A Second Take on Take-Two Earnings: What Investors Must Know

Credit: The Street
Published on August 6, 2019 - Duration: 00:54s

A Second Take on Take-Two Earnings: What Investors Must Know

All in all, investors were really excited.

Take-Two Interactive beat Wall Street's estimates on revenue and earnings.

Plus, management raised full-year revenue guidance.

The stock rose considerably in after hours trading Monday, and was rising 7.74% to $124 a share in premarket trading Tuesday.

Here were the positives and negatives.

Positives The revenue beat was an absolute blow-out.

Take-Two posted revenue of $540 million, 51% better than analysts expected $357 million.

Company's may sometimes lift guidance when they beat on estimates, but not always.

But when a company beats expectations by this margin, they're almost always sure to raise guidance.

On the back of strong digital sales for Grand Theft Auto and sales for NBA 2K19, Take-Two was able to raise full year 2020 revenue guidance to a range between $2.83 billion and $2.93 billion, from a previous range of $2.5 billion and $2.6 billion.

Earnings per share guidance is now a range of $3.71 to $3.96.

Negatives The growth rates seen for Take-Two are high, but decelerating.

"Growing at the same rate will become more challenging," said President Karl Slatoff on the conference call.

Revenue grew at 47% year-over-year for 2019.

Revenue growth for 2021 is expected to be a touch above 20% over 2020 and 28% in 2022.

Still, analysts maintain Take-Two shares will be just fine, as continued solid game sales will drive the strong expected revenue growth rates.

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