Morningstar | Take-Two Reports Another Strong Quarter; RDR 2 Launch a Massive Success
Take-Two posted another strong quarter as fiscal 2019 second-quarter revenue and EBITDA both came in ahead of the Street estimates. Recurrent consumer spending in GTA Online and the launch of NBA 2K19 drove growth on the top and bottom lines. Red Dead Redemption 2 retail sell-through hit over $725 million in its opening weekend and has already outsold its predecessor. Due to the very strong critical response, we expect that the game will continue to sell well through the holiday season and beyond. We are maintaining our narrow moat rating and our fair value estimate of $114. With shares trading above our fair value estimate, we would seek a wider margin of safety before investing.Non-GAAP net bookings of $583 million (up 1% year over year) was driven by recurrent revenue spending in NBA 2K19 and GTA Online as well as sales of the full-game NBA 2K19. Digitally delivered revenue in the quarter hit $426 million and made up 73% of non-GAAP total revenue, up from 62% a year ago. Digital full games sales for current gen titles increased to 47% of all sales, up from 35% a year ago, and came in well above the firm’s full-year fiscal 2019 target of 37%. Recurring revenue increased to 53% of non-GAAP total revenue, up from 42% in the second quarter of fiscal 2018.
The NBA 2K titles were the largest contributors to recurring revenue in the quarter. The most recent installment of the basketball title set the NPD record for largest launch month in revenue for a sports title in the U.S. and is the best-selling sports game year to date in 2018 despite launching over a month after EA’s Madden 19. We note that the firm saw continued growth in recurring revenue for the previous installment of NBA2K despite the imminent launch of the new version. We think that this revenue growth demonstrates the stickiness of the MyTeam and MyCareer modes in the 2K titles and bodes well for recurring revenue growth in 2K19 over the next year.
Take-Two Interactive Software is a developer, publisher and marketer of interactive entertainment for consumers. The company develops and publishes products principally through its two wholly-owned labels Rockstar Games and 2K, as well as its Private Division label and Social Point, a developer of mobile games. The company's products are designed for console gaming systems such as the Sony Computer Entertainment, Inc. PlayStation?4, Microsoft Corporation Xbox One?, and Xbox 360?, the Nintendo Switch, and personal computers, including smartphones and tablets. The company delivers its products through physical retail, digital download, online platforms and cloud streaming services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.