10-QPeriod: Q1 FY2025

TAKE TWO INTERACTIVE SOFTWARE INC Quarterly Report for Q1 Ended Jun 30, 2024

Filed August 9, 2024For Securities:TTWO

Summary

Take-Two Interactive Software, Inc. (TTWO) reported its fiscal first-quarter 2025 results, facing a net loss of $262.0 million, a wider deficit compared to the $206.0 million loss in the prior year's comparable quarter. This widening loss was primarily driven by increased operating expenses, particularly related to business reorganization charges and selling and marketing costs, alongside a significant increase in the provision for income taxes. Despite the loss, total net revenue saw a modest increase of 4.2% to $1.338 billion, largely fueled by strong performance in mobile gaming, particularly from titles like "Match Factory!" and "Toon Blast," and a modest uptick in console revenue driven by "Red Dead Redemption" and new releases like "TopSpin 2K25." The company also announced the completion of its acquisition of The Gearbox Entertainment Company for approximately $440.7 million, aiming to bolster its creative talent and intellectual property portfolio. While revenue growth is positive, investors should monitor the impact of ongoing restructuring efforts and the substantial goodwill associated with acquisitions. The company reiterated its plan to release "Grand Theft Auto VI" in Fall 2025, which remains a key catalyst for future growth, though the wider net loss and increased expenses warrant close attention.

Financial Highlights

53 data points
Beta

Revenue

$1.34B

57.6% Gross Margin

Net Income

-$262.00M

-19.6% Net Margin

EPS (Diluted)

$-1.52

Total Assets

$12.94B

Cash & Equivalents

$1.08B

Free Cash Flow

-$226.10M

Financial Statements
Beta
Revenue$1.34B
Cost of Revenue$567.10M
Gross Profit$771.10M
Operating Expenses$956.00M
Operating Income-$184.90M
Interest Expense$34.30M
Net Income-$262.00M
EPS (Basic)$-1.52
EPS (Diluted)$-1.52
Shares Outstanding (Basic)172.30M

Key Highlights

  • 1Net loss widened to $262.0 million in Q1 FY2025, up from $206.0 million in Q1 FY2024, primarily due to increased operating expenses and taxes.
  • 2Total net revenue increased by 4.2% to $1.338 billion, driven by mobile gaming revenue (54% of total) and console games.
  • 3Completed the acquisition of The Gearbox Entertainment Company for approximately $440.7 million, adding significant goodwill and intangible assets.
  • 4Operating expenses increased by 8.2% to $956.0 million, with notable increases in selling and marketing and significant business reorganization charges.
  • 5Gross profit margin improved to 57.6% from 52.9% year-over-year, benefiting from lower development royalties and amortization.
  • 6The company maintained a strong liquidity position with $1.47 billion in cash and cash equivalents and restricted cash and cash equivalents.
  • 7Reiterated the planned release of "Grand Theft Auto VI" in Fall 2025.

Frequently Asked Questions

The net loss widened to $262.0 million from $206.0 million in the prior year period, mainly due to an increase in operating expenses, particularly selling and marketing costs and business reorganization charges. Additionally, a higher provision for income taxes contributed to the wider net loss.

The acquisition of Gearbox for approximately $440.7 million was completed on June 11, 2024. This acquisition resulted in the addition of $285.2 million in goodwill and other intangible assets, impacting the balance sheet. Transaction costs of $6.0 million were recorded in general and administrative expenses for the quarter.

The company has confirmed that "Grand Theft Auto VI" is planned for release in Fall 2025. While the financial projections for this highly anticipated title are not detailed in this filing, it is expected to be a significant driver of future revenue and profitability, though its exact impact will depend on market reception and release timing.

Take-Two Interactive has a substantial amount of long-term debt, but maintains a strong liquidity position with $1.47 billion in cash and cash equivalents and restricted cash and cash equivalents as of June 30, 2024. The company also has an undrawn $750 million revolving credit facility, providing financial flexibility.