Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported results for the first quarter of its fiscal year 2024, ended June 30, 2023. First quarter results include the Company's combination with Zynga, which closed on May 23, 2022, and affects the comparability of its results relative to last year. For further information, please see the first quarter fiscal 2024 results slide deck posted to the Company’s investor relations website at take2games.com/ir.
Management Comments
"We had a strong start to the fiscal year and achieved Net Bookings of $1.2 billion, which was at the high end of our expectations. Our performance was led by our catalog of iconic, industry-leading intellectual properties, which continues to resonate with our player communities worldwide," said Strauss Zelnick, Chairman and CEO of Take-Two.
"Our core business trends remain healthy, and we are reiterating our prior guidance of $5.45 to $5.55 billion in Net Bookings for Fiscal 2024. Our teams are making excellent progress on our strategic focus areas, including the advancement of our eagerly-anticipated development pipeline and capitalizing on our revenue-driven opportunities and synergies, all while maintaining a deep focus on efficiency."
"We remain confident that we are positioning our business for a significant inflection point in fiscal 2025, which we believe will include new record levels of operating performance. We would like to thank all of our stakeholders for their continued support, and we look forward to delivering on this exciting next chapter."
First Quarter Fiscal 2024 Financial and Operational Highlights
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Total Net Bookings* grew 20% to $1.20 billion, as compared to $1.00 billion during last year’s fiscal first quarter.
- Net Bookings from recurrent consumer spending** grew 38% and accounted for 84% of total Net Bookings.
- The largest contributors to Net Bookings were NBA® 2K23, Grand Theft Auto® Online and Grand Theft Auto V, our hyper-casual mobile portfolio, Empires & Puzzles™, Toon Blast™, Merge Dragons!™, Words With Friends™, Red Dead Redemption® 2 and Red Dead Online, and Toy Blast™.
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GAAP net revenue increased 17% to $1.28 billion, as compared to $1.10 billion in last year’s fiscal first quarter.
- Recurrent consumer spending** increased 29% and accounted for 83% of total GAAP net revenue.
- The largest contributors to GAAP net revenue were NBA 2K23, Grand Theft Auto Online and Grand Theft Auto V, our hyper-casual mobile portfolio, Toon Blast, Empires & Puzzles, Merge Dragons!, Red Dead Redemption 2 and Red Dead Online, Words With Friends, and Toy Blast.
- GAAP net loss was $206.0 million, or $1.22 per share, as compared to $104.0 million, or $0.76 per share, for the comparable period last year.
- Our results included impairment charges of $18.2 million related to capitalized software development costs.
* Net Bookings is our operational metric and defined as the net amount of products and services sold digitally or sold-in physically during the period, and includes licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.
** Recurrent consumer spending is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and in-game advertising.
First Quarter Fiscal 2024 Financial Results
The following data is used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP and Non-GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:
Three Months Ended June 30, 2023 | ||||||||||||
Financial Data | ||||||||||||
in millions | Statement of Operations | Change in deferred net revenue and related cost of revenue | Stock-based compensation | Amortization of acquired intangibles | Business acquisition | Other (1) | ||||||
GAAP | ||||||||||||
Total net revenue | $1,284.7 | (83.2) | ||||||||||
Cost of revenue | 605.5 | (6.8) | (6.7) | (186.9) | 10.0 | |||||||
Gross profit | 679.2 | (76.4) | 6.7 | 186.9 | ||||||||
Operating expenses | 883.5 | (72.0) | (62.4) | (27.2) | (7.2) | |||||||
(Loss) income from operations | (204.3) | (76.4) | 78.7 | 249.3 | 17.2 | 7.2 | ||||||
Interest and other, net | (25.4) | 0.6 | (4.6) | 13.8 | ||||||||
(Loss) gain on fair value adjustments, net | 0.8 | 1.5 | (2.3) | |||||||||
(Loss) income before income taxes | (228.9) | (75.8) | 78.7 | 249.3 | 14.1 | 18.7 | ||||||
Non-GAAP | ||||||||||||
EBITDA | 64.5 | (76.4) | 78.7 | 17.2 | 21.0 | |||||||
Note: For management reporting purposes, the table above assumes a management tax rate of 18% and a fully diluted share count of 171.4 million in order to calculate net income per diluted share.
(1) Other includes adjustments for (i) the revaluation of the Turkish Lira against the U.S. Dollar, (ii) business reorganization expenses, and (iii) a net gain on fair value adjustments related to certain equity investments.
Outlook for Fiscal 2024
Take-Two is revising its outlook for the fiscal year ending March 31, 2024 and is providing its initial outlook for its fiscal second quarter ending September 30, 2023:
Fiscal Year Ending March 31, 2024
The Company is also providing selected data, which is used internally by its management and Board of Directors to adjust the Company’s GAAP and Non-GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:
Fiscal Year Ending March 31, 2024 | ||||||||||
Financial Data | ||||||||||
$ in millions except for per share amounts | Outlook (1) | Change in deferred net revenue and related cost of revenue | Stock-based compensation | Amortization of acquired intangibles | Business acquisition and other (1) | |||||
GAAP | ||||||||||
Total net revenue | $5,370 to $5,470 | $80 | ||||||||
Cost of revenue | $2,521 to $2,548 | $17 | $(18) | $(744) | $10 | |||||
Operating expenses | $3,383 to $3,403 | $(303) | $(115) | $(35) | ||||||
Interest and other, net | $119 | $(14) | ||||||||
(Loss) income before income taxes | $(653) to $(600) | $63 | $321 | $859 | $39 | |||||
Net loss | $(545) to $(501) | |||||||||
Net loss per share | $(3.20) to $(2.95) | |||||||||
Net cash provided by operating activities | approximately $90 | |||||||||
Capital expenditures | approximately $180 | |||||||||
Non-GAAP | ||||||||||
EBITDA | $413 to $466 | $63 | $321 | $25 | ||||||
Adjusted Unrestricted Operating Cash Flow | approximately $100 | |||||||||
Operational metric | ||||||||||
Net Bookings | $5,450 to $5,550 | |||||||||
- Management reporting tax rate anticipated to be 18%
- Share count used to calculate GAAP net loss per share is expected to be 170.0 million
- Share count used to calculate management reporting diluted net income per share is expected to be 171.9 million
(1) Other includes adjustments for (i) the revaluation of the Turkish Lira against the U.S. Dollar, (ii) business reorganization expenses, and (iii) a net gain on fair value adjustments related to certain equity investments.
Second Quarter Ending September 30, 2023
The Company is also providing selected data, which is used internally by its management and Board of Directors to adjust the Company’s GAAP and Non-GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:
Three Months Ending September 30, 2023 | ||||||||||
Financial Data | ||||||||||
$ in millions except for per share amounts | Outlook (1) | Change in deferred net revenue and related cost of revenue | Stock-based compensation | Amortization of intangible assets | Business acquisition | |||||
GAAP | ||||||||||
Total net revenue | $1,260 to $1,310 | $140 | ||||||||
Cost of revenue | $630 to $649 | $16 | $(4) | $(186) | ||||||
Operating expenses | $811 to $821 | $(78) | $(18) | |||||||
Interest and other, net | $32 | $(1) | ||||||||
(Loss) income before income taxes | $(213) to $(192) | $124 | $82 | $204 | $1 | |||||
Net loss | $(170) to $(153) | |||||||||
Net loss per share | $(1.00) to $(0.90) | |||||||||
Non-GAAP | ||||||||||
EBITDA | $43 to $64 | $124 | $82 | |||||||
Operational metric | ||||||||||
Net Bookings | $1,400 to $1,450 | |||||||||
- Management reporting tax rate anticipated to be 18%
- Share count used to calculate GAAP net loss per share is expected to be 169.9 million
- Share count used to calculate management reporting diluted net income per share is expected to be 171.7 million
1)The individual components of the financial outlook may not foot to the totals, as the Company does not expect actual results for every component to be at the low end or high end of the outlook range simultaneously.
Key assumptions and dependencies underlying the Company’s outlook include: a continuation of the current economic backdrop; the timely delivery of the titles included in this financial outlook; continued growth in the installed base of PlayStation 5 and Xbox Series X|S, as well as engagement on Xbox One and PlayStation 4; the ability to develop and publish products that capture market share for these current generation systems while also leveraging opportunities on PC, mobile and other platforms; factors affecting our performance on mobile, such as player acquisition costs; our ongoing focus on our live services portfolio and new game pipeline; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.
Product Releases
The following have been released since April 1, 2023:
Label | Product | Platforms | Release Date |
2K | Marvel's Midnight Suns | PS4, Xbox One | May 11, 2023 |
2K | LEGO 2K Drive | PS4, PS5 Xbox One, Xbox Series X|S, PC, Switch | May 19, 2023 |
Private Division | After Us | PS5, Xbox Series X|S, PC | May 23, 2023 |
Rockstar Games | San Andreas Mercenaries Summer Update | PS4, PS5 Xbox One, Xbox Series X|S, PC | June 13, 2023 |
Take-Two's future lineup announced to-date includes:
Label | Product | Platforms | Release Date |
Rockstar Games | Red Dead Redemption and Undead Nightmare | PS4, Switch | August 17, 2023 |
2K | NBA 2K24 | PS4, PS5 Xbox One, Xbox Series X|S, PC, Switch | September 8, 2023 |
Private Division | Penny's Big Breakaway |
