TTWO Q3 2019 Earnings

Call Details

• Call Title: Take-Two Interactive Q3 2019 Earnings Call
• Date: February 6, 2019 at 9:30 PM UTC
• Management Team:
  • Strauss Zelnick (Chief Executive Officer)
  • Karl Slatoff (President)
  • Lainie Goldstein (Chief Financial Officer)
  • Hank Diamond (Senior Vice President, Investor Relations & Corporate Communications)

Call Summary

Financial Performance

• Total net bookings grew 140% to $1.57B in the quarter and exceeded the prior outlook range of $1.4B to $1.45B.
• Digitally delivered net bookings increased 85% to $704M and represented 45% of total net bookings in the quarter.
• GAAP net revenue increased to $1.25B and cost of goods sold was $898M for the quarter.
• GAAP operating expenses increased 46% to $299M driven primarily by higher marketing spend.
• GAAP net income was $180M, or $1.57 per share, versus $25M, or $0.21 per share, in the prior-year period, with a $109M tax benefit from the release of deferred tax valuation allowances.
• Nine-month non-GAAP adjusted operating cash flow grew 188% to $587M, and cash and short-term investments were $1.6B as of December 31, 2018.

Guidance

• Q4 net bookings were guided to $450M to $500M, compared with $411M in the fourth quarter last year.
• Take-Two increased fiscal 2019 net bookings guidance to $2.89B to $2.94B from the prior outlook of $2.8B to $2.9B, representing a midpoint increase of 46% year-over-year.
• The company expects Q4 GAAP net revenue of $530M to $580M, GAAP cost of goods sold of $248M to $274M, and GAAP operating expenses of $205M to $215M.
• Fiscal 2019 GAAP net revenue guidance was increased to $2.66B to $2.71B, with cost of goods sold guided to $1.51B to $1.54B and operating expenses to $921M to $931M.
• Fiscal 2019 GAAP net income was guided to $354M to $367M, or $3.07 to $3.18 per share, and the management reporting tax rate was reiterated at 20%.
• The company expects fiscal 2019 adjusted operating cash flow of approximately $740M and capital expenditures of about $60M.