TTWO Q3 2020 Earnings

Call Details

• Call Title: Take-Two Interactive Q3 2020 Earnings Call
• Date: February 6, 2020 at 9:30 PM UTC
• Management Team:
  • Strauss Zelnick (Chairman and Chief Executive Officer)
  • Karl Slatoff (President)
  • Lainie Goldstein (Chief Financial Officer)
  • Hank Diamond (Senior Vice President of Investor Relations)

Call Summary

Financial Performance

• Total net bookings for the third quarter were $888 million, which was within the company's increased outlook of $860 to $910 million.
• GAAP net revenue grew to $930 million for the quarter while GAAP net income was $164 million, or $1.43 per share, versus $180 million, or $1.57 per share, in the prior-year quarter.
• Adjusted unrestricted operating cash flow for the nine months ended December 31, 2019 was $548 million and the company ended the period with approximately $2 billion in cash and short-term investments.
• Cost of goods sold decreased to $437 million for the quarter and operating expenses increased 6% to $316 million, driven primarily by higher personnel and R&D costs offset by lower marketing.
• Add-on content bookings grew 135% in the quarter, led by Borderlands 3, Sid Meier's Civilization VI, and WWE 2K20.
• Key title unit sales reported include Grand Theft Auto V at more than 120 million units, Red Dead Redemption 2 at over 29 million units, Borderlands 3 at nearly 8 million units, and The Outer Worlds at more than 2 million units.

Guidance

• The company projects fourth-quarter net bookings of $540 to $590 million, up from $488 million in the comparable prior quarter.
• For the fourth quarter, GAAP net revenue is expected to range from $635 to $685 million, cost of goods sold from $274 to $286 million, and operating expenses from $247 to $257 million.
• GAAP net income for the fourth quarter is forecast at $105 to $128 million, or $0.92 to $1.12 per share, with a management reporting tax rate of 17% for fiscal 2020.
• Full-year net bookings guidance low end was raised by $50 million to a range of $2.8 to $2.85 billion while the high end was maintained.
• The company expects full-year GAAP net revenue of $2.96 to $3.01 billion, cost of goods sold of $1.42 to $1.43 billion, and GAAP net income of $387 to $409 million, or $3.38 to $3.58 per share.
• Digitally delivered net bookings growth guidance was reduced to approximately 25% for the full year from a prior expectation of nearly 30%, as a result of a higher mix of physical sales in the holiday quarter.