 billion and raised the low end of its earnings guidance by 2 cents to a range of 57 cents to 75 cents a share, while analysts expect $1.66 a share on $8.62 billion in revenue.
- All eyes are on Nov. 19. Chief Executive Strauss Zelnick said pre-orders for “Grand Theft Auto VI,” which goes on sale Nov. 19, have reached unprecedented levels, adding, “We expect to deliver an historic year for our company,” and the shares rose 3.7% to $215.12 in after-hours trading.
What Happened?
Take-Two reported results for its fiscal second quarter on Monday after the market close, its final quarterly report before the release of “GTA VI” later this month. For the current third quarter, which will include the launch, the company guided for earnings of $1.30 to $1.44 a share on revenue of $3.27 billion to $3.42 billion. Analysts are expecting third-quarter earnings of $1.50 a share on $3.42 billion in revenue, meaning the top end of the revenue guide only matches the consensus. CNBC put the after-hours gain at 4%.
Why It Matters?
Investors are looking past a soft quarter because the year hinges on one title. The raised revenue outlook and Zelnick’s comments on pre-orders suggest the launch is tracking well, but even the top end of the new full-year range sits below the $8.62 billion analysts expect, and the earnings guide is far below the $1.66 consensus. That gap leaves room for upside surprises if “GTA VI” sales outrun management’s forecast, but it also means the stock’s rally is pricing in a stronger launch than the company is willing to guide to. The decline in recurrent consumer spending, which makes up most of revenue, shows how much the business needs a new blockbuster.
What’s Next?
The Nov. 19 launch is the immediate catalyst, and early sales data will show whether pre-order strength translates into record sell-through. The fiscal third-quarter report will be the first to reflect the release, so watch whether Take-Two lands at the top of its $3.27 billion to $3.42 billion revenue range or beats it. Investors will also track whether management raises full-year guidance again to close the gap with consensus and whether recurrent spending rebounds as players return to the franchise.
Affected Tickers and Coins: TTWO
Source: The Wall Street Journal, CNBC
