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Take-Two (TTWO) to Report Q2 Earnings: What's in Store?

Zacks Equity Research
·4-min read

Take-Two Interactive TTWO is set to report second-quarter fiscal 2023 results on Nov 7.

For the quarter, it expects net revenues between $1.37 billion and $1.42 billion.

For the quarter, the Zacks Consensus Estimate for revenues is currently pegged at $1.52 billion, suggesting a rise of 53.93% from the figure reported in the year-ago quarter.

The consensus mark for second-quarter earnings has been unchanged in the past 30 days at $1.37, indicating a decline of 13.29% from the year-ago quarter’s reported figure.

The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters while missing twice. TTWO delivered a trailing four-quarter earnings surprise of 6.01%, on average.

TakeTwo Interactive Software, Inc. Price and EPS Surprise

TakeTwo Interactive Software, Inc. Price and EPS Surprise
TakeTwo Interactive Software, Inc. Price and EPS Surprise

TakeTwo Interactive Software, Inc. price-eps-surprise | TakeTwo Interactive Software, Inc. Quote

Factors to Consider

Take-Two’s second-quarter revenues are expected to have benefited from its popular franchises GTA, Red Dead Redemption and NBA 2K and WWE 2K22. NBA 2K22 has sold more than 12 million units till the first quarter of 2023 and the average number of games played per user increased 16% year over year. This trend is expected to have continued in the second quarter as consumer spending increases for NBA 2K22.

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Take-Two is expected to have capitalized on the growing popularity of Grand Theft Auto (GTA). Rockstar Games developed GTA V for PlayStation 5 and Xbox series, which helped attract more console players to the platform. In the last quarter, console players of GTA grew 40% year over year and new players monetized at 36% higher than previous generation players. This is expected to have continued in the second quarter, impacting top-line growth positively.

However, rising operating costs are a matter of concern for the company. In the first quarter, operating expenses surged 124.9% year over year to $704.1 million. The company is continuously investing in product development and advertising to win market share. However, this is expected to have impacted Take-Two’s bottom-line growth negatively in the second quarter of fiscal 2023.

TTWO acquired Zynga with a strategic plan to realize $100 million in annual cost in two years and deliver $500 million of annual net bookings opportunities over time. As Zynga continues to experience continued user engagement and retention in its key high-margin mobile-first emerging markets, TTWO is expected to have benefited from its cost synergies strategy in the second quarter, helping it reduce operating costs.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is just the case here.

TTWO currently has an Earnings ESP of +0.66% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are a few other companies worth considering, as our model shows that these, too, have the right combination of elements to beat on earnings in their upcoming releases:

Backblaze BLZE currently has an Earnings ESP of +7.41% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

BLZE shares have lost 71.7% in the year-to-date period compared with the Zacks Internet - Software industry’s decline of 59.5%.

Tencent Music Entertainment Group TME has an Earnings ESP of +4.76% and a Zacks Rank #2 at present.

TME shares have lost 45.2% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 37.7%.

Upstart UPST has an Earnings ESP of +114.71% and a Zacks Rank #3.

UPST shares have lost 85.3% in the year-to-date period compared with the Zacks Computers - IT Services industry’s decline of 31.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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TakeTwo Interactive Software, Inc. (TTWO) : Free Stock Analysis Report
 
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Backblaze, Inc. (BLZE) : Free Stock Analysis Report
 
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Zacks Investment Research