THQ - Saints Row titles ship 11M, Devil's Third dropped

THQ has announced increased revenue and losses for FY12. The firm also delayed South Park: The Game into Q1 2013, and it will no longer publish Itagaki's actioner Devil's Third.

THQ reported revenue of $184.2 million for the three months ending March 31, and revenue of $830.8 million for the full year, compared to $124.2 million and $665.3 million in revenue for the same periods in 2011, respectively.

For the quarter, the firm reported net losses of $53.2 million compared to $44.1 the year prior ($9.1M difference), and for full year $239.9 million in losses compared to $136.1 million in 2011 ($103.8M difference). The firm said all figures "exceeded guidance."

THQ’s digital revenues for Q4 2012 were $18 million, up 44% compared to the same quarter in 2011. Digital revenues the full fiscal year were $59 million, an increase of 62% year-over-year.

Revenues for the firm have increased 25.7% on average year-over-year for the last five quarters. The second quarter saw a revenue increase of 89.5% year-over-year, by far the largest for the period.

“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.”

Farrell noted in the call to investors this evening that THQ was currently in discussions with third-parties regarding Tomonobu Itagaki's Devil's Third which he said no longer "fits THQ's profile." The driving force for this, according to Farrell, was loss of profitability due to two "unforeseen development events."

One of these unforeseen events was that the company which provided Valhalla with the game engine went out of business. THQ had to help Itagaki and Valhalla with procuring a new engine "which cost a fair amount of money," said Farrell.

The second reason was the current Yen and Dollar conversion rates. Both contributed to the loss of profitability, despite Devil's Third being an "excellent franchise."

Farrell said THQ has enjoyed working with Itagaki and will do what it can to make sure the game comes to the market - albeit through a third-party.

WWE 12 has shipped more than 2.2 million units since its launch in November 2011 thanks to higher sell-through rate of 20% on like-for-like platforms in North America versus last year's release. Farrell attributed the game's stellar sales with the revamping of the series.

UFC Undisputed 3 has shipped 1.4 million units since its mid-February 2012 launch, and the firm noted 11 million units were shipped globally for the Saints Row franchise with 4.25 million units of Saints Row: The Third shipped. Both figures are up from what was previously reported by the firm in April.

The firm also touched on its realignment plan, which will be fully realized in fiscal 2013, and is expected to result in "a reduction of product development expenditures, selling and marketing expenses, and general and administrative expenses totaling $180 million from the company’s annualized run rate."

The company has reduced its future kids’ license commitments by approximately $30 million and is no longer manufacturing software and hardware for the uDraw GameTablet.

Based upon sell-through in North America of approximately 84% of units shipped, THQ expects to be able to sell its remaining uDraw inventory in fiscal 2013 at its current, carrying value. An additional 137,000 tablets were shipped during Q4.

THQ also reiterated its upcoming software lineup as follows:

• Darksiders II - August 14, 2012
• Saints Row: The Third – Enter The Dominatrix - September 2012
• Annual WWE Game - Q3 FY13
• Company of Heroes 2- Q4 FY13
• Metro: Last Light - Q4 FY13
• South Park: The Game - Q4 FY13

Note the delay of Obsidian's South Park RPG, which means it will release sometime between January 1 and March 31, 2013.

During the call to investors this evening, Farrell mentioned the Turtle Rock,Patrice Désilets and Del Toro's game inSane in passing, but failed to offer details other than all are still in development. The firm also expects to have next-gen system games available for launch or shortly afterward, but Farrell didn't indicate whether the aforementioned games would release on current systems or if THQ would hold out for next-gen.

CFO Paul Pucino said at this point, it's "premature to talk about [next-gen] costs," but THQ assumes the cost of development will be "relatively equal," to current gen systems.