Take-Two Interactive Software FY2024 Q3 Earnings Release

Feb, 2024 TAKE -TWO INTERACTIVE
SOFTWARE, INC.
(NASDAQ: TTWO)
THIRD 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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Q3 FY2024 RESULTS SUMMARY:
GAAP
FINANCIAL SUMMARY ($ in millions, except EPS)
Q 3
ACTUAL GUID ANCE
GAAP Net Revenue $ 1 , 3 6 6 $ 1 , 2 9 0 T O $ 1 , 3 4 0
Operating Expenses $808 $ 8 2 6 T O $ 8 3 6
GAAP Net Loss $(92) $(124) TO $(107)
GAAP EPS $ ( 0 . 5 4 ) $ ( 0 . 7 3 ) T O $ ( 0 . 6 3 )
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Note: GAAP results were impacted by: 1) an impairment charge of $53 million, 2) $177 million of amortization of acquired intangibles,
and 3) a tax benefit of $40 million for a lapse in statute

Q3 FY2024 RESULTS SUMMARY:
SELECT MANAGEMENT AND OPERATING RESULTS
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• We delivered solid holiday results, including Net Bookings of $1.34
billion, which were within our guidance range
• Grand Theft Auto V, Grand Theft Auto Online , the Red Dead Redemption
series, and Zynga’s in -app purchases, led by Toon Blast , exceeded our
expectations. This was partially offset by softness in mobile advertising
and NBA 2K24
• RCS declined 7%, slightly below our outlook, driven by weakness in
mobile advertising and NBA 2K , which was largely due to the effect of
lower unit sales on its in -game monetization. RCS for Grand Theft Auto
Online virtual currency and GTA+ membership was up notably
• On a management basis, operating expenses rose 4% YoY and was
favorable to our guidance, due to lower marketing and personnel
expenses
SELECT FINANCIAL DATA ($ in millions)
Q3
ACTUAL GUID ANCE
Net Bookings $1,338 $1,300 TO $1,350
Recurrent Consumer Spending Growth
(RCS)
-7% -5%

NET REVENUE
AND NET BOOKINGS
$1,383 $1,338
$1,308
$1,268
Q3 FY23 Q3 FY24 Recurrent Consumer Spending Physical & Other Digital
78% of
Total 75% of
Total
$69 $75
GAAP Net Revenue
Net Bookings (Operational Metric)
$ in Millions
$523
$405
$684
$400
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$1,408 $1,366
$1,337
$1,297
Q3 FY23 Q3 FY24 Recurrent Consumer Spending Physical & Other Digital
79% of
Total 76% of
Total
$71 $69
$ in Millions
$3,408
$5,284 $5,250 -$5,300
$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 $5,270 -$5,320
$3,149
$5,086
FY22 FY23 FY24E Recurrent Consumer Spending Physical & Other Digital
65% of
Total
78% of
Total $400
$264
$356

CASH FLOW
$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
$ 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.
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$36 -$7
$138 $96
9 Months FY23 9 Months FY24
Net Cash From Operating Activities Capital Expenditures
$123 $108 $138 $96
9 Months FY23 9 Months FY24
Adjusted Unrestricted Operating Cash Flow Capital Expenditures
Net Cash From Operating Activities

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 $5,270 TO $5,320 PREVIOUSLY: $5,370 TO $5,470
Operating Expenses $3,545 TO $3,555 PREVIOUSLY: $3,530 TO $3,550
GAAP Net Loss $(1,013) TO $(995) PREVIOUSLY: $(957) TO $(910)
GAAP EPS $(5.95) TO $(5.85) PREVIOUSLY: $(5.62) TO $(5.35)

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)
• We are lowering our outlook to reflect the softness we are currently experiencing in mobile advertising and NBA 2K24 , a planned release moving out of the Q4, and increased marketing for Zynga’s new hit
mobile title, Match Factory! While the timing of the user acquisition expense will lower our profitability in the current fiscal year, we believe that thi s investment will allow us to grow its audience
meaningfully and increase the lifetime value of the franchise. Our revised Net Bookings forecast is $5.25 to $5.3 billion
• We project RCS growth of 1% YoY, which includes a full year of Zynga, partially offset by a slight decline in NBA 2K . GTA Online is expected to deliver modest growth for virtual currency and GTA+ membership
• We have always managed Take -Two for the long -term, and we have great confidence in our groundbreaking pipeline for fiscal 2025 a nd beyond
• We are currently working on a significant cost reduction program across our entire business to maximize our margins, while st ill investing for growth. These measures are incremental to, and even more
robust than, our prior cost reduction program, and we aim to achieve greater operating leverage as we roll out our eagerly -await ed release schedule
FY 2024
CURRENT GUIDANCE
($ IN MILLIONS)
FY 2024
PRIOR GUIDANCE
($ IN MILLIONS)
Net Bookings $5,250 TO $5,300 PRIOR:$5,450 TO $5,550
Recurrent Consumer Spending Growth
(RCS)
+1% YOY PRIOR: +4%
Non -GAAP Adjusted Unrestricted
Operating Cash Flow
APPROXIMATELY $100 NO CHANGE

Q4 FY2024 GUIDANCE:
GAAP
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Q4 FISCAL 2024 GUIDANCE ($ in millions, except EPS)
Q4 FY24 GUIDANCE
GAAP Net Revenue $1,323 TO $1,373
Operating Expenses $896 TO $906
GAAP Net Loss $(170) TO $(153)
GAAP EPS $(0.90) TO $(1.00)

Q4 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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Q4 FISCAL 2024 GUIDANCE ($ in millions, except EPS)
• We expect to deliver Net Bookings of $1.270 billion to $1.320 billion
• Our release slate for the quarter includes WWE 2K24 , as well as Penny’s Big Breakaway from
Private Division
• We project recurrent consumer spending to decrease by approximately 5%, which assumes flat
results for Zynga and a decline for NBA 2K . For Grand Theft Auto Online , virtual currency and
GTA+ membership are expected to be up
Q4 FY2024 GUIDANCE
($ IN MILLIONS)
Net Bookings $1,270 TO $1,320
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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