Take-Two to Report Q1 Earnings: What's in Store?

Take-Two Interactive TTWO is set to report first-quarter fiscal 2025 results on Aug 8.

For the first quarter of fiscal 2025, Take-Two expects GAAP net revenues between $1.3 billion and $1.35 billion. The company expects a loss per share between $1.43 and $1.58.

The Zacks Consensus Estimate for revenues is currently pegged at $1.24 billion, suggesting an increase of 2.95% from the figure reported in the year-ago quarter.

The consensus mark for fiscal first-quarter loss per share has remained unchanged at 1 cent in the past 30 days, indicating a decline of 97.22% from the year-ago quarter's reported figure.

Take-Two's earnings beat the Zacks Consensus Estimate twice in the last four quarters and missed the other two occasions, delivering an average surprise of 89.84%.

Let's see how things have shaped up for this announcement.

Factors to Consider

Take-Two's fiscal first-quarter performance is expected to have reflected steady demand for its popular franchises, including Grand Theft Auto, Red Dead Redemption, NBA 2K and WWE 2K.

Moreover, the acquisition of Zynga has been highly accretive to the company's prospects as it has expanded its mobile gaming portfolio. Zynga's Top Troops, a game that blends mobile strategy, RPG and merge mechanics, is expected to have aided mobile revenues in the to-be-reported quarter.

The growing popularity of Grand Theft Auto Online and Grand Theft Auto V, the Red Dead Redemption series and Zynga's in-app purchases are likely to have aided TTWO's top-line growth.

In the fiscal first quarter, the company released TopSpin 2K25, the revival of the beloved tennis simulation video game. Take-Two's publishing label, Zynga, announced the availability of Star Wars: Hunters for the Nintendo Switch, iOS and Android devices.

However, dullness in recurrent consumer spending growth, which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and advertising, is likely to have reflected in the company's top-line growth.

In fourth-quarter fiscal 2024, recurrent consumer spending decreased 2% year over year and accounted for 79% of total net revenues.

Moreover, continued softness in mobile advertising and NBA 2K24 is expected to have adversely impacted the top line.

The company has been witnessing increased operating expenses for game development and marketing. The rising expenses are likely to have kept margins under pressure in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

TTWO has an Earnings ESP of +85.72% and sports a Zacks Rank #1 at present.

Other Stocks to Consider

Here are some other stocks worth considering, as our model shows that these also have the right combination of elements to beat on earnings this season.

Shopify has an Earnings ESP of +7.78% and a Zacks Rank #2 at present.

Shopify's shares have plunged 32.9% year to date. SHOP is set to report its second-quarter 2024 results on Aug 7.

DigitalOcean DOCN has an Earnings ESP of +2.19% and flaunts a Zacks Rank of 1 at present.

DigitalOcean's shares have lost 25.7% year to date. DOCN is set to report its second-quarter 2024 results on Aug 8.

MKSI MKSI has an Earnings ESP of +7.28% and sports a Zacks Rank #1 at present.

MKSI's shares have gained 2% year to date. MKSI is set to report second-quarter 2024 results on Aug 7.

To read this article on Zacks.com click here.