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Take Two (TTWO) to Report Q4 Earnings: What's in the Cards?

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Take Two Interactive (TTWO - Free Report) is set to report fourth-quarter fiscal 2020 results on May 20.

For the quarter, the company expects GAAP net revenues between $635 million and $685 million, and GAAP earnings between 92 cents and $1.12 per share.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings remained steady at 87 cents per share over the past 30 days, indicating growth of 1.2% year over year.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, the average positive surprise being 180.4%.

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 in the fiscal third quarter, including Sid Meier’s Civilization VI for the Xbox One family of devices and PS4, Red Dead Redemption 2 for the PC, The Outer Worlds and WWE2K20 for Xbox One family of devices, PS4, PS4 Pro, and Windows PC, is also 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, Sid Meier’s Civilization VI 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 $540 million and $580 million in the fiscal fourth quarter.

Notably, Grand Theft Auto V is the best-selling game of the past decade in U.S. dollar sales, also earning BBC’s top Game of the Decade. Additionally, Grand Theft Auto V also hit a new record for video engagements in January boosted by the coronavirus lockdown.

Meanwhile, Red Dead Redemption 2 achieved a new benchmark as the top-selling title of the last four years in U.S. dollar sales. Red Dead Online also hit a new peak in player numbers in January after the release of Moonshiners update.

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.

The company expects digitally-delivered net bookings to be up 20% from the year-ago quarter, assuming that 66% of current generation console games are delivered digitally, up from the prior year’s 57%.

Take Two’s Private division released Ancestors: The Humankind Odyssey for digital download on PS4, PS4 Pro, and across the Xbox One family of devices, including Xbox One X in the fiscal third quarter, which is likely to have contributed to digitally-delivered net bookings in the soon-to- be-reported quarter.

Other Factors at Play

Moreover, 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 fourth quarter, Take-Two expects recurrent consumer spending to grow approximately 10% year over year driven primarily by growth in Grand Theft Auto Online and Red Dead Online.

Additionally, the release of Civilization VI Expansion Bundle, WWE SuperCard limited edition cards and Kerbal Space Program Enhanced Edition: Breaking Ground expansion pack in the third quarter is 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 +13.24% 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 some companies, which, per our model, also have the right combination of elements to post an earnings beat in their upcoming release.

Anaplan, Inc. (PLAN - Free Report) has an Earnings ESP of +3.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

BJs Wholesale Club Holdings Inc. (BJ - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #1.

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.15% and currently carries a Zacks Rank of 2.

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