Take-Two Narrows Loss, Plans for Release of Grand Theft Auto V and Other Blockbusters

Andrew Klips  |

Keeping the theme of solid tech earnings for the latest quarter, Take-Two Interactive Software Inc. (TTWO) posted better-than-expected results after Tuesday’s closing bell as sales of Borderlands 2 and NBA2K13 rose.  Meanwhile, the game maker boosted its outlook for the current quarter and for the full fiscal 2014 year, ending March 31, 2014.

For the first quarter of fiscal 2014, the New York-based company posted net revenue of $142.7 million, down sharply from sales of $226.1 million in the year prior quarter that swelled on the release of Max Payne 3 and Spec Ops: The Line.  Take-Two didn’t have a major title release in the latest quarter.  Net loss from continuing operations for the quarter was $61.9 million, or 71 cents per share, versus a net loss of $110.8 million, or $1.30 per share, in the year prior quarter.  On an adjusted basis, which accounts for deferred revenue from certain games, discontinued operations and other special items, net loss narrowed to $47.1 million, or 54 cents per share, compared to $98.8 million, or $1.16 per share, in last year’s quarter.

Wall Street was expecting a larger adjusted loss of 66 cents per share on revenue of $131.8 million.

Sales from digitally delivered content expanded 128 percent year-over-year to account for more than half of all GAAP revenue.  The biggest contributions were made by three new digital expansion packs for Borderlands 2.  Catalog sales of older titles, such as the Borderlands and Grand Theft Auto franchises and Red Dead Redemption, made up 60 percent of adjusted net revenue.

Trade Commission-FREE with Tradier Brokerage

Major upcoming releases for Take-Two include NBA 2K14 (featuring the debut of Lebron James on the cover) on October 1; WWE 2K14 (featuring Dwayne “The Rock” Johnson on the cover) on October 29; The Bureau: XCOM Declassified on August 20; and the much-anticipated release of Grand Theft Auto V on September 17.  Another upgrade pack for Borderlands 2 is also expected in the fall as well as the release of several games for Xbox One and PlayStation 4 once those next-generation gaming consoles debut later this year.

“Our better-than-expected first quarter results demonstrate that the market remains strong for the highest-quality interactive entertainment,” said Strauss Zelnick, chairman and chief executive of Take-Two.  “With Grand Theft Auto V launching on September 17th, followed by the releases of NBA 2K14 and WWE 2K14, fiscal 2014 is poised to be one of our best years ever,” he added.

Looking at the current quarter, the company sees non-GAAP net revenue between $750 and $800 million and adjusted profits between $1.25 and $1.35 per share.  Analysts were expecting earnings per share of $1.66 on sales of $818 million.

For the full fiscal year, Take-Two forecast non-GAAP net revenue in the range of $1.775 billion to $1.875 billion and earnings per share of $2.25 to $2.50.  This is up from the company’s prior guidance of profits between $2.05 and $2.30 per share.

Shares of TTWO ended the regular session Tuesday essentially flat at $16.99, but have climbed to $17.25 in extended trading with the earnings beat, although the soft second-quarter guidance moderated the gains.  Shares are up about 55 percent so far in 2013 and are sitting near their highest level in five years.  Shares have fought resistance at $17.55, hitting it in May 2011 and again two months ago to now challenge it yet again.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


Symbol Last Price Change % Change