Take-Two Interactive Software Inc. (TTWO, Financial) saw shares increase 7% to $25.98 after the American developer and distributor of Video Games Company reported its fiscal fourth quarter statistics. Revenue increased 54% to $300.1 million for the fourth fiscal quarter. The revenue, however, did not match up to the expectations of analysts, but the profit posted was higher than analysts' estimates. Excluding special items, adjusted earnings increased to $54.3 million that is 49 cents a share for the quarter. Analysts had estimated adjusted earnings to be 27 cents per share, according to a data compiled by Thomson Reuters I/B/E/S.
Number mix
The developer of Grand Theft Auto had posted a net loss under generally accepted accounting principles of $2.99 per share, as compared to the $0.40 from the same period in the previous years. It increased from $30.8 million to $242.8 million last year. The main reasons for the increased losses were the increased expenses. Revenue saw an increase to $427.7 million on a non-GAAP basis. This is a whopping 83% increase year over year for the quarter ended March 30. This figure represents the adjusted revenue which excludes effects of change in deferred revenues. A group of 15 analysts had estimated revenue to be around $459 million. Digitally delivered content saw an increase of 66% to $202.5 million in revenues as compared to last year's quarter. Not surprisingly, a whopping 47% of the quarterly revenue came in from GTA, NBA 2K, Borderlands, WWE 2K series and Evolve games. The NBA 2K unit was even recognized by CEO Strauss Zelnick, who went on to say that the revenues and profits from the NBA 2K was a very significant area of focus for them, in terms of the Asia Pacific region. GTA V sold around 52 million units ever since it was launched in 2013. The game was also ranked among the top five games for the month of February & March in NPD Group's top games. NBA 2K15 was also ranked among the top 10, according to NPD Group.
For the fiscal year 2015, the company earned around $1.7 billion, much more than the expected $1.35 to $1.45 billion. Profits posted for the year was $220 million equating to $1.98 a share. For this quarter, which ends in June, an EPS of $0.25 is expected on $325 to $350 million estimated sales. Though the company has warned gamers that there will be fewer releases in the current year as compared to the prior years, there is nothing that can take their spirits away. Take-Two plans on launching the WWE 2K16 on October 27 for North America alone. According to the financial release, the game will be internationally released three days later. Mike Hickey, an analyst at Benchmark Co., said that Take-Two is showing rocking performance in its digital business. The gaming company is moving from physical sales to digital sales and margins will increase for the next term due to this occurrence, he said. Sales form digital platform constituted 48% of sales in the fourth quarter, a 43% increase as compared to the same period last year.
Investor take
One great thing is that the GTA maker plans on buying back around 10 million shares. However, top-level management has said that buybacks aren't anticipated in its expectations for the fiscal year of 2016. Take-Two has estimated their adjusted earnings for the next year 2016 to be between 75 cents to $1 per share on $1.3 billion to $1.4 billion or earnings. Consensus estimates of EPS by a group of analysts for 2016 are $1.29 a share on $1.52 billion revenue for 2016. Mr. Strauss said that GTA V for PC's have performed better than what was expected. Given this high performance, fiscal 2016 is off to a great start, he was quoted as saying. Shareholders can be rest assured that their shares will gain momentum once Take-Two launches a select array of the highest-quality titles. Shares have risen a whopping 40% ever since Grand Theft Auto V was launched in September 2013. On trading day Monday, shares were being traded at $24.20, a decrease of 49 cents or 1.98%. However, share value increased in after-hours trade to $1.61, a 6.65% rise.
