Take-Two Interactive beats the Street, raises guidance thanks to Red Dead 2’s outperformance
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Take-Two Interactive beats the Street, raises guidance thanks to Red Dead 2’s outperformance

Video game developer and publisher Take-Two Interactive released quarterly earnings at the end of last week that blew analysts’ expectations – as well as its own comparable figures – out of the water. Usually, that would be big news. But when it comes to Take-Two Interactive, that news is being overshadowed by the recent success of its latest release Red Dead Redemption 2. This title has generated successes similar to another Take-Two title, Grand Theft Auto V. That bodes very well for the company’s continued performance – hence, Take-Two has raised its guidance.

Take-Two Interactive’s share price has increased by 3% over the year so far

graph 1211 takeTwo

Source: Yahoo Finance

For the second quarter of fiscal 2019, Take-Two reported revenues of $583 million – an easy beat against analysts’ expectations of $550 million. It’s also a beat against the company’s revenue from the year-ago quarter of $577 million. Perhaps even more impressive is the company’s continued strides in pursuing revenue digitally. Take-Two said that as much as $426.2 million of its revenue this quarter (73%) came via digital channels. That’s a 20% increase from the second quarter of 2018 when it collected $355.7 million digitally.

The big news around Take-Two, however, remains the release of Red Dead 2, which is being hailed as the biggest release of the year – and one of the biggest releases ever. Take-Two’s CEO, Strauss Zelnick, singled the game out for comment in the company’s earnings press release, saying:

“On October 26th, Rockstar Games launched its highly-anticipated Red Dead Redemption 2, the label’s first game built from the ground up for the current console generation. Red Dead Redemption 2 has received outstanding reviews, with numerous critics awarding the title a perfect score. The title is now tied with Grand Theft Auto V as the highest rated title on PlayStation 4 and Xbox One, with a 97 Metacritic score. A massive commercial success, Red Dead Redemption 2 has set numerous records, including achieving the biggest opening weekend in the history of entertainment, with over $725 million in retail sell-through during its first three days. Red Dead Redemption 2 sold-in more units in its first 8 days than the original blockbuster Red Dead Redemption sold in its first 8 years and, as of today, the title has sold-in over 17 million units worldwide.

Largely as a result of this title’s outperformance, Zelnick said that the company has raised its outlook for full year 2019

Disclosure
Dominion holds Take-Two Interactive in its Global Trends Ecommerce Fund.


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