08.11.2022

Take-Two shares fall 17% amid mounting losses and reduced financial guidance

Take-Two has released a financial report for the three months ended September 30, 2022. The company recorded a net loss of over $250 million and lowered its full-year guidance.

Take-Two reports a net loss of $257 million for the three months ended September 30, 2022

Financial highlights

  • The company’s net revenue was $1.4 billion, which is up 62% year-over-year.
  • Digital sales accounted for 94.6% of this sum, while 79% of total revenue came from recurrent spending (back catalog).
  • Net loss was $257 million, compared to Take-Two’s guidance of $160 million. For the same period last year, the company reported a profit of $10.2 million.
  • The company lowered its forecast for the whole fiscal year ending March 31, 2023. It expects to reach $5.4-5.5 billion in revenue at a net loss of $631-674 million.

“Our reduced forecast reflects shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile,” Take-Two CEO Strauss Zelnick said in a statement.

As a result, Take-Two shares slumped 17% yesterday in extended trading. As pointed out by Reuters, this also indicates the games industry’s struggles with a “demand drop caused by the lack of major new titles, lifting of COVID-19 curbs and lower spending from inflation-hit consumers.”

The lowest quarterly sales of GTA V

Take-Two reported that GTA V has reached over 170 million units sold to date. Sales of the whole franchise have topped 385 million units globally.

As pointed out by industry analyst Benji Sales, the company shipped only around 1 million copies during the last three months. “This [is] the lowest quarter in shipments that Grand Theft Auto V has ever had since release,” he wrote.

The publisher also shared updated figures for its other IPs:

  • Read Dead Redemption — 70 million units sold (RDR2 reached 46 million copies sold);
  • NBA 2K — 130 million units sold (NBA 2K23 sold 5 million copies globally);
  • BioShock — 41 million units sold;
  • Sid Meier’s Civilization — 63 million units sold;
  • Borderlands — 77 million units sold (16 million copies for Borderlands 3, 27 million — for Borderlands 2).

Zynga and a strong pipeline are key to Take-Two’s growth

  • The company said it will continue to increase engagement and recurrent player spending to enhance its margins.
  • Take-Two also plans to leverage Zynga’s gaming portfolio and unlock “significant revenue opportunities and cost synergies” in the mobile market.
  • Pursuing new regions and business areas, as well as the continued focus on M&A were cited as other factors that could potentially drive Take-Two growth in the future.
  • On top of that, the company calls its development pipeline the strongest in its history. It plans to launch 24 “immersive core” titles (large AAA releases like GTA and its sports franchises), 10 independent games (like Rollerdrome), and 38 mobile titles (including GTA The Trilogy — The Definitive Edition) by the end of FY2025 (ending March 31, 2025).
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