May 16, 2018 / 8:14 PM / 2 months ago

Take-Two fourth-quarter revenue misses as "NBA 2K" underperforms

(Reuters) - Videogame publisher Take-Two Interactive Software Inc (TTWO.O) reported fourth-quarter revenue that missed analysts’ estimates, as sales from its popular basketball title “NBA 2K” came in below the company’s own expectations.

On an adjusted basis, the company reported revenue of $411.4 million in the reported quarter, missing the analysts’ average estimate of $444.63 million, according to Thomson Reuters I/B/E/S.

The company’s shares were down about 1.5 percent at $111.40 in after-market trading.

“Even though it (NBA 2K) has had a great year and a record year, we had somewhat higher expectations for the fourth quarter than what materialized,” Chief Executive Officer Strauss Zelnick told Reuters.

The company forecast first-quarter adjusted revenue of $215 million to $265 million, below analysts’ estimates of $368.4 million.

Other game publishers such as Electronic Arts (EA.O) and Activision Blizzard’s (ATVI.O) current-quarter forecast had also come in below Wall Street expectations.

Take-Two also forecast adjusted revenue between $2.67 billion and $2.77 billion for the year ending March 31, 2019, missing estimates of $2.90 billion.

One of the company’s highly anticipated titles from 2K, one of its video game publishing labels, was delayed to allow for additional development time, Take-Two said on the post-earnings call.

“Obviously they slipped the ‘highly anticipated’ 2K title (likely Borderlands) into F’20 which will explain the FY outlook coming in below expectations,” Jefferies analyst Timothy O’Shea said.

U.S. videogame producers are known to typically give outlook below market expectations but almost always beat them.

A bright spot in Take-Two’s results was that its iconic “Grand Theft Auto” franchise continued to perform strongly and was the largest contributor to adjusted revenue.

“GTA V” was launched in 2013 by the company’s Rockstar Games studio and has been driving Take Two’s revenues since then.

The company’s net income fell to $90.9 million, or 77 cents per share, in the fourth quarter, from $99.3 million, or 89 cents per share, a year earlier.

The success of “Fortnite” and “PlayerUnknown’s Battlegrounds” have somewhat challenged game publishers.

Epic Games launched the free-to-play “battle royale” mode for “Fortnite” on computers and gaming consoles in September. The mode allows up to 100 online players to battle each other to the death until only one player survives.

“For the quarter EPS was well ahead of expectations but revenue missed and NBA 2K was to blame, not Grand Theft Auto Online, which was widely perceived to be most at-risk from Fortnite,” O’Shea added.

Reporting by Arjun Panchadar in Bengaluru; Editing by Shounak Dasgupta

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