Take-Two earnings slip 25%, but microtransactions and digital are up

Take-Two's latest Holiday 2019 quarterly revenues show more of the same trends: Digital reigns in earnings split, microtransaction revenues are up, and total net revenues are solidly driven by sports and catalog games.

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In the Fiscal Year Q3'20 quarter ending December 31, 2019, Take-Two Interactive earned $930.1 million in total net revenues, down roughly $300 million from last year or a tremendous 25%. The main driver for the YoY loss was the absence of Red Dead Redemption 2, which launched during the Holiday 2019 quarter to thunderous success.

Recurrent consumer spending (microtransactions and DLC) accounted for 37% of total net revenues during Q3'20, or roughly $344.13 million. Take-Two notes this is a sizable 15% spike in player spending over 2018. NBA 2K20 led the charge in microtransaction earnings as per usual, followed closely by GTA V and Red Dead Redemption 2.

Digital was also a big catalyst for earnings, and rightly so as all microtransactions count towards digital earnings. In Q3'20, Take-Two pulled in $700.3 million in digitally-delivered earnings, up a sizable 17.2% from last year.

Take-Two's main earnings drivers remain as consistent as ever. Big breadwinners were the annualized NBA 2K franchise and Rockstar's stellar duo. Other catalog games like Borderlands 3 contributed strongly to total net revenues, and The Outer Worlds, which debuted in October, moved over 2 million copies and also generated impressive revenues in the quarter.

Take-Two delivered the following sales figures in its earnings call:

• GTA V - 150 million copies
• Red Dead Redemption 2 - 29 million copies
• Borderlands 3 - 8 million copies to date
• NBA 2K - 8 million copies since launch
• The Outer Worlds - 2 million copies

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Remember Take-Two doesn't keep all the money it earns. Like any company, it has to spend money to make money.

In Q3'20, Take-Two spent $316.2 million on total expenses, including operating costs like marketing and costs of goods sold. This left the company with a total quarterly net income of $163.64 million, which is down 9% YoY.

Take-Two Interactive Fiscal Year Q3'20 Earnings At-A-Glance

• Net Revenue (total Q3 earnings) - $930.1 million, down 25% YoY
• Recurrent consumer spending (mTX) - $344.13 million, up 15% YoY
• Digital net revenues - $700.3 million, up 17.72% YoY
• Net income (after spending/expenses) - $163.64 million, down 9% YoY