• Net Bookings: $1.37 billion, within guidance range of $1.35 billion to $1.4 billion.
• Recurrent Consumer Spending: Increased 9% year over year, accounting for 79% of net bookings.
• NBA 2K Performance: Grew over 30%, surpassing forecasts.
• Mobile Growth: Increased 6%, below guidance of low double-digit growth.
• GAAP Net Revenue: $1.36 billion, flat compared to last year.
• Cost of Revenue: Declined 13% to $600 million.
• Operating Expenses: Increased 10% to $892 million; management basis increase of 8% year over year.
• Fiscal Year Net Bookings Guidance: Reiterated at $5.55 billion to $5.65 billion, representing 5% growth over fiscal 2024.
• Recurrent Consumer Spending Forecast: Raised to 5% growth, driven by NBA 2K.
• Non-GAAP Adjusted Unrestricted Operating Cash Flow: Expected outflow of $150 million.
• Capital Expenditures: Approximately $140 million, primarily for game technology and office buildouts.
• Fourth Quarter Net Bookings Guidance: Projected to range from $1.48 billion to $1.58 billion.
• Fourth Quarter Operating Expenses: Planned to range from $900 million to $920 million.

• Warning! GuruFocus has detected 9 Warning Signs with TTWO.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Take-Two Interactive Software Inc (NASDAQ:TTWO) achieved solid third-quarter results with net bookings of $1.37 billion, within their guidance range.
• NBA 2K delivered a phenomenal quarter, with sales exceeding 7 million units and recurrent consumer spending up over 30%.
• The company is optimistic about its upcoming releases, including Grand Theft Auto 6, Borderlands 4, and Sid Meier's Civilization VII, which are expected to drive future growth.
• Zynga's Match Factory is performing well and is on track to become Zynga's second-largest title by the end of the fiscal year.
• Take-Two Interactive Software Inc (NASDAQ:TTWO) is forecasting a strong fiscal year 2026 and 2027, with expectations of record levels of net bookings and financial growth.

Negative Points

• Some mobile franchises underperformed, with Empires and Puzzles not meeting expectations.
• The company anticipates challenges in the fourth quarter due to continued mobile trends and a shift of operating expenses.
• Recurrent consumer spending growth in mobile was below expectations, primarily due to underperformance in the hyper-casual mobile portfolio.
• Grand Theft Auto Online experienced a decline, impacting overall performance.
• Operating expenses increased by 10% year over year, partly due to a shift in timing of expenses into the fourth quarter.

Q & A Highlights

Q: When you originally bought Zynga, part of the thesis was potential revenue synergies. Are you getting closer to realizing these synergies, particularly with mobile IP? A: Strauss Zelnick, CEO: While bringing legacy core IP to mobile is an opportunity, the biggest hits in mobile are native to mobile. We are working on interesting projects not yet announced. We have realized revenue synergies by building our direct-to-consumer business within mobile, generating significant incremental contribution.

Q: Is Match Factory still expected to be profitable by the end of fiscal '25? A: Lainie Goldstein, CFO: Yes, Match Factory is expected to turn profitable towards the end of the year. The title is performing well, and we continue to invest in marketing, which will lead to profitability as the game matures in the market.

Q: How much of NBA 2K's success is due to Gen 8 transition issues versus underlying success with the NBA fan base? A: Karl Slatoff, President: The Gen 8 to Gen 9 transition has been a factor, but the game's innovation and quality are key. Visual Concepts continues to deliver new modes and innovations, defining sports gaming and driving engagement.

Q: With the launch of GTA 6, how do you view the potential to reactivate lapsed players? A: Strauss Zelnick, CEO: We focus on delivering quality experiences rather than predicting numbers. GTA 5's success across three console generations shows that if we deliver what consumers want, they will engage. We have a significant consumer database to tailor marketing efforts.

Q: How do you evaluate the attractiveness of partnering with new distribution modes like Netflix for WWE? A: Strauss Zelnick, CEO: We evaluate opportunities based on consumer benefits. We aim to be where our consumers are, whether through our own platforms or third-party services like Netflix, tailoring opportunities to reach our audience effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.