Take-Two Raises Annual Forecast With More GTA on the Way

(Bloomberg) -- Take-Two Interactive Software Inc. improved its outlook for the fiscal year, indicating confidence in a lineup of games that depends largely on the Grand Theft Auto franchise.

Adjusted revenue will be $3.3 billion to $3.4 billion for the year ending in March, the company said in a statement Wednesday. Although it’s an increase from the previous forecast, it’s short of what analysts expected, according to an average of estimates compiled by Bloomberg.

Take-Two outperformed expectations in the fiscal second quarter and said it spent about $200 million to repurchase shares. The stock was up as much as 1.5% in extended trading Wednesday.

The financial report raised some reasons for concern, though. The revenue projection for the holiday quarter missed estimates, reflecting a lack of big video game releases through the end of the year. 

The publisher forecast adjusted revenue of $800 million to $850 million in the third quarter. The projection missed the average estimate of $917 million, according to data compiled by Bloomberg.

Take-Two’s fall lineup is slim. The company plans to put out remastered versions of old Grand Theft Auto titles in November but delayed the release of Grand Theft Auto V for the PlayStation 5 and Xbox Series X to March.

The company also said Wednesday that it delayed another title. It bumped Midnight Suns, a strategy game set in the Marvel universe, to the second half of 2022, from a planned spring release. A spinoff in the Borderlands franchise is still scheduled to come out in March.

The publisher’s business is heavily reliant on the NBA 2K basketball series and Grand Theft Auto V, which has sold 155 million copies. GTA V is the most profitable entertainment property of all time, largely thanks to its multiplayer component, Grand Theft Auto Online. Both franchises helped the publisher beat expectations in the fiscal second quarter.

Take-Two generated adjusted revenue of $985 million in the period that ended Sept. 30, exceeding analyst projections of $866 million. The publisher said adjusted earnings were $1.63 a share. The average estimate was $1.40.

“We experienced consistently strong engagement trends across our key franchises, underscoring the durability of our offerings and the deep relationships that we have established with new, existing and returning players,” Chief Executive Officer Strauss Zelnick said in the statement.

The company’s releases in the second quarter included NBA 2K22, which received mixed reviews, and updates to Grand Theft Auto Online and Red Dead Online. Take-Two said sales were driven by the new basketball game, as well as the long tail from Grand Theft Auto and the shooter game Borderlands 3, which came out in 2019.

For the period that ends in December, adjusted earnings will be 95 cents to $1.05 a share, slightly missing estimates.

Analysts and investors continue to wonder when the company will unveil the much-anticipated Grand Theft Auto VI, said Matthew Kanterman, an analyst at Bloomberg Intelligence. “It’s like the Loch Ness Monster,” he said. Observers have also expressed concern over the publisher’s pattern of delays, Kanterman said.

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