Take-Two Interactive Software, Inc. (TTWO) on Q1 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to Take-Two First Quarter Fiscal Year 2021 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Hank Diamond. Thank you. You may begin. Henry Diamond: Strauss Zelnick: Thanks, Hank. Good afternoon and thank you for joining us today. I'd like to start by expressing on behalf of our entire management team our deepest sympathies for those who have been and continue to be affected by this pandemic. We are immensely grateful to everyone who serves on the front lines caring for people in need and helping the world navigate this crisis. Turning to our business. Fiscal 2021 is off to a terrific start with first quarter operating results that significantly exceeded our expectations, including fiscal first quarter records for GAAP net revenue and net bookings. Our outstanding results were driven by the outperformance of NBA 2K20, Grand Theft Auto V and Grand Theft Auto Online, Red Dead Redemption 2 and Red Dead Online, and Social Point's mobile games. I remain incredibly proud of our entire organization which exemplifies our core tenets of creativity, innovation and efficiency and continues to deliver industry-leading entertainment experiences to our audiences during these challenging times. Karl Slatoff: Thanks, Strauss. I'd like to begin by thanking our teams for delivering an excellent start to the year. The work being accomplished across our Company is a shining example of what can be achieved through our culture and collaboration, which is more important than ever during these challenging times. I'll now discuss our recent and upcoming releases. On July 1st Private Division in partnership with the European Space Agency launched new update for Kerbal Space Program for PC entitled Shared Horizons. The update, which will also be available later this year on consoles, celebrates ESA's outstanding contribution to space exploration and is free for all players of the critically acclaimed physics based space simulation game. In addition, Private Division's new development studio Intercept Games remains hard at work on Kerbal Space Program 2, which is expected to launch in the fall of 2021. Lainie Goldstein: Thanks, Karl and good afternoon everyone. Today, I'll discuss our first quarter results and then review our financial outlook for the second quarter and fiscal year 2021. Please note that additional details regarding our actual results and outlook are contained in our press release. As Strauss mentioned, fiscal 2021 is off to a great start with our first quarter operating results significantly beating our expectations. Net bookings grew 136% to $996 million, which was a fiscal first quarter record. This result exceeded our outlook of $800 million to $850 million, driven by the exceptional performance throughout our portfolio led by NBA 2K20, Grand Theft Auto V and Grand Theft Auto Online, Red Dead Redemption 2 and Red Dead Online and Social Point's mobile games, partially offset by the underperformance of Disintegration. Digitally delivered net bookings grew 139% as compared to our outlook of 100% growth and accounted for 92% of the total. This result exceeded our outlook primarily due to the outperformance of recurrent consumer spending. During the first quarter, 77% of sales of current generation console games were delivered digitally, up from 75% last year. Recurrent consumer spending grew 127% as compared to our outlook of 75% growth and accounted for 65% of total net bookings. This growth was driven primarily by NBA 2K20, Grand Theft Auto Online, and Social Point's mobile games. GAAP net revenue grew 54% to $831 million, which is the fiscal first quarter record and cost of goods sold increased to $477 million. Operating expenses increased by 10% to $272 million due primarily to our COVID-19 charitable initiative, head count expansion and higher incentive compensation as a result of the Company's performance. And GAAP net income grew to $89 million or $0.77 per share as compared to $46 million or $0.41 per share in the first quarter last year. Now to our guidance, starting with the fiscal second quarter. We project net bookings to range from $775 million to $825 million compared to $951 million in the second quarter last year, which benefited from the launch of Borderlands 3. The largest contributor to net bookings are expected to be NBA 2K, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Borderlands 3, Social Point's mobile games, Sid Meier's Civilization VI and The Outer Worlds. We expect digitally delivered net bookings to be flat, driven by growth in recurrent consumer spending, offset by lower digitally delivered sales of Borderlands 3 which launched last year. Our forecast assumes that 63% of our current generation console game sales will be delivered digitally, up from 51% last year. We project recurrent consumer spending to grow by approximately 10%. We expect GAAP net revenue to range from $750 million to $800 million and cost of goods sold to range from $355 million to $381 million. Operating expenses are expected to range from $285 million to $295 million. At the midpoint, this represents 8% decrease over last year, driven primarily by lower marketing expense. And GAAP net income is expected to range from $98 million to $110 million or $0.85 to $0.95 per share. For management reporting purposes, we expect our tax rate to be 16% throughout fiscal 2021. Turning to our outlook for the full fiscal year. We are increasing our net bookings outlook range to $2.8 billion to $2.9 billion from $2.55 billion to $2.65 billion, driven by our outperformance in the first quarter along with an updated forecast for the balance of the year. We are continuing to see elevated engagement and sales from people sheltering at home, which we have included in the second quarter, but have not yet factored into the back half of the year. We expect growth in NBA 2K, Grand Theft Auto Online and Social Point's mobile games to be offset by lower results in Borderlands 3, Red Dead Redemption 2 and Grand Theft Auto V. Red Dead Online, excluding digital content bundled with the premium edition is projected to be approximately flat versus fiscal 2020. The largest contributor to net bookings are expected to be NBA 2K, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Borderlands 3, Social Point's mobile games, Sid Meier's Civilization VI and The Outer Worlds. We expect the net bookings breakdown from our label to be roughly 55% 2K, 35% Rockstar Games and 10% Private Division and Social Point. And we forecast our geographic net booking split to be about 60% United States and 40% international. We now project digitally delivered net bookings to increase by approximately 3% as compared to our prior outlook of an 8% decline. This growth is being driven by recurrent consumer spending and digitally delivered sales. As a percentage of our business, digital is projected to represent 87%, up from 82% last year. Our forecast assumes that 68% of current generation console game sales will be delivered digitally, up from 55% last year. We now expect recurrent consumer spending to grow by 15% as compared to our prior outlook of flat versus fiscal 2020 and represent to 61% of net bookings as compared to 51% last year. This growth is being driven by NBA 2K, Grand Theft Auto Online and Social Point. We are increasing our non-GAAP adjusted unrestricted operating cash flow outlook to more than $500 million, up from our prior outlook of more than $350 million. We plan to deploy approximately $75 million for capital expenditures. We expect GAAP net revenue to range from $2.8 billion to $2.9 billion and cost of goods sold to range from $1.28 billion to $1.32 billion. Total operating expenses are expected to range from $1.15 billion to $1.17 billion. At the midpoint this represents a 3% increase over the prior year, driven by higher headcount, R&D expense and charitable contributions, partially offset by lower marketing and stock compensation expenses. And we expect GAAP net income to range from $350 million to $380 million or $3.05 to $3.30 per share. In closing, fiscal 2021 is off to a strong start and is poised to be another terrific year for our organization. We remain well positioned both to navigate the uncertainties of these times and to capitalize on the positive trends within our industry. Over the long term our industry-leading creative assets, firm commitment to operational excellence and strong financial foundation position our Company to deliver significant growth and margin expansion for our shareholders. Thank you. I'll now turn the call back to Strauss. Strauss Zelnick: Thanks, Lainie and Karl. On behalf of our entire management team, I'd again like to thank our colleagues for their hard work, commitment to excellence and for delivering an exceptional start to the year. To our shareholders, I want to express our appreciation for your continued support. We'll now take your questions. Operator? Operator: Thank you. Our first question comes from Mario Lu with Barclays. Please proceed with your question. Mario Lu: Great. Thanks for taking the questions. Amazing quarters. So the first question is on the $70 price point announced for NBA 2K21. Any color behind making that decision? And was that decision broadbased or title specific spans NBA 2K21 will span two NBA seasons this time instead of one? So in other words, is the higher price point embedded in guidance for all AAA new-gen titles going forward or just NBA 2K? And I have a follow-up. Strauss Zelnick: Yes, we're definitely announcing pricing on a title by title basis. I would just observe there hasn't been a frontline price increase for a very long time although costs have increased significantly. But most importantly we believe we're delivering the highest-quality titles in the business and consumers are staying more engaged than ever. Games have extraordinary playability and replayability and they offer many, many hours of entertainment. We think it's a great value. It does rely on our continuing to deliver amazing experiences and that's our strategy and our goal. Mario Lu: Got it. And then the second question is on GTA Online. Anything you can share in terms of the normalized growth rate for GTA Online this quarter, so excluding the Epic Store? Similarly can you share what percentage of the bookings came from new versus existing players in fiscal 1Q? Thank you. Strauss Zelnick: No, we don't -- we don't give that kind of granular detail. Mario Lu: Okay. No worries. Operator: Our next question comes from Mike Ng with Goldman Sachs. Please proceed with your question. Mike Ng: Thanks for the question. I was just wondering if you could expand on the GTA V enhanced edition for next holiday. It feels a little inappropriate to call it a typical remaster and I was just wondering if you could talk a little bit about whether or not there is an opportunity for a GTA, call it, replacement cycle, if you will. Thank you. Strauss Zelnick: Well, it's a great question and I appreciate the sentiment with which it's asked because we've now sold in over 135 million units. And of course GTA V was created for the last console generation. It's the standard-bearer in this generation. And now we've announced that it will be available for the next generation of consoles which is just amazing. Historically Rock Star always delivers a great new experience with new content and new opportunities to excite, engage and surprise players. That's true of everything that Rockstar Games releases. Any more details, I think, will properly come from the label in due time, but we couldn't be more excited that the title will be available for the next generation of consoles. Mike Ng: Great. Thank you, Strauss. Operator: Our next question comes from Brian Fitzgerald with Wells Fargo. Please proceed with your question. Brian Fitzgerald: Thanks, guys. At Xbox 20/20 a couple of weeks ago, two weeks ago, we saw Outer Worlds grounded about -- they look great, these are all Private Division titles. So our question was around this. Strauss when you mentioned -- I think you said The Outer Worlds and the Switch was 2.8 million units already. How do you see Private Division aggregating up volumes over time? Lainie, I think you said near term it's going to hit 10%, that's Private Division and Social Point. So how should we think about that metering out, going to be longer down the road, going to be a bigger percentage? And then the second part of that question was, these titles seem to appeal maybe especially to the expanding demographic of gamers that are being pulled in the ecosystem. Can you give us any color or dynamics in terms of how types of players are engaging with private label versus some of your other studios? Strauss Zelnick: Well, thanks for your question. Just to clarify, Outer Worlds has sold in 2.8 million units across all platforms so far as recently made available for Switch. So -- and we're very excited about it. Outer Worlds also has more content coming and that's a very exciting opportunity. We think the opportunity for Private Division to be a greater percentage of our overall net bookings is strong and to state the obvious, it will all depend on the quality of the releases. But they continue to sign up and announce great publishing arrangements with first class independent developers and so far their track record is pretty extraordinary which is amazing. In terms of the demographic to which they appeal, I think that's title by title. I don't think there's anything in particular in their strategy that would either limit or expand the scope of their potential audience except that their titles are created by developers who live outside of the big company system. And does that give them an opportunity to be perhaps more innovative and take more risk, possibly, although we pride ourselves on being the most innovative company across everything we do. So it's a -- it's a really good start. We're incredibly proud of what the team has achieved so far at Private Division and very optimistic about the future. Brian Fitzgerald: Great. Thank you, Strauss. Operator: Our next question is from Colin Sebastian with Robert W. Baird. Please proceed with your question. Colin Sebastian: Thanks. Congrats on the quarter. I have a couple of questions as well. First off, with the start of the NBA season in Orlando, curious if you've seen any change positively or negatively with respect to NBA 2K and broadly where markets have reopened if you've seen any interesting changes or observations with respect to usage trends. And then a bigger picture question on digital distribution. Strauss, I know you guys support platforms where your users are where they were they want to access games. There are an increasing number of platforms, which seems to add some complexity to the industry. And I'm curious if you have any updated thoughts on a direct-to-consumer offering, if you think that makes more sense now or maybe less sense, but just curious on your thoughts on distribution. Thank you. Karl Slatoff: So for NBA 2K, obviously this has been an incredible year for us and we had a really, really nice run, obviously much better than our expectations. We were original projecting that it wasn't going to be a record year. And now it's going to be a record year across the board. We obviously have some tailwind with that behind the shelter-at-home. But generally speaking the game has been improving since the day it came out and it's really generated a huge amount of interest across the Board. In terms of has that interest changed with the new seasons etc. There's really nothing to report there at this point. It is -- certainly we're excited that basketball is back at it. It's always a good thing when people are engaged with the NBA. It's an incredible brand and having players on the court is obviously a good thing for us. But there's nothing really that we have to report about the results and stuff specifically related to that. Strauss Zelnick: And with regard to distribution, yes, I think you captured it well. We said we want to be where the consumer is. We need to find that intersection of what's great for the consumer and what makes sense for us as a producer and distributor. And there are a lot of opportunities. We tend to be very supportive of new launches. We were supportive early of Google Stadia. We certainly support what Microsoft and Sony and Nintendo do when they bring out new platforms and I think that will continue. In terms of direct to consumer opportunities, naturally we have the ability to go direct to consumer. Rockstar goes direct to consumer through their Launcher. 2K goes direct to consumer. We have the ability for consumers to buy goods directly from our Company and I expect that to continue. It's still a relatively small portion of our business. And I think our expectation over time is that our goal is not to drive consumers to any particular destination including one of our own. Our goal is to be where the consumer is. Colin Sebastian: Okay. Thank you. Operator: Our next question is from Eric Handler with MKM Partners. Please proceed with your question. Eric Handler: Yes. Good afternoon. Thanks for the question. Wondered if you could talk a little bit about how you're balancing concerns in the back half of the year about how the economy is going to fare versus what you're seeing in engagement in July. Are you seeing much of a fall-off versus the months in the first quarter? How is that shaping up? Karl Slatoff: So in our Q2 guidance we have included the facts that we're seeing some benefits continue on our business. Some of the similar tailwinds that we've had since starting the first quarter, actually the end of the fourth quarter as well. So we do see some of that in our Q2 guidance. In terms of the back half of the year, we really haven't factored anything in related to that or even -- or take into account any sort of recessionary possibilities. Eric Handler: So you're feeling good about the consumer right now but basically you don't have a crystal ball for the back half of the year. So too challenging to predict at this point. Strauss Zelnick: That's right. Eric Handler: Okay. Thank you very much. Operator: Our next question is from Drew Crum with Stifel. Please proceed with your question. Drew Crum: Okay. Thanks. Hey guys. Good afternoon. Karl, I think you and I have talked about this in the past, but want to revisit the software development cost balance and reconcile the total against your commentary around the game pipeline. It's considerably lower versus recent years and with more than 90 games in development. Does that suggest these are smaller titles or just not it's far along and hence the pipeline is very back-end loaded? Thanks. Karl Slatoff: Can you just clarify what you mean, what's considerably lower? balance sheet. Drew Crum: Well, if you look at -- if you -- yes, correct. Yes, current plus non-current. Karl Slatoff: Yes, I think, look, as we said, our pipeline is twice the size as it was, more than double the size it was five years ago and we're really excited about what that is. Some of these titles are early on in development, some of those titles are much further along in development. Some of these titles are very, very big titles and some of these titles are very, very, very small titles. And so there is a big -- there is a big mix there. And in terms of -- so you can't really say whether it's just more titles are they are less expensive because there is such a play between those two elements. But you identified those elements. Those two things will certainly play into how large that capitalized balance sheet moves going forward. It's relative to the scale and where we are on development. Drew Crum: Okay. Thanks. Operator: Our next question is from Matthew Thornton with SunTrust. Please proceed with your question. Matthew Thornton: Hey. Good afternoon, everyone. Thanks for taking the question. Maybe first, Strauss, did you guys update your thoughts three months later since the last call, given the COVID environment, just would be interested to hear your thoughts on the lasting impact of all this, whether it's Take-Two kind of operation specific, whether it's consumer and kind of what you think you can kind of hold onto once things kind of normalize? I'd just be very interested to hear your latest thinking about the lasting impact of this environment longer term. And then, just secondly, quickly, you talked about obviously GTA moving to next-gen consoles. Curious if there's any other nonrecurring franchises that could also see a similar upgrade path. Thanks everyone. Strauss Zelnick: Yes. In terms of the lasting impact of this period of time, it's so hard to predict because most humans tend to believe that whatever is going on right now is what will always continue and of course that's not the case. Everything in fact generally changes. So we've seen certain companies announce that from their point of view, everyone should just always work from home. And I know there are people -- I know who believe they'll never go to the movies again or they'll never fly in an airplane again or stay in a hotel again or eat inside in a restaurant again. I don't see the world that way. So from our point of view this tragedy will pass and the world will go back to looking an awful lot like it did before. However, it does feel like this has been a period of time where previously existing trends have been accelerated. And I do think that we appreciate the possibility of remote work as needed where we understand in a disaster scenario how we can continue to be productive. I think, frankly, it's created a great benefit in our morale as an organization. As any tragedy does, I think tragedy will either pull people together, push them apart. I think we had a strong enough culture that it pulled people even more together. It's just my point of view. But I think it's borne out in the level of productivity, in the quality of our games and the quality of our operations. I'm hopeful that that continues. In terms of the consumer, I do think that this has intensified a shift from old analog entertainment to new interactive entertainment. And I do think that people have come back to video games and tried video games when they hadn't tried them previously. And I think you're going to see a long-lasting increase in demand. Again, that's not reflected in our numbers because we don't build our guidance based on my opinion about things, luckily. But I do believe that's the case and I think you're seeing a systemic shift in favor of interactive entertainment. And there are only a handful of companies on earth who aim to do what we do, never mind are able to do what we do. So, it puts us in a very good position indeed. In terms of your question about other older titles being brought to next-gen consoles, we always leave those announcements to our labels. But I'm sure there'll be more in the future. Operator: Our next question comes from Brian Nowak with Morgan Stanley. Please proceed with your question. Unidentified Analyst: Hi, guys. It's Matt on for Brian. Thanks for taking the question. Two if I could. So on GTA on the next-gen, can you walk us through the decision to split it into -- in the back half of next year, split it into a separate online mode and then like the upgraded version of GTA V? Obviously you had tremendous success kind of just packaging those two together when you went from the last generation to the current generation. So what was the opportunity that you saw on next-gen to maybe separate those two games? And then just separately, thinking about pipeline now that we're kind of three months into the work-from-home environment, are you seeing more of an impact on games maybe that are a little farther out in the development cycle or do you feel that the pipeline is more or less kind of on track that you expect it to be -- you would have expected it to be three months ago? Thanks. Strauss Zelnick: Yes, I mean the decision regarding GTA for next-gen is a marketing decision and a production decision by Rockstar Games and I'm sure they'll have more to say about that in the coming months. But I'll leave it to them as I prefer to do. In terms of the pipeline, we've been very fortunate. As I just said, our workforce has been exceedingly productive and I think we only have announced one delay since this whole tragedy started and that was a delay of Kerbal Space Program 2 to fiscal '22. But apart from that everything is looking really good and is on track and on target, no issues whatsoever. Unidentified Analyst: Thank you. Operator: Our next question comes from Mike Hickey with The Benchmark Company. Please proceed with your question. Mike Hickey: Hey, Strauss, Karl, Lainie, Hank. Thanks for taking my questions, guys and congrats on another solid quarter. Just two questions for me. I'd just be curious, the response you've gotten from your player community on The Naturalist experience, latest upgrade or update for Red Dead Online and also curious about future cadence of content. I think it was December last year when we got the Moonshiners update. So, it seemed like it was sort of an extended period of time before we got an update. I'm just curious if that was maybe because of work from home or if there is something else going on that sort of led to that sort of lengthy time in between updates. And then Strauss, I know you talked on pricing. Just want to -- I'm just curious on how you think about the economy with $70 price point? Obviously a lot of people without jobs, how you think about how it could impact the recurrent spend within the game and if you've done any sort of survey work or what gives you, I guess, the confidence that demand won't slip with that price point? Thanks guys. Best of luck. Strauss Zelnick: Yes, the productivity has been strong across the board and across all of our labels. And as you know, Rockstar Games decides on the cadence of updates and it's driven by great ideas and the ability to deliver those great ideas into superb experiences. And all of our labels wait to distribute new content until it's nearly -- it's as perfect as it can possibly be. There is more content coming for both Red Dead Online and Grand Theft Auto Online this fiscal year. So stay tuned. I think it's going to be awesome. In terms of the price point, this is a very modest price increase. The pricing has been going down on a real dollar basis for the better part of 15 years. And we're applying this price point in the case where we think the quality not only supports it, but demands it. Our production costs have gone up greatly. But most importantly, the consumer experience is more robust than ever before. And I am utterly convinced that NBA 2K '21 will be nothing short of extraordinary. So I don't expect that there will be any concerns. Mike Hickey: Thank you. Operator: Our next question comes from Eric Sheridan with UBS. Please proceed with your question. Eric Sheridan: Thanks so much for taking the question. Maybe two, if I can, following up on some of the themes earlier in the call. Based on what you have seen from player behavior through COVID-19, what might some of the key learnings have been around re-marketing to older content and sort of reinvigorating players' desire to sort of go back and revisit content and games from a prior generation that continue to sort of drive out lifetime value of that content? And secondly, what have you learned about marketing efficiency as a result of the COVID environment and how that might -- how might that carry forward into the next console cycle as well? Thanks so much. Strauss Zelnick: Yes, I don't think this period of time has led us to look at our catalog any differently than before. We're bringing out the Mafia Trilogy. We always bring out legacy content usually in an enhanced format for new consoles on a regular basis or even in the absence of a new distribution opportunities and I'm sure that will continue, of course driven by the demand for our properties. And, if I'm not mistaken, we still have the highest sales per SKU of catalog of any of our competitors based on the quality of what we have historically done. We aim to keep doing that. In terms of marketing efficiency, I haven't really seen a change. At any given time, we're trying to be more and more efficient with our marketing. Undoubtedly in the mobile business there is going to be a meaningful change in marketing based on changes that have been announced by Apple and other changes that are driven by privacy legislation and privacy concerns. But I don't know that that will enhance efficiency. In fact, it may go in the other direction. So it's always a challenge to create the best marketing and I wouldn't say it's becoming more or less efficient than before. Operator: Our next question comes from Todd Juenger with Sanford Bernstein. Please proceed with your question. Todd Juenger: Hi, thanks a ton for taking the questions. I also have two, if you don't mind for whoever wants to field them. The first, at the risk of being shut down again and just waiting for more from Rockstar, I'd love to explore the topic of the relationship with PlayStation around GTA Online. And just at a higher level without the specifics, what sorts of factors go into the decision to make such a partnership with a company like Sony? And in particular what sorts of things would we expect you would get in return from them in order to offer them the things you've done, including the exclusivity? That's question number one. The second one is, it wasn't too long ago every night we turn on the TV we saw NBA celebrities playing against each other on NBA 2K on television. I'm just -- I'm really curious less about what that did in terms of licensing revenues or engagement in the quarter, although that's interesting, I'm more interested in whether that's opened your mind or any of your development teams' mind into how to keep things like that going well into the future and what that can do in terms of bringing together a celebrity and culture and your games in a social and engaging way and sort of driving that whole experience to a whole new level. Thanks. Strauss Zelnick: Yes, I mean, without going into too much detail on confidential arrangements, typically we have great relationships with all of our platform partners and we will sometimes announce a particular situation. In many instances, it's driven by marketing support and other benefits that both parties obtain from such an arrangement. And Karl will take the question on basketball. Karl Slatoff: Yes. In the case of the NBA, the player tournament that we did, obviously that was an exciting event. And it was an unplanned event as you could probably tell. It's like something that would probably not have happened but were not for the COVID situation. So in a lot of ways there are some interesting things that come out of these situations when you're dealt with them. This particular one, I wouldn't really think about it as a specific moneymaking opportunity in the moment. But like any marketing or anything that engages an audience or even creates new audience, it has the benefit of creating interest and engagement with the game. So we really look at that kind of thing, like we would as any other marketing opportunity. Is there a big, huge learning from it, something we can keep going, perhaps. I mean, it was definitely something different than what we've done before although we have done player-based things in the past, and we've done tournaments in the past, this was just kind of marrying them together. So that's not to say we can do it every day or that this is something that is going to set some kind of precedent for us, but it certainly is interesting, it was a lot of fun to do and it undoubtedly increased interest and engagement with the game. And our financial results ultimately reflect all of these things happening for us at once. Todd Juenger: Fair enough. Operator: Our next question comes from Doug Creutz with Cowen and Company. Please proceed with your question. Doug Creutz: Thank you. A little bit along the lines of the last question. In the last couple of years you've really extended the lifespan of NBA 2K very deep into the annual cycle, far beyond where it used to be sort of falling off. Do you think the NBA 2K League has been an important part of that? If so, is there anything you can point to specifically where the league is really helping engaging with the overall game or do you think the two are incidental to each other? Thanks. Strauss Zelnick: Very hard to point to it, but I think the NBA 2K League is not only an interesting opportunity as a stand-alone but also forms part of building the brand and building overall engagement. I think you're 100% right. It used to be a three-month experience and it became a six-months experience. Now it's very close to a year-along experience and that's very much our goal. And that's really a reflection of NBA 2K morphing from being the highest quality sim in the market to one of the highest quality interactive entertainment experiences of any kind. And it's both a sim and the lifestyle and a world you can inhabit that's constantly evolving and changing. That's very much the goal of visual concepts and you're seeing that goal being realized. And I believe you will see it'd be more and more realized. Does the League form a part of that, unquestionably. We also expect it to be very successful on a standalone basis. Doug Creutz: Okay. Thank you. Operator: Our next question comes from Alex Giaimo with Jefferies. Please proceed with your question. Alex Giaimo: Thanks for taking the question. Karl, a follow up to previous question, but the upcoming game pipeline for 93 new titles that you mentioned last quarter that will launch by, I think, it was fiscal '25. Should we expect a similar cadence as we've seen in the past of maybe one non-sports AAA title per year? And I think that the 11 franchises in your portfolio now that have sold in at least 5 million units. Is it also fair to assume that the content play will include people from most of bigger franchise? Thanks. Karl Slatoff: The -- it certainly -- the development pipeline certainly does include sequels to the bigger franchises and in some cases could include sequels from new franchises to the extent they actually work. So that -- there is no doubt that that's the case. I'm sorry, what was the first part of the question? Alex Giaimo: If -- in the past I think the goal has been one non-sports AAA title per year, is that cadence we should still think about? Karl Slatoff: Yes. I mean, look, it's, again, I think, look one, two, whatever it may be that is obviously our goal to come up with more than one -- more than what we have now and to be more consistent with the number of AAA releases that come out every year in addition to our annualized titles. So whether that number is one to three, that certainly would be the goal. Alex Giaimo: Okay. Thanks, Karl. Operator: Our next question is from Ryan Gee with Bank of America. Please proceed with your question. Ryan Gee: Yes. Hey, good afternoon. Thanks for taking the question. So the 100% plus growth in MyTEAM players, certainly consistent with demand we're seeing for expression personalization in games right now. But does this speak to the opportunity for a non-sim game from the NFL and why 2021 is the right time in place to deliver that game? And then on a related matter, the doubling of the NBA players I think it was last quarter. Can you speak to how much you've seen a growth in players brand new to the franchise so that as you look forward even if you lost some of these kind of French casual guys you will still be net ahead? Thanks. Strauss Zelnick: Yes, I would just observe as I did previously that the game already offers numerous opportunities that are in addition to the sim -- the core sim game. And we'll leave to visual concepts how that will be expressed going forward. But right now we think NBA 2K offers something for everyone. You want the best sim game, it's there; you want an opportunity to experience great music, it's there; great characters, it's there; play outside of the sim game, it's there; or just experience the world, that's a possibility too. So I'm sure there'll be much more to talk about. We'll let visual concepts and 2K talk about it. In terms of data around players, we don't tend to get -- to go into that much detail. But with 14 million units sold, 18% greater than last year, wonderful engagement and enormous growth in recurrent consumer spending. I think you can safely assume that the audience is expanding. Karl Slatoff: And also -- and to answer your question about football, look we obviously think that there is a significant opportunity for non-simulation game play with the NFL and the football business. Otherwise we wouldn't have done that partnership and won't be so excited about it. The fact -- the success of MyTEAM isn't necessarily a barometer for that. There are so many different kinds of non-simulation play. Whether the MyTEAM phenomenon is relevant or not, remains to be seen. But irrespective of that the non-sim market is very exciting for us and that's why we're going forward with NFL with that. Ryan Gee: That's helpful color. Thank you, guys. Operator: Ladies and gentlemen, we've reached the end of the question-and-answer session. At this time, I'd like to turn the call back over to Strauss Zelnick for closing comments. Strauss Zelnick: Thank you so much for joining us today. On behalf of everyone at Take-Two, we appreciate your interest, we appreciate your support and we'd like to wish you all happy, healthy and, most of all, safe summer. Thank you for joining us. Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) Under Investigation Amidst Stock Volatility
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is a leading figure in the video game sector, boasting renowned titles such as Grand Theft Auto and NBA 2K. The company, operating through its labels Rockstar Games and 2K, is a key competitor against other industry giants like Electronic Arts and Activision Blizzard. However, recent events have placed Take-Two in the spotlight for less favorable reasons, as it faces an investigation by Pomerantz LLP concerning potential securities fraud or unlawful business practices.
The probe by Pomerantz LLP is centered around allegations of securities fraud or illicit business operations within Take-Two and its executive team. This investigation was set off by an announcement from Rockstar Games, a Take-Two subsidiary, regarding the postponement of Grand Theft Auto VI to May 26, 2026. This delay significantly impacted Take-Two's stock, which experienced a drop of $15.67 per share, or 6.66%, closing at $219.50 on May 2, 2025. Amidst this scrutiny, Ellen F. Siminoff, a director at Take-Two, proceeded with the sale of 268 shares of the company's common stock at $230.95 each on June 16, 2025.
Post-transaction, Siminoff's holdings in the company stood at 4,696 shares. This sale was executed following a recovery in the stock price to $239, marking a 0.62% increase. The stock has demonstrated volatility, with a trading range between $235.67 and $241.82 on the day of the sale. Over the past year, Take-Two's stock performance has witnessed fluctuations, reaching a high of $241.98 and a low of $135.24. The company's market capitalization stands at approximately $42.4 billion, underscoring its significant role in the gaming industry. Despite the challenges faced, trading volume on the NASDAQ remains strong, with 1,377,729 shares traded, indicating sustained investor interest in Take-Two.
Take-Two Posts Earnings Miss, GTA IV Delay Weigh on Outlook
Take-Two Interactive (NASDAQ:TTWO) delivered mixed fiscal fourth-quarter results, falling short on earnings and issuing cautious guidance that disappointed investors following the delay of the next Grand Theft Auto installment.
The company posted earnings per share of $1.08 on revenue of $1.58 billion, missing the $1.12 EPS consensus but edging past revenue expectations of $1.55 billion. Net bookings rose 17% year-over-year to $1.58 billion, reflecting strong underlying demand across its game portfolio.
Looking ahead, Take-Two guided for a fiscal Q1 net loss between $0.78 and $0.65 per share on revenue of $1.35 billion to $1.4 billion, in line with revenue expectations but reflecting ongoing cost pressures. Bookings are forecast between $1.25 billion and $1.3 billion.
For the full fiscal year, the company expects a net loss of $2.79 to $2.45 per share and revenue of $5.95 billion to $6.05 billion. Bookings are projected at $5.9 billion to $6 billion.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) Maintains Buy Rating Amidst Potential Data Breach Investigation
- Ascendiant maintains its "Buy" rating for NASDAQ:TTWO, priced at $208.06.
- TTWO's stock price has experienced a slight decrease to $208.05, indicating some volatility.
- An ongoing investigation into potential data breaches on the Borderlands website could impact Take-Two Interactive's reputation and financial standing.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is a prominent player in the video game industry, known for its popular franchises like Grand Theft Auto and Borderlands. The company develops and publishes interactive entertainment for consumers worldwide. It competes with other major gaming companies such as Electronic Arts and Activision Blizzard. On March 3, 2025, Ascendiant maintained its "Buy" rating for TTWO stock, which was priced at $208.06 at the time.
Despite the positive rating from Ascendiant, TTWO's stock price has seen a slight decrease. Currently, the stock is priced at $208.05, reflecting a decrease of approximately 1.85% or $3.93. The stock has traded between $207.79 and $214.50 today, indicating some volatility in its price. Over the past year, TTWO has experienced a high of $218.75 and a low of $135.24, showcasing its fluctuating performance.
The company's market capitalization is approximately $36.72 billion, highlighting its significant presence in the gaming industry. With a trading volume of 1,736,454 shares on the NASDAQ exchange, TTWO remains an actively traded stock. However, the ongoing investigation by Levi & Korsinsky, LLP into potential data breaches on the Borderlands website could impact the company's reputation and financial standing.
The investigation suggests that legally protected data may have been unlawfully intercepted during transactions on the Borderlands platform. If Take-Two Interactive is found responsible for failing to secure this data, it could face legal and financial consequences. This situation could affect customer trust and potentially influence the company's stock performance in the future.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) Maintains Buy Rating Amidst Potential Data Breach Investigation
- Ascendiant maintains its "Buy" rating for NASDAQ:TTWO, priced at $208.06.
- TTWO's stock price has experienced a slight decrease to $208.05, indicating some volatility.
- An ongoing investigation into potential data breaches on the Borderlands website could impact Take-Two Interactive's reputation and financial standing.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is a prominent player in the video game industry, known for its popular franchises like Grand Theft Auto and Borderlands. The company develops and publishes interactive entertainment for consumers worldwide. It competes with other major gaming companies such as Electronic Arts and Activision Blizzard. On March 3, 2025, Ascendiant maintained its "Buy" rating for TTWO stock, which was priced at $208.06 at the time.
Despite the positive rating from Ascendiant, TTWO's stock price has seen a slight decrease. Currently, the stock is priced at $208.05, reflecting a decrease of approximately 1.85% or $3.93. The stock has traded between $207.79 and $214.50 today, indicating some volatility in its price. Over the past year, TTWO has experienced a high of $218.75 and a low of $135.24, showcasing its fluctuating performance.
The company's market capitalization is approximately $36.72 billion, highlighting its significant presence in the gaming industry. With a trading volume of 1,736,454 shares on the NASDAQ exchange, TTWO remains an actively traded stock. However, the ongoing investigation by Levi & Korsinsky, LLP into potential data breaches on the Borderlands website could impact the company's reputation and financial standing.
The investigation suggests that legally protected data may have been unlawfully intercepted during transactions on the Borderlands platform. If Take-Two Interactive is found responsible for failing to secure this data, it could face legal and financial consequences. This situation could affect customer trust and potentially influence the company's stock performance in the future.
Take-Two Interactive Reiterates Annual Booking Guidance Despite Widened Loss
Take-Two Interactive Software (NASDAQ:TTWO) reaffirmed its annual bookings guidance and projected future growth, even as it forecasted a deeper annual loss and delivered mixed fiscal first-quarter results. The video game maker reported a Q1 loss of $1.52 per share on revenue of $1.34 billion, missing analyst expectations of a $1.37 per share loss on $1.26 billion in revenue.
Net bookings, which represent the net amount of products and services sold digitally or physically, rose 1% to $1.22 billion. For fiscal Q2, Take-Two anticipates a net loss ranging from $2.15 to $2.30 per share and net bookings between $1.42 billion and $1.47 billion. The company also revised its fiscal 2025 loss forecast to a range of $3.95 to $4.33 per share, compared to its previous estimate of $3.50 to $3.90.
Despite the wider loss forecast, Take-Two maintained its bookings guidance for the year at $5.55 billion to $5.65 billion and highlighted expected growth in the coming years. The company anticipates sequential increases in net bookings in fiscal 2026 and 2027, which it believes will drive long-term shareholder value.
Following the results, Take-Two's shares rose more than 4% on Friday.
Take-Two Interactive Reiterates Annual Booking Guidance Despite Widened Loss
Take-Two Interactive Software (NASDAQ:TTWO) reaffirmed its annual bookings guidance and projected future growth, even as it forecasted a deeper annual loss and delivered mixed fiscal first-quarter results. The video game maker reported a Q1 loss of $1.52 per share on revenue of $1.34 billion, missing analyst expectations of a $1.37 per share loss on $1.26 billion in revenue.
Net bookings, which represent the net amount of products and services sold digitally or physically, rose 1% to $1.22 billion. For fiscal Q2, Take-Two anticipates a net loss ranging from $2.15 to $2.30 per share and net bookings between $1.42 billion and $1.47 billion. The company also revised its fiscal 2025 loss forecast to a range of $3.95 to $4.33 per share, compared to its previous estimate of $3.50 to $3.90.
Despite the wider loss forecast, Take-Two maintained its bookings guidance for the year at $5.55 billion to $5.65 billion and highlighted expected growth in the coming years. The company anticipates sequential increases in net bookings in fiscal 2026 and 2027, which it believes will drive long-term shareholder value.
Following the results, Take-Two's shares rose more than 4% on Friday.
Take-Two Interactive Software's Financial Outlook Amid Industry Challenges
- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) projects second-quarter bookings to fall short of expectations due to a slowdown in consumer spending.
- The company remains optimistic about future growth, particularly with the upcoming launch of "Grand Theft Auto VI."
- Despite near-term challenges, Take-Two's diverse development pipeline and strategic focus on long-term growth highlight its resilience and potential for future success.
NASDAQ:TTWO, Take-Two Interactive Software, is a major player in the video game industry, known for its blockbuster titles like "Grand Theft Auto" (GTA) and "NBA 2K." Recently, the company projected its second-quarter bookings to fall short of Wall Street expectations, a development attributed to a slowdown in consumer spending on its flagship games amid an uncertain economic climate. Despite this immediate challenge, Take-Two remains optimistic about its future, particularly with the highly anticipated launch of "Grand Theft Auto VI" next year. This optimism is rooted in the franchise's proven track record of success, with its predecessor, "GTA V," achieving over 200 million units sold worldwide.
The company's stock responded positively to this long-term outlook, with shares rising more than 5% in extended trading. This investor confidence is bolstered by the insights of analysts like Michael Pachter from Wedbush Securities, who points to the upcoming release of "GTA VI" as a key driver for growth in bookings over the next two fiscal years. Furthermore, Take-Two's announcement of a robust development pipeline, planning around 40 titles through fiscal 2027, underscores its commitment to sustaining growth and innovation in the gaming sector.
However, the near-term forecasts present a more challenging picture. Take-Two expects second-quarter bookings to range between $1.42 billion and $1.47 billion, slightly below the consensus analyst estimate of $1.47 billion as per LSEG data. This projection reflects the impact of declining recurrent consumer spending on "GTA Online" during the first quarter, hinting at a potential dip in player engagement for this live-service game. The company's first-quarter bookings, totaling $1.22 billion, also fell short of the expected $1.25 billion, further illustrating the immediate hurdles faced by the company.
Despite these challenges, Take-Two has reassured stakeholders that the ongoing video game performers strike has not affected its title development, a sentiment shared by its industry peer, Electronic Arts. This resilience is further demonstrated by the company's surprising first-quarter profit of 5 cents per share on an adjusted basis, defying expectations of a 2-cent loss. This financial performance, coupled with the strategic focus on long-term growth through high-profile releases and a diverse development pipeline, positions Take-Two Interactive Software as a company with promising prospects, navigating through short-term uncertainties with a clear vision for future success.
