Take-Two earnings miss estimates as consumer spending slows

Yahoo Finance Live anchors discuss Take-Two quarterly earnings.

Video transcript

BRIAN SOZZI: Welcome back. We're a few minutes away from the opening bell on Wall Street. But first, let's dive into some earnings reports. And, guys, it's very tough for me not to talk about the Serena Williams potentially retiring thing, but we'll save that for the end of the show. Let's start with Take-Two.

Not a good quarter from them. Warning on the conference call last night about a slowdown in mobile spending due to the broader pullback in consumer spending. I really like this Jefferies note on their quarter saying, this quarter will require patience. The analyst had said, quote, "We received several incoming investor calls, emails frustrated with the lack of disclosure from Take-Two."

And I echo their sentiment there. That conference call was very light on details on the Zynga integration, the extent of the slowdown in mobile spending. I think investors wanted a lot more. They deserve a lot more. They just didn't get it.

BRAD SMITH: Yeah, Strauss Zelnick saying on the call, I think we're seeing now the decline in consumer spending and the increase in inflation going to have an impact on the industry. They saw it in the report today or yesterday at least. And particularly here, it's not just the consumer spending that they're going to see it impact their business on.

It's also on the advertising revenue side, too, because even if you think about those free-to-play games that they've integrated into this larger business, it still does rely on some of the advertising revenue that would be driven. But what are advertisers doing right now, marketers doing right now, and companies with those spending? Still looking to get marketing budgets trimmed at this point. And so that's going to directly impact where they actually put some of those marketing dollars to work as well. And this could be another unfortunate headwind that Take-Two has to whether.

JULIE HYMAN: Yeah, I mean, it's notable here that the company's forecast for the full year earnings are well below what analysts are anticipating, but revenue is well above what analysts are anticipating. So, obviously, it's a bottom line problem here.

BRIAN SOZZI: Yeah, the positive thing I'll say is Strauss can still, I guess, claim the title for being the fittest CEO in America. I mean, this guy's chiseled. I mean, you got see pictures of his abs online. I mean, hat tip to him. He's no spring chicken.

JULIE HYMAN: I'm not going to touch that one, but I am going to tell you-- you mentioned that Jefferies note. And the analyst commentary--

BRIAN SOZZI: Follow that one, Julie.

JULIE HYMAN: I'm not.

BRIAN SOZZI: Follow that one. There we go.

JULIE HYMAN: Not even gonna try.

BRAD SMITH: He's ordering your Chipotle order. That's what he's doing.

JULIE HYMAN: The analyst commentary I saw was almost uniformly positive on the long-term story for Take-Two. So it's interesting here that there is that disconnect.

BRIAN SOZZI: I think he's called chief ab officer, Julie. Chief ab officer.