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Take Two's (TTWO) Q4 Earnings Decline Y/Y, Revenues Rise

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Take Two Interactive Software (TTWO - Free Report) reported fourth-quarter fiscal 2022 earnings of 95 cents per share, down 49.5% year over year.

Net revenues increased 4.9% year over year to $903.3 million. Net bookings increased 7.8% to $845.8 million.

The Zacks Consensus Estimate for earnings and revenues was pegged at $1.01 per share and $873 million, respectively.

NBA 2K22, Grand Theft Auto (GTA) Online and GTA V, Tiny Tina's Wonderlands, WWE 2K22, Red Dead Redemption 2 and Red Dead Online, Top Eleven, Two Dots, and GTA: The Trilogy - The Definitive Edition were the biggest contributors to the company’s fourth-quarter fiscal 2022 top line.

Digital revenues (89.6% of revenues) improved 8.5% year over year to $833.3 million.  Physical retail and other segment revenues (10.4% of revenues) increased 35.3% year over year to $96.7 million.

Recurrent consumer spending (virtual currency, add-on content and in-game purchases, including the allocated value of virtual currency and add-on content incorporated in special editions of certain games) increased 1% year over year and accounted for 63% of total net revenues.

Net bookings from recurrent consumer spending decreased 6% year over year and accounted for 60% of total net bookings.

On Jan 9, 2022 Take-Two entered into a definitive agreement under which Take-Two will acquire all the outstanding shares of Zynga. The transaction, which is anticipated to close on May 23, 2022, is subject to the approval of both Take-Two and Zynga stockholders and the satisfaction of other customary closing conditions.

Top-Line Details

Region-wise, revenues from the United States (59.9% of revenues) increased 8.5% year over year to $557.3 million. International revenues (40.1% of revenues) increased 14.4% year over year to $372.7 million.

On the basis of platforms, revenues from console (71.5% of revenues) increased 9.3% year over year to $664.8 million. Revenues from PC and other (17.5% of revenues) increased 14.6% year over year to $163 million. Revenues from mobile (11% of revenues) increased 14.5% year over year to $102.3 million.

Operating Details

Take Two’s gross profit decreased 5.1% year over year to $531.4 million. Reported gross margin of 58.8% contracted 620 basis points on a year-over-year basis.

Operating expenses increased 32.4% year over year to $402.5 million.

Operating income came in at $128.9 million, plunging 49.5% year over year. The operating margin was 14.3% compared with the year-ago quarter’s 29.6%.

Balance Sheet

As of Mar 31, 2022, Take Two had $2.55 billion in cash, cash equivalents and short-term investments compared with $2.73 billion as of Dec 31, 2021.

Guidance

For the first quarter of fiscal 2023, Take Two expects GAAP net revenues between $810 million and $860 million. The company expects earnings between 80 and 90 cents per share.

Net bookings are projected between $700 million and $750 million.

Zacks Rank & Stocks to Consider

Take-Two Interactive currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Zacks Consumer Discretionary sector are Ralph Lauren (RL - Free Report) , Oxford Industries (OXM - Free Report) and Academy Sports and Outdoors (ASO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Ralph Lauren is scheduled to announce first-quarter 2022 results on May 24. Ralph Lauren is down 17.3% in the year-to-date period compared with the Zacks Textile - Apparel industry’s decline of 29.1%.

Oxford Industries is scheduled to announce first-quarter 2022 results on Jun 8. Oxford Industries is down 16.3% in the year-to-date period compared with the Zacks Textile - Apparel industry’s decline of 29.1%.

Academy Sports and Outdoors is scheduled to announce first-quarter 2022 results on Jun 14. Academy Sports and Outdoors is down 17.8% in the year-to-date period against the Zacks Leisure and Recreation Services industry’s decline of 33.8%.

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