(Reuters) -Take-Two Interactive Software forecast second-quarter net bookings below Wall Street targets on Tuesday, in a sign that spending on games remained under pressure amid inflationary pressures.
U.S. spending on videogame content, including new games and character skins, was flat in the first half of the year, while console sales rose 23%, according to data from gaming research firm Circana.
Last fiscal, Take-Two (NASDAQ:TTWO) incurred $79 million in costs relating to unreleased and canceled titles. It canceled "several titles" that were a part of its fiscal 2026 pipeline to focus on those games with "higher levels of conviction and expectations of success".
The videogame publisher forecast net bookings for the September quarter between $1.4 billion and $1.45 billion, the mid-point of which is below analysts' average estimate of $1.45 billion, according to Refinitiv data.
CEO Strauss Zelnick, however, said he expects the company to be in a "reasonably good position from an economic point of view" early next year, signaling that demand would improve.
The company reiterated net bookings forecast for the fiscal ending March 2024. It remains confident to see a "significant inflection point" in fiscal 2025, when it expects net bookings of over $8 billion.
Analysts and investors expect that boost to come from the much-awaited game: "Grand Theft Auto 6".
"For investors, the focus is more around them (Take-Two) maintaining their guidance," said Wedbush Securities analyst Nick McKay.
Take-Two's shares were up 3.8% after the bell.
Net bookings for the first quarter rose 20% to $1.20 billion, driven by strong demand for its proven gaming titles including "Grand Theft Auto" and "NBA 2K". Analysts expected $1.21 billion.
Take-Two said net bookings from customers who make in-game purchases rose 38% in the quarter ended June 30.
Quarterly ad revenue grew about 11%, driven by improvements at Zynga (NASDAQ:ZNGA)'s mobile games business.