Take-Two Interactive (TTWO, Financial) posted striking results for the first quarter of fiscal 2015 on the back of solid performances by the NBA2K14 franchise worldwide and Grand Theft Auto V that continues to receive tremendous response from gamers. The NBA2K14 title has sold more than 7 million units since its release and has turned out to be the third highest-selling unit on the current as well as next generation platforms in the United States.
Quarterly performance
Take-Two Interactive’s results for the first quarter exceeded the Wall Street estimates on both the top as well as bottom lines. The company reported non-GAAP revenue of $151.6 million, an upturn of about 5% from $ 144.3 million in the corresponding period last year. Moreover, the company narrowed down its net loss to $11.2 million, or earnings of $(0.14) per share as compared to net loss of $47.1 million or earnings of $(0.54) per share in the first quarter a year earlier. The analysts had been modeling earnings of $(0.26) on the revenue of $135.2 million.
The company has also highlighted its full-year outlook. It now expects its full-year non-GAAP revenue in the range of $1.35 billion to $1.45 billion and its non-GAAP net profit is expected to range between $0.80 and $1.05 per share for the fiscal year 2015, which is in line with the consensus estimates of $1.44 billion in revenue and net profit of $1.05 per share.
A good pipeline
Take-Two Interactive continues to benefit from the growing product portfolio of its digital offerings such as new releases of Borderlands 2 and Headhunter 5 during the quarter. Also, the company is gaining fantastic traction in the market for both Grand Theft Auto Online and NBA 2K14 as consumer spending of virtual currency continue to get accelerated.
In addition, the company is planning to launch blockbuster Grand Theft Auto V this fall on PlayStation 4, Xbox One and PC that will certainly drive growth for the Rockstar games in the future as this game will come along with the advanced technology and graphic enhancement that should attract more gamers. Meanwhile, the company is also strategically engaged in content drop and in limited time event updates that will continue to engage gamers and compliment the growth for Rockstar games going forward.
Besides, the company should also benefit from the highest quality titles in catalog unit sales per SKU on many consoles such as Xbox One, Xbox 360, PlayStation 4 and PlayStation 3. Take-Two Interactive was also named the number one third-party publisher with respect to the catalog unit sales per SKU. Take-Two is additionally looking forward for its newly launched XCOM Enemy Unknown for top quality Android devices. This XCOM Enemy unknown is a mobile version of 2012’s most popular and critically applauded console/PC releases from Firaxis Games.
Productive pipeline to lead its growth ahead
Take-Two is relying on four of its key strategic attributes to its business that should possibly lead to enhancement and growth for its business in the coming years like world-class talents in the business, robust portfolio of intellectual property, innovative technology and positive cash flow. The company looks forward to benefiting tremendously from its groundbreaking new intellectual property and from its established franchises in the coming years.
The company is eagerly waiting for the release –Â Â so are the gamers across the world –Â to this game whose title has won about 18 rewards worldwide at the Electronic Entertainment Expo held in the first half of 2014.
Take-Two will also be releasing WWE2K15 on October 28, 2014; it will be its first ever next-gen offering from this popular series. This game will be available on all the consoles like Xbox One, Xbox 360, PS4 and PS3. This game is also scheduled to be inaugurated globally on October 31, 2014. At the same time the company is planning to release Borderlands: The Pre-Sequel in North America on Xbox 360, PS3 and PC. This is a new standalone game laid down between Borderlands and Borderlands 2.
There are few other games that are scheduled to be released in the next fiscal year 2016 such as Evolve and Battleborn which are solely a new intellectual property for the next gen consoles and PC. Evolve is designed by the Rock Studio that is the originator of the cooperative shooter classic, Left 4 Dead. Take-Two Interactive plans to launch it officially on February 10, 2015. The company will also be releasing Battleborn that is being designed at the Gearbox Software and be available for release by 2015.
Conclusion
Take-Two Interactive is currently trading at the P/E of 6.88 and forward P/E of 17.05 that shares cheap valuation for the stock. Also, the PEG ratio of 0.80 for the next five years indicates strong growth for the stock in the coming years. Besides, the stock has been relatively performing well on both performance as well as wealth matrix. Its profit and operating profit yields for the trailing twelve months are 16.363% and 18.50% respectively, while its ROE stands at 55.85%.Moreover, the analysts have estimated CAGR of 26.20%, which is higher than the average industry CAGR of 20.60% for the next five years indicate solid growth for stock in the future.
