Take-Two Interactive Software Beats Expectations But Takes A Step Back Anyway

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Take-Two Interactive Software (NAS: TTWO) reported earnings on Feb. 2. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q3), Take-Two Interactive Software missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted significantly and GAAP earnings per share contracted significantly.

Gross margins expanded, operating margins shrank, net margins dropped.

Revenue details
Take-Two Interactive Software tallied revenue of $236.3 million. The 14 analysts polled by S&P Capital IQ predicted a top line of $248.2 million. Sales were 29% lower than the prior-year quarter's $334.3 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.27. The 13 earnings estimates compiled by S&P Capital IQ predicted $0.24 per share on the same basis. GAAP EPS of $0.32 for Q3 were 29% lower than the prior-year quarter's $0.45 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 46.5%, 290 basis points better than the prior-year quarter. Operating margin was 8.6%, 600 basis points worse than the prior-year quarter. Net margin was 6.0%, 620 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $166.1 million. On the bottom line, the average EPS estimate is -$0.17.

Next year's average estimate for revenue is $852.1 million. The average EPS estimate is -$0.30.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 1,166 members out of 1,254 rating the stock outperform, and 88 members rating it underperform. Among 342 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 325 give Take-Two Interactive Software a green thumbs-up, and 17 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Take-Two Interactive Software is outperform, with an average price target of $17.68.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Take-Two Interactive Software. Motley Fool newsletter services have recommended buying shares of Take-Two Interactive Software. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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