Beware: Take-Two Interactive Software, Inc. (NASDAQ:TTWO) can be as addictive as the video games that it sells. Not a few Wall Street watchers must have been glued to the TTWO ticker as the price of this New York-based company has almost doubled from their 52-week low on the NYSE. How this darling of PC gamers achieved this feat can be gleaned from the results of its third quarter fiscal 2013 released earlier in February.
TTWO’s growth and profits for the quarter exceeded most expectations, even the company’s. During the period GAAP net revenue soared to $415.8 million from the $236.3 million posted in its fiscal 2012 third quarter. Non-GAAP net revenue rose to $405.0 million from $236.3 million of the year-ago period. GAAP net profit from continuing operations amounted to $70.9 million, or $0.66 per diluted share, a robust improvement compared to the $14.2 million, or $0.16 per diluted share, registered for the year-earlier period.
Appreciable non-GAAP net income increased to $78.8 million, or $0.67 per diluted share, from the $29.0 million, or $0.27 per diluted share, recorded a year earlier. As of Dec. 31, 2012, the company’s coffers brim with $448.7 million in cash and cash equivalents.
Bagging the Market’s Holiday Mood
One of the drivers of these rosy results was TTWO’s record-breaking launch of NBA 2K13, the latest installment in the company’s top-rated and best-selling basketball franchise, which has already sold 4.5 million copies. Demand likewise continues to be strong for its Borderlands 2, sales of which have already hit the 6 million mark. The surprisingly warm market acceptance of the turn-based strategy game XCOM: Enemy Unknown and strong holiday sales also contributed to TTWO’s outstanding fiscal 2013 third quarter results.
In stark contrast, Zynga Inc (NASDAQ:ZNGA) , the San Francisco-based maker of such games as Farmville, popularized on Facebook Inc (NASDAQ:FB) , struggled through a challenging holiday quarter, usually one of the most robust seasons for companies of its ilk. As a result of the dismal holidays for Zynga, its shares have now sunk to around $2.60 from its $15.91 peak and the $10 price tag it had when the company went public on Dec. 16, 2011.
To its credit, Zynga appears on the right track toward a turnaround. Besides cutting manpower and closing studios, it is has also phased out older games that have lost much of their following. All told, there were some thirteen Zynga games that had been sent to the dustbins. Complementary to this move, the company is now encouraging gamers to try its newer titles and is developing new game platforms.