Gaming Heavyweight Take-Two Crushes Earnings But Says Holiday Looks Thin

Video game publisher Take-Two Interactive Software reported better than expected fiscal second quarter earnings. $TTWO names Red Dead Redemption 2, Grand Theft Auto Online and NBA 2K19  helped raise guidance but worries about the holiday season.

Video game publisher Take-Two Interactive Software reported better than expected fiscal second quarter earnings. $TTWO names Red Dead Redemption 2, Grand Theft Auto Online and NBA 2K19  helped raise guidance but worries about the holiday season.

Grand Theft Auto


Reported Earnings After Close  Thursday

$1.93 Beat Exp $1.67 EPS and $950.58M Beat $913 Million Forecast in Revenue


Take-Two Interactive Software (TTWO) reported second quarter fiscal 2020 earnings Thursday. The publisher reported net revenue of $857.8 million, which is up 74% year-over-year from $492.7 million. The company earned an adjusted $1.93 a share on net bookings of $950.5 million in its fiscal second quarter ended Sept. 30. Analysts expected Take-Two to earn an adjusted $1.67 a share on sales of $913 million, according to Zacks Investment Research. In the year-earlier period, Take-Two earned an adjusted $1.05 a share on net bookings of $583.4 million.

Most of that growth came from what Take-Two calls “recurrent consumer spending,” or microtransactions. That category was up 32% year-over-year for the company. It made up 37% of Take-Two’s total net revenue.



Market Reaction After hours $116.20 −0.71 (-0.61%)

  • Game franchises “Grand Theft Auto,” “NBA 2K” and “Red Dead” fueled net bookings and earnings last quarter.
  • Take-Two also released sci-fi shooter game “Borderlands 3” on Sept. 13. It has sold nearly 7 million units of “Borderlands 3” worldwide to date.
  • The company generated solid results “across the board” in the September quarter, Chief Executive Strauss Zelnick told Investor’s Business Daily.

“We raised our outlook for the year,” Zelnick said. “It’s going to be nearly a record year. We had a record year last year.” For the fiscal year ending March 31, Take-Two guided to net bookings of $2.8 billion, vs. analyst forecasts of $2.76 billion. Three months ago, it estimated full-year net bookings of $2.65 billion. However, the company’s outlook for the current fiscal third quarter was below Wall Street estimates. “The holiday quarter looks kind of thin to us,” Zelnick said. “There are some competitive offerings in the marketplace. But we’re gratified that our strategy of creating the highest quality entertainment of any type continues to pay off.”

Red Redemption was an instant hit which should come as a big relief for the firm to reduce its dependency on the Grand Theft Auto franchise. Within three months after launch, the company sold 23 million units, surpassing analyst lifetime estimates for the game.

NBA 2K franchise has also been getting good traction with gamers. Jointly owned with NBA, the game was launched in May 2018 on the lines of a sports league format. Take-Two has announced that next season would see 21 teams participating which would augur well to bump up its revenues. This also would help the firm to grow its esports business in the near future.

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


Take-Two raised guidance to revenues of $2.93 billion to $3.03 billion. That is up from previous guidance of $2.7 billion to $2.8 billion

. “The third quarter is off to a solid start with the launches of The Outer Worlds, Red Dead Redemption 2 for PC, and WWE 2K20,” said Zelnick. “And we will bolster our holiday line-up with offerings for Google Stadia and Sid Meier’s Civilization VI for PlayStation 4 and Xbox One.”

Recurrent consumer spending is also driving higher earnings going forward.  TTWO plans to launch new games inclusing both sequels as well as completely new properties.

“Throughout the fiscal year, we will continue to support our titles with experiences designed to captivate audiences and drive ongoing engagement, including new content for Grand Theft Auto Online and Red Dead Online,” said Zelnick. “Looking ahead, Take-Two has the strongest development pipeline in its history, including sequels from our biggest franchises as well as exciting new IP. We are actively investing in emerging markets, platforms, and business models, and are exceedingly well positioned to capitalize on the positive trends in our industry and to generate growth and margin expansion over the long-term.”

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 2019.

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,

From The TradersCommunity Research Desk

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