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Take-Two (TTWO) Up 0.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Take-Two Interactive (TTWO - Free Report) . Shares have added about 0.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Take-Two due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Take Two’s Q1 Earnings Rise Y/Y, Net Bookings Decline
Take Two Interactive Software reported first-quarter fiscal 2022 earnings of $1.30 per share, up 68.8% year over year.
Net revenues decreased 2.2% year over year to $813.3 million on easing social distancing and lockdown guidelines. Due to the shelter-in-place orders that began last year, the company experienced heightened levels of engagement and net bookings growth during fiscal 2021 period as players spent more time at home.
Grand Theft Auto (GTA) Online and GTA V, NBA 2K20 and NBA 2K21, Red Dead Redemption 2 and Red Dead Online, Borderlands 3, Sid Meier’s Civilization VI, the WWE series, Dragon City and Two Dots were the biggest contributors to the company’s first-quarter fiscal 2022 top line.
Digital revenues (91.1% of revenues) improved 0.7% year over year to $740.8 million. Physical retail and other segment revenues (8.9% of revenues) declined 24.2% year over year to 72.5 million.
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 15% year over year and accounted for 70% of total revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 93 cents per share and $686 million, respectively.
Top-Line Details
Region-wise, revenues from the United States (60.6% of revenues) increased 4.8% year over year to $493.2 million. International revenues (39.4% of revenues) decreased 11.3% year over year to $320.2 million.
On the basis of platforms, revenues from console (74.1% of revenues) decreased 1.5% year over year to $602.4 million. Revenues from PC and other (15.8% of revenues) declined 22.2% year over year to $128.6 million. Revenues from mobile (0.1% of revenues) increased 51.3% year over year to $82.3 million.
Booking Details
Net bookings of $711.4 million decreased 28.6% on a year-over-year basis. Net bookings from recurrent consumer spending declined 25% year over year and accounted for 69% of net bookings.
Notably, Catalog accounted for $652.6 million of net bookings. Strong demand for GTA Online and GTA V, NBA 2K21 and 2K20, Red Dead Redemption 2 and Red Dead Online, Borderlands 3, the WWE series, Dragon City, Two Dots, Sid Meier’s Civilization VI and Monster Legends were witnessed in the reported quarter.
Digitally delivered net bookings (95.6% of net bookings) decreased 26.4% to $680.4 million. Bookings from Physical retail and other segments (4.4% of net bookings) decreased 56.7% to $31 million.
New Game Releases & Updates
During the reported quarter, Take Two’s division Rockstar Games released new free content updates for GTA Online. Moreover, the division released new free content updates for Red Dead Online.
Take-Two’s 2K division launched NBA 2K21 Arcade Edition on Apple Arcade, delivering an all-new basketball simulation game experience to Apple’s video game subscription service and offered a variety of updates to NBA Supercard.
Additionally, 2K released several updates to PGA TOUR 2K21 and revealed the first teaser video for WWE 2K22, which will be launched within fiscal 2022. It also announced Tiny Tina’s Wonderlands, a new franchise from 2K and Gearbox, which will be released later this fiscal year.
Besides, 2K released the Borderlands 3: Director’s Cut add-on, which is available for purchase separately and available to download for owners of Borderlands 3 Ultimate Edition or Season Pass 2.
It launched Sid Meier’s Civilization VI Anthology for Windows PC, which includes Sid Meier’s Civilization VI, all DLC packs, all expansions and the New Frontier Pass
Further, Take Two’s Private Division announced a partnership with Supergiant Games to release a physical edition of Hades for PS and Xbox consoles.
Private Division also announced that it will release OlliOlli World and Kerbal Space Program Enhanced Edition this winter.
Operating Details
Take Two’s gross profit increased 36.4% year over year to $483.6 million. Reported gross margin of 59.5% expanded from 42.7% in the year-ago quarter.
Operating expenses increased 14.9% year over year to $313.2 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 22.5% and 26.2%, respectively, on a year-over-year basis. General & administrative expenses (G&A) increased 2.2% year over year.
Operating income came in at $170.5 million, which surged 107.5% year over year. Operating margin expanded from 9.9% in the year-ago quarter to 21%.
Balance Sheet
As of Jun 30, 2021, Take Two had $2.53 billion in cash, cash equivalents and short-term investments compared with $2.72 billion as of Mar 31, 2021.
Acquisition Details
During the reported quarter, Take Two acquired privately-held Nordeus for an upfront purchase price of $225 million.
On Jul 1, Take Two announced that it has acquired privately-held Dynamixyz, a world-class leader in video-based facial animation services.
Guidance
For the second quarter of fiscal 2022, Take Two expects GAAP net revenues between $740 million and $790 million. The company projects earnings between 35 and 45 cents per share.
Net bookings are projected between $815 million and $865 million.
For fiscal 2022, net bookings are expected between $3.20 billion and $3.30 billion. GAAP net revenues are likely to be in the range of $3.14-$3.24 billion. Take Two projects earnings of $1.95-$2.20 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Take-Two has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Take-Two has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Take-Two (TTWO) Up 0.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Take-Two Interactive (TTWO - Free Report) . Shares have added about 0.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Take-Two due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Take Two’s Q1 Earnings Rise Y/Y, Net Bookings Decline
Take Two Interactive Software reported first-quarter fiscal 2022 earnings of $1.30 per share, up 68.8% year over year.
Net revenues decreased 2.2% year over year to $813.3 million on easing social distancing and lockdown guidelines. Due to the shelter-in-place orders that began last year, the company experienced heightened levels of engagement and net bookings growth during fiscal 2021 period as players spent more time at home.
Grand Theft Auto (GTA) Online and GTA V, NBA 2K20 and NBA 2K21, Red Dead Redemption 2 and Red Dead Online, Borderlands 3, Sid Meier’s Civilization VI, the WWE series, Dragon City and Two Dots were the biggest contributors to the company’s first-quarter fiscal 2022 top line.
Digital revenues (91.1% of revenues) improved 0.7% year over year to $740.8 million. Physical retail and other segment revenues (8.9% of revenues) declined 24.2% year over year to 72.5 million.
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 15% year over year and accounted for 70% of total revenues.
The Zacks Consensus Estimate for earnings and revenues was pegged at 93 cents per share and $686 million, respectively.
Top-Line Details
Region-wise, revenues from the United States (60.6% of revenues) increased 4.8% year over year to $493.2 million. International revenues (39.4% of revenues) decreased 11.3% year over year to $320.2 million.
On the basis of platforms, revenues from console (74.1% of revenues) decreased 1.5% year over year to $602.4 million. Revenues from PC and other (15.8% of revenues) declined 22.2% year over year to $128.6 million. Revenues from mobile (0.1% of revenues) increased 51.3% year over year to $82.3 million.
Booking Details
Net bookings of $711.4 million decreased 28.6% on a year-over-year basis. Net bookings from recurrent consumer spending declined 25% year over year and accounted for 69% of net bookings.
Notably, Catalog accounted for $652.6 million of net bookings. Strong demand for GTA Online and GTA V, NBA 2K21 and 2K20, Red Dead Redemption 2 and Red Dead Online, Borderlands 3, the WWE series, Dragon City, Two Dots, Sid Meier’s Civilization VI and Monster Legends were witnessed in the reported quarter.
Digitally delivered net bookings (95.6% of net bookings) decreased 26.4% to $680.4 million. Bookings from Physical retail and other segments (4.4% of net bookings) decreased 56.7% to $31 million.
New Game Releases & Updates
During the reported quarter, Take Two’s division Rockstar Games released new free content updates for GTA Online. Moreover, the division released new free content updates for Red Dead Online.
Take-Two’s 2K division launched NBA 2K21 Arcade Edition on Apple Arcade, delivering an all-new basketball simulation game experience to Apple’s video game subscription service and offered a variety of updates to NBA Supercard.
Additionally, 2K released several updates to PGA TOUR 2K21 and revealed the first teaser video for WWE 2K22, which will be launched within fiscal 2022. It also announced Tiny Tina’s Wonderlands, a new franchise from 2K and Gearbox, which will be released later this fiscal year.
Besides, 2K released the Borderlands 3: Director’s Cut add-on, which is available for purchase separately and available to download for owners of Borderlands 3 Ultimate Edition or Season Pass 2.
It launched Sid Meier’s Civilization VI Anthology for Windows PC, which includes Sid Meier’s Civilization VI, all DLC packs, all expansions and the New Frontier Pass
Further, Take Two’s Private Division announced a partnership with Supergiant Games to release a physical edition of Hades for PS and Xbox consoles.
Private Division also announced that it will release OlliOlli World and Kerbal Space Program Enhanced Edition this winter.
Operating Details
Take Two’s gross profit increased 36.4% year over year to $483.6 million. Reported gross margin of 59.5% expanded from 42.7% in the year-ago quarter.
Operating expenses increased 14.9% year over year to $313.2 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 22.5% and 26.2%, respectively, on a year-over-year basis. General & administrative expenses (G&A) increased 2.2% year over year.
Operating income came in at $170.5 million, which surged 107.5% year over year. Operating margin expanded from 9.9% in the year-ago quarter to 21%.
Balance Sheet
As of Jun 30, 2021, Take Two had $2.53 billion in cash, cash equivalents and short-term investments compared with $2.72 billion as of Mar 31, 2021.
Acquisition Details
During the reported quarter, Take Two acquired privately-held Nordeus for an upfront purchase price of $225 million.
On Jul 1, Take Two announced that it has acquired privately-held Dynamixyz, a world-class leader in video-based facial animation services.
Guidance
For the second quarter of fiscal 2022, Take Two expects GAAP net revenues between $740 million and $790 million. The company projects earnings between 35 and 45 cents per share.
Net bookings are projected between $815 million and $865 million.
For fiscal 2022, net bookings are expected between $3.20 billion and $3.30 billion. GAAP net revenues are likely to be in the range of $3.14-$3.24 billion. Take Two projects earnings of $1.95-$2.20 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Take-Two has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Take-Two has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.