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Take-Two bookings drop 4% to $1.44B in September quarter as Rockstar teases next GTA


Take-Two Interactive reported its bookings fell 4% to $1.44 billion from a year ago for the second fiscal quarter ended September 30.

But the news of the day was that Sam Houser, head of Take-Two’s Rockstar Games label, announced that a trailer for the next Grand Theft Auto game will debut in early December, presumably at The Game Awards.

It’s fair to say that Grand Theft Auto VI — if that is indeed its title — is one of the most anticipated games of all time. Grand Theft Auto V debuted in 2013 and has sold 190 million copies to date. At retail, that’s about $11.1 billion in sales. In the quarter, GTA V sold another five million copies. In after-hours trading, Take-Two’s stock is up 2.46% to $147 a share.

“Our strong second quarter results, including Net Bookings of $1.4 billion, underscore the strength of our portfolio of iconic, industry-leading intellectual properties. During the period, our teams released new offerings, delivered engaging post-launch content, and advanced further the development of our eagerly-anticipated pipeline,” said Strauss Zelnick, Chairman and CEO of Take-Two, in a statement. “While we expect continued macroeconomic uncertainty, we believe that we are well positioned for the holiday season and are reiterating our fiscal 2024 Net Bookings guidance of $5.45 to $5.55 billion.”

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Strauss Zelnick is CEO of Take-Two Interactive.
Strauss Zelnick is CEO of Take-Two Interactive.

Zelnick added, “Looking ahead, I am optimistic about our Company’s multi-year growth trajectory and our ability to deliver long-term value for our shareholders. Our development pipeline is robust and diverse, and we are getting closer to delivering the groundbreaking titles that our audiences throughout the world have been anticipating. With an unwavering commitment to being the most creative, the most innovative, and the most efficient entertainment company, I have great confidence that our offerings will surpass our players’ expectations and set new standards of creative excellence in our industry.”

In an analyst call, Zelnick congratulated Rockstar on its GTA announcement and its focus on delivering the highest quality.

In the quarter, the company took “impairment charges” against goodwill and other investments that totaled $385.1 million for one of its labels. In an interview with GamesBeat, Zelnick declined to provide more details on that, and noted the company had not signaled this was coming. Hannah Sage, chief accounting officer of Take-Two, said in an interview with GamesBeat that it was the result of updating the company’s long-term expectation for one of the reporting divisions.

Such impairments can sometimes happen when a company acquires something and then later writes down the value of the acquired assets. Or they can happen when a company gives an update on long-term expectations for a division.

Regarding the next GTA, Zelnick declined to comment and deferred any commentary on that to the label. I asked if we can assume the game will come out in fiscal 2025, as Take-Two had signaled earlier that bookings could jump to $8 billion in the fiscal year ending March 31, 2025. Zelnick noted the company is not giving out a release schedule yet.

“We did indicate that we were looking at net bookings around $8 billion. I don’t expect that we’ll deliver $8 billion in fiscal 25,” Zelnick said. “I want to make sure to make it clear that we now expect things to be below that number. However, not materially below.”

For the quarter, company credited ongoing revenues from NBA 2K24 and NBA 2K23, Grand Theft Auto Online and Grand Theft Auto V, the hypercasual mobile games owned by Zynga, Empires & Puzzles, Toon Blast, Red Dead Redemption 2 and Red Dead Online, Words With Friends, Merge Dragons!, and Zynga Poker.

Streaming games like Google
The world of Red Dead Redemption 2.

Red Dead Redemption 2 has now sold 57 million copies to date. NBA 2K24 has sold 4.5 million units so far. On mobile, Take-Two said it continues to make excellent progress on profitability initiatives, including expanding the number of mobile games that leverage our direct-to-consumer platform.  As the company converts additional players, it is gaining key insights that it believes will better serve players’ preferences. 

“We remain optimistic that over the next few years, most of our mobile games will leverage this highly-accretive, owned distribution channel,” Take-Two said.

Analysts had expected $1.4 billion in bookings. Adjusted quarterly expectations were for $1.03 earnings per share, and the company came in at an adjusted number of $1.02. After Houser’s announcement earlier in the day, Take-Two’s stock price jumped 6.4% to $145.20 a share. In an analyst call, Zelnick said that the bookings were at the company’s high end of expectations.

During the quarter, Rockstar Games announced that Citizen FX, the team behind the FiveM and RedM role-playing communities for Grand Theft Auto V and Red Dead Redemption 2, officially joined the label. 

Expectations

Grand Theft Auto V is the best-selling game of the decade in the United States.
Grand Theft Auto V is the best-selling game of the decade in the United States.

Take-Two also reiterated its optimistic guidance for the fiscal year 2024, which ends March 31, 2024, with overall bookings for the year expected to hit $5.45 billion to $5.55 billion. GAAP Net loss for the fiscal year is expected to be $957 million to $910 million.

For the third fiscal quarter ending December 31, the company expects net GAAP revenue of $1.29 billion to $1.34 billion, and a net loss of $124 million to $107 million. Net bookings are expected to be $1.3 billion to $1.35 billion.

On a GAAP basis, net revenue fell 7% from a year ago to $1.3 billion, compared to $1.39 billion a year ago. Recurrent consumer spending decrease 9% and accounted for 77% of total revenue. The GAAP net loss was $543.6 million, or $3.20 a share, compared with $257 million, or $1.54 a share, a year ago.

The company said the GAAP results include impairment charges of $219.7 million related to intangible assets and $165.4 million related to goodwill, representing a partial impairment of one of the company’s divisions.

Take-Two said it expects the net bookings breakdown from labels to be roughly 49% Zynga, 31% 2K, 18% Rockstar Games, and 2% Other. And it forecasts the geographic net bookings split to be about 65% United States and 35% international.

Releases

Star Wars: Hunters arena action.
Star Wars: Hunters arena action.

During the quarter, Zynga released its first Web3 game, Sugartown, as well as the Power Slap, Match Factory and Top Troops mobile games. Rockstar released Red Dead Redemption and Undead Nightmare for the PS4 and Switch. 2K released the Borderlands Collection: Pandora’s Box, NBA 2K24, Borderlands 3 Ultimate Edition and NBA 2K24 Arcade Edition on Apple Arcade.

Upcoming titles from Private Division include Rollerdrome on November 28, Penny’s Big Breakaway (early 2024) and Tales of the Shire (unannounced date). 2K is releasing WWE 2K24 in fiscal 2024 (by March 31, 2024). Zynga is releasing Star Wars Hunters and Game of Thrones: Legends, both in 2024. Rockstar Games has Grand Theft Auto: The Trilogy — The Definitive Edition on mobile at an unannounced date, and Ghost Story Games has Judas coming at an undetermined date.

All told, there are 52 titles in the works. As for AI and game development, Zelnick said, “We’ve been in the AI business since the dawn of the video game industry. Our titles are largely created inside and with computers. I think the most recent advances in generative AI may help us improve efficiency. However, for better for worse, they won’t help us make games.”

The company has about 12,000 employees, including more than 9,300. Zelnick said the headcount is now stable after a cost reduction program in the wake of acquiring Zynga. Zelnick noted that we had a recession from early 2022 for about a year and a half, and he noted mobile dropped 10% in 2022 and the console market was down single digits. But he said, “It now appears that both markets are stable. I hope that stays the case. But in good times or bad, we have the same job, which is to create games that serve our customers and that’s our plan.”

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