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Take-Two sees profit slump

by on08 February 2017

Higher royalty payments

Take-Two Interactive Software which is known for the "Grand Theft Auto" video game series, is not doing so well.

The outfit cut its profit forecast for its fiscal year 2017, largely due to higher royalty payments.

Chief Financial Officer Lainie Goldstein said the bleaker outlook was because there were higher internal royalties resulting from the continued outperformance of Grand Theft Auto V and Grand Theft Auto Online.

"Grand Theft Auto V", one of the best-selling video games, was launched in 2013 by the company's Rockstar Games studio.

The company said that to date, sell-in for "Grand Theft Auto V" has surpassed 75 million units.

The company also trimmed its full-year net revenue forecast range, mainly due to deferrals.

US financial regulators have issued new guidelines that require deferred revenue from games with online components be accounted for over however long users play them, typically six to nine months.

Take-Two said it now expected the top end of its full-year revenue at $1.80 billion, down from $1.85 billion earlier. The company retained the lower end at $1.75 billion.

Chief Executive Strauss Zelnick thinks it is better to see the health of the business by looking at its bookings.

The company raised its full-year bookings forecast to $1.72 billion to $1.77 billion, up from $1.6 billion to $1.7 billion it expected previously.

Take-Two said net revenue rose to $476.5 million from $414.2 million in the third quarter.

On an adjusted basis, the company reported revenue of $744.8 million, beating the Cocaine Nose Jobs of Wall Street’s predictions of about $705.6 million.

The company benefited from sales of "Grand Theft Auto V" and higher digital downloads of its games.

Take-Two had also released its pro-wrestling "WWE 2K17" and strategy "Sid Meier's Civilization VI" games during the period, which also contributed to the increase in revenue. The company's net loss narrowed to $29.8 million helped by lower total operating expenses.

Last modified on 08 February 2017
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