Take-Two Loss Narrows, Lifts FY Outlook

(RTTNews) - Video-game publisher Take-Two Interactive Software Inc. (TTWO), Tuesday reported a first-quarter loss that narrowed from a year ago, as significantly lower expenses offset a decline in revenue. Loss for the quarter was lower than what Wall Street expected, with revenues also coming in ahead of expectations.

Take-Two, which publishes the hit Grand Theft Auto series and the Midnight Club racing series, also lifted its full-year 2014 financial outlook, but issued a weak forecast for the second quarter.

Take-Two, which owns 2K Games and Rockstar Games, said revenues for the quarter plunged to $142.7 million from $226.1 million last year. Revenues, excluding items such as deferred revenues, were $144.3 million for the quarter. Analysts expected revenues of $124.68 million for the quarter.

The company did not release any new major games during the quarter, while last year revenues were boosted by the releases of Max Payne 3 and Spec Ops: The Line.

Video-game companies are now searching new avenues to improve their bottom-line as game shoppers are unwilling to buy the expensive video-games and have switched to low-ticket mobile and web social games. Video game makers have since started focusing on development of web-based games.

Nevertheless, Take-Two, which publishes games for mainly serious video gamers and has many cult followers, expects a better year going forward with the help of upcoming releases. The company also believes the launch of new consoles-- Microsoft's Xbox One and Sony Playstation 4, will work in its favor.

Chief Executive Strauss Zelnick said, "With Grand Theft Auto V launching on September 17th, followed by the releases of NBA 2K14 and WWE 2K14, fiscal 2014 is poised to be one of our best years ever. Looking ahead, we are well-positioned to capitalize on the opportunities presented by the upcoming launches of the next-generation consoles."

Revenue from digitally delivered content grew 128 percent year-over-year and accounted for a record 52 percent of adjusted revenues.

New York-based Take-Two's loss for the quarter narrowed to $61.9 million or $0.71 per share from $110.8 million or $1.30 per share a year ago.

On an adjusted basis, loss for the quarter narrowed to $0.54 per share from $1.16 per share last year. Analysts polled by Thomson Reuters expected a loss of $0.57 per share for the quarter. Analysts' estimates typically exclude one-time items.

Rival, Electronic Arts Inc. (EA) last week reported an increased first-quarter profit, reflecting the company's strong growth in digital revenues.

Meanwhile, Take-Two was able to leverage its costs during the quarter. Total cost of goods sold, which includes software development costs and product costs, dropped to $93.8 million from $186.7 million. Selling and marketing costs declined to $41.6 million from $79.0 million, while general and administrative expenses dropped to $32.9 million from $43.2 million.

Looking forward the second quarter, the company expects adjusted earnings of $1.20 to $1.35 per share and revenues of $750 million to $800 million. Analysts currently expect earnings of $1.57 per share on revenue of $814.60 million for the second quarter.

For the fiscal year 2014, the company now sees adjusted earnings of $2.25 to $2.50 per share and revenues of $1.775 billion to $1.875 billion. Analysts currently expect earnings of $2.35 per share on revenue of $1.85 billion for 2014.

Previously, the company anticipated full year 2014 adjusted earnings of $2.05 to $2.30 per share and adjusted revenues of $1.75 billion to $1.85 billion.

TTWO closed Tuesday's trading at $16.99, up $0.02 or 0.12%, on the Nasdaq. The stock further gained $0.26 or 1.53% in after-hours trade.