Q2 was a profitable quarter and Zumba Fitness continues to sell. Zumba Fitness has sold over 7 million units worldwide. Zumba Fitness is the second largest fitness franchise in the video game industry behind Wii Fit, and it is the best selling fitness franchise on the Kinect.
Zumba Fitness Rush was launched solely on the Kinect during Q2, and in April, it was the second best selling Kinect game. Zumba Fitness Rush also received good reviews in the media.
In October, Zumba Core will be released on both the Wii and the Kinect. It is designed to deliver tight and toned abs along with a total body workout. It was created by the same developer that created Zumba Fitness Rush.
Majesco expects the video game industry to remain slow in Q3. However, it has a number of releases for the holidays and expects a strong holiday season. In September, it will be releasing NBA Baller Beats, a full body motion game that will allow the player to perform just like a basketball player. NBA Baller Beats will be released on the Kinect for Xbox. The response to the game at the E3 expo was “incredible.” It will be packaged with an officially licensed NBA replica game ball from Spaulding and will sell for $59.99.
Majesco is also releasing Double Dragon: Neon on the Xbox Live and Playstation Network downloadable platforms.
In October, Majesco will also be releasing for the DS and Wii Harley Pasternak's Hollywood Workout, a workout program that requires only 25 minutes for 5 days a week. Around the holidays, it will be releasing Hello Kitty for the first time on Nintendo 3DS in Hello Kitty Picnic. It will also be releasing 3 different Cooking Mama in 2 for 1 combo packs for the DS and Wii.
Majesco will be releasing Mini Putt Park on Facebook. Finally, it expects to release 3 or 4 games for the iPhone, iPad and iPod Touch, half of which will be free to play. The first of these free to play mobile games in Sci Fi Heroes, which will be available later this summer. It is spending between $4 and $5 million creating the free games.
It's too early to expect price cuts on gaming consoles, as those cuts would come closer to the holidays. The launch of the Wii U platform will carry many opportunities and should increase sales during the holidays.
Financials.
Revenue in Q2 declined by 5 percent, although the software market declined by 30 percent in the same period. The decline was primarily due to the timing of the release of the Zumba Fitness products. Zumba Fitness products accounted for 86 percent of sales versus 75 percent in Q2/2011. In fiscal year 2012, Majesco expects sales of $130 to $140 million versus sales of $125 million in fiscal year 2011.
In Q2, international sales were 21 percent of revenue versus 10 percent last year. In the first half of the year, international sales were $23.2 million versus $3.3 million in Q2/2011. The increase was due to the fact that Majesco's European Zumba products were released earlier in the year in fiscal year 2012 than they were released in fiscal year 2011. Additionally, in fiscal year 2012, Majesco is selling finished goods through a distribution agreement in certain markets, while in fiscal year 2011, it licensed all manufacturing rights to another publisher.
Majesco obtains about 60 percent of its income from Wii games. With regard to Zumba Fitness, Kinect has not surpassed the volume of sales on the Wii.
Gross margins in Q2 were 40 percent versus 42 percent in Q2/2011. The decrease in margin was due primarily to increased price promotions and licensing royalties on Majesco's products.
Operating expenses were $9 million, an increase of $1 million. The increase was primarily due to increased marketing expenses of $2.1 million in a marketing program with Microsoft for the release of Zumba Rush. This increase was partially offset by write offs on canceled game projects due to the changes in prospects for new gaming consoles and handheld devices.
Earnings per share was $.07 versus $.13 a year ago. For fiscal year 2012, Majesco expects earnings per share of $.20 to $.30 versus $.28 a year ago. This is $.05 lower than Majesco's earlier guidance due to anticipated softness in software in Q3.
At the end of Q2, Majesco had $31.7 million in cash and cash equivalents, with another $6 million in advances available under its factoring agreement.
The full transcript of the earnings conference call can be found on Seeking Alpha at the following link:
No comments:
Post a Comment