Ayush Bansal
Image: Annualreports.com
Video game publisher Take-Two Interactive Software (TTWO) late Monday beat Wall Street’s target for earnings in the March quarter but missed estimates on sales.
Its guidance for the current quarter and year ahead also fell below views. Still, TTWO stock rose in extended trading.
The New York City-based company earned an adjusted $1.09 a share on net bookings of $845.8 million in its fiscal fourth quarter ended March 31.
Analysts polled by FactSet had expected Take-Two earnings of $1 a share on sales of $883 million. On a year-over-year basis, Take-Two earnings declined 22% while net bookings rose 8%.
For the current quarter, Take-Two forecast adjusted earnings of 65 cents a share on net bookings of $725 million. That’s based on the midpoint of its guidance. Wall Street had predicted earnings of 90 cents a share on sales of $798 million in the company’s fiscal first-quarter ending June 30.
For the full fiscal year, Take-Two predicted adjusted earnings of $4.33 a share on net bookings of $3.8 billion. Analysts were looking for earnings of $5.81 a share on sales of $4.15 billion. In the company’s just-finished fiscal 2022, Take-Two earned an adjusted $5.06 a share on net bookings of $3.41 billion.
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Take-Two announced the $12.7 billion cash-and-stock deal for Zynga in January. The deal gives Take-Two a far stronger footprint in the mobile games business, adding key franchises like Words With Friends, as well as Zynga’s data and mobile advertising resources. Zelnick told Barron’s.
For the 2023 fiscal year, Take-Two forecasts net bookings between $3.75 billion and $3.85 billion, and GAAP earnings between $1.90 a share and $2.15 a share.
Wall Street had been forecasting bookings of $4.15 billion and earnings of $3.19 a share—an expectation that doesn’t include the merger with Zynga.
Asked about nonfungible tokens, or NFTS, given falling valuations for cryptocurrencies and other digital assets, Zelnick reiterated his view that Take-Two sees an opportunity in rare durable goods.
“We’ve, however, seen everything in the Web 3.0 space be overlaid with speculation,” Zelnick said. “And unless and until the speculation largely is driven out of the system, it’s hard to imagine how we can participate because we’re not speculators. And our consumers aren’t speculators.”
Zelnick did note that he thinks there is a real business in Web 3.0, and that blockchain technology can and will be relevant to parts of Take-Two’s business, but not until there’s a correction from largely speculative activity.
“Once it’s corrected, we’ll then get to see what the business looks like,” he said. “And we’re doing a huge amount of research so that we’re in a position to act when the time is right.”