Take-Two Interactive Software Inc. shares declined in extended trading Monday after the videogame publisher revised its outlook lower, to not only account for its recent acquisition of Zynga but for shifts in the release dates of some titles.
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Chief Financial Officer Lainie Goldstein told analysts on a conference call that while foreign exchange rates and an uncertain macroeconomic background contributed to the dip in outlook, the greatest weight came from a shift in game releases.
“I would say that the shifts in our pipeline were the most meaningful to our numbers,” Goldstein said. “So I would say, we had some titles that moved within the year and that was ‘Marvel’s Midnight Suns.’ And then there was unannounced title that moved out of the year as well. So I would say definitely the pipeline changes that were the most meaningful to the change in the guidance.”
“Marvel’s Midnight Suns” has an estimated release of fiscal 2023.
The company also revised its outlook to include Zynga. For the second quarter, Take-Two said it expects a loss of 96 cents to 86 cents a share on revenue of $1.37 billion to $1.42 billion. Analysts had estimated earnings of $1.50 a share on revenue of $1.73 billion.
For the year, Take-Two said it expects a loss of $2.75 to $2.50 a share on revenue of $5.73 billion to $5.83 billion. Analysts estimate earnings of $5.37 a share on revenue of $6.22 billion.
Even though there’s some softness in the mobile market, Take-Two Chief Executive Strauss Zelnick told analysts “the good news is, I think we’re doing better than most, if not all.” Not only did Take-Two get a huge slate of mobile games with its acquisition of Zynga, it also acquired ad platform Chartboost, which Zynga had acquired in 2021, and had been its best-performing business before Take-Two closed the deal.
“I think the reason we’re seeing probably a bit more softness in mobile than in console is, in console to participate, you have to buy,” Zelnick said on the call. “And in mobile, by definition, you’re in a free-to-play environment. You can play without paying.”
“And if you are feeling the pinch of inflation, specifically with regard to non-discretionary expenditures like fuel and food, you could imagine that if you’re playing the game, you might choose to spend a bit less or spend a bit less frequently,” Zelnick said.
Known for its “Grand Theft Auto” and “NBA 2K” titles, Take-Two reported a first-quarter loss of $104 million, or 76 cents a share, versus net income of $152.3 million, or $1.30 a share, in the year-ago period.
Revenue increased to $1.1 billion from $813.3 million in the year-ago quarter, while bookings came in at $1 billion compared with $711.4 million in the year-ago period.
Analysts expected Take-Two to report first-quarter unadjusted earnings of 84 cents a share, adjusted earnings of 87 cents a share, revenue of $1.21 billion and bookings of $1.1 billion. Take-Two does not provide adjusted earnings information, instead providing some financial information that can be used to calculate that number.
For the first quarter, Take-Two had forecast unadjusted earnings of 80 cents to 90 cents a share, revenue of $810 million to $860 million, and bookings of $700 million to $750 million, prior to the close of its acquisition of Zynga.
Shares fell 7% in after-hours trading immediately following the release of the results, and were down about 3% after the conference call. Shares closed down 1.3%, to $125.51, in regular trading.
