Majesco Q1 declines necessitate move to most profitable platforms moving forward
Majesco has released its financial results for its first quarter of fiscal 2013. For the period ending on January 31, net revenues came in at $23.5 million, which is down 65% compared to $66.2 million year-over-year. Net loss for Q1 was $2.1 million compared to net income of $7.7 million during Q1 of fiscal year 2012.
"As we expected, sales patterns during the holiday period reflected declining demand for products on the Nintendo Wii game platform, including our Zumba Fitness titles," said Jesse Sutton, CEO. "As the industry transitions to next generation consoles, we are managing the business conservatively with an eye on cash preservation and relying on our past experience in weathering industry transitions.
"Already we have taken the necessary steps to lower our fixed cost base and we plan to introduce a smaller slate of high-profile branded console and mobile games during fiscal 2013."
During a call to investors, Sutton also noted the decline in Wii sales, a console the firm derived a "significant portion" of its product sales from in the last year.
"As a point of reference, software sales for all video games for the Nintendo Wii platform declined 44% in 2012 according to the research firm, the NPD Group," said Sutton. "To best manage the business during the transition to next-generation consoles, we've made adjustments to our cost structure, business model and product slate. For 2013, we are planning to introduce a smaller slate of products focused on lower-risk, high-profile, branded console and mobile games in partnership with consumer-oriented companies like Disney and Zumba.
"We believe this is the right strategy to guide us through the industry shift, one that will enable us to preserve our cash as we determine what combination of platforms and products will provide the most profitable opportunities moving forward. We remain confident in the strength of brands, such as Zumba and Disney, and our ability to deliver compelling experiences based on them regardless of platform."
Due to declines in Q1 FY13, the firm expects revenue for Q2 and Q3 to be " significantly below fiscal 2012" due to the "light product release slate" over the next two quarters, said the firm.
For Q2 ending April 30, Majesco expects to release Monster High: Skultimate Roller Maze for 3DS. For fiscal year 2013, the following titles are on slate: Young Justice: Legacy on Xbox 360, PS3, and Wii U; Phineas and Ferb (working title) for retail consoles and gaming handhelds, including smartphones and tablets; the next iteration of Zumba Fitness with specific product details to be announced.
The Company is currently compiling its release slate for the 2013 holiday selling period and will provide further product details as the year progresses.
Full year and Q4 financials for fiscal year 2012 can be found through Brenna's previous report.