01—Abstract
Summary
Summary of the 10-Q filed February 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported its third-quarter fiscal year 2024 results, ending December 31, 2023.
The company experienced a net loss of $91.6 milliona for the quarter, a slight improvement from the $153.4 million net loss in the same period last year. Total net revenue was $1.37 billion, down 2.9% year-over-year, primarily due to lower contributions from mobile games and console titles, partially offset by strong performance in the Grand Theft Auto and Red Dead Redemption franchises. The company also recognized a significant goodwill impairment charge of $165.4 million and intangible asset impairments totaling $273.1 million for the nine-month period, reflecting challenges in certain game titles.
Despite the quarterly revenue decline, Net Bookings, a key operating metric, saw a modest increase of 2.4% for the nine-month period, driven by the inclusion of Zynga and recent mobile game launches. The company's balance sheet shows robust liquidity with cash and cash equivalents totaling $1.19 billionb.
Debt levels remain significant, with long-term debt at $2.71 billionc, though the company recently completed an add-on offering of senior notes and intends to use proceeds for general corporate purposes, including the retirement of maturing debt. Investors will be closely watching the upcoming release of Grand Theft Auto VI in 2025 as a major potential catalyst for future growth.
02—Key points
Key Highlights
- Net loss for the three months ended December 31, 2023, was $91.6 million, an improvement from $153.4 million in the prior year period.
- Total net revenue for the quarter decreased by 2.9% year-over-year to $1.37 billion, impacted by lower mobile and console game revenue.
- Net Bookings, an operating metric, increased by 2.4% for the nine months ended December 31, 2023, driven by Zynga's performance and new mobile titles.
- The company recognized significant impairment charges totaling $165.4 million for goodwill and $273.1 million for intangible assets during the nine-month period.
- Cash and cash equivalents stood at $1.19 billion as of December 31, 2023, indicating strong liquidity.
- Long-term debt remained substantial at $2.71 billion as of December 31, 2023.
- Grand Theft Auto VI is slated for release in 2025, representing a significant future growth driver.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2024, Take Two Interactive Software Inc lost $0.07.
- Revenue$1.37B100.0%
- Cost of revenue−$688.2M50.4%
- Gross profit$678.1M49.6%
- Operating costs−$807.6M59.1%
- Operating income−$129.5M9.5%
- Interest, other & tax$37.9M2.8%
- Net income−$91.6M6.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed February 9, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.37B$1.41B | −2.9% |
| Cost of Revenue | $688.20M$691.90M | −0.5% |
| Gross Profit | $678.10M$715.90M | −5.3% |
| Operating Expenses | $807.60M$888.80M | −9.1% |
| Operating Income | -$129.50M-$172.90M | +25.1% |
| Interest Expense | $31.10M$29.50M | +5.4% |
| Net Income | -$91.60M-$153.40M | +40.3% |
| EPS (Basic) | $-0.54$-0.91 | +40.7% |
| EPS (Diluted) | $-0.54$-0.91 | +40.7% |
| Shares Outstanding (Basic) | 170.30M168.00M | +1.4% |
05—Questions
Frequently Asked Questions
What was Take-Two's financial performance in the third quarter of fiscal year 2024?
For the quarter ended December 31, 2023, Take-Two reported a net loss of $91.6 million on total net revenue of $1.37 billion. While revenue decreased by 2.9% compared to the prior year, the net loss improved from $153.4 million in the same period last year.
What factors contributed to the company's net loss and impairment charges?
The net loss was influenced by a decrease in revenue from certain game franchises and higher cost of revenue. The significant impairment charges, totaling $165.4 million for goodwill and $273.1 million for intangible assets during the nine-month period, were attributed to a reduction in the forecasted performance of certain games due to industry conditions and strategic changes.
How is the company managing its debt and liquidity?
Take-Two maintains strong liquidity with $1.19 billion in cash and cash equivalents as of December 31, 2023. The company has a substantial debt load, with long-term debt at $2.71 billion. It recently issued additional senior notes and intends to use the proceeds for general corporate purposes, including debt retirement. The company also has an undrawn $500 million revolving credit facility.
What are the key upcoming catalysts for Take-Two Interactive?
The most significant upcoming catalyst is the highly anticipated release of Grand Theft Auto VI in 2025. The company is also continuing to develop and release content for its existing franchises and has recently launched new mobile titles contributing to Net Bookings growth.
06—Continue