![]() One of the reasons for these losses is because the company is working on multi-year projects such as Grand Theft Auto 6 which won't launch for at least another year so these projects are going to record losses until they launch and generate revenues. Part of this year's loss came from write offs and amortization costs tied to some acquisitions and some project calculations but even without these costs, the company would have reported a loss of $600 million for the year. The company is often times criticized for taking a long time to launch products but this won't be a big deal if their recurrent revenues keep rising Concern 1: Big losses for this year and the nextįor this year, the company reported a pretty sizeable loss of $1.1 billion and for the next year it guided for another loss of $500 million. For example when Microsoft switched to this model, their P/E multiple jumped from mid 10s to mid 30s within the next year and half because investors prefer predictable recurring revenues over unpredictable revenue that could rise or drop sharply over time. ![]() As we know from SAAS (software as a service) companies, recurring revenues include revenues that happen on a predictable cadence and investors love these types of revenues so much that they reward SAAS companies with much higher multiples. The company reported that recurring revenues now make up 78% of its total revenues after rising 115% from last year which is very impressive. Good news 2: Recurrent revenues keep rising Take-two reported that its net bookings rose 65% from last year to $1.39 billion at a time many consumer staples are barely posting any growth because consumers are holding back on discretionary spending due to certain recessionary pressures in the economy. This speaks volumes about the company's ability to "milk" its products for years and years after their initial launch but this also makes sense since it usually takes them multiple years to finish each of these games (which seems to hurt the company's profitability in the short term but we'll get to that below). It's very rare for a video game to continue generating flat revenues for 5-10 years in a row let alone actually generating higher and higher revenues over time. The company launched GTA V in 2013 (10 years ago) and RDR 2 in 2018 (5 years ago) and both products continue to contribute to the company's revenue growth even after all these years. Good News 1: GTA V and RDR 2 continue to generate revenue growth even after years On May 17th Take-Two Interactive ( NASDAQ: TTWO) announced results for the last quarter which had several positives and a couple negatives in them.
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