Take Two Interactive (TTWO - Free Report) is set to report first-quarter fiscal 2021 results on Aug 3.
For the quarter, the company expects GAAP net revenues between $775 million and $825 million, and GAAP earnings between 90 cents and $1 per share.
The Zacks Consensus Estimate for fiscal first-quarter earnings has improved 0.6% to $1.58 per share over the past 30 days. The company had reported GAAP earnings of 24 cents in the year-ago quarter.
The consensus mark for revenues is pegged at $844.2 million, indicating an increase of 99.9% from the year-ago quarter.
Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missed in one, resulting in surprise of 199.7%, on average.
Let’s see how things have shaped up prior to this announcement.
Will Portfolio Strength Aid the Top Line?
Take Two is expected to have benefited from the popularity of its franchises — Borderlands, Grand Theft Auto (GTA), Red Dead Redemption and NBA.
Additionally, coronavirus-led lockdown is expected to have been a major growth driver in increasing the number of active users in the to-be-reported quarter.
TakeTwo Interactive Software, Inc. Price and EPS Surprise
Notably, worldwide release of games and updates in the fiscal first quarter, including the release of Sid Meier’s Civilization VI - New Frontier Pass, XCOM: Chimera Squad, Disintegration, Mafia: Trilogy, Mafia II: Definitive Edition and Mafia III: Definitive Edition are expected to have boosted active user growth and contributed to the company’s top line.
Moreover, Grand Theft Auto Online and Grand Theft Auto V, NBA 2K20, Red Dead Redemption 2 and Red Dead Online and Borderlands 3 are expected to have been the largest contributors to net bookings in the to-be-reported quarter.
The company expects net bookings between $800 million and $850 million in the fiscal first quarter.
Notably, Grand Theft Auto V is the best-selling game of the past decade in U.S. dollar sales and has earned BBC’s top Game of the Decade title. Meanwhile, Red Dead Redemption 2 achieved a new benchmark as the top-selling title of the last four years in U.S. dollar sales.
Grand Theft Auto V and Red Dead Redemption 2 have sold-in more than 150 million units worldwide collectively since their launches. This is expected to have fueled user growth and engagement levels in the quarter under discussion.
Take Two’s continued support for both Red Dead Online and Grand Theft Auto Online, with new features and updates, are expected to have enhanced user engagement and player growth.
Moreover, the company expects digitally delivered net bookings to double year over year. The company assumes that 81% of current generation console games will be delivered digitally, up from 75% in the same period last year.
Private division’s Ancestors: The Humankind Odyssey is likely to have contributed to digitally delivered net bookings in the soon-to- be-reported quarter.
Other Factors at Play
Moreover, strong video game spending bodes well for Take Two. Per The Verge, which cited NPD data, the U.S. video game sales jumped 26% to $1.2 billion in June, highest since $1.3 billion reported in Jun 2009.
Notably, per NPD data, U.S. video game sales in May hit $977 million, up 52% year over year. For April, sales had jumped 73% year over year to $1.5 billion.
Further, the company is expected to have benefited from growth in 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).
Notably, for the fiscal first quarter, Take-Two expects recurrent consumer spending to grow approximately 75% year over year driven primarily by growth in Grand Theft Auto Online and NBA 2K20.
Additionally, Civilization VI Expansion Bundle, WWE SuperCard limited edition cards and Kerbal Space Program Enhanced Edition: Breaking Ground expansion pack are anticipated to have attracted players, driving recurrent consumer spending for the to-be-reported quarter.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Take-Two has an Earnings ESP of +5.35% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few other companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
NXP Semiconductors N.V. (NXPI - Free Report) has an Earnings ESP of +5.28% and holds a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AMETEK, Inc. (AME - Free Report) has an Earnings ESP of +3.96% and a Zacks Rank #2.
GoPro, Inc. (GPRO - Free Report) has an Earnings ESP of +43.66% and a Zacks Rank #2.
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