Take-Two Interactive Software (NASDAQ:TTWO) disclosed a larger GAAP net loss of $3.20 per share for the second quarter of fiscal 2024, compared to a loss of $1.54 in the corresponding period last year. The Zacks Consensus Estimate projected earnings at $1.02 per share.
The company experienced a 6.8% year-over-year decrease in net revenues, totaling $1.3 billion, attributed to a decline in gaming revenues. Game revenues, comprising 86.9% of total revenues, dropped 7.4% to $1.1 billion, while advertising revenues, making up 13.1% of revenues, saw a 2.3% decrease to $170.6 million.
Shares of Take-Two demonstrated a 37.8% year-to-date increase, surpassing the Zacks Consumer Discretionary sector’s growth of 6.1%.
Key Highlights from the Quarter
Recurrent consumer spending, encompassing virtual currency, add-on content, in-game purchases, and advertising, witnessed a 9% year-over-year decrease, contributing to 77% of total net revenues.
The company’s top-line growth was buoyed by successful titles, including NBA 2K23 and NBA 2K24, Grand Theft Auto Online, Grand Theft Auto V, Empires & Puzzles, Toon Blast, Red Dead Redemption 2, Red Dead Online, Merge Dragons!, Words With Friends, and Zynga Poker.
Take-Two’s gross profit declined by 38.9% year over year to $415.4 million, resulting in a reported gross margin of 32%, down from 48.8% reported in the year-ago quarter. Operating expenses increased by 2.9% to $959.1 million, leading to an operating loss of $543.7 million, compared to $252.7 million in the same quarter last year.
Gaming Metrics
Grand Theft Auto V achieved sales of approximately 190 million units to date, while Grand Theft Auto Online continued its momentum with the San Andreas Mercenaries update, contributing to sustained engagement and net bookings.
Red Dead Redemption 2 exceeded company plans, selling over 57 million units to date. Ongoing support for Red Dead Online includes new content, bonuses for The Naturalist and Bounty Hunters, and new free-roam missions and events.
Zynga’s launches of Top Troops and Match Factory demonstrated strong potential, with excellent KPIs in soft launch. Star Wars Hunters is expected to release in fiscal 2024.
Financial Snapshot
As of September 30, 2023, Take-Two held $1.23 billion in cash, cash equivalents, and short-term investments, slightly down from $1.27 billion as of June 30, 2023. The company’s debt remained nearly unchanged at $3.08 billion as of September 30, 2023.
Guidance
For the third quarter of fiscal 2024, Take-Two anticipates GAAP net revenues between $1.29 billion and $1.34 billion, with a projected loss ranging from 73 cents to 63 cents per share.
For the full fiscal year 2024, the company forecasts GAAP net revenues between $5.37 billion and $5.47 billion, expecting a loss between $5.62 and $5.35 per share.
Net cash provided by operating activities for fiscal 2024 is estimated at approximately $90 million, with capital expenditures expected to be around $150 million.
Take-Two reiterated its net bookings outlook for fiscal 2024 between $5.45 billion and $5.55 billion. The breakdown of net bookings by label is expected to be approximately 49% in Zynga, 31% in 2K, 18% in Rockstar Games, and 2% in Other. Geographically, net bookings are projected to be split 65% in the United States and 35% internationally.
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