01—Abstract
Summary
Summary of the 10-Q filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported its financial results for the second quarter of fiscal year 2025, ending September 30, 2024.
The company saw a modest increase in net revenue, driven primarily by its mobile segment and strong performance from titles like "Match Factory!" and "Toon Blast." Gross profit saw a significant improvement year-over-year, largely due to lower amortization of intangible assets and reduced internal royalties, which more than offset higher digital platform fees. While the company continues to invest heavily in research and development and faces increased selling and marketing expenses, the overall operating expenses, excluding goodwill impairment charges from the prior year, saw a manageable increase. The company also reported progress in its cost reduction program, impacting business reorganization expenses.
Despite ongoing investments and some operational cost increases, Take-Two's focus on recurrent consumer spending, digital distribution, and strategic acquisitions like Gearbox positions it for future growth. The upcoming release of "Grand Theft Auto VI" in Fall 2025 remains a key event to watch.
02—Key points
Key Highlights
- Net revenue increased by 4.1% to $1.35 billion for the three months ended September 30, 2024, compared to the prior year period, driven by strong performance in the mobile segment and new titles.
- Gross profit margin improved significantly to 53.8% from 32.0% year-over-year, mainly due to lower amortization of intangible assets and reduced internal royalties.
- Operating expenses increased by 6.9% to $1.03 billion, with higher selling and marketing, and general and administrative costs partially offset by the absence of goodwill impairment charges from the prior year.
- The company acquired The Gearbox Entertainment Company, Inc. in June 2024 for approximately $435 million, adding to its intellectual property and creative talent.
- Net loss for the quarter was $365.5 million, an improvement from a net loss of $543.6 million in the same period last year.
- As of September 30, 2024, the company had $1.32 billion in cash, cash equivalents, and restricted cash and cash equivalents, showing an increase from the prior fiscal year-end.
- The company reiterated its plan to release "Grand Theft Auto VI" in the fall of calendar year 2025.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2025, Take Two Interactive Software Inc lost $0.27.
- Revenue$1.35B100.0%
- Cost of revenue−$625.2M46.2%
- Gross profit$727.9M53.8%
- Operating costs−$1.03B75.8%
- Operating income−$297.2M22.0%
- Interest, other & tax−$68.3M5.0%
- Net income−$365.5M27.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed November 7, 2024Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $1.35B$1.30B | +4.1% |
| Cost of Revenue | $625.20M$883.80M | −29.3% |
| Gross Profit | $727.90M$415.40M | +75.2% |
| Operating Expenses | $1.03B$959.10M | +6.9% |
| Operating Income | -$297.20M-$543.70M | +45.3% |
| Interest Expense | $40.80M$31.30M | +30.4% |
| Net Income | -$365.50M-$543.60M | +32.8% |
| EPS (Basic) | $-2.08$-3.20 | +35.0% |
| EPS (Diluted) | $-2.08$-3.20 | +35.0% |
| Shares Outstanding (Basic) | 175.40M169.90M | +3.2% |
05—Questions
Frequently Asked Questions
How did the Gearbox acquisition impact the financial results for this quarter?
The Gearbox acquisition was completed on June 11, 2024. For the three months ended September 30, 2024, Gearbox contributed $10.3 million in net revenue and incurred a net loss of $20.8 million. Transaction costs related to the acquisition were recorded in General and Administrative expenses. Goodwill from the acquisition was $208.4 million.
What is the outlook for 'Grand Theft Auto VI' and its potential financial impact?
Take-Two Interactive has announced that 'Grand Theft Auto VI' is scheduled for release in the fall of calendar year 2025. While specific financial projections are not provided in this filing, the company expects the title to be a significant driver of future revenue and profitability, building on the immense success of previous installments in the franchise.
What is driving the significant increase in gross profit margin?
The substantial improvement in gross profit margin to 53.8% from 32.0% in the prior year is primarily attributed to lower amortization of intangible assets, which were significantly impacted by impairment charges in the previous year. Additionally, lower internal royalties and a favorable product mix contributed to the increase. These factors more than offset higher digital platform fees.
How is the company managing its debt and liquidity position?
As of September 30, 2024, Take-Two Interactive had $3.06 billion in long-term debt and $599.2 million in short-term debt. The company had $747.7 million available under its 2022 Credit Agreement and $1.32 billion in cash, cash equivalents, and restricted cash and cash equivalents. The company believes its current liquidity is sufficient to meet its cash requirements.
06—Continue