Take-Two Interactive Software FY2024 Q1 Earnings Release

Aug, 2023 TA K E-TWO INTERACTIVE
SOFTWARE, INC.
(NASDAQ: TTWO)
FIRST QUARTER FISCAL 2024 RESULTS
& GUIDANCE SUMMARY

CAUTIONARY NOTE:
FORWARD LOOKING STATEMENTS
Statements contained herein which are not historical facts are considered forward-looking statements under federal securities la ws and may be
identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “potential,” “predicts,” ” projects,” “seeks,” “should,”
“will,” or words of similar meaning and include, but are not limited to, statements regarding the outlook for the Company’s f uture business and
financial performance. Such forward -looking statements are based on the current beliefs of our management as well as assumptions made by and
information currently available to them, which are subject to inherent uncertainties, risks and changes in circumstances that ar e difficult to predict.
Actual outcomes and results may vary materially from these forward -looking statements based on a variety of risks and uncertaint ies including: risks
relating to our combination with Zynga, such as the ability of the Company to retain key personnel; the risks of conducting b usiness internationally;
the impact of changes in interest rates by the Federal Reserve and other central banks, including on our short -term investment p ortfolio; the impact
of inflation; volatility in foreign currency exchange rates; our dependence on key management and product development personnel; our dependence
on our NBA 2K and Grand Theft Auto products and our ability to develop other hit titles; our ability to leverage opportunitie s on PlayStation®5 and
Xbox Series X|S; factors affecting our mobile business, such as player acquisition costs; the timely release and significant mar ket acceptance of our
games; and the ability to maintain acceptable pricing levels on our games.
Other important factors and information are contained in the Company’s most recent Annual Report on Form 10 -K, including the ris ks summarized in
the section entitled “Risk Factors,” the Company’s most recent Quarterly Report on Form 10 -Q, and the Company’s other periodic f ilings with the
SEC, which can be accessed at www.take2games.com. All forward -looking statements are qualified by these cautionary statements and apply only
as of the date they are made. The Company undertakes no obligation to update any forward -looking statement, whether as a result of new
information, future events or otherwise.
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Q1 FY2024 RESULTS SUMMARY:
GAAP
FINANCIAL SUMMARY ($ in millions, except EPS)
Q1
ACTUAL GUIDANCE
GAAP Net Revenue $1,285 $1,210 TO $1,260
Operating Expenses $883 $827 TO $837
GAAP Net Loss $(206) $(178) TO $(161)
GAAP EPS $(1.22)$(1.05) TO $(0.95)
3
Note: GAAP results were impacted by amortization of acquired intangibles, business acquisition costs, and
the devaluation of the Turkish Lira against the U.S. Dollar

Q1 FY2024 RESULTS SUMMARY:
SELECT MANAGEMENT AND OPERATING RESULTS
4
•Net Bookings were $1.2 billion, which was at the high end
of our guidance range
• In the current macroeconomic backdrop, we continue to
observe that many of our consumers are purchasing
established franchises and those that offer strong value,
and our catalog stands at the intersection of these two
trends. Accordingly, our performance reflects better -than –
expected results from
Grand Theft Auto Online and Grand
Theft Auto
V, and NBA 2K
• Recurrent consumer spending rose 38%, which was above
our outlook, primarily driven by
Grand Theft Auto Online
and
NBA 2K23
• We recorded an impairment charge of $ 18 million, related
primarily to capitalized software and development costs for
an unreleased title, which affected our management results
compared to our guidance
SELECT FINANCIAL DATA ($ in millions)
Q1
ACTUAL GUIDANCE
Net Bookings $1,202 $1,150 TO $1,200
Recurrent Consumer Spending
Growth (RCS)
+38% +35%
Digitally -Delivered Net
Bookings (% of Net
Bookings)
97% N/A
Digitally -Delivered Console
Game Sales (% of Net Bookings)
80% N/A
Note: Results from last year included a partial quarter from our
Zynga business, as the transaction closed 5/23/2022

NET REVENUE
AND NET BOOKINGS
$1,002$1,202
$956 $1,166
Q1 FY23 Q1 FY24 Recurrent Consumer Spending Physical & Other Digital
73% of
Total 84% of
Total
$46 $36
GAAP Net Revenue
Net Bookings (Operational
Metric)
$ in Millions
$523 $405
$684
$400
5
$1,102$1,285
$1,038 $1,240
Q1 FY23 Q1 FY24 Recurrent Consumer Spending Physical & Other Digital
75% of
Total 83% of
Total
$65 $45
$ in Millions
$3,408$5,284
$5,450
–
$5,550
$3,085 $5,034
FY22
FY23 FY24E Recurrent Consumer Spending Physical & Other Digital
64% of
Total 78% of
Total
$405
$250
79% of
Total
$323
$3,505 $5,350
$5,370
–
$5,470
$3,149 $5,086
FY22
FY23 FY24E Recurrent Consumer Spending Physical & Other Digital
65% of
Total 78% of
Total
$400 $264
$356

CASH FLOW
6
Net Cash From Operating Activities
(1) The Company is reporting a Non-GAAP measure of financial performance: Adjusted unrestricted Operating Cash Flow, which is define d as GAAP net cash from operating activities, adjusted for changes in
restricted cash. See slide 15 for a reconciliation to the most directly comparable GAAP measure.
$258
$1$90
$159
$204
$180
FY22 FY23 FY24E
Net Cash From Operating Activities Capital Expenditures
$425
$56$100
$159
$204
$180
FY22 FY23 FY24E
Adjusted Unrestricted Operating Cash Flow Capital Expenditures
Adjusted Unrestricted Operating Cash Flow (Non -GAAP) (1)
$ in Millions
$ in Millions
(1) The Company is reporting a Non -GAAP measure of financial performance: Adjusted unrestricted Operating Cash Flow, which is define d as GAAP net cash from operating activities, adjusted for changes in
restricted cash. See slide 15 for a reconciliation to the most directly comparable GAAP measure. 6
$101
$5
$43
$32
3 Months FY23 3 Months FY24
Net Cash From Operating Activities Capital Expenditures
-$14 –
$74
$43
$32
3 Months FY23 3 Months FY24
Adjusted Unrestricted Operating Cash Flow Capital Expenditures

FY 2024 GUIDANCE:
GAAP
7
FISCAL YEAR 2024 GUIDANCE ($ in millions, except EPS)
FY 2024 REVISED
GUIDANCE PRIOR GUIDANCE
GAAP Net Revenue $5,370 TO $5,470
NO CHANGE
Operating Expenses $3,383 TO $3,403PREVIOUSLY: $3,386 TO $3,406
GAAP Net Loss $(545) TO $(501) PREVIOUSLY: $(518) TO $(477)
GAAP EPS $(3.20) TO $(2.95)PREVIOUSLY: $(3.05) TO $(2.80)
Note: GAAP results are expected to be impacted amortization of acquired intangibles, business acquisition
costs, and the devaluation of the Turkish Lira against the U.S. Dollar

FY 2024 GUIDANCE:
SELECT FINANCIAL DATA
(3) The individual components of the financial outlook may not foot the totals, as the Company does not expect actual results fo r every component to be at the low end or high end of the outlook range
simultaneously. 8
FISCAL YEAR 2024 GUIDANCE ($ in millions, except EPS)
•Our business is performing well, and we are reiterating our Net bookings outlook
range of $5.45 billion to $5.55 billion
• We continue to forecast RCS growth of 5% vs. fiscal 2023. Mobile trends are
projected to remain stable, with Zynga’s ad business continuing to grow
• As we approach our expected significant inflection point in fiscal 2025, our teams
continue to make excellent progress advancing our development pipeline and
capitalizing on our revenue -driven opportunities and synergies
• Our teams are working together to maintain our focus on efficiency amidst the
current backdrop
FY 2024
CURRENT GUIDANCE
($ IN MILLIONS)
FY 2024
PRIOR GUIDANCE
($ IN MILLIONS)
Net Bookings $5,450 TO $5,550 NO CHANGE
Recurrent Consumer Spending
Growth (RCS)
+5% YOY NO CHANGE
Non -GAAP Adjusted
Unrestricted Operating Cash
Flow
APPROXIMATELY $100 NO CHANGE
Digitally -Delivered Net
Bookings (% of Net
Bookings)
96%
–
Digitally – Delivered Console
Game Sales (% of Net
Bookings)
77%
–

Q2 FY2024 GUIDANCE:
GAAP
9
Q2 FISCAL 2024 GUIDANCE ($ in millions, except EPS)
Q2 FY24 GUIDANCE
GAAP Net Revenue $1,260 TO $1,310
Operating Expenses $811 TO $821
GAAP Net Loss $(170) TO $(153)
GAAP EPS $(1.00) TO $(0.90)
Note: GAAP results are expected to be impacted by amortization of acquired intangibles

Q2 FY2024 GUIDANCE:
SELECT FINANCIAL DATA
(3) The individual components of the financial outlook may not foot the totals, as the Company does not expect actual results fo r every component to be at the low end or high end of the outlook range simultaneously.
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Q2 FISCAL 2024 GUIDANCE ($ in millions, except EPS)
•We expect to deliver Net Bookings of $1.400 billion to $1.450 billion
• Our release slate for the quarter includes
Red Dead Redemption and Undead
Nightmare
for Switch and PS4, and NBA 2K24
• Largest contributors to Net Bookings expected to be NBA 2K, Grand Theft
Auto Online
and Grand Theft Auto V , our hyper -casual mobile portfolio,
Empires & Puzzles, Toon Blast, Words With Friends, Merge Dragons, Red Dead
Redemption 2
and Red Dead Online and Zynga Poker
• We project RCS of -7%, which assumes modest declines in our mobile
business;
NBA 2K , driven by changes to its summer promotional cadence;
and
Grand Theft Auto Online; as well as a reduction in DLC revenue from
several titles that were released in prior years
Q2 FY2024 GUIDANCE
($ IN MILLIONS)
Net Bookings $1,400 TO $1,450
Recurrent Consumer Spending
Growth (RCS)
– 7% YOY
Digitally – Delivered Net
Bookings (% of Net
Bookings)
96%
Digitally -Delivered Console
Game Sales (% of Net
Bookings)
77%

FY24-FY26 PIPELINE DETAILS
* FY24 -26 release estimates provided as of May 17, 2023. Full updated FY25/26 pipeline details to be given with Q4 FY2024 result s.
** Mobile count only includes titles in our plans for worldwide launch and excludes hyper -casual games.
These titles are a snapshot of our current development pipeline. It is likely that some of these titles will not be develope d through completion, that launch timing may change, and that we will
also be adding new titles to our slate.
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FY 2024 –
FY 2026* TITLES OFFICIALLY ANNOUNCED TO
-DATE
Immersive Core Independent Mobile**
(Currently scheduled
for worldwide launch)
Mid -Core
New Iterations of Previously
Released Titles 17
• NBA 2K24
(2K) – Launching September 8, 2023
•
WWE 2K24 (2K) – Launching Fiscal 2024
•
Judas (Ghost Story Games) – TBA
7
18 46
• Star Wars Hunters (Zynga) – Planned for worldwide launch in Fiscal 2024
• Top Troops (Zynga) – Planned for worldwide launch in Fiscal 2024
• Grand Theft Auto: The Trilogy – The Definitive Edition (Rockstar Games)
• After Us (Private Division) – Launched May 23, 2023
• Penny’s Big Breakaway (Private Division) – Launching Early Calendar 2024
• Title planned from partnership with Weta Workshop
• Title planned from partnership with Game Freak
• LEGO 2K Drive (2K) – Launched May 19, 2023
• Red Dead Redemption and Undead Nightmare for Switch and PS4 – Launching August 17, 2023

PIPELINE DEFINITIONS
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Titles that have the deepest gameplay and the most hours of content. Examples include our key sports franchises
(e.g.
PGA TOUR 2K and NBA 2K ) as well as Grand Theft Auto and Red Dead Redemption (to name a few).
IMMERSIVE CORE
Externally
-developed Private Division releases.
INDEPENDENT
Any title released on a mobile platform. Our title counts only include titles we have scheduled for worldwide launch
and exclude hyper
-casual games.
MOBILE
Titles that are either an arcade title (like
WWE Battlegrounds ) or games that have many hours of gameplay,
but not to the same extent as an immersive core title. MID -CORE
This includes ports and remastered titles. Sequels would not fall into this category. NEW ITERATIONS OF PRIOR RELEASES

NON-GAAP FINANCIAL MEASURE
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In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Compa ny uses Non-GAAP
measures of financial performance: Adjusted Unrestricted Operating Cash Flow, which is defined as GAAP net cash from operating a ctivities,
adjusted for changes in restricted cash, and EBITDA, which is defined as GAAP net income (loss) excluding interest income (ex pense), provision for
(benefit from) income taxes, depreciation expense, and amortization and impairment of acquired intangibles.
The Company’s management believes it is important to consider Adjusted Unrestricted Operating Cash Flow, in addition to net c ash from operating
activities, as it provides more transparency into current business trends without regard to the timing of payments from restr icted cash, which is
primarily related to a dedicated account limited to the payment of certain internal royalty obligations. The Company’s manag ement believes it is
important to consider EBITDA, in addition to net income, as it removes the effect of certain non- cash expenses, debt-related charges, and income
taxes. Management believes that, when considered together with reported amounts, EBITDA is useful to investors and management in
understanding the Company’s ongoing operations and in analysis of ongoing operating trends and provides useful additional inf ormation relating to
the Company’s operations and financial condition.
These Non -GAAP financial measures are not intended to be considered in isolation from, as a substitute for, or superior to, GAAP results. These Non-
GAAP financial measures may be different from similarly titled measures used by other companies. In the future, Take -Two may al so consider
whether other items should also be excluded in calculating these Non- GAAP financial measures used by the Company. Management believes that
the presentation of these Non- GAAP financial measures provides investors with additional useful information to measure Take -Tw o ‘ s financial and
operating performance. In particular, these measures facilitate comparison of our operating performance between periods and may help investors to
understand better the operating results of Take -Two. Internally, management uses these Non- GAAP financial measures in assessing the Company’s
operating results and in planning and forecasting. A reconciliation of these Non- GAAP financial measures to the most comparable GAAP measure is
contained in the financial tables to this press release.

RECONCILIATION OF GAAP TO NON-GAAP MEASURE
14
TA K E -TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON -GAAP MEASURE
(in millions)

RECONCILIATION OF GAAP TO NON-GAAP MEASURE
15
TA K E -TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON -GAAP MEASURE
(in millions)

RECONCILIATION OF GAAP TO NON-GAAP MEASURE
16
TA K E -TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON -GAAP MEASURE
(in millions)

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