Take Two's (TTWO) Q4 Earnings Decline Y/Y, Revenues Rise

Take Two Interactive Software TTWO reported fourth-quarter fiscal 2022 earnings of 95 cents per share, down 49.5% year over year.

Net revenues increased 4.9% year over year to $903.3 million. Net bookings increased 7.8% to $845.8 million.

The Zacks Consensus Estimate for earnings and revenues was pegged at $1.01 per share and $873 million, respectively.

NBA 2K22, Grand Theft Auto (GTA) Online and GTA V, Tiny Tina's Wonderlands, WWE 2K22, Red Dead Redemption 2 and Red Dead Online, Top Eleven, Two Dots, and GTA: The Trilogy - The Definitive Edition were the biggest contributors to the company’s fourth-quarter fiscal 2022 top line.

Digital revenues (89.6% of revenues) improved 8.5% year over year to $833.3 million. Physical retail and other segment revenues (10.4% of revenues) increased 35.3% year over year to $96.7 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 1% year over year and accounted for 63% of total net revenues.

Net bookings from recurrent consumer spending decreased 6% year over year and accounted for 60% of total net bookings.

On Jan 9, 2022 Take-Two entered into a definitive agreement under which Take-Two will acquire all the outstanding shares of Zynga. The transaction, which is anticipated to close on May 23, 2022, is subject to the approval of both Take-Two and Zynga stockholders and the satisfaction of other customary closing conditions.

TakeTwo Interactive Software, Inc. Price, Consensus and EPS Surprise

TakeTwo Interactive Software, Inc. Price, Consensus and EPS Surprise

TakeTwo Interactive Software, Inc. price-consensus-eps-surprise-chart | TakeTwo Interactive Software, Inc. Quote

Top-Line Details

Region-wise, revenues from the United States (59.9% of revenues) increased 8.5% year over year to $557.3 million. International revenues (40.1% of revenues) increased 14.4% year over year to $372.7 million.

On the basis of platforms, revenues from console (71.5% of revenues) increased 9.3% year over year to $664.8 million. Revenues from PC and other (17.5% of revenues) increased 14.6% year over year to $163 million. Revenues from mobile (11% of revenues) increased 14.5% year over year to $102.3 million.

Operating Details

Take Two’s gross profit decreased 5.1% year over year to $531.4 million. Reported gross margin of 58.8% contracted 620 basis points on a year-over-year basis.

Operating expenses increased 32.4% year over year to $402.5 million.

Operating income came in at $128.9 million, plunging 49.5% year over year. The operating margin was 14.3% compared with the year-ago quarter’s 29.6%.

Balance Sheet

As of Mar 31, 2022, Take Two had $2.55 billion in cash, cash equivalents and short-term investments compared with $2.73 billion as of Dec 31, 2021.

Guidance

For the first quarter of fiscal 2023, Take Two expects GAAP net revenues between $810 million and $860 million. The company expects earnings between 80 and 90 cents per share.

Net bookings are projected between $700 million and $750 million.

Zacks Rank & Stocks to Consider

Take-Two Interactive currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Zacks Consumer Discretionary sector are Ralph Lauren RL, Oxford Industries OXM and Academy Sports and Outdoors ASO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Ralph Lauren is scheduled to announce first-quarter 2022 results on May 24. Ralph Lauren is down 17.3% in the year-to-date period compared with the Zacks Textile - Apparel industry’s decline of 29.1%.

Oxford Industries is scheduled to announce first-quarter 2022 results on Jun 8. Oxford Industries is down 16.3% in the year-to-date period compared with the Zacks Textile - Apparel industry’s decline of 29.1%.

Academy Sports and Outdoors is scheduled to announce first-quarter 2022 results on Jun 14. Academy Sports and Outdoors is down 17.8% in the year-to-date period against the Zacks Leisure and Recreation Services industry’s decline of 33.8%.

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