Take Two Interactive Software


TTWO

reported third-quarter fiscal 2021 earnings of $1.57 per share, up 9.8% year over year.

Net revenues decreased 7.4% year over year to $860.9 million due to decline in net bookings and higher operating expenses. Moreover, bookings declined 8.3% year over year to $814.2 million.

Markedly, digital revenues (84.6% of revenues) increased 4% year over year to $728.5 million. Meanwhile, Physical retail and other segment revenues (15.4% of revenues) declined 42.4% year over year to $132.4 million.

Grand Theft Auto

(GTA)

Online

and

GTA V, NBA 2K2

0 and

NBA 2K21, Red Dead Redemption 2

and

Red Dead Online, Borderlands 3, Sid Meier’s Civilization VI,

Social Point’s mobile offerings, the

WWE

series, and the

Mafia: Definitive Editions

and

Mafia: Trilogy

were the biggest contributors to the company’s third-quarter fiscal 2021 top line.

Recurrent consumer spending (virtual currency, add-on content and in-game purchases, including the allocated value of virtual currency and add-on content incorporated in special editions of certain games) increased 57% year over year and accounted for 62% of total revenues.

The Zacks Consensus Estimate for earnings and revenues was pegged at 95 cents per share and $750 million, respectively.

Top-Line Details

Region-wise, revenues from the United States (61.4% of revenues) decreased 1.6% year over year to $528.3 million. Moreover, international revenues (38.6% of revenues) decreased 15.4% to $332.6 million.

On the basis of platforms, revenues from console (76.2% of revenues) decreased 3.5% to $656.1 million. Revenues from PC and other (23.8% of revenues) fell 18.2% to $204.8 million.

Booking Details

Net bookings of $814.2 million declined 8.3% on a year-over-year basis. Net bookings from recurrent consumer spending grew 30% year over year and accounted for 58% of net bookings.

Notably, Catalog accounted for $500 million of net bookings. Strong demand for

GTA, NBA 2K, Red Dead Redemption, Borderlands,

Social Point’s mobile offerings, the

Mafia: Definitive Edition

and

Mafia: Trilogy

and the

WWE

series were witnessed in the reported quarter.

Digitally delivered net bookings (81.6% of net bookings) declined 3.8% to $664.4 million. Bookings from Physical retail and other segments (18.4% of net bookings) decreased 24.2% to $149.9 million.

New Game Releases & Updates

During the reported quarter, Take Two division Rockstar Games released

GTA Online

‘s biggest update to date — The Cayo Perico Heist — featuring a new tropical island Heist location for up to four players, including, for the first time, the option to play the entire Heist solo.

A standalone version of

Red Dead Online

was released on PS 4, Xbox One and PC for the first time to allow new players who do not already own

Red Redemption 2

to experience everything that

Red Dead Online

has to offer.

Take-Two’s 2K division launched

NBA 2K21

and

Borderlands 3

for PS 5 and Xbox Series X. Moreover, 2K launched the Babylon and Vietnam & Kublai Khan packs for

Sid Meier’s Civilization VI

as part of Firaxis Games’ New Frontier Pass for PS 4, Xbox One, Nintendo Switch and PC.

Additionally, the company expanded the breadth of

NBA 2K

offerings with the releases of

NBA SuperCard

and

NBA 2K Mobile

season 3 for iOS and Android devices.

Moreover, a series of free and paid content for

PGA TOUR 2K21

was launched for PS4, Xbox One,

Nintendo


NTDOY

Switch (digital), PC and

Alphabet


GOOGL

owned Google Stadia.

Season 7 of

WWE SuperCard

was launched as a free, downloadable update for iOS, Android and

Facebook


FB

Gaming.

Further, Take Two’s Private Division released the Some Assembly Required update for

Kerbal Space Program

for PC.

Operating Details

Take Two’s gross profit increased 4.4% year over year to $514.6 million. Reported gross margin of 59.8% expanded 680 basis points (bps) year over year.

Operating expenses increased 7.1% year over year to $338.6 million primarily due to higher selling & marketing (S&M) and research & development (R&D) expenses in the reported quarter. S&M and R&D expenses increased 2.1% and 4.7%, respectively, on a year-over-year basis. Meanwhile, general & administrative expenses (G&A) increased 16.7% year over year.

Operating income came in at $176.1 million, down 0.4% year over year. Operating margin expanded 140 bps year over year to 20.5%.

Balance Sheet

As of Dec 31, 2020, Take Two had $2.42 billion in cash, cash equivalents and short-term investments compared with $2.84 billion as of Sep 30, 2020.

Acquisition Details

During the reported quarter, Take Two’s wholly owned subsidiary Rockstar Games announced the acquisition of Ruffian Games. Based in Dundee, Scotland, the studio will operate under the new name of Rockstar Dundee. The terms of the acquisition were not disclosed.

Guidance

For the fourth quarter of fiscal 2021, Take Two expects GAAP net revenues between $702 million and $752 million. The company projects GAAP earnings between 88 cents and 98 cents per share.

Net bookings are projected between $602 million and $652 million.

For fiscal 2021, net bookings are expected between $3.37 billion and $3.42 billion. GAAP net revenues are likely to be in the range of $3.235-$3.285 billion. Take Two projects GAAP earnings of $4.08-$4.18 per share.

This Zacks Rank #2 (Buy) company currently expects net cash flow to be more than $810 million for the fiscal year. You can see

the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

.

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