Take-Two reports results: ‘Q3 isn’t that important in the scheme of Take-Two’

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Take-Two Interactive Software Inc (NASDAQ: TTWO) on Monday said its net bookings in the fiscal third quarter were up less-than-expected. The stock slid nearly 3.0% as future guidance also disappointed shareholders.

Notable figures in the Q3 report

Take-Two reported $144.5 million in net income ($1.24 per share) versus the year-ago figure of $182.2 million ($1.57 per share). Revenue jumped 5.0% to $903.3 million. According to FactSet, experts had forecast 79 cents of EPS on $870.1 million in revenue.

The video game company valued net bookings at $866.1 million in Q3 – an increase from $814.3 million last year but below the FactSet consensus of $868.4 million. Late last week, Take-Two’s Rockstar Games said GTA VI development was “well underway”. CEO Strauss Zelnick said:

From investing in talent to acquiring some of the industry’s leading creative studios and announcing our transformational agreement to combine with Zynga, we are taking exciting steps to diversify our business, gain market share and enhance our positioning as one of the world’s top three pure-play publishers of interactive entertainment. Together with our incredible pipeline of new intellectual properties and eagerly anticipated sequels, we are confident that we are positioning our business for long-term success and shareholder value creation.

Future guidance and analyst’s remarks

For the current quarter, Take-Two forecasts 46 cents to 56 cents of per-share earnings on $835 million to $885 million in revenue and $808 million to $858 million in bookings, as per the earnings press release. In comparison, analysts were calling for 71 cents of EPS, $911.9 million in revenue, and $924.9 million of bookings.

The U.S. firm raised its guidance for the full year, but it was still weaker than expected. Take-Two expects up to $3.20 of EPS, $3.41 billion to $3.46 billion in revenue, and $3.42 billion of bookings at the top end.

This compares to analysts at $3.31 of EPS, $3.5 billion in revenue, and $3.45 billion of bookings. On CNBC’s “Closing Bell”, LightShed Partners’ Brandon Ross said:

They guide very conservatively. You saw that in the most recent quarter, where consensus was way ahead of the guidance. They missed it slightly. And they’re guiding below, but I don’t think much of it. I also don’t think that these two quarters are that important in the scheme of Take-Two.

Last month, Take-Two said it will buy Zynga for $12.7 billion. At the time, the company said it was aiming to compound at roughly 14% growth, which is only achievable if GTA VI is released in the fall of 2023, added Ross.

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