Take-Two Interactive Software FY2024 Q4 Earnings Release
Download PDFMay, 2024 TA K E-TWO INTERACTIVE
SOFTWARE, INC.
(NASDAQ: TTWO)
FOURTH QUARTER AND 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 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 uncertainti 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 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 opportunities on PlayStation®5 and Xbox Series X|S; factors affecting our mobile business, such as player acquisitio n costs; the timely release and significant market
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 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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Q4 FY2024 RESULTS SUMMARY:
GAAP
FINANCIAL SUMMARY ($ in millions, except EPS)
Q4
ACTUAL GUIDANCE
GAAP Net Revenue $1,399 $1,323 TO $1,373
Operating Expenses $3,182 $896 TO $906
GAAP Net Loss $(2,903) $(170) TO $(153)
GAAP EPS $(17.02)$(1.00) TO $(0.90)
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Note: GAAP results were impacted by: 1) a goodwill impairment charge of $2.2 billion, 2) an impairment charge of $304 million
related to acquired intangible assets; and 3) $93 million of business reorganization expenses related to our cost reduction p rogram
Q4 FY2024 RESULTS SUMMARY:
SELECT MANAGEMENT AND OPERATING RESULTS
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•4Q Net Bookings were above our revised guidance range due to better –
than- expected results from NBA 2K24; Zynga’s in -app purchases, led by
Toon Blast and Match Factory! ; the Red Dead Redemption series and the
Grand Theft Auto series
• RCS was above our outlook, driven by the outperformance of NBA 2K,
Toon Blast , and Match Factory!. Recurrent consumer spending declined
for Grand Theft Auto Online (although was up for G TA + and virtual
currency); NBA 2K was in line with the prior year; and mobile increased
slightly
• On a management basis, operating expenses rose 20% YoY, which was
slightly above our guidance, due to higher personnel and IT costs, and
professional fees
SELECT FINANCIAL DATA ($ in millions)
Q4
ACTUAL GUIDANCE
Net Bookings $1,349 $1,270 TO $1,320
Recurrent Consumer Spending Growth
(RCS)
-2% -5% YoY
FY2024 RESULTS SUMMARY:
GAAP
FINANCIAL SUMMARY ($ in millions, except EPS)
FY2024
ACTUAL GUIDANCE
GAAP Net Revenue $5,350 $5,270 TO $5,320
Operating Expenses $5,832$3,545 TO $3,555
GAAP Net Loss $(3,744) $(1,013) TO $(995)
GAAP EPS $(22.01)$(5.95) TO $(5.85)
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Note: GAAP results were impacted by: 1) a goodwill impairment charge of $2.3 billion, 2) an impairment charge of $577 million
related to acquired intangible assets, and 3) $105 million of business reorganization expenses related to our cost reduction programs
FY2024 RESULTS SUMMARY:
SELECT MANAGEMENT AND OPERATING RESULTS
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•Net Bookings were slightly above our guidance range
• Recurrent consumer spending grew 2%, which exceeded our outlook.
Recurrent consumer spending for mobile increased high single -digits;
NBA 2K virtual currency and Seasons was up slightly; and Grand Theft
Auto Online virtual currency and GTA+ membership was flat
• On a management basis, operating expenses rose 15% year- over-year
and were slightly above our guidance, due to higher personnel and IT
costs, and professional fees
SELECT FINANCIAL DATA ($ in millions)
FY2024
ACTUAL GUIDANCE
Net Bookings $5,333 $5,250 TO $5,300
Recurrent Consumer Spending Growth
(RCS)
+2% +1% YoY
NET REVENUE
AND NET BOOKINGS
$1,393$1,349
$1,348 $1,292
Q4 FY23 Q4 FY24 Recurrent Consumer Spending Physical & Other Digital
78% of
Total 79% of
Total $57
$45
GAAP Net Revenue
Net Bookings (Operational Metric)
$ in Millions
$523$405
$684
$400
$1,446
$1,399
$1,392 $1,335
Q4 FY23 Q4 FY24 Recurrent Consumer Spending Physical & Other Digital
79% of
Total 79% of
Total
$54
$64
$ in Millions
$5,284
$5,333$5,550
– $5,650
$5,034 $5,097
FY23
FY24 FY25E Recurrent Consumer Spending Physical & Other Digital
78% of
Total 78% of
Total
$250
$236
76% of
Total
$5,350 $5,350$5,570
– $5,670
$5,086 $5,112
FY23 FY24 FY25E Recurrent Consumer Spending Physical & Other Digital
78% of
Total 79% of
Total
$264
$237
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CASH FLOW
Net Cash From Operating Activities
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. 8
$1
-$16
-$20
$204
$142$140
FY23 FY24 FY25E
Net Cash From Operating Activities Capital Expenditures
$56
$42
-$200
$204
$142$140
FY23 FY24 FY25E
Adjusted Unrestricted Operating Cash Flow Capital Expenditures
FY 2025 GUIDANCE:
GAAP
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FISCAL YEAR 2025 GUIDANCE ($ in millions, except EPS)
FY 2025 GUIDANCE
GAAP Net Revenue $5,570 TO $5,670
Operating Expenses $3,559 TO $3,579
GAAP Net Loss $(674) TO $(606)
GAAP EPS $(3.90) TO $(3.50)
FY 2025 GUIDANCE:
SELECT FINANCIAL DATA
(1) The individual components of the financial outlook may not foot the totals, as the Company does not expect actual results fo r every component to be at the low end or high end of the outlook range simultaneously.
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FISCAL YEAR 2025 GUIDANCE ($ in millions, except EPS)
• We project 5% Net Bookings growth over Fiscal 2024. Our outlook reflects a narrowing of Rockstar Games’ previously establishe d window of Calendar 2025 to Fall of Calendar 2025 for Grand Theft Auto VI.
Consumer anticipation for the title is unprecedented and our expectations for its commercial impact continue to increase.
• We expect RCS to be up approximately 3% YoY. Our forecast assumes high single- digit growth for mobile, a slight increase for NBA 2K, and a decline for Grand Theft Auto Online
• We are not providing specific guidance beyond Fiscal 2025, as our release schedule includes numerous titles each year and eve n modest shifts can have a significant effect on results in any given period. Our
outlook on the lifetime value of our pipeline remains as strong as ever and we expect sequential growth in Net Bookings for F iscal 2025, 2026 and 2027
FY 2025
GUIDANCE
($ IN MILLIONS)
Net Bookings $5,550 TO $5,650
Recurrent Consumer Spending Growth (RCS) +3% YOY
Non – GAAP Adjusted Unrestricted Operating Cash
Flow
APPROXIMATELY ($200)
Q1 FY2025 GUIDANCE:
GAAP
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Q1 FISCAL 2025 GUIDANCE ($ in millions, except EPS)
Q1 FY25 GUIDANCE
GAAP Net Revenue $1,300 TO $1,350
Operating Expenses $928 TO $938
GAAP Net Loss $(272) TO $(245)
GAAP EPS $(1.58) TO $(1.43)
Q1 FY2025 GUIDANCE:
SELECT FINANCIAL DATA
(1) The individual components of the financial outlook may not foot the totals, as the Company does not expect actual results fo r every component to be at the low end or high end of the outlook range simultaneously.
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Q1 FISCAL 2025 GUIDANCE ($ in millions, except EPS)
• Our release slate for the quarter includes TopSpin 2K25, No Rest for the Wicked on Early Access
for PC and NFL 2K Playmakers , all of which have already released, and Star Wars Hunters
• We project RCS to increase +1%, which assumes mid single -digit growth in mobile, flat results
for NBA 2K , and a decline for Grand Theft Auto Online
• On a management basis, operating expenses are expected to grow by approximately 14% year-
over -year, which is primarily driven by additional marketing for Match Factory!, partially offset
by our cost reduction program. Direct marketing accounts for nearly 90% of operating expense
growth for the quarter
Q1 FY2025 GUIDANCE
($ IN MILLIONS)
Net Bookings $1,200 TO $1,250
Recurrent Consumer Spending Growth
(RCS)
+1% YOY
FY 2025 –
FY 2027* TITLES OFFICALLY ANNOUNCED TO
-DATE
Immersive Core
Independent Mobile**
(Currently scheduled for
worldwide launch)
New Iterationsof Previously
Released Titles 22
• Top Spin 2K25 (2K) – Launched April 26, 2024
• NBA 2K25 (2K) – Launching Fiscal 2025
• WWE 2K25 (2K) – Launching Fiscal 2025
• Grand Theft Auto VI – Launching Fall of Calendar 2025
• Judas (Ghost Story Games) – TBA
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10 5
• NFL 2K Playmakers (2K) – Launched April 23, 2024
• Star Wars Hunters (Zynga) – Launching June 4, 2024
• Game of Thrones: Legends (Zynga) – Launching Fiscal 2025
• No Rest for the Wicked (Private Division) – Launched April 18, 2024
• Tales of the Shire: A The Lord of The Rings Game (Private Division) – Launching Fiscal 2025
• Title planned from partnership with Game Freak
•FY25-27 release estimates provided as of May 16, 2024. Does not include pending acquisition of Gearbox.
** 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 developed through complet ion, that launch timing may change, and that we will
also be adding new titles to our slate.
INVESTING IN THE STRONGEST
DEVELOPMENT PIPELINE IN THE COMPANY’S HISTORY
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Titles that have the deepest gameplay and the most hours of content. Examples include our key sports franchises (like
PGA 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 that are currently scheduled for
worldwide launch and exclude hyper -casual games.
MOBILE
This includes ports and remastered titles. Sequels would not fall into this category. NEW ITERATIONS OF PRIOR RELEASES
PIPELINE DEFINITIONS
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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 Company 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 mortization 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 elated 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 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 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 provides 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 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 c ontained in the financial tables to this press
release.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE
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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
17
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
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TA K E -TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON- GAAP
MEASURE
(in millions)
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