Earnings Reports

Google Ad

Take-Two Interactive Software beat September earnings and raised guidance targets sending the video game publisher and distributor shares higher. $TTWO was driven primarily by Grand Theft Auto V,  Grand Theft Auto Online and the successful launch of NBA 2K19.

Grand Theft Auto

TAKE-TWO INTERACTIVE SOFTWARE, INC - NASDAQ: TTWO ·

Reported Earnings After Close Wednesday

$1.05 Beat Exp $0.93 EPS and $583.4M Beat $549.9 million forecast in revenue 

Earnings

Take-Two Interactive Software (TTWO) late Wednesday reported earnings for the September quarter and guided higher. Take-Two earned an adjusted $1.05 a share on revenue of $583.4 million in its fiscal second quarter ended Sept. 30. Analysts consensus was 93 cents a share on sales of $549.9 million. In the year-earlier period, Take-Two earned an adjusted $1.09 a share on net bookings of $557 million.

 TTWO Q2 2019 earnings

TAKE-TWO INTERACTIVE SOFTWARE, INC NASDAQ: TTWO·

Market Reaction > After hours 128.92 +3.11 (+2.47%)

“Take-Two delivered better-than-expected operating results, including growth in Net Bookings, during the fiscal second quarter. This outperformance was driven primarily by Grand Theft Auto V and Grand Theft Auto Online, as well as the successful launch of NBA 2K19,” said CEO Strauss Zelnick.

Highlights

  • During fiscal second quarter 2019, total Net Bookings grew 1% to $583.4 million, as compared to $577.0 million during last year’s fiscal second quarter.
  • Net Bookings from recurrent consumer spending grew 28% and accounted for 53% of total Net Bookings.
  • The largest contributors to Net Bookings in fiscal second quarter 2019 were NBA 2K19 and NBA 2K18, Grand Theft Auto Online and Grand Theft Auto V, Dragon City and Monster Legends, WWE SuperCard, and NBA 2K Online 2.
  • Catalog accounted for $287.8 million of Net Bookings led by Grand Theft Auto, Dragon City and Monster Legends, and NBA 2K.
  • Digitally-delivered Net Bookings grew 20% to $426.2 million, as compared to $355.7 million in last year’s fiscal second quarter, and accounted for 73% of total Net Bookings.
  • The largest contributors to digitally-delivered Net Bookings in fiscal second quarter 2019 were NBA 2K19 and NBA 2K18, Grand Theft Auto Online and Grand Theft Auto V, Dragon City and Monster Legends, WWE SuperCard, and NBA 2K Online 2.
  • Launched Red Dead Redemption 2 for PlayStation 4 and Xbox One. Told across the deepest and most expansive Rockstar world to date, Red Dead Redemption 2 is Rockstar’s first game built from the ground up for the current console generation.
  • The title has received outstanding reviews, with numerous influential critics awarding Red Dead Redemption 2 a perfect score, including IGN, The Guardian, Game Informer, The Telegraph, Digital Trends and others.
  • Red Dead Redemption 2 sold-in more units in its first 8 days than the original blockbuster Red Dead Redemption sold in its first 8 years and, as of today, the title has sold-in over 17 million units worldwide.

A gaming stock's guidance is affected by the games they produce and when and with Take Two the money tree, “Grand Theft Auto Online”. 

Red Dead Redemption 2

Analysts Notes From Last Quarter

Barclays in a note said "Overall, we continue to see upside from Red Dead 2 in FY19 and the two year EPS stack looks good with close to $5.00/yr and OI margins likely flat-to-up. We also still expect further multiple expansion as the Digital biz scales and margins improve. Our PT moves to $126 and we reiterate our OW rating."

  • TTWO guided Rockstar to ~$1.5bn in FY19, which Barclays and others consider conservative on Red Dead 2 units and leaves upside risk if the title outperforms.
  • TTWO guided FY19 OI Margin down ~300bp Y/Y to 22% vs. up ~800bp Y/Y in FY18 due to higher costs for upcoming titles. 

Wedbush in a note said "Despite its lowered guidance, we think that Take-Two has a clear path for earnings growth ahead. The delay of the unannounced 2K title bolsters our confidence that the company can grow earnings again in FY:20, as catalog sales of Red Dead Redemption 2, the launch of Borderlands 3, and growth from the core portfolio (including contribution from at least one Private Division title) should allow Take-Two to grow its top line by 5% or more and its EPS by 10% or more. Going forward, we expect a new BioShock title, new games from Rockstar, new titles from Private division, and continued growth of recurring revenue. We expect Rockstar to launch titles annually beginning in 2020 after a 5 year hiatus.

What is impressive with $TTWO is both Grand Theft Auto V and Grand Theft Auto Online remain among the company biggest contributors nearly four years after they were first launched for Playstation 3 and Xbox 360. NBA 2K18, WWE 2K18, WWE SuperCard and Mafia III all were top contributors. Red Dead Redemption 2 is an exciting addition for fiscal year 2018.

TTWO does great at keeping the customer happy, Net sales from recurrent consumer spending continue to make well over 50% of sales. 

Grand Theft Auto V includes access to Grand Theft Auto Online, which initially launched in 2013. Rockstar Games is also known for developing brands in other genres, including the LA Noire, Bully and Manhunt franchises. Rockstar Games continues to expand on the company’s established franchises by developing sequels, offering downloadable add-on episodes, content and virtual currency, and releasing titles for smartphones and tablets.

Software titles published by the company’s Rockstar Games label are primarily internally developed. It expects Rockstar Games, its wholly-owned publisher of the Grand Theft Auto, Max Payne, Midnight Club, Red Dead, and other franchises, to continue to operate in the action/adventure product category and create groundbreaking entertainment by utilizing its existing titles, as well as developing new brands.

TTWO’s 2K label has published various entertainment properties across all key platforms and across a range of genres, including shooter, action, role-playing, strategy, sports and family/casual entertainment.

2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock, Mafia, Sid Meier's Civilization and XCOM Enemy Unknown series. 2K also publishes highly externally developed franchises, such as Borderlands and Evolve. 2K's realistic sports simulation titles, including the company’s primary NBA 2K series.

Source: TTWO, Alphastreet, Wedbush, Barclays

From The TradersCommunity Research Desk

Log in to comment
Discuss this article in the forums (1 replies).