Take-Two reports bookings grew 8% to $784.1M for Q1 2021

Take-Two Interactive reported today that revenue for its fourth fiscal quarter (first calendar quarter ended March 31) that beat Wall Street’s expectations, with record net bookings of $784.5 million, up 8% from a year ago.

Revenue for the New York video game publisher came in at in at $839.4 million on a GAAP basis, up 10% from $760.5 million a year ago.

The company credited sales of NBA 2K21, Grand Theft Auto V, Grand Theft Auto Online, Red Dead Redemption 2, and Red Dead Online and other existing titles for the results.

Take-Two’s stock price is trading at $166.50 a share, down 0.71% in after-hours trading.

“They crushed the quarter,” said Michael Pachter, an analyst at Wedbush Securities, in an email to GamesBeat.

But he noted that earnings guidance for the upcoming fiscal year ending March 31, 2022, wasn’t as strong as some expected. Still, he noted the revenue projection for the next fiscal year is impressive compared to the strength of revenues during the pandemic in the year just completed.

In an analyst call today, Take-Two CEO Strauss Zelnick said in a statement, “We delivered record operating results, including net bookings of approximately $3.6 billion and adjusted unrestricted operating cash flow of $920 million. Throughout the year, we enhanced our organization for the long term by broadening our portfolio of offerings, capitalizing on diverse business models, enhancing our infrastructure, and most importantly, investing in our creative talent.”

He didn’t announce any new games, but he said that Take-Two and its labels such as Rockstar, 2K, Social Point, and Private Division have scores of games in the works. Take-Two said it believes the “pandemic initiated a transformational shift in entertainment consumption, revealing the possibilities of interactive entertainment to a much broader market, with interactive entertainment becoming the No. 1 entertainment vertical.”

Above: Strauss Zelnick is CEO of Take-Two Interactive.

Image Credit: Take-Two Interactive

In an analyst call, Zelnick said he was grateful of how well the team performed during the pandemic. Of all the titles, only Kerbal Space Program 2 was delayed during the past year.

“At this point in time, we feel very good about the way our production is unfolding,” he said.

As a result, the total addressable market for the industry will be notably larger than in the past. But some of those trends that benefited the industry over the past year will moderate as the world returns to a new normal.

In November, Take-Two disclosed it bid $973.8 million to buying racing game maker Codemasters. But in December, Electronic Arts announced it bid $1.2 billion for Codemasters, and its offer was accepted. He said that the company is still poised to make acquisitions, particularly in mobile, in the future.

“Our lens is pretty disciplined,” he said. “In 14 years, we haven’t had one failed acquisition.”

He acknowledged that the chip shortage has caused a shortage of new game consoles. But he added that Take-Two had a limited number of titles that launched during the console transition. Over time, he said he wasn’t worried about it and it didn’t hurt the company so far.

Product slate

Above: GTA Online is a social casino now.

Image Credit: Rockstar Games

Take-Two’s Rockstar Games label has generate sales to date of 37 million for Red Dead Redemption 2 and 145 million for Grand Theft Auto V. NBA 2K21 has sold-in more than 10 million copies to retailers, and 2.3 million play the game daily.

PGA Tour 2K21 sold-in more than 2 million copies. Sid Meier’s Civilization VI has sold more than 11 million copies in the past five years. Private Division’s The Outer Worlds has sold more than three million copies, and Ancestors: The Humankind Odyssey has sold-in more than one million copies.

Social Point’s live mobile games, Dragon City and Monster Legends, exceeded expectations. And WWE SuperCard on mobile has been downloaded more than 23 million times. NBA 2K Online in China has more than 52 million registered users.

Sixty titles are coming in the next three years. Of the games in the pipeline, Take-Two said 21 are coming for the fiscal year ending March 31, 2022. Four of those are immersive core releases, including two from new franchises and two from existing franchises.

The list also includes OlliOlli World from Private Division, a Take-Two label targeted at indie games. Ten upcoming titles are free-to-play mobile games, including six from new franchises and four from existing franchises. There will also be six new iterations of previously released titles.

Altogether, there are 40 more titles coming in the fiscal years ending March 31, 2023, and March 31, 2024. Those include 19 immersive core releases, seven of which are sports simulation games. Fifteen of these will be available to purchase, while four are free-to-play games. Five are independent titles, 10 are free-to-play mobile games, four are mid-core games (three in sports), and three are new iterations of previously released games. That was more detail than Take-Two has offered before about its upcoming release slate. Mid-core games are like WWE Battlegrounds on mobile. Immersive core games are like sports simulations, strategy games, and games like Grand Theft Auto V.

In a conference call, Zelnick said that the Firaxis division, the maker of Civilization VI, will reveal two new games later this year.

There are also “massive updates” coming for Red Dead Online and Grand Theft Auto Online this summer, said Karl Slatoff, president of Take-Two, in an analyst call. Red Dead Online has a big update coming on May 25, while Grand Theft Auto Online will have an update on May 27. Meanwhile, enhanced graphics versions of Grand Theft Auto V and Grand Theft Auto Online will arrive on November 11 on the next-generation consoles.

Financial results

Above: GTA Online

Image Credit: Rockstar Games

GAAP net income per share was $218.8 million, or $1.88 a share, compared to $122.7 million, or $1.07 a share.

Like other game companies, Take-Two has benefited from gamers turning to games as a kind of relief or distraction during the pandemic.

For the full year, net bookings were $3.55 billion, up 19% from a year earlier. GAAP revenue was $3.37 billion, up from $3.09 billion a year earlier. GAAP net income was $588.9 million and earnings per share were $5.09, compared with net income of $404.4 million and earnings per share of $3.54 a share a year earlier.

Recurrent consumer spending grew 48% and represents 63% of total net bookings for the fiscal year. During the year, Take-Two hired more than 700 game developers.

Outlook

Above: The Outer Worlds: Peril on Gorgon launches in September.

Image Credit: Obsidian

For the first fiscal quarter (second calendar quarter of 2021) ending June 30, Take-Two said that GAAP revenue is expected to be $730 million to $780 million. Net income is expected to be $116 million to $129 million, or $1.00 a share to $1.10 a share. Net bookings are expected to be $625 million to $675 million.

For the full year ending March 31, 2022, Take-Two expects revenue to be $3.14 billion to $3.24 billion. Net income is expected to be $228 million to $257 million, or $1.95 a share to $2.20 a share. Net bookings are expected to be $3.2 billion to $3.3 billion. The company has higher expenses coming because of hiring for marketing and information technology. Pachter said the earnings guidance is week while the overall revenue guidance is good.

In response to a question, Zelnick said there are a lot of interesting things going on with user-generated content and there are opportunities to be explored, but the company also has to be concerned about protecting its intellectual property.

“There’s the rub,” he said, as protecting IP is very important.

He declined to comment on the timing for Rockstar’s upcoming games. Many are eagerly expecting Grand Theft Auto VI to be announced at some point.

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