Take two interactive looks beyond "Red Dead Redemption 2" – The Fool Motley

Take-Two Interactive (NASDAQ: TTWO) has just completed a solid fiscal year (2019) despite intense competition in the industry for the time and money of the players. Same as both Activision Blizzard (NASDAQ: ATVI) and Electronic Arts (NASDAQ: EA) Decrease in sales, Take-Two's sales figure reaches a new record thanks to the success Red Dead Redemption after. Cash flow also increased as sales continued to shift to digital delivery.

Ironically, this success prepares the company for a difficult fiscal year, as the developer strives to maintain momentum. According to Strauss Zelnick, CEO, a well-stocked outflow pipeline of existing and new properties will help, but this is unlikely to be enough to avoid a modest decline in sales in 2020. Zelnick and his team discussed the details of these prospects in the near future. a conference call. with Wall Street analysts, and here are some highlights.

Generalized gains

We generated record net bookings and adjusted operating cash flow [in 2019], which exceeded our outlook early in the year, as well as strong earnings growth driven by the unprecedented launch of Red Dead Redemption 2, the outstanding performance of NBA 2K and better than expected results of Grand Theft Auto Online and Grand Theft Auto V.
– Zelnick

The record of Take-Two 2019 was fueled by the Red Dead Redemption suite, which sold more than 24 million units and accounted for 32% of annual sales despite its launch in the second half of the year. Grand Theft Auto 26% of product sales. NBA 2K The franchise completes the leading trio by selling 9 million copies and setting a new record for recurring subscription-based revenue. These strong combined results produced a significantly better year than management expected, while EA and Activision were far from reaching their annual targets.

Maintain the commitment

One of the key success factors is our proven ability to maintain a long-term commitment with our titles well after their initial launch. As a result, we have generated strong growth in recurring consumer spending in recent years.
– Zelnick

GTA V The titles continue to attract a lot of players' playing time nearly six years after their initial launch. This suggests that Take-Two can achieve more and more stable income growth over time. Indeed, recurring consumer spending of the year on products such as GTA online and NBA 2K increased by 20% and accounted for 39% of total sales, management said.

Executives hope to maintain this positive momentum with Red Dead Online over the next quarters and years.

Big shoes to fill

We have the strongest development pipeline in our history, including from our largest franchises, as well as new [intellectual property]. In addition, we are actively investing in new opportunities, such as the private division, mobile games, esport and geographic expansion, which could be huge growth drivers.
– CFO Lainie Goldstein

Since more than a decade has elapsed between the main Red Dead For the moment, the company predicts that its sales will fall between 2.7 and 2.8 billion dollars, against 2.9 billion dollars last year.

However, shareholders will have many launches to be hoped for in successful sports franchises and established brands like Borderlands, which will publish its first new chapter in almost six years. Overall, this pipeline is expected to generate a slight decline in sales in 2020 after the 47% increase recorded last year.