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Why Is Take-Two (TTWO) Down 16.3% Since Last Earnings Report?

·4-min read

A month has gone by since the last earnings report for Take-Two Interactive (TTWO). Shares have lost about 16.3% 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 drivers.

Take Two’s Q2 Earnings Fall Y/Y, Despite Top-Line Growth

Take Two Interactive Software reported second-quarter fiscal 2022 earnings of 9 cents per share, down 89.5% year over year.

Net revenues increased 2% year over year to $858.2 million. Net Bookings increased 3% to $984.9 million.

The Zacks Consensus Estimate for earnings and revenues was pegged at $1.35 per share and $860 million, respectively.

NBA 2K22 and NBA 2K21; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; Two Dots; Sid Meier’s Civilization VI and Dragon City were the biggest contributors to the company’s second-quarter fiscal 2022 top line.

Digital revenues (90.8% of revenues) improved 7.4% year over year to $779.1 million.  Physical retail and other segment revenues (9.2% of revenues) declined 31.5% year over year to $79.1 million.

Recurrent consumer spending (virtual currency, add-on content and in-game purchases, including the allocated value of virtual currency and add-on content incorporated in special editions of certain games) increased 8% year over year and accounted for 66% of total revenues.

Top-Line Details

Region-wise, revenues from the United States (60% of revenues) increased 2.3% year over year to $514.9 million. International revenues (40% of revenues) increased 1.7% year over year to $343.3 million.

On the basis of platforms, revenues from console (69.5% of revenues) decreased 7% year over year to $596.1 million. Revenues from PC and other (17.1% of revenues) increased 6% year over year to $147 million. Revenues from mobile (13.4% of revenues) surged 88.1% year over year to $82.3 million.

Operating Details

Take Two’s gross profit decreased 1.7% year over year to $401.5 million. Reported gross margin of 46.8% contracted 180 basis points on a year-over-year basis.

Operating expenses increased 30% year over year to $381.4 million.

Operating income came in at $20.2 million, plunging 82.5% year over year. Operating margin was 2.3% compared with the year-ago quarter’s 13.7%.

Balance Sheet

As of Sep 30, 2021, Take Two had $3.05 billion in cash, cash equivalents and short-term investments compared with $2.53 billion as of Jun 30, 2021.


For the third quarter of fiscal 2022, Take Two expects GAAP net revenues between $840 million and $890 million. The company expects earnings between 85 and 95 cents per share.

Net bookings are projected between $800 million and $850 million.

For fiscal 2022, net bookings are expected between $3.3 billion and $3.4 billion. GAAP net revenues are likely to be $3.35-$3.45 billion. Take Two expects earnings between $2.75 per share and $3 per share.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted -16.63% due to these changes.

VGM Scores

At this time, Take-Two has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.


Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Take-Two has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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