THQ Earnings: Double Digit Revenue Growth, But Loss Widens

THQ Inc.’s (NASDAQ:THQI) loss widened in the fourth quarter, as the company’s results were dragged down by higher costs. THQ is a worldwide developer and publisher of interactive entertainment software for all popular game systems.

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THQ Earnings Cheat Sheet for the Fourth Quarter

Results: Loss widened to $53.2 million (78 cents per diluted share) from $44.1 million (loss of 65 cents per share) in the same quarter a year earlier.

Revenue: Rose 48.3% to $184.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: THQ Inc. reported an adjusted net loss of 12 cents per share. By that measure, the company beat the mean analyst estimate of a loss of 43 cents per share. It beat the average revenue estimate of $157.4 million.

Quoting Management: “We exceeded our initial fourth quarter guidance for net sales, earnings and cash position, driven by high quality core games with a significant digital component, which is the blueprint for our future,” said THQ President and CEO Brian Farrell. “We have made significant changes to our business, and are on track to execute our strategy of delivering quality connected core gaming experiences, beginning with the sequel to the award-winning Darksiders in August.”

Key Stats:

Gross margin shrank 28.3 percentage points to 2.3%. The contraction appeared to be driven by increased costs, which rose more than twofold from the year earlier quarter while revenue rose 48.3%.

The company topped expectations last quarter after falling short of forecasts in the third quarter with net income of 33 cents versus a mean estimate of net income of 76 cents per share.

Over the last five quarters, revenue has increased 25.7% on average year-over-year. The biggest increase came in the second quarter, when revenue rose 89.5% from the year-earlier quarter.

For the fiscal year, the average estimate has moved from a loss of $1.79 a share to a loss of $1.76 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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