The video game industry has garnered a lot of attention over the years, and as one of the giants in the market, Take-Two Interactive Software (NASDAQ:TTWO) has looked to sustain its long history of reliably strong performance. The maker of Grand Theft Auto and other popular game franchises has rewarded its long-term investors, and even though competition has picked up fiercely in the years since it first came onto the scene, Take-Two still has a good position in relation to its peers.

Coming into Wednesday's fiscal third-quarter financial report, Take-Two investors were hoping that the holiday season would go well. Take-Two's numbers were solid, but the way that the company intends to move forward with its long-term strategic vision was even more encouraging. Let's look more closely at Take-Two and what its latest results say about its future.

Covers of Take-Two annual reports, one in white, the other in blue.

Image source: Take-Two Interactive.

Take-Two looks for top scores

Fiscal third-quarter results reflected the success that the video game specialist has had for some time, although tough comparisons against the year-earlier quarter made the numbers look weaker than they actually were. GAAP revenue inched higher by 1% to $480.8 million, but Take-Two's net bookings, which it sees as a more accurate measure of performance, dropped 12% to $653.9 million. GAAP net income of $25.1 million reversed a year-earlier loss, and earnings of $0.21 per share were far better than the losses it had projected in its guidance three months ago.

The reason for the big bookings drop had to do with releases in the year-ago quarter. Take-Two said that the launch of Mafia III and Sid Meier's Civilization VI helped to push results from the previous year higher, making it difficult for the most recent quarter to reach those numbers.

Once again, Take-Two has prided itself on the progress it's made in moving to a recurring revenue model. Recurrent consumer spending soared 64% from year-ago levels, making up almost a third of total revenue for the company. Digitally delivered net revenue rose 8% and is now responsible for more than half of its sales. Just about all of Take-Two's most important franchises helped push digital revenue higher, including Grand Theft Auto, NBA 2K18, WWE, and Sid Meier's Civilization VI.

CEO Strauss Zelnick was pleased with the performance of his company. "During the holiday season," Zelnick said, "we benefited from high consumer demand for our offerings, enabling our Company to deliver another quarter of both strong net bookings and net cash provided by operating activities." He pointed to record levels of recurrent customer spending on key franchises in driving Take-Two forward.

What's next for Take-Two?

Take-Two has high hopes for the future. In December, the company said it would form a label called Private Division that would concentrate on bringing games from independent developers to market. The label already has some interesting offerings in its pipeline, and Zelnick believes that Private Division will be a good complement to Take-Two's own games.

More broadly, Take-Two is looking for ongoing record results. Fiscal 2019 should be a good year, with the October launch of Red Dead Redemption 2 and another unspecified new title.

Guidance from Take-Two was fairly encouraging. For the fiscal fourth quarter, it expects to make between $0.73 and $0.83 per share in GAAP earnings, with net revenue of $460 million to $510 million and net bookings of between $410 million and $460 million. Those figures are favorable compared to current investor forecasts. For the full 2018 fiscal year, Take-Two boosted its bookings guidance, with a new range of $1.99 billion to $2.04 billion resting mostly on the upper half of its previous forecast. Full-year GAAP earnings of $1.50 to $1.60 per share reflects better prospects to finish the year.

Despite the solid numbers, Take-Two investors weren't entirely pleased with the report, and the stock dropped 4% in after-hours trading following the announcement. In the long run, though, Take-Two is on track to follow through in some of the most attractive opportunities in the video game industry, and shareholders should watch closely to see how the latest games perform in the year to come.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Take-Two Interactive. The Motley Fool has a disclosure policy.