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Take-Two Interactive (TTWO) reported strong fiscal year 2020 second quarter earnings of $1.89 per share, beating the Zacks Consensus Estimate of $1.67 per share.
Net revenues grew to $857.8 million compared to a year ago, representing a 74.1% gain. The earnings growth was driven by the popular games Borderlands 3, NBA 2K20, NBA 2K19, Grand Theft Auto V, and Red Dead Redemption 2. Other noteworthy titles include WWE 2K19, WWE SuperCard, and mobile offerings from Social Point.
The company reported that several of its titles reached major milestones, including how Borderlands 3 reached seven million total sales worldwide while Red Dead Redemption 2 sold 26.5 million copies. Grand Theft Auto V also hit a milestone with over 115 million copies sold to date.
Unsurprisingly, ongoing growth is directly related to live service games such as Grand Theft Auto Online and Red Dead Online, in addition to virtual in-game content for its core titles. In fact, the company announced that consumer spending on add-on content and in-game purchases grew by 32%, accounting for 37% of total GAAP net revenues. A major revenue generator for add-on content was NBA 2K20.
As a result of the strong performance, Take-Two raised its full-year guidance to between $2.75 billion and $2.85 billion in net bookings, up from $2.6 billion to $2.7 billion. Net revenue estimates are now at $2.93 billion to $3.03 billion, up from $2.83 billion to $2.92 billion.
The Outer Worlds will impact Q3 earnings
Although it’s too early to tell, we are likely to see similar growth in Q3, given the success of the recently launched role-playing game The Outer Worlds – published by Take-Two subsidiary, Private Division. The sci-fi game launched on October 25, which put it outside of the Q2 earnings report. But even though the company wouldn’t provide specific numbers, it said that the game should have a notable impact on the Q3 results.
“It’s outperforming our expectations handily,” said Take-Two CEO Strauss Zelnick on an investor call. “We’re very happy.”
Zelnick also admitted that the success of The Outer Worlds is one of the main reasons why Take-Two is raising its guidance for the year.
“The third quarter is off to a solid start with the launches of The Outer Worlds, Red Dead Redemption 2 for PC, and WWE 2K20,” said Zelnick. “And we will bolster our holiday line-up with offerings for Google Stadia and Sid Meier’s Civilization VI for PlayStation 4 and Xbox One.”
