Take-Two Jumps on Blockbuster Quarter for Grand Theft, NBA Games

(Bloomberg) -- Take-Two Interactive Software Inc. jumped as much as 6% in late trading after earnings beat estimates and the video-game company raised its forecast, fueled by sales of longstanding hits like Grand Theft Auto and NBA basketball.

• Bookings for the quarter ended June 30 more than doubled to $996.2 million, Take-Two said Monday, setting a record for the period as the Covid-19 pandemic spurred more at-home play of games. Adjusted earnings amounted to $2.30 a share, beating analysts' estimates of $1.60. Among game highlights, NBA 2K20 recently crossed $1 billion in total net bookings, while Grand Theft Auto has sold nearly 135 million units.
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Key Insights

• New players are flocking to the company's games. For Grand Theft Auto, the quarter was the second-best ever for new-player acquisition since the franchise launched in 2013, according to the company. Existing players, meanwhile, are opening their wallets: Bookings from recurrent spenders rose 127%, far above Take-Two's own forecasts.
• The company anticipates the elevated demand -- boosted by Covid-related stay-at-home orders -- to last into the current second quarter. But it's not baking the bump in demand into expectations for the second half of its fiscal year.
• This period, the company predicts second-quarter adjusted earnings of $1.25 to $1.35 a share, above analysts' estimates of $1.10. The guidance for bookings, or adjusted revenue, ranges from $775 million to $825 million, compared with analysts' projections of $739.2 million.
• For the year, Take-Two raised its profit forecast to $4.05 to $4.30 a share and lifted the outlook for sales to as much as $2.9 billion.
• Next-generation game consoles will hit the market later this year. Yet Take-Two said it won't release Grand Theft Auto V for the new players until the second half of calendar 2021 because of the time needed for development.
• “That's just how long it takes to develop something that will be truly great,” Chief Executive Officer Strauss Zelnick said in a phone interview, adding that the company is also waiting for the installed base of next-generation consoles to grow before the release.

Market Reaction

• After hours, Take-Two shares traded as high as $177.80, a new record. They had gained 37% through Monday's close in New York.

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