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A Second Take on Take-Two Interactive Software

November 8, 2017

You may not have heard of Take-Two Interactive Software, Inc. (TTWO), but if you know any teenagers, they've probably played one of their games. The company develops and publishes action/adventure products under the Grand Theft Auto, Max Payne, Midnight Club and Red Dead names. Yesterday afternoon, the company released earnings. In today's blog we'll take a look at how this software developer performed, and what that means for you today…

Based in New York City, Take-Two Interactive Software is a leading developer of video games. The company develops and markets its products through Rockstar Games and 2K, its two wholly-owned labels. Take-Two Interactive Software's games can be used on personal computers, smartphones and tablets, as well as game consoles like PlayStation and Xbox.

The company announced results for its second quarter in fiscal year 2018 after the stock market closed yesterday. During the quarter, net bookings grew 20.2% year-over-year to $577.0 million, above analysts' estimates for $510.31 million. However, the company also reported a net loss of $2.7 million, or $0.03 per share, compared with net income of $36.4 million, or $0.39 per share, in the year ago quarter.

Adjusted earnings per share were $0.52. Analysts were looking for earnings of $0.79 per share, so TTWO also posted a 34.2% earnings miss. While it was a big miss, it was in part due to reorganization expenses.

Though results didn't meet expectations, Wall Street has now turned its attention to Take-Two's outlook for its third quarter in fiscal year 2018, which has been raised. The company expects net bookings to range from $610 million to $660 million.

For its full fiscal year 2018, the company is looking for net bookings between $1.93 billion and $2.03 billion, or 8% to 14% annual sales growth. Looking even further out, Take-Two expects to see record highs in fiscal year 2019, led by new game launches such as Rockstar Games' Red Dead Redemption 2 and a highly anticipated title from one of Take-Two's largest franchises.

Shares moved about 8% higher in after-hours trading yesterday evening following the company's strong forward-looking guidance, and as I write this today, those share prices have stayed strong. That's why Take-Two, despite its earnings hit, maintains an A-rating in my Portfolio Grader tool.

Going forward, I urge you to stay tuned into this blog throughout earnings season. I'll continue analyzing the results of some of the most widely held stocks on the market.

Sincerely,

Louis Navellier

Louis Navellier

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