Take-Two Interactive Software FY2024 Q2 Earnings Release
Download PDFNov, 2023 TAKE -TWO INTERACTIVE
SOFTWARE, INC.
(NASDAQ: TTWO)
SECOND 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 future business and financial performance. Such forward -looking s tatements 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 uncertai nti es, risks, and changes in circumstances that are
difficult to predict. Actual outcomes and results may vary materially from these forward -looking statements based on a variety o f risks and uncertainties including risks relating to our
combination with Zynga Inc.; the risks of conducting business internationally, including as a result of unforeseen geopolitic al events; the impact of changes in interest rates by the
Federal Reserve and other central banks, including on our short -term investment portfolio; the impact of inflation; volatility i n 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 opportunities on PlayStation®5 and Xbox Series X|S; factors affecting our mobile business, such as player acquisitio n c osts; the timely release and significant market
acceptance of our games; 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 filings 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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Q2 FY2024 RESULTS SUMMARY:
GAAP
FINANCIAL SUMMARY ($ in millions, except EPS)
Q 2
ACTUAL GUID ANCE
GAAP Net Revenue $ 1 , 2 9 9 $ 1 , 2 6 0 T O $ 1 , 3 1 0
Operating Expenses $955 $ 8 1 1 T O $ 8 2 1
GAAP Net Loss $(553) $(170) TO $(153)
GAAP EPS $ ( 3 . 2 5 ) $ ( 1 . 0 0 ) T O $ ( 0 . 9 0 )
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Note: GAAP results were impacted by: 1) an impairment charge of $237 million related to acquired intangibles and 2) $161 million of
goodwill impairment, representing a partial impairment of one of our reporting units
Q2 FY2024 RESULTS SUMMARY:
SELECT MANAGEMENT AND OPERATING RESULTS
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• We delivered another great quarter, which demonstrates the enduring
strength of our catalog, our ability to deliver deeply engaging post -launch
content, and our commitment to disciplined execution
• Net Bookings were $1.44 billion, which was at the high end of our
guidance range
• Our performance reflects better -than -expected results from Grand Theft
Auto V and Grand Theft Auto Online , and Red Dead Redemption 2
• Recurrent consumer spending declined 7%, which was in line with our
outlook
• On a management basis, operating expenses were flat year -over -year,
which was favorable to our guidance, driven by lower marketing
expenditures, some of which was shifted to later this year
SELECT FINANCIAL DATA ($ in millions)
Q2
ACTUAL GUID ANCE
Net Bookings $1,445 $1,400 TO $1,450
Recurrent Consumer Spending Growth
(RCS)
-7% -7%
NET REVENUE
AND NET BOOKINGS
$1,505 $1,445
$1,421
$1,372
Q2 FY23 Q2 FY24 Recurrent Consumer Spending Physical & Other Digital
80% of
Total 78% of
Total
$84 $73
GAAP Net Revenue
Net Bookings (Operational Metric)
$ in Millions
$523
$405
$684
$400
5
$1,394 $1,299
$1,319
$1,240
Q2 FY23 Q2 FY24 Recurrent Consumer Spending Physical & Other Digital
79% of
Total 77% of
Total
$74 $60
$ 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 78% 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
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 14 for a reconciliation to the most directly comparable GAAP measure.
$258
$1
$90
$159
$204
$150
FY22 FY23 FY24E
Net Cash From Operating Activities Capital Expenditures
$425
$56
$100
$159
$204
$150
FY22 FY23 FY24E
Adjusted Unrestricted Operating Cash Flow Capital Expenditures
Adjusted Unrestricted Operating Cash Flow (Non -GAAP) (1)
$ in Millions
6
$155
$70 $99 $60
6 Months FY23 6 Months FY24
Net Cash From Operating Activities Capital Expenditures
-$17 -$54
$99 $60
6 Months FY23 6 Months FY24
Adjusted Unrestricted Operating Cash Flow Capital Expenditures
$ in Millions
FY 2024 GUIDANCE:
GAAP
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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 $3,530 TO $3,550 PREVIOUSLY: $3,383 TO $3,403
GAAP Net Loss $(957) TO $(910) PREVIOUSLY: $(545) TO $(501)
GAAP EPS $(5.62) TO $(5.35) PREVIOUSLY: $(3.20) TO $(2.95)
FY 2024 GUIDANCE:
SELECT FINANCIAL DATA
(1) The individual components of the financial outlook may not foot the totals, as the Company does not expect actual results for every component to be at the low end or high end of the outlook range simultaneously.
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FISCAL YEAR 2024 GUIDANCE ($ in millions, except EPS)
• While we expect continued macroeconomic uncertainty, we believe that we are well positioned for the holiday season and are re ite rating our fiscal 2024 Net Bookings guidance of $5.45 to $5.55 billion
• We project RCS growth of 4%, which assumes growth in NBA 2K as well as Zynga, since we will own the business for a full 12 months this year. For Grand Theft Auto Online , virtual currency and GTA+
membership is expected to be flat
• We have great confidence in our multi -year growth trajectory and we believe there are many exciting upcoming catalysts that will enable our Company to achieve new record levels of financ ial performance
FY 2024
CURRENT GUIDANCE
($ IN MILLIONS)
FY 2024
PRIOR GUIDANCE
($ IN MILLIONS)
Net Bookings $5,450 TO $5,550 NO CHANGE
Recurrent Consumer Spending Growth
(RCS)
+4% YOY PREVIOUSLY: +5%
Non -GAAP Adjusted Unrestricted
Operating Cash Flow
APPROXIMATELY $100 NO CHANGE
Q3 FY2024 GUIDANCE:
GAAP
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Q3 FISCAL 2024 GUIDANCE ($ in millions, except EPS)
Q3 FY24 GUIDANCE
GAAP Net Revenue $1,290 TO $1,340
Operating Expenses $826 TO $836
GAAP Net Loss $(124) TO $(107)
GAAP EPS $(0.73) TO $(0.63)
Q3 FY2024 GUIDANCE:
SELECT FINANCIAL DATA
(1) The individual components of the financial outlook may not foot the totals, as the Company does not expect actual results for every component to be at the low end or high end of the outlook range simultaneously.
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Q3 FISCAL 2024 GUIDANCE ($ in millions, except EPS)
• We expect to deliver Net Bookings of $1.300 billion to $1.350 billion
• Our release slate for the quarter includes two mobile titles, Top Troops and Match Factory , as
well as Borderlands 3 Ultimate Edition , all of which have been released
• We project RCS to decline by approximately 5%, which assumes a modest decline in our mobile
business, which is partly offset by growth in NBA 2K . For Grand Theft Auto Online , virtual
currency and GTA+ membership is expected to be up
Q3 FY2024 GUIDANCE
($ IN MILLIONS)
Net Bookings $1,300 TO $1,350
Recurrent Consumer Spending Growth
(RCS)
-5% YOY
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. 11
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 excl ude 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 activities, adjusted for changes in restricted cash, and EBITDA, which is defined as GAAP
net income (loss) excluding interest income (expense), provision for (benefit from) income taxes, depreciation expense, and a mor tization 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 restricted cash, which is primarily r ela ted to a dedicated account limited to the payment of
certain internal royalty obligations. The Company’s management believes it is important to consider EBITDA, in addition to n et 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, EBIT DA 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 orm ation 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 also 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 pro vides investors with additional useful
information to measure Take -Two’s financial and operating performance. In particular, these measures facilitate comparison of o ur operating performance between periods and may
help investors to understand better the operating results of Take -Two. Internally, management uses these Non -GAAP financial mea sures 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 c ontained in the financial tables to this press
release.
RECONCILIATION OF GAAP TO NON -GAAP MEASURE
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TAKE -TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON -GAAP
MEASURE
(in millions)
RECONCILIATION OF GAAP TO NON -GAAP MEASURE
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TAKE -TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON -GAAP
MEASURE
(in millions)
RECONCILIATION OF GAAP TO NON -GAAP MEASURE
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TAKE -TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON -GAAP
MEASURE
(in millions)
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