Take-Two Reports Wider Loss on Higher Costs

Take-Two Interactive Software Inc. on Monday reported fiscal first-quarter revenue that more than doubled thanks to a strong performance from its most popular franchises, though the company's profit fell short of Wall Street's expectations.

The videogame publisher, best known for its "Grand Theft Auto" and "NBA 2K" franchises, said adjusted revenue surged to $366.4 million from $151.6 million in the year-earlier quarter. That was more than the $351.4 million expected by analysts surveyed by Thomson Reuters.

Revenue was driven higher by a handful of reliable franchises, including "Grand Theft Auto," "Borderlands," and sports games tied to WWE wrestling and NBA basketball, Take-Two said. A fifth installment of GTA and an online version of the game were released for PCs in the quarter, though the company didn't have any major new games.

Take-Two swung to an adjusted profit of $34.2 million, or 31 cents a share, from a loss of $11.2 million a year ago. Analysts, though, expected a bigger profit of 36 cents a share, according to Thomson Reuters.

Shares of Take-Two, up 48% over the past year, fell 3.2% to $29.95 in after-hours trading.

Like its competitors Electronic Arts Inc. and Activision Blizzard Inc., Take Two has shifted its focus in recent years to selling content delivered over the Internet, including full-game downloads, expansion packs, subscriptions and virtual goods. Adjusted digital revenues totaled $254 million, more than two-thirds of overall adjusted revenue.

"Even in a quarter when you don't have any new releases at all, you can still make a lot of money on digital," said Ben Schachter, a senior analyst with Macquarie Group.

Under U.S. accounting rules, game companies defer some revenue for online-enabled games for as long as they plan to provide content. That has a significant impact on game companies, which increasingly are making expansion packs and other add-on content a big part of game releases.

Take-Two said its loss widened to $67 million, or 81 cents a share, from $35.4 million, or 45 cents a share, a year ago. The company reported a nearly 30% jump in total operating expenses. Revenue under generally accepted accounting principles more than doubled to $275.3 million.

For the second quarter, Take-Two said it expects adjusted revenue of between $275 million and $325 million, and adjusted per-share profit of between 5 cents and 15 cents.

Analysts had been expecting revenue of $189.3 million and a loss of 22 cents a share, according to Thomson Reuters.

Write to Sarah E. Needleman at [e-mail]

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