Take-Two Interactive Software Inc. shares dropped in the extended session Monday after the videogame publisher cut its bookings outlook for the year by $400 million because of pipeline “shifts,” and weaker-than-expected mobile and in-game spending.
shares fell as much as 18% after hours, following a 0.1% decline to close the session at $108.40. At Monday’s close, Take-Two shares were down 39% for the year to date, compared with a 20% decline by the S&P 500 index
and a 32% fall by the tech-heavy Nasdaq Composite Index
In a statement, Take-Two Chairman and Chief Executive Strauss Zelnick said the company lowered its bookings outlook for the year to a range between $5.4 billion and $5.5 billion, reflecting “shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile.”
Analysts surveyed by FactSet had forecast $5.9 billion, based on company’s previous estimate between $5.8 billion and $5.9 billion.
On a call with analysts, Zelnick said the pipeline shifts were “modest,” and that there was some pressure on in-game spending, which he expects to clear up in the next three to six months. Unlike other tech companies, Zelnick pointed out that Take-Two does not have a hiring freeze. In fact, the current rollout of tech layoffs gives the publisher a broader talent pool from which to pick.
Regarding the cut in bookings, Chief Financial Officer Lainie Goldstein told analysts that “about 70%” of the download revision was due to a much weaker-than-expected mobile business and the release shifts, and about $50 million in currency headwinds.
That said, Goldstein told analysts the company had “identified additional cost-savings opportunities” of up to more than $100 million per year within two years of closing its acquisition of Zynga. Goldstein also told analysts the company is “also re-evaluating other efficiencies across our core businesses by ensuring that we have the appropriate resources to deliver on our significant growth prospects.”
The company also expects third-quarter bookings of $1.43 billion to $1.48 billion, down from a previous estimate of $1.5 billion to $1.55 billion, compared with the Street estimate of $1.55 billion.
Known for its “Grand Theft Auto” and “NBA 2K” titles, Take-Two reported a second-quarter loss of $257 million, or $1.54 a share, versus net income of $10.2 million, or 9 cents a share, in the year-ago period.
Revenue increased to $1.22 billion from $832.7 million in the year-ago quarter, while bookings came in at $1.39 billion compared with $858.2 million in the year-ago period. Mobile accounted for $730.1 million, or 47%, of bookings in the second quarter, the company said.
Analysts expected Take-Two to report a second-quarter unadjusted loss of 95 cents a share, adjusted earnings of $1.37 a share, revenue of $1.41 billion and bookings of $1.55 billion. Take-Two does not provide adjusted earnings information, instead providing some financial information that can be used to calculate that number.
Back in September, Take-Two had a scare when a hacker had claimed to have source code and assets of “Grand Theft Auto VI,” and published them online. On the call, execs said they have found no evidence that any material data was taken.