Take-Two Interactive posts upbeat Q4 results, but guides below expectation

Take-Two Interactive Software Inc. (TTWO) reported a drop in earnings for the fourth quarter as the company increased its spending on R&D as well as on business reorganization. Earnings and revenue came in above street expectations.

With revenue tumbling 21% to $450.3 million, the company’s earnings declined 8.5% to $90.9 million, or $0.77 per share.

Recurrent consumer spending (virtual currency, add-on content, and microtransactions) grew 42% year-over-year and accounted for 44% of total net revenue. The largest contributors to net revenue in the fourth quarter were Grand Theft Auto V and Grand Theft Auto Online; NBA 2K18, Sid Meier’s Civilization VI; WWE 2K18 and WWE SuperCard; and Dragon City and Monster Legends.

Digitally-delivered net revenue grew 8% during the quarter, while net bookings increased 1.1% to $411.4 million. Looking ahead into the first quarter of fiscal 2019, the company predicts net income of $62 million to $74 million on a net revenue of $345 million to $395 million. EPS is expected to be $0.53 to $0.63, while net bookings are predicted to come in the range of $215 million to $265 million.

For fiscal 2019, net income is seen to be $180 million to $211 million, or $1.53 to $1.80 per share. Net bookings are expected in the range of $2.67 billion to $2.77 billion, as revenue climbs to $2.50 billion to $2.60 billion.

Take-Two anticipates capital expenditures of about $60 million and net cash provided by operating activities of about $710 million for fiscal 2019.

Grand Theft Auto Online and NBA 2K generated record results, exceeding our original expectations, and we benefited from strong ongoing sales of Grand Theft Auto V and other catalog titles.

Take-Two expects fiscal 2019 to be another year of profitable growth, including both record net bookings and net cash provided by operating activities, led by the launch of Red Dead Redemption 2, besides new annual releases from NBA 2K and WWE 2K.

The company said it rescheduled the release date of its highly-anticipated title from one of 2K’s biggest franchises to fiscal 2020, to allow additional development time. Take-Two remains excited about this title and expects it to enhance its results next fiscal year.

“Our solid performance marked the completion of another outstanding year for our company, highlighted by growth in net bookings, earnings and net cash provided by operating activities, along with margin expansion. Grand Theft Auto Online and NBA 2K generated record results, exceeding our original expectations, and we benefited from strong ongoing sales of Grand Theft Auto V, which sold 95 million copies globally, and other catalog titles,” executive chief Strauss Zelnick said.

Shares of Take-Two ended Wednesday’s regular trading session down 0.35% at $113.07 on the Nasdaq. The stock had been trading between $65.63 and $129.25 for the past 52 weeks. In the after-hours, the stock took a hit due to weaker-than-expected guidance.