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Take-Two (TTWO) Reports Loss in Q3 Earnings, Revenues Up Y/Y

Take-Two Interactive Software TTWO reported a third-quarter fiscal 2023 loss of 91 cents per share against the year-ago quarter’s earnings of $1.24 per share.

Net revenues jumped 55.9% year over year to $1.41 billion. Net Bookings increased 59.6% to $1.38 billion.

The Zacks Consensus Estimate for earnings and revenues was pegged at 88 cents per share and $1.44 billion, respectively.

Game revenues (87.5% of revenues) improved 39.4% year over year to $1.23 billion.  Advertising revenues (12.5% of revenues) surged 782.5% year over year to $176.5 million.

Take-Two Interactive Software, Inc. Price, Consensus and EPS Surprise

 

Take-Two Interactive Software, Inc. Price, Consensus and EPS Surprise
Take-Two Interactive Software, Inc. Price, Consensus and EPS Surprise

Take-Two Interactive Software, Inc. price-consensus-eps-surprise-chart | Take-Two Interactive Software, Inc. Quote

 

Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and in-game advertising) increased 104% year over year and accounted for 79% of total net revenues.

Top-line growth benefited from strong adoption titles, including NBA 2K22 and NBA 2K23, Grand Theft Auto Online and Grand Theft Auto V, Empires & Puzzles, Rollic's hyper-casual portfolio, Toon Blast, Red Dead Redemption 2 and Red Dead Online, Words With Friends, Merge Dragons! and Toy Blast.

Top-Line Details

Digital revenues (94.9% of revenues) improved 68% year over year to $1.34 billion.  Physical retail revenues (5.1% of revenues) declined 33.9% year over year to $71.1 million.

Region-wise, revenues from the United States (63% of revenues) soared 65.8% year over year to $886.8 million. International revenues (37% of revenues) increased 41.4% year over year to $521 million.

Based on platforms, revenues from consoles (39.9% of revenues) decreased 15.6% year over year to $561.4 million. Revenues from mobile (51.2% of revenues) surged 594.8% year over year to $721.2 million. Revenues from PC and other (8.9% of revenues) decreased 6.6% year over year to $125.2 million.

Operating Details

Take-Two’s gross profit increased 29.5% year over year to $715.9 million. Reported gross margin was 50.9% compared with the 61.2% reported in the year-ago quarter.

Operating expenses surged 122.9% year over year to $888.8 million.

Operating loss was $172.9 million against the year-ago quarter’s operating income of $154.1 million.

Balance Sheet

As of Dec 31, 2022, Take-Two had $1.46 billion in cash, cash equivalents and short-term investments compared with $1.90 billion as of Sep 30, 2022.

The company had a debt of $3.09 billion as of Dec 31.

Guidance

For the fourth quarter of fiscal 2023, Take Two expects GAAP net revenues between $1.34 billion and $1.39 billion. The company expects a loss between $1.27 and $1.17 per share.

Net bookings are projected between $1.31 billion and $1.36 billion.

For fiscal 2023, Take-Two expects GAAP net revenues between $5.24 billion and $5.29 billion. The company expects a loss between $4.50 and $4.40 per share.

Net bookings are projected between $5.2 billion and $5.25 billion.

For fiscal 2023, net cash provided by operating activities is expected to be more than $350 million. Capital expenditures are expected to be approximately $170 million.

Zacks Rank & Stocks to Consider

Take-Two currently carries a Zacks Rank #3 (Hold).

Take-Two shares have lost 39.8% in the past year, underperforming the Zacks Consumer Discretionary sector’s decline of 19.3%.

Cumulus Media CMLS, BJ’s Wholesale Club BJ and Warner Bros. Discovery WBD are some better-ranked stocks that investors can consider in the broader sector. Both Cumulus and BJ’s Wholesale currently sport a Zacks Rank #1 (Strong Buy) while Warner Bros. carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cumulus Media is set to announce its fourth-quarter 2022 results on Feb 23. CMLS shares have declined 38.4% in the past year.

BJ’s Wholesale is set to announce its fourth-quarter 2022 results on Mar 9. BJ shares have gained 20.3% in the past year.

Warner Bros. is set to announce its fourth-quarter fiscal 2023 results on Feb 23. WBD shares have declined 46.7% in the past year.

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