Looking back on video gaming stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Take-Two (NASDAQ:TTWO) and its peers.
Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
The 4 video gaming stocks we track reported a softer Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 3.3% below.
Thankfully, share prices of the companies have been resilient as they are up 6.2% on average since the latest earnings results.
Best Q3: Take-Two (NASDAQ:TTWO)
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Take-Two reported revenues of $1.35 billion, up 4.1% year on year. This print exceeded analysts’ expectations by 1%. Despite the top-line beat, it was still a slower quarter for the company with full-year EBITDA guidance missing analysts’ expectations.
“I am pleased to report that we delivered strong second quarter results. Our Net Bookings of $1.47 billion were at the top of our guidance range, driven by the continued success of the Grand Theft Auto and Borderlands franchises, and our operating results surpassed our plans, largely due to a shift in the timing of marketing expenses within the year,” said Strauss Zelnick, Chairman and CEO of Take-Two Interactive.
Take-Two scored the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 8.7% since reporting and currently trades at $181.02.
Read our full report on Take-Two here, it’s free.
Electronic Arts (NASDAQ:EA)
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Electronic Arts reported revenues of $2.03 billion, up 5.8% year on year, outperforming analysts’ expectations by 2.3%. The business performed better than its peers, but it was unfortunately a slower quarter with EPS guidance for next quarter missing analysts’ expectations.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $146.08.
Is now the time to buy Electronic Arts? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Skillz (NYSE:SKLZ)
Taking a new twist at video gaming, Skillz (NYSE:SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.
Skillz reported revenues of $24.56 million, down 32.6% year on year, falling short of analysts’ expectations by 7.9%. It was a disappointing quarter as it posted a decline in its users and a significant miss of analysts’ number of paying monthly active users estimates.
Skillz delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company reported 121,000 monthly active users, down 28% year on year. As expected, the stock is down 20% since the results and currently trades at $4.51.
Read our full analysis of Skillz’s results here.
Roblox (NYSE:RBLX)
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Roblox reported revenues of $919 million, up 28.8% year on year. This number surpassed analysts’ expectations by 3.8%. Taking a step back, it was a slower quarter as it logged full-year EBITDA guidance missing analysts’ expectations.
Roblox pulled off the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update among its peers. The company reported 88.9 million daily active users, up 26.6% year on year. The stock is up 34.9% since reporting and currently trades at $58.24.
Read our full, actionable report on Roblox here, it’s free.
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