What to expect when Take-Two Interactive Software (TTWO) reports Q4 earnings next week

Shares of Take-Two Interactive Software, Inc. (NASDAQ: TTWO) were down slightly on Friday. The stock has gained 19% year-to-date. The gaming company is scheduled to report its fourth quarter 2023 earnings results on Wednesday, May 17, after market close. Here’s a look at what to expect from the earnings report:

Revenue

Take-Two has guided for revenue of $1.34-1.39 billion in the fourth quarter of 2023. Analysts are projecting revenue of $1.34 billion. This compares to revenue of $930 million reported in Q4 2022. In the third quarter of 2023, revenue increased 56% year-over-year to $1.41 billion.

Earnings

Take-Two expect net loss of $197-214 million and loss per share of $1.17-1.27 in Q4 2023. Analysts are projecting EPS of $0.68. This compares to net income of $111 million, or $0.95 per share, reported in the prior-year quarter and a net loss of $153.4 million, or $0.91 per share, reported last quarter.

Points to note

For the fourth quarter of 2023, Take-Two expects net bookings to range between $1.31-1.36 billion. In the year-ago quarter, net bookings increased 8% YoY to $845.8 million while in the third quarter of 2023, bookings grew 60% YoY to $1.38 billion.

During the third quarter, challenging macroeconomic conditions affected the performance of some of the company’s new releases and the recurrent consumer spending for some of its console and PC games. However, established franchises and titles performed well, led by Grand Theft Auto V, Red Dead Redemption 2, and NBA2K23. Along with these popular titles, Toon Blast, Toy Blast, Empires & Puzzles, and Rollic’s hyper-casual portfolio contributed to bookings growth in the quarter.

For the fourth quarter, Take-Two expects NBA 2K, Grand Theft Auto Online and Grand Theft Auto V, Empires & Puzzles, Toon Blast, Rollic’s hyper-casual mobile portfolio, and the newly-launched WWE 2K23 to be the biggest contributors to net bookings. The company expects recurrent consumer spending to grow approx. 105% and digitally-delivered net bookings to increase around 70%. Take-Two also expects 80% of console game sales to be delivered digitally, which is up from 75% last year.

The addition of Zynga has proved to be a compelling advantage for Take-Two. Its mobile offerings such as Empires & Puzzles, Top Eleven, and Rollic’s Balls’n Ropes performed well during the third quarter. This acquisition is expected to generate significant gains for TTWO in the mobile gaming space, which will be an important growth driver in the long term.