TTWO Q1 2020 Earnings

Call Details

• Call Title: Take-Two Interactive Q1 2020 Earnings Call
• Date: August 5, 2019 at 8:30 PM UTC
• Management Team:
  • Hank Diamond (SVP of Investor Relations and Corporate Communications)
  • Strauss Zelnick (Chairman and Chief Executive Officer)
  • Carl Slater (President)
  • Lenny Goldstein (Chief Financial Officer)

Call Summary

Financial Performance

• Total net bookings grew 46% to $422 million for Q1 (net bookings, a company non-GAAP metric).
• GAAP net revenue grew to $540 million for the quarter, and GAAP cost of goods sold increased to $241 million.
• GAAP net income was $46 million, or $0.41 per share, compared to $72 million, or $0.62 per share, in the prior-year period.
• Adjusted operating cash flow increased to nearly $47 million in Q1 and cash and short-term investments totaled $1.54 billion at quarter end.
• Digitally delivered net bookings grew 51% and accounted for 91% of total net bookings in Q1.
• Recurrent consumer spending grew 55% in Q1 and accounted for 67% of total net bookings in the quarter.
• Add-on content revenue grew nearly 135% year over year in the quarter driven by Borderlands and Civilization VI content.

Guidance

• Company raised full-year net bookings guidance to a range of $2.6 to $2.7 billion, up from prior guidance of $2.5 to $2.6 billion.
• Full-year GAAP net revenue is expected to range from $2.83 to $2.93 billion and full-year COGS is expected to range from $1.3 to $1.34 billion.
• Company now expects recurrent consumer spending to increase in the mid-teens for fiscal 2020, up from prior low single-digit expectations.
• Digitally delivered net bookings are now forecast to grow in the high teens for the full year, and the company assumes 55% of current-generation console games will be delivered digitally in fiscal 2020.
• Second-quarter net bookings are projected at $860 to $910 million, with GAAP net revenue guidance of $855 to $905 million and GAAP net income of $118 to $130 million ($1.04 to $1.14 per share).
• The company expects to generate more than $450 million in adjusted operating cash flow for fiscal 2020 and plans approximately $90 million of capital expenditures.
• For fiscal 2020, net bookings by label are expected to be roughly 60% 2K, 30% Rockstar Games, and 10% private division, Social Point and other, and geographic net bookings are forecasted at approximately 65% U.S. and 35% international.