Take-Two Seconds For These Tech Earnings

Several tech stocks reported today, so let’s see how they did. 👇

First, we’ll start with Take-Two Interactive, which inspired this section’s title. 📝

The American video game company missed earnings expectations by $0.09, but its revenue of $1.39 billion topped estimates of $1.34 billion. Higher inflation has led consumers to be more selective about spending, primarily benefiting bargain titles and blockbuster games.

And executives expect that to continue. As a result, they now see fiscal 2024 net bookings of $5.45 to $5.55 billion, which was well below the $6.11 consensus view. 📉

With that said, they’re optimistic about fiscal 2025, expecting net bookings of $8 billion and over $1 billion in adjusted unrestricted operating cash flow. They also hinted at further growth in fiscal 2026, which investors took to mean that Grand Theft Auto VI isn’t too far away. Its predecessor is known as “the most financially successful media title of all time,” so progress here is a big win.

Whether the optimism is warranted or not remains to be seen. But as of now, $TTWO shares are trading up 8% after hours to new year-to-date highs. 📈

Next up is digital communications company Cisco, which is falling despite topping guidance. 🤔

It reported adjusted earnings per share of $1.00 and revenues of $14.6 billion. Both numbers topped the consensus views of $0.97 and $14.4 billion. Fiscal fourth-quarter guidance also topped expectations, but full-year guidance is where things turned for the worst.

Executives increased their annual profit guidance but did not raise the ceiling on revenue growth for the year as expected. Instead, they anticipate full-year revenue growth of 10% to 10.5%, up from their previous 9% to 10.5% forecast. 👎

Ultimately, investors and analysts remain concerned that delays in its backlogged orders are masking meaningful declines in new orders. Orders declined 23% YoY in the most recent quarter. However, executives say the QoQ numbers are more relevant since the pandemic-era comparables were essentially outliers. 

Nonetheless, investors are selling after hours. $CSCO shares are down about 5%. 🔻

Lastly, it’s worth mentioning ServiceNow. $NOW shares soared 5% as the company partnered with Nvidia on generative AI. The cloud computing company will develop customized large language models (LLMs) for data using Nvidia’s software, services, and infrastructure. 🤖

This followed news that ServiceNow would invest $1 billion in its venture-capital arm by 2026 to back enterprise-software startups in AI and automation. Additionally, the company announced its first-ever share repurchase program of $1.5 billion, with the CEO predicting a “$20 billion-plus company in the not-too-distant future.” 

Time will tell if he’s right. For now, investors are celebrating the short-term gains caused by the optimism. 🥳

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