THQ Fights to Strong First Quarter
THQ is a company still at work turning itself around but the waypoints along the trail show its clearly making progress and moving in the right direction. A day after winning an arbitration ruling over Jakks Pacific, the Agoura Hills game developer reported a record setting first quarter.
For the three months ended June 30th, revenue soared 77% to $243.5m. Net income was $6.4m, or 9 cents a share, compared to a loss of $27.2m, or 41 cents a share, last year. Less one time charges for restructuring and stock compensation, THQ earned $6.9m, or 10 cents a share (compared to a loss of 38 cents last year).
Analysts were expecting a loss of 8 cents a share on revenue of $203.5.
The consensus-topping result directly contrasts weak earnings at some rivals and also appears to temper questions about the interactive gaming industry’s current health. In this climate, the message seems to be: consumers are buying but they’re buying selectively. Quality content is essential.
In its first quarter, THQ had quality. The company’s product slate was fresh at a time when some rivals were stale. THQ’s sales were driven “primarily” by its UFC franchise and Red Faction: Guerrilla. UFC 2009: Undisputed was May’s top seller in the US market and both games ranked on NPD’s top ten list for June as well.
Worldwide, UFC 2009 has sold more than 2.9m titles to date, the company reports.
The June quarter was the best June quarter (net sales and net income) in THQ’s history.
Pointing to the future, THQ is forecasting revenue in the range of $85 to $95m for the current quarter. That won’t thrill analysts who were expecting approximately $122 to $123m, but the conservative projection reflects the fact that the company has no new titles debuting in the second quarter.
For the full fiscal year ending in March 2010, THQ expects to be profitable.
Alongside earnings, THQ also said Tuesday it is planning to offer $90m in convertible notes. The offer, which includes an overallotment option of $10m will raise proceeds for “general corporate purposes.” The Notes would be due in 2014.
Related Articles from Metue
• June NPD: Gaming’s Mixed Bag
• May NPD Results: A Closer Look
• THQ Reorganizes, Looks Ahead
• 38 Studios Swallows Up THQ’s Big Huge Games
• Stats Survey: Nielsen Takes New Look at Game Sector
