Take-Two Feels the Sting in Q3

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When Take-Two Interactive Software Inc. (NASDAQ: TTWO) released its fiscal third-quarter earnings report before the markets opened on Wednesday, the video game firm posted $1.57 in earnings per share (EPS) and $1.25 billion in revenue. The same period of last year reportedly had EPS of $0.21 on revenue of $653.94 million.

The largest contributors to net revenue in the most recent quarter were “Red Dead Redemption 2,” “NBA 2K19” and “NBA 2K18,” “Grand Theft Auto Online” and “Grand Theft Auto V,” “WWE 2K19” and “WWE SuperCard,” “Dragon City” and “Monster Legends,” and “Sid Meier’s Civilization VI.”

Recurrent consumer spending increased and accounted for 24% of total net revenue. Digitally delivered net bookings grew 85% to $703.8 million, as compared to $379.7 million in last year’s fiscal third quarter, and accounted for 45% of total net bookings.

Looking ahead to the fiscal fourth quarter, the company expects to see EPS in the range of $0.67 to $0.77 with net revenue in the range of $530 million to $580 million, with net bookings in the range of $450 million to $500 million. Consensus estimates are calling for $1.09 in EPS and $606.29 million in revenue for the coming quarter.

Strauss Zelnick, board chair and chief executive of Take-Two, commented:

Take-Two delivered better-than-expected results in the fiscal third quarter. Our outperformance was driven primarily by the record-breaking launch of Red Dead Redemption 2 along with strong results from NBA 2K19. In addition, consumers engaged significantly with our offerings, and recurrent consumer spending grew 31% to a new record. We generated strong cash flow and ended the period with $1.6 billion in cash and short-term investments, after deploying $109 million to repurchase 1 million shares of our stock.

Shares of Take-Two were last seen down 10% at $96.58 on Wednesday, in a 52-week range of $92.34 to $139.91. The stock has a consensus price target of $139.36.