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A month has gone by since the last earnings report for Take-Two Interactive (TTWO). Shares have added about 5.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Take-Two due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Take-Two Q2 Loss Widens Y/Y, Ad Revenues Decline
Take-Two Interactive Software reported 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.
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.
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 2K24, Grand Theft Auto Online and Grand Theft Auto V, hyper-casual mobile portfolio, Toon Blast, Empires & Puzzles, Merge Dragons!, Red Dead Redemption 2 and Red Dead Online, Words With Friends and Toy Blast.
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.
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.