Andy Wang visits The Watch List with Nicole Petallides sharing his thoughts on Take-Two Interactive's earnings report.

Take-Two Interactive (TTWO)

  • FQ4 bookings and profitability beat expectations, driven by NBA 2K24, Zynga IAP, Red Dead Redemption, and GTA.
  • Industry normalizing from pandemic peak; console and mobile (segments) returning to modest growth.
  • Launch of Grand Theft Auto VI from “calendar 2025” to “fall 2025.”
  • Reduction in the size of title pipeline / refocus resources towards highest potential titles.

Take-Two Interactive reported a good quarter (Q4:F24) with bookings and earnings per share beating expectations, mainly driven by the strong performance of NBA 2K and robust mobile in-app purchase bookings.

NBA 2K24 is the number one basketball simulation experience. Players of the game responded well to Take-Two's promotions, in-game content strategy, and updates within seasons. To-date, the title has sold in over 9 million units. Engagement remains high with nearly 2 million consumers playing daily.

Take-Two Interactive has had to make some difficult decisions since the pandemic peak. In April, the company laid off 5% of its staff, or around 600 workers. It closed two game studios and canceled some unreleased games to improve its operations. Investors should be watching to see if the significant cost reduction program can bring in over $165 million of annual cost savings. Also, the company is refocusing its resources toward its highest potential titles and eliminated some projects so there’s been a meaningful reduction in the size of the game pipeline. There are 40 titles looking out to FY25-FY27 compared to 52 titles previously.

Take-Two Interactive management narrowed the window for the launch of Grand Theft Auto VI from “calendar 2025” to “fall 2025.” Wall Street analysts are modeling the title in FY26. While the stock initially dropped on that news, the market appears to be digesting the news in stride.

To-date GTA is sold in approximately 200 million units worldwide and continues to exceed Unit sales forecasts. More than a decade after their initial releases, Grand Theft Auto V and Grand Theft Auto Online grew their audience size by an incredible 35% and 23% respectively for the full year.

Company management remains optimistic that net bookings can grow sequentially through FY27 based on the breadth of the multi-year pipeline, expectations around Grand Theft Auto VI, and the strong current performance of key titles.