Take-Two Beats Q2 Expectations, But Posts Losses

Grand Theft Auto and Red Dead Redemption publisher Take-Two on Tuesday said it posted better-than-expected financial results for the second fiscal quarter ended September 30. But the publisher still reported a drop in revenues as well as increased losses. Sales for the company during the quarter were $107 million, down from $245 million for the same period a year prior, when Mafia II and Sid Meier's Civilization V launched. GAAP losses hit $47.3 million, up from profits of $8 million for the comparable quarter a year ago. The publisher cited sales of catalog titles and digital sales as the main revenue driver during the period. Catalog sales were were led by the Grand Theft Auto franchise, Red Dead Redemption, Borderlands, Sid Meier's Civilization V, Midnight Club Los Angeles, and NBA 2K11, the company said. Digital sales contributed 25 percent of total overall revenues for Take-Two, led again by Grand Theft Auto, Borderlands, Red Dead Redemption, as well as the Sid Meier's Civilization franchise. Take-Two studio Firaxis released the Facebook game CivWorld earlier this year, testing the waters of social network gaming. While the title has seen declines following its launch, Take-Two chairman and CEO Strauss Zelnick said in a Gamasutra-attended earnings call, "We're really happy with the way it turned out. Stay tuned, we have a lot more to say about social gaming in the coming months." The CEO said in a separate statement, "The second half of the year is off to a solid start with the launch of NBA 2K12, which received the highest ratings in the history of our industry-leading basketball series." Zelnick added in the earnings call that the NBA lockout has affected sales of NBA 2K12. "We are seeing some impact from the lockout," he said. "It's not a positive impact but we're well within the expectations of the title to date." Zelnick said Take-Two will build on the momentum with the release of Max Payne 3 from Rockstar Games and The Darkness II from 2K Games, both coming this fiscal year. But the juggernaut on the horizon is the recently-confirmed Grand Theft Auto V. "Looking ahead, Take-Two has the strongest development pipeline in the Company's history," said Zelnick. "At the cornerstone of our stellar lineup is the recently announced next installment of Rockstar Games' iconic franchise that has sold-in more than 114 million units - Grand Theft Auto V," he added. Despite pushing the upcoming title XCOM into next fiscal year, Take-Two reiterated annual guidance thanks to the strong Q2 results, expecting revenues in the range of $1-1.1 billion for the full year, and non-GAAP diluted net income per share in the range of 10-35 cents. Beyond this year, Zelnick added, "With our diverse lineup of industry-leading franchises and focus on operational excellence, we continue to expect fiscal 2012 to be another profitable year for Take-Two on a non-GAAP basis and fiscal 2013 to be one of our best years ever, with Non-GAAP net income in excess of $2.00 per diluted share."