Take-Two Interactive Software’s Q1 Earnings Preview

Take-Two Interactive Software (NASDAQ:TTWO) reaffirmed its annual bookings guidance and projected future growth, even as it forecasted a deeper annual loss and delivered mixed fiscal first-quarter results. The video game maker reported a Q1 loss of $1.52 per share on revenue of $1.34 billion, missing analyst expectations of a $1.37 per share loss on $1.26 billion in revenue.

Net bookings, which represent the net amount of products and services sold digitally or physically, rose 1% to $1.22 billion. For fiscal Q2, Take-Two anticipates a net loss ranging from $2.15 to $2.30 per share and net bookings between $1.42 billion and $1.47 billion. The company also revised its fiscal 2025 loss forecast to a range of $3.95 to $4.33 per share, compared to its previous estimate of $3.50 to $3.90.

Despite the wider loss forecast, Take-Two maintained its bookings guidance for the year at $5.55 billion to $5.65 billion and highlighted expected growth in the coming years. The company anticipates sequential increases in net bookings in fiscal 2026 and 2027, which it believes will drive long-term shareholder value.

Following the results, Take-Two's shares rose more than 4% on Friday.

• Take-Two Interactive Software, Inc. (NASDAQ:TTWO) projects second-quarter bookings to fall short of expectations due to a slowdown in consumer spending.
• The company remains optimistic about future growth, particularly with the upcoming launch of "Grand Theft Auto VI."
• Despite near-term challenges, Take-Two's diverse development pipeline and strategic focus on long-term growth highlight its resilience and potential for future success.

NASDAQ:TTWO, Take-Two Interactive Software, is a major player in the video game industry, known for its blockbuster titles like "Grand Theft Auto" (GTA) and "NBA 2K." Recently, the company projected its second-quarter bookings to fall short of Wall Street expectations, a development attributed to a slowdown in consumer spending on its flagship games amid an uncertain economic climate. Despite this immediate challenge, Take-Two remains optimistic about its future, particularly with the highly anticipated launch of "Grand Theft Auto VI" next year. This optimism is rooted in the franchise's proven track record of success, with its predecessor, "GTA V," achieving over 200 million units sold worldwide.

The company's stock responded positively to this long-term outlook, with shares rising more than 5% in extended trading. This investor confidence is bolstered by the insights of analysts like Michael Pachter from Wedbush Securities, who points to the upcoming release of "GTA VI" as a key driver for growth in bookings over the next two fiscal years. Furthermore, Take-Two's announcement of a robust development pipeline, planning around 40 titles through fiscal 2027, underscores its commitment to sustaining growth and innovation in the gaming sector.

However, the near-term forecasts present a more challenging picture. Take-Two expects second-quarter bookings to range between $1.42 billion and $1.47 billion, slightly below the consensus analyst estimate of $1.47 billion as per LSEG data. This projection reflects the impact of declining recurrent consumer spending on "GTA Online" during the first quarter, hinting at a potential dip in player engagement for this live-service game. The company's first-quarter bookings, totaling $1.22 billion, also fell short of the expected $1.25 billion, further illustrating the immediate hurdles faced by the company.

Despite these challenges, Take-Two has reassured stakeholders that the ongoing video game performers strike has not affected its title development, a sentiment shared by its industry peer, Electronic Arts. This resilience is further demonstrated by the company's surprising first-quarter profit of 5 cents per share on an adjusted basis, defying expectations of a 2-cent loss. This financial performance, coupled with the strategic focus on long-term growth through high-profile releases and a diverse development pipeline, positions Take-Two Interactive Software as a company with promising prospects, navigating through short-term uncertainties with a clear vision for future success.

Baird analysts cut their price target for Take-Two Interactive (NASDAQ:TTWO) to $172 from $173 while keeping an Outperform rating on the stock.

The analysts noted that the delay of GTA VI to fiscal 2026 from 2025 was not unexpected by investors. Management's commentary suggests a high level of confidence in this new release window.

The analysts are optimistic about the anticipated return to bookings growth in fiscal 2025 and stable or improved operating margins as the company focuses on reducing overhead. Additionally, the increase in mobile bookings is a positive sign, though it is partly due to higher marketing expenditures.

Take-Two Interactive Software (NASDAQ:TTWO) experienced a decline of over 7% pre-market today following the announcement of an unexpected fiscal third-quarter loss and a downward revision of its annual forecast. The video game publisher cited challenges including a downturn in mobile advertising and lower sales for its NBA 2K24 basketball franchise as key factors behind its performance.

The company disclosed an adjusted loss of $0.54 per share, which did not meet the anticipated earnings of $0.72 per share.

Looking forward to fiscal 2024, Take-Two adjusted its net bookings forecast to a range between $5.25 billion and $5.3 billion, down from the previous projection of $5.45 billion to $5.55 billion. The company now anticipates a net loss per share ranging from $5.95 to $5.85, based on projected revenue of $5.27 billion to $5.32 billion. This marks a shift from earlier loss estimates of $5.62 to $5.35 per share, with revenue expectations previously set between $5.37 billion and $5.47 billion.

Deutsche Bank analysts upgraded Take-Two Interactive Software (NASDAQ:TTWO) to Buy from Hold on Tuesday, also lifting the share price target from $155 to $175. As a result, shares rose more than 3% intra-day today.

The analysts’ note explained the upgrade, citing enhanced long-term prospects and near-term driving factors for the stock. They emphasized the recent announcement by Take-Two that Rockstar Games would release the first trailer for the next "Grand Theft Auto" installment in early December.

The analysts believe that this significant product announcement, particularly the eagerly awaited GTA 6 trailer, will likely boost investor enthusiasm and act as a key driver for the stock's performance.

Furthermore, they expect that as fiscal 2024 progresses into its second half and into 2025, Take-Two will begin announcing other major titles from its extensive development pipeline, which encompasses 14 core immersive games across 2025 and 2026.

Take-Two Interactive Software (NASDAQ:TTWO) reported mixed results for its second quarter on Wednesday but maintained its full-year outlook and expressed confidence in its positioning for the upcoming holiday season. Following the results, shares rose more than 3% intra-day today.

The video game company posted a quarterly loss of $3.20 per share, with revenue reaching $1.44 billion. This compares to Wall Street's expectations of a $1.03 earnings per share on revenue of $1.43 billion.

Looking ahead to the third quarter, Take-Two forecasts a loss per share ranging from $0.73 to $0.63 and revenue between $1.29 billion and $1.34 billion. These projections stand in contrast to analysts' expectations, which anticipate an earnings per share of $0.93 and higher revenue of $1.43 billion.

Despite the prevailing economic uncertainties, Take-Two reiterated its net bookings guidance for the fiscal year 2024, expecting them to be between $5.45 billion and $5.55 billion, and projecting revenues to range from $5.37 billion to $5.47 billion.

Raymond James analysts upgraded Take-Two Interactive Software (NASDAQ:TTWO) to Outperform from Market Perform and set a price target of $170 per share. This optimism for the future (particularly fiscal 2025 and beyond) arises from a few key points: anticipation of details emerging soon about "Grand Theft Auto 6," which is expected to clear up current financial uncertainties; a growing confidence in the stable and sustainable release of products from the ex-Rockstar portfolio; and a belief in a reasonable company valuation, assuming a higher earnings baseline following the release of GTA 6.

The analysts foresee a brighter near- and medium-term future for the company, supported by a more consistent release strategy and strong potential opportunities in the pipeline.