Take-Two gets computer gaming results season off to mixed start

Take-Two Interactive Software Inc, the parent of Grand Theft Auto publisher Rockstar Games, kicked off a busy week for US computer gaming results with a strong set of quarterly results but guidance that disappointed investors. However, guidance for revenues of US$765mln and bookings of US$840mln for the coming quarter were below market estimates. Management also reiterated guidance for the full year to end-March, with a midpoint of US$3.19bn revenues implying a decrease of 5% on the previous year due to a "moderation" in player trends as the world comes out of lockdown, as well as the tough comparison against last year’s pandemic-fuelled strength. Take-Two, which tried to buy London-listed Codemasters earlier this year before Electronic Arts (EA) won the bid battle, added that a busy slate of game releases should see the business returning to sequential growth the year after, with plans to launch around 60 titles over the next three years. As well as Rockstar Games, which makes Grand Theft Auto and Red Dead Redemption, Take-Two also owns 2K Sports, which makes popular games based on licences for PGA Golf, the NBA and WWE pro wrestling and such as NBA 2K22. Under its 'private division' the company said it will work with Roll7 to release 'OlliOlli World' digitally this winter for consoles and PC, a skateboarding action-platformer that "marks a bold new direction in this critically acclaimed franchise and has received outstanding initial feedback from early media impressions". The shares fell 8% overnight despite numbers coming in above management and Wall Street expectations. Broker Liberum said: "Whilst TTWO’s weaker than expected guidance is disappointing, it comes as little surprise given the inevitable downturn in player engagement that comes as a result of global lockdowns ending." "However, we maintain that this pull back is temporary (as is confirmed by their comments around FY23), and expect the overall gaming market to continue structurally growing going forwards given the incremental new players who entered the space last year. "Elsewhere we have recently heard that both the PlayStation 5 and the Xbox Series X/S are the fastest-selling consoles ever despite supply shortages, which in our view shows that demand remains strong and sets the industry up for long-term growth as the installed base expands." Activision reports later today and EA report tomorrow, so the broker expects to receive more colour on the impact of re-opening on global gaming companies in the coming days. In London, video games maker Team17 provided a very short trading update that suggested things were going well.