Back to top

Image: Bigstock

Take-Two (TTWO) Down 1.7% Since Last Earnings Report: Can It Rebound?

Read MoreHide Full Article

It has been about a month since the last earnings report for Take-Two Interactive (TTWO - Free Report) . Shares have lost about 1.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Take-Two due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Take-Two Reports Loss in Q4 Earnings, Revenues Up Y/Y

Take-Two Interactive Software reported a fourth-quarter fiscal 2023 loss of $3.62 per share against the year-ago quarter’s earnings of 95 cents per share.

Net revenues jumped 55.5% year over year to $1.45 billion.

Adjusted earnings were 85 cents per share in the reported quarter compared with $1.16 per share in the year-ago quarter. The figure beat the Zacks Consensus Estimate by 25%.

Game revenues (87.6% of revenues) improved 39% year over year to $1.27 billion. Advertising revenues (12.4% of revenues) surged 841.9% year over year to $179.9 million.

Quarter Details

Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and in-game advertising) surged 94% year over year and accounted for 79% of total net revenues.

Digitally-delivered net revenues increased 67% to $1.39 billion and accounted for 96% 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.

Take-Two’s gross profit decreased 58% year over year to $223.2 million. Reported gross margin was 15.4% compared with the 57.1% reported in the year-ago quarter.

Operating expenses surged 130% year over year to $925.6 million.

Operating loss was $702.4 million against the year-ago quarter’s operating income of $128.9 million.

Balance Sheet

As of Mar 31, 2023, Take-Two had $1.01 billion in cash, cash equivalents and short-term investments compared with $1.46 billion as of Dec 31, 2022.

The company had a debt of $3.08 billion as of Mar 31, slightly down from $3.09 billion as of Dec 31, 2022.

Guidance

For the first quarter of fiscal 2024, Take-Two expects GAAP net revenues between $1.21 billion and $1.26 billion. It expects a loss between $1.05 and 95 cents per share.

For fiscal 2024, the company expects GAAP net revenues between $5.37 billion and $5.47 billion. It expects a loss between $3.05 and $2.80 per share.

For fiscal 2024, net cash provided by operating activities is expected to be roughly $90 million. Capital expenditures are expected to be approximately $180 million.

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months.

The consensus estimate has shifted -34.93% due to these changes.

VGM Scores

At this time, Take-Two has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Take-Two has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Take-Two belongs to the Zacks Toys - Games - Hobbies industry. Another stock from the same industry, Electronic Arts (EA - Free Report) , has gained 2.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.

Electronic Arts reported revenues of $1.95 billion in the last reported quarter, representing a year-over-year change of +11.1%. EPS of $1.77 for the same period compares with $1.18 a year ago.

For the current quarter, Electronic Arts is expected to post earnings of $1 per share, indicating a change of +212.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.1% over the last 30 days.

Electronic Arts has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Take-Two Interactive Software, Inc. (TTWO) - free report >>

Electronic Arts Inc. (EA) - free report >>

Published in