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Take-Two Interactive Software Inc. shares slipped in the extended session Monday, after the videogame publisher announced it was cutting costs, which includes personnel, and said it had misjudged its previous outlook for the fiscal year, following a holiday quarter that disappointed many consumer-electronics makers, chip makers and game publishers.
Take-Two
TTWO,
shares initially slipped 2% after hours, following a 3.4% decline to close the regular session at $105.56, but were last down only 0.5%. Take-Two publishes such videogame franchises as “Grand Theft Auto” and “Red Dead Redemption” under its Rockstar Games label, and “Borderlands” and “NBA2K” under its 2K label.
“We are operating in an environment that is, in many ways, more challenging than we anticipated,” Strauss Zelnick, Take-Two’s chairman and chief executive, told analysts on the conference call.
Zelnick told analysts he took “personal responsibility” for the outlook cut, and that net bookings for the third quarter of $1.38 billion were below even the company’s own forecast $1.41 billion to $1.46 billion. The company forecast net bookings for the fourth quarter of $1.31 billion to $1.36 billion, and $5.2 billion to $5.25 billion for the year. Meanwhile, the Street was expecting $1.5 billion and $5.45 billion, respectively.
Take-Two forecast fiscal fourth-quarter total revenue of $1.34 billion to $1.39 billion, and revenue of $5.24 billion to $5.29 billion for the year.
Analysts surveyed by FactSet had estimated total revenue of $1.5 billion for the fourth quarter, and $5.52 billion for the year.
“Accordingly, we have embarked on a cost-reduction program that we believe will deliver over $50 million of annual savings, which is in addition to the $100 million of annual cost synergies that we plan to realize from our combination with Zynga,” Zelnick said.
On the call, Zelnick said game delays last quarter were not a result of the COVID-19 pandemic interfering with production schedules. Zelnick characterized the delays on two “immersive core titles” as “some movement in our release schedule.”
The cost savings “will begin to realize in the fourth quarter of its fiscal year 2023,” the company said in a statement. Without specifics, Take-Two said the cost-cutting program “includes personnel, processes, infrastructure and other areas, and will primarily focus on corporate and publishing functions,” and the cuts are not expected to impact the multi-year game pipeline.
For the fiscal third quarter, Take-Two reported a loss of $153.4 million, or 91 cents a share, versus net income of $144.6 million, or $1.24 a share, in the year-ago period. Total net revenue rose to $1.41 billion from $903.3 million in the year-ago quarter.
Analysts had forecast earnings of 89 cents a share on total revenue of $1.48 billion.
