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Take-Two (TTWO) Q2 Loss Widens Y/Y, Ad Revenues Decline
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Take-Two Interactive Software (TTWO - Free Report) reported the second-quarter fiscal 2024 GAAP net loss of $3.20 per share, wider than a loss of $1.54 in the year-ago quarter. The Zacks Consensus Estimate for earnings was pegged at $1.02 per share.
Net revenues decreased 6.8% year over year to $1.3 billion due to lower gaming revenues.
Game revenues (86.9% of revenues) decreased 7.4% year over year to $1.1 billion. Advertising revenues (13.1% of revenues) decreased 2.3% year over year to $170.6 million.
Shares of Take-Two have gained 37.8% year to date, outperforming the Zacks Consumer Discretionary sector’s growth of 6.1%.
Take-Two Interactive Software, Inc. Price, Consensus and EPS Surprise
Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and advertising) decreased 9% year over year and accounted for 77% of total net revenues.
Top-line growth benefited from strong adoption titles, including NBA 2K23 and NBA 2K24, Grand Theft Auto Online and Grand Theft Auto V, hyper-casual mobile portfolio, Empires & Puzzles, Toon Blast, Red Dead Redemption 2 and Red Dead Online, Merge Dragons!, Words With Friends and Zynga Poker.
Take-Two’s gross profit decreased 38.9% year over year to $415.4 million. Reported gross margin was 32% compared with 48.8% reported in the year-ago quarter.
Operating expenses increased 2.9% year over year to $959.1 million.
Operating loss was $543.7 million compared with the year-ago quarter’s operating loss of $252.7 million.
Gaming Metrics
Grand Theft Auto V has sold approximately 190 million units to date. Grand Theft Auto Online experienced continued momentum due to the rollout of new gameplay and items from the San Andreas Mercenaries update, with new seasonal events, vehicles, modes, clothes and weapons driving sustained engagement and net bookings.
Red Dead Redemption 2 surpassed the company’s plans and has sold more than 57 million units to date. Rockstar Games continues to support Red Dead Online with new content, including bonuses for The Naturalist and Bounty Hunters and new free-roam missions and events.
Zynga also launched Top Troops and Match Factory, both of which delivered excellent KPIs in soft launch and appear to have strong long-term potential for the portfolio. Star Wars Hunters is expected to release in fiscal 2024.
Balance Sheet
As of Sep 30, 2023, Take-Two had $1.23 billion in cash, cash equivalents and short-term investments compared with $1.27 billion as of Jun 30, 2023.
The company had a debt of $3.08 billion as of Sep 30, which remained almost unchanged from Jun 30, 2023.
Guidance
For the third quarter of fiscal 2024, Take-Two expects GAAP net revenues between $1.29 billion and $1.34 billion. It expects a loss between 73 cents and 63 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 $5.62 and $5.35 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 $150 million.
The company reiterated its net bookings outlook for fiscal 2024 between $5.45 billion and $5.55 billion.
The company expects the net bookings breakdown from the labels to be roughly 49% in Zynga, 31% in 2K, 18% in Rockstar Games and 2% in Other. It forecasts geographic net bookings split to be 65% in the United States and 35% Internationally.
Image: Bigstock
Take-Two (TTWO) Q2 Loss Widens Y/Y, Ad Revenues Decline
Take-Two Interactive Software (TTWO - Free Report) reported the second-quarter fiscal 2024 GAAP net loss of $3.20 per share, wider than a loss of $1.54 in the year-ago quarter. The Zacks Consensus Estimate for earnings was pegged at $1.02 per share.
Net revenues decreased 6.8% year over year to $1.3 billion due to lower gaming revenues.
Game revenues (86.9% of revenues) decreased 7.4% year over year to $1.1 billion. Advertising revenues (13.1% of revenues) decreased 2.3% year over year to $170.6 million.
Shares of Take-Two have gained 37.8% year to date, outperforming the Zacks Consumer Discretionary sector’s growth of 6.1%.
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
Quarter Details
Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and advertising) decreased 9% year over year and accounted for 77% of total net revenues.
Top-line growth benefited from strong adoption titles, including NBA 2K23 and NBA 2K24, Grand Theft Auto Online and Grand Theft Auto V, hyper-casual mobile portfolio, Empires & Puzzles, Toon Blast, Red Dead Redemption 2 and Red Dead Online, Merge Dragons!, Words With Friends and Zynga Poker.
Take-Two’s gross profit decreased 38.9% year over year to $415.4 million. Reported gross margin was 32% compared with 48.8% reported in the year-ago quarter.
Operating expenses increased 2.9% year over year to $959.1 million.
Operating loss was $543.7 million compared with the year-ago quarter’s operating loss of $252.7 million.
Gaming Metrics
Grand Theft Auto V has sold approximately 190 million units to date. Grand Theft Auto Online experienced continued momentum due to the rollout of new gameplay and items from the San Andreas Mercenaries update, with new seasonal events, vehicles, modes, clothes and weapons driving sustained engagement and net bookings.
Red Dead Redemption 2 surpassed the company’s plans and has sold more than 57 million units to date. Rockstar Games continues to support Red Dead Online with new content, including bonuses for The Naturalist and Bounty Hunters and new free-roam missions and events.
Zynga also launched Top Troops and Match Factory, both of which delivered excellent KPIs in soft launch and appear to have strong long-term potential for the portfolio. Star Wars Hunters is expected to release in fiscal 2024.
Balance Sheet
As of Sep 30, 2023, Take-Two had $1.23 billion in cash, cash equivalents and short-term investments compared with $1.27 billion as of Jun 30, 2023.
The company had a debt of $3.08 billion as of Sep 30, which remained almost unchanged from Jun 30, 2023.
Guidance
For the third quarter of fiscal 2024, Take-Two expects GAAP net revenues between $1.29 billion and $1.34 billion. It expects a loss between 73 cents and 63 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 $5.62 and $5.35 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 $150 million.
The company reiterated its net bookings outlook for fiscal 2024 between $5.45 billion and $5.55 billion.
The company expects the net bookings breakdown from the labels to be roughly 49% in Zynga, 31% in 2K, 18% in Rockstar Games and 2% in Other. It forecasts geographic net bookings split to be 65% in the United States and 35% Internationally.
Zacks Rank & Stocks to Consider
Currently, TTWO carries a Zacks Rank #4 (Sell).
NetEase (NTES - Free Report) , AST SpaceMobile (ASTS - Free Report) and Genius Sports Limited (GENI - Free Report) are some better-ranked stocks that investors can consider in the broader sector. NTES sports a Zacks Rank #1 (Strong Buy), and ASTS and GENI carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of NetEase have gained 54.4% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
Shares of AST SpaceMobile have declined 15.1% year to date. ASTS is slated to report its third-quarter 2023 results on Nov 13.
Shares of Genius Sports Limited have gained 49.9% year to date. GENI is set to report its third-quarter 2023 results on Nov 13.