As expected, Take-Two Interactive (NASDAQ:TTWO) reported great results for its fiscal third quarter. Despite a crowded market for games these days, Take-Two managed to sell 23 million copies of Red Dead Redemption 2, while NBA 2K19 continues to perform well, too. What's more, management hinted that it may use its newfound cash hoard to go shopping.

Overall, there was plenty to digest in the latest earnings conference call. Here are three highlights.

Game art for Take Two's Red Dead Redemption depicting a man wearing a wide-brimmed hat pointing a gun with a sunset and men riding horses in the background.

IMAGE SOURCE: TAKE-TWO INTERACTIVE.

1. Robust revenue growth

Take-Two delivered robust growth in net bookings (a non-GAAP measure of revenue) of 140% year over year to $1.57 billion. This marked a new quarterly record for the company and exceeded management's outlook for net bookings between $1.4 billion and $1.45 billion. The outperformance on the top line was primarily due to two games: Red Dead Redemption 2 and NBA 2K19

Red Dead Redemption 2 was the No. 1 selling video game of 2018. The combined monthly active users across Grand Theft Auto Online and Red Dead Online is at an all-time high, which bodes well for further growth in recurrent consumer spending (or in-game spending). 

NBA 2K19 continues to sell at a record pace. Sales of the game exceeded management's expectations during the quarter, and they now expect lifetime unit sales to be slightly higher than NBA 2K18.

Because of the better-than-expected results, management raised its outlook for fiscal 2019 (which ends in March) for net bookings to land between $2.89 billion and $2.94 billion, which is up from the previous guidance of $2.8 billion to $2.9 billion. At the midpoint, this represents a 46% increase over fiscal 2018. Management also expects free cash flow to be $680 million, which is roughly double the amount generated last year. 

2. In-game spending grew 31%

Recurrent consumer spending is an increasingly important metric in evaluating Take-Two because gamers tend to stick with one or two games over an extended period these days. Take-Two was able to generate a prolonged phase of revenue growth off of Grand Theft Auto V by updating the game with fresh content. The company plans to do the same with Red Dead Redemption 2.

Recurrent spending grew 31% year over year and made up 22% of net bookings. The largest contributor to recurrent consumer spending last quarter was NBA 2K19, which saw growth of 39% year over year and reached a new record. NBA 2K Online is the most popular sports title in China, and management expects net bookings from NBA 2K19 to be the highest ever for a 2K sports title.

Also, Social Point's two popular mobile games, Dragon City and Monster Legends, were top contributors to recurrent consumer spending. Social Point has a deep pipeline of games under development, and this is true for the rest of the company. 

During the third-quarter conference call, President Karl Slatoff emphasized the company's focus on releasing much more content going forward: "Not every title is going to come out in the next 12 months, but over time, you're going to see a higher release of cadence from our titles because that's the state of the objective of ours." 

Take-Two has an unannounced title from one of the company's biggest franchises scheduled for release during fiscal 2020. Plus, the company just announced that it was forming a new development studio that will be headed by Michael Condrey, who worked for Sledgehammer Games -- the lead developer for Activision Blizzard's Call of Duty franchise. 

All in all, it appears Take-Two is laying the foundation for sustained growth in revenue.

Check out the latest earnings call transcript for Take-Two.

3. Acquisitions could be on the horizon

Take-Two's monster quarter padded the company's coffers. The company ended the quarter with $1.6 billion of cash and short-term investments and no debt. That war chest, combined with the company's free cash flow, means management has some firepower, and they plan to use it smartly. 

The game maker hasn't been afraid to spend cash on other game development studios. Take-Two acquired Social Point and the studio behind the hit game Kerbal Space Program in 2017. Zelnick stated that they are "only interested in accretive transactions like Social Point" that improve the company's profitability. 

Also, Zelnick has demonstrated his knack for making timely share repurchases in the past, so expect management to continue using cash to buy back shares when the stock price offers the potential for good returns. On this score, Zelnick restated what he has said in the past: "We're interested in returning capital to our shareholders when it makes sense. My philosophy about buybacks is well known, which is you do buybacks when you see deep value in the marketplace." 

It's apparent he sees value in the stock right now because Take-Two repurchased another $109 million worth of shares in the fiscal third quarter. Over the last nine months through December, management has repurchased a total of $262 million worth of shares. That represents about 2% of the company's total market value over the last year. 

Final thoughts

The stock sank after the earnings release, but I think it was unjustified. Investors are caught up on worries about the impact of Fortnite, but Take-Two's recent performance and guidance suggests other games in the marketplace are not impacting the company's growth.

Also, keep in mind, Red Dead Online is currently in beta. When it comes out of beta, probably sometime next year, recurrent consumer spending should get a boost as management begins to release more content for the game.