Take-Two Interactive Software, Inc. Reports Results for Fiscal Year 2023

GAAP net revenue increased 52.6% to $5.35 billion

GAAP net loss per share was $7.03

GAAP net cash provided by operating activities for the twelve-months ended March 31, 2023 was $1.1 million

Adjusted Unrestricted Operating Cash Flow (Non-GAAP) for the twelve-months ended March 31, 2023 was $55.7 million

Net Bookings were $5.28 billion

NEW YORK–(BUSINESS WIRE)–Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported results for the fourth quarter and its fiscal year 2023, ended March 31, 2023. Fourth quarter and full-year results include the Company’s combination with Zynga, which closed on May 23, 2022, and affects the comparability of its results relative to last year. In addition, the Company provided its initial outlook for fiscal year 2024, ending March 31, 2024, and fiscal first quarter 2024, ending June 30, 2023. For further information, please see the fourth quarter fiscal 2023 results slide deck posted to the Company’s investor relations website at take2games.com/ir.

Fourth Quarter Fiscal 2023 Financial Highlights

GAAP net revenue increased 56% to $1.45 billion, as compared to $930.0 million in last year’s fiscal fourth quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and in-game advertising) increased 94% and accounted for 79% of total GAAP net revenue. Digitally-delivered GAAP net revenue increased 67% to $1.39 billion, as compared to $833.4 million in last year’s fiscal fourth quarter, and accounted for 96% of total GAAP net revenue. The largest contributors to GAAP net revenue were NBA® 2K23 and NBA 2K22; Grand Theft Auto® Online and Grand Theft Auto V; our hyper-casual mobile portfolio; Empires & Puzzles™; Toon Blast™; Red Dead Redemption® 2 and Red Dead Online; Merge Dragons!™; Words With Friends™; and Zynga Poker™.

GAAP net loss was $610.3 million, or $3.62 per share, as compared to net income of $110.9 million, or $0.95 per diluted share, for the comparable period last year. GAAP net loss included (i) an impairment charge of $465.3 million for acquisition-related intangible assets and (ii) an impairment charge of $54.2 million related to capitalized software development costs for unreleased and cancelled titles.

The following data, together with a management reporting tax rate of 18%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP and Non-GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 170.2 million. In addition, included in cost of revenue is a $54.2 million impairment charge related to capitalized software development costs for unreleased and cancelled titles.

Fiscal Fourth Quarter Operational Metric – Net Bookings

Net Bookings is defined as the net amount of products and services sold digitally or sold-in physically during the period, and includes licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.

During fiscal fourth quarter 2023, total Net Bookings grew 65% to $1.39 billion, as compared to $845.8 million during last year’s fiscal fourth quarter. Net Bookings from recurrent consumer spending grew 115% and accounted for 78% of total Net Bookings. Digitally-delivered Net Bookings were up 76% to $1.35 billion, as compared to $765.8 million in last year’s fiscal fourth quarter, and accounted for 97% of total Net Bookings. The largest contributors to Net Bookings were NBA 2K23; Grand Theft Auto Online and Grand Theft Auto V; our hyper-casual mobile portfolio; Empires & Puzzles; Toon Blast; Red Dead Redemption 2 and Red Dead Online; WWE® 2K23; Merge Dragons!; and Words With Friends.

Fiscal Year 2023 Financial Highlights

GAAP net revenue increased 53% to $5.35 billion, as compared to $3.50 billion in fiscal year 2022. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and in-game advertising) increased 84% and accounted for 78% of total GAAP net revenue. Digitally-delivered GAAP net revenue increased 62% to $5.09 billion, as compared to $3.15 billion in fiscal year 2022, and accounted for 95% of total GAAP net revenue. The largest contributors to GAAP net revenue were NBA 2K23 and NBA 2K22; Grand Theft Auto Online and Grand Theft Auto V; Empires & Puzzles; our hyper-casual mobile portfolio; Toon Blast; Red Dead Redemption 2 and Red Dead Online; Words With Friends; and Merge Dragons!.

GAAP net loss was $1.12 billion, or $7.03 per share, as compared to net income of $418.0 million, or $3.58 per diluted share, for the comparable period last year. GAAP net loss included (i) an impairment charge of $465.3 million for acquisition-related intangible assets and (ii) an impairment charge of $79.1 million related to capitalized software development costs for unreleased and cancelled titles.

During the twelve-month period ended March 31, 2023, GAAP net cash provided by operating activities was $1.1 million, as compared to $258.0 million in the same period last year. During the twelve-month period ended March 31, 2023, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, was $55.7 million, as compared to $424.9 million in the same period last year (please see the section below titled “Non-GAAP Financial Measures” for additional information). As of March 31, 2023, the Company had cash and short-term investments of $1.0 billion and debt of $3.1 billion.

The following data, together with a management reporting tax rate of 18%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP and Non-GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 162.1 million. In addition, included in cost of revenue is a $79.1 million impairment charge related to capitalized software development costs for unreleased and cancelled titles.

Fiscal Year 2023 Operational Metric – Net Bookings

Net Bookings is defined as the net amount of products and services sold digitally or sold-in physically during the period, and includes licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.

Total Net Bookings grew 55% to $5.28 billion, as compared to $3.41 billion in fiscal year 2022 . Net Bookings from recurrent consumer spending grew 88% and accounted for 78% of total Net Bookings. Digitally-delivered Net Bookings were up 63% to $5.03 billion, as compared to $3.08 billion in fiscal year 2022, and accounted for 95% of total Net Bookings. The largest contributors to Net Bookings were NBA 2K23 and NBA 2K22; Grand Theft Auto Online and Grand Theft Auto V; Empires & Puzzles; our hyper-casual mobile portfolio; Toon Blast; Red Dead Redemption 2 and Red Dead Online; Words With Friends; and Merge Dragons!.

Management Comments

“We finished fiscal 2023 with momentum. Our fourth quarter Net Bookings were $1.4 billion, above the high end of our guidance range, driven by Grand Theft Auto V and Grand Theft Auto Online, Red Dead Redemption 2, and Zynga’s mobile portfolio,” said Strauss Zelnick, Chairman and CEO of Take-Two.

“We also issued guidance for Fiscal 2024, which includes Net Bookings in the range of $5.45 to $5.55 billion. Our forecast reflects the challenging consumer backdrop, as well as an extension of the development timelines for several high-profile, long-awaited titles in our pipeline. We believe that we will enter our next phase of growth in Fiscal 2025, as we plan to deliver several groundbreaking titles that we anticipate will set new standards of quality and success and enable us to deliver over $8 billion in Net Bookings and over $1 billion in Adjusted Unrestricted Operating Cash Flow. We expect to sustain this momentum with additional growth in operating performance in Fiscal 2026.”

“After numerous years of investment and creative development, we are excited about this next chapter for Take-Two. As we execute on our strategy and release what we expect will be an array of hit titles, we believe that we will grow our scale and margins, generating industry-leading returns for our shareholders.”

Business and Product Highlights

Since January 1, 2023:

Take-Two:

• On April 14^th, Take-Two announced that it completed an underwritten public offering and sale of $1.0 billion aggregate principal amount of its Senior Notes, consisting of $500 million of its 5.000% Senior Notes due 2026 and $500 million of its 4.950% Senior Notes due 2028. Subsequently, the Company used $350.0 million of the proceeds to prepay all of its outstanding term loan. The remainder of the proceeds will be used for general corporate purposes, including the repurchase or retirement of the Company’s other outstanding indebtedness.

Rockstar Games:

• On January 19^th, announced that Grand Theft Auto: The Trilogy – The Definitive Edition is available to purchase on Steam, and on sale through February 2^nd as part of the Rockstar Games Publisher Sale. In addition to modern controls, graphical and environmental upgrades, and other enhancements — these versions of Grand Theft Auto III, Grand Theft Auto: Vice City, and Grand Theft Auto: San Andreas are Playable on Steam Deck and support additional features including achievements and more.
• Rockstar Games continued to provide an array of free content for their vast and growing online communities, including:
  • During the period, Rockstar Games continued to support the passionate, global Grand Theft Auto Online community with an array of new content offerings, including The Last Dose – the epic finale of the Los Santos Drug Wars update, as well as the roving Gun Van, Taxi Work missions, a new 50-car garage, new vehicles, clothes, weapons, modes, and much more.
  • Through the GTA+ premium membership program, enrolled members benefit from a rotation of numerous exclusive in-game benefits, including vehicles, business opportunities, special upgrades, and many other perks throughout the game.
  • Drove engagement for Red Dead Online through an array of monthly bonuses and rewards, seasonally-themed gifts, and more.

2K:

• Continued to drive engagement for NBA 2K23 with the launch of new seasons that feature new music, content, and rewards.
• On March 17^th, 2K and Visual Concepts released WWE 2K23, the newest installment of the flagship WWE 2K video game franchise developed by Visual Concepts for PlayStation 5, PlayStation 4, Xbox Series X|S, Xbox One, and PC via Steam. In celebration of his 20^th anniversary as a WWE Superstar, 16-time World Champion, Hollywood icon, philanthropist, and WWE 2K23 Executive Soundtrack Producer, John Cena, is featured on the cover of each edition of the game. WWE 2K23 features several franchise advancements, including a unique new take on the 2K Showcase, the WWE 2K introduction of the fan-favorite WarGames, and expansions to several marquee game modes.
• Additionally, there were updates to WWE Supercard, including a New WrestleMania 39 card Tier, Battle Pass, Twitch drops, special themed events and more.
• PGA TOUR 2K23 continues to impress critics and players alike, laying the claim to the title of “Highest Rated Golf Sim” of the last decade on Xbox and PC.
• Continued to support PGA TOUR 2K23 with additional features, as well as the introduction of Matthew Fitzpatrick and John Cena as playable golfers.
• On March 23^rd, 2K and the LEGO Group announced LEGO® 2K Drive, the ultimate driving adventure game, available worldwide on May 19^th, 2023. Developed by Visual Concepts, LEGO 2K Drive evolves the iconic LEGO play experience with a vast, open world where players can build any vehicle, drive anywhere and become a LEGO racing legend. LEGO 2K Drive will be the first release in a multi-title partnership between 2K and the LEGO Group. LEGO 2K Drive will combine the best elements of open-world driving and fast-paced competitive racing, while introducing a diverse vehicle customization system.
• On February 17^th, 2K announced that industry veteran and Firaxis Games Chief Operating Officer, Heather Hazen, has been promoted to Studio Head, ushering in a new era of development at the legendary interactive entertainment studio behind Sid Meier’s Civilization, XCOM, and the recently-released and critically-acclaimed Marvel’s Midnight Suns. As Studio Head, Hazen will manage Firaxis Games’ development teams and lead its mission to build the best strategy games on the planet. With 22 years of experience in gaming and entertainment, Hazen joined Firaxis Games in 2020 as the studio’s Chief Operating Officer.
• On March 16^th, 2K and Firaxis made Civilization VI available for Xbox Game Pass.
• During the quarter, 2K and Marvel supported Marvel’s Midnight Suns with three DLC packs, including The Good, the Bad, and the Undead, which launched on January 26^th, Redemption, which launched on February 23^rd, and the Hunger, which launched on March 21^st.

Private Division:

• On February 24^th, Private Division and Intercept Games announced that Kerbal Space Program 2 is available in PC Early Access on Steam, Epic Games Store, Private Division Store, and other digital storefronts. Kerbal Space Program 2, the sequel to the original rocket simulation game that sold over 5 million units worldwide, ushers in the next generation of space adventure by allowing players to build their own space program with hundreds of new and improved parts, an upgraded onboarding experience, modernized visuals, vibrant and realistic environments with unprecedented detail, customizable color schemes for spacecraft, and more. Kerbal Space Program 2 has been built from the ground up to be expanded upon for years to come.
• On March 7^th, Private Division, Obsidian Entertainment, and Virtuos announced that The Outer Worlds: Spacer’s Choice Edition is available on Xbox Series X|S, PlayStation 5, and PC. The Outer Worlds: Spacer’s Choice Edition introduces overhauled lighting and environments, dynamic 4K resolution, enhanced details resulting in more realistic characters, an increased level cap up to level 99, and more.
• On May 9^th, announced a partnership to publish a new title from Game Freak. Founded in 1989, the Japanese development company has created dozens of hit games, including more than 30 entries in the Pokémon franchise, which is widely recognized as one of the best-selling game series of all time.

Zynga:

• On January 19^th, Chartboost announced Chartboost Mediation, the largest expansion of the company’s Helium platform to date. Chartboost Mediation provides mobile app developers and publishers with an all-in-one solution for increasing revenue, making Chartboost’s tools and services one of the most advanced in the industry today.
• On February 14^th, Empires & Puzzles released its Season of Love, a new in-game event with Rare, Epic, and Legendary Heroes for players to use in epic battles, giving them better chances of obtaining hard-earned Epic Hero Tokens.
• On February 23^rd, Rollic celebrated the first anniversary of Fill The Fridge!
• On March 1^st, Top Eleven launched the Mastermind campaign which supported a new feature, Season in Review, and new game mode, Proving Grounds, in February and March.
• On March 13^th, CSR Racing 2 launched the European Invitational – a celebration of Europe’s love affair with cars, featuring some of the greatest cars from across the continent.
• On March 20^th, Zynga Poker introduced ‘Cash Clash’, a new tournament-inspired event, giving players even more ways to compete against one another in the classic game of Texas Hold’Em Poker.
• On March 27^th, Zynga Turkey launched a new game, Backgammon Plus, which reimagines the popular board game.
• On April 27^th, announced the promotion of Akshay Bharadwaj as the new head of its Socialpoint studio. In his previous role as Vice President and General Manager of Zynga India, Bharadwaj oversaw the live operations of many titles in the Zynga portfolio, including the FarmVille franchise, while building teams to create new mass market games.

Outlook for Fiscal 2024

Take-Two is providing its initial outlook for the fiscal year ending March 31, 2024 and fiscal first quarter ending June 30, 2023.

Fiscal Year Ending March 31, 2024

• GAAP net revenue is expected to range from $5.37 to $5.47 billion
• GAAP net loss is expected to range from $518 to $477 million
• GAAP net loss per share is expected to range from $3.05 to $2.80
• Share count used to calculate GAAP net loss per share is expected to be 170.1 million
• Share count used to calculate management reporting diluted net income per share is expected to be 171.9 million⁽¹⁾
• Net cash provided by operating activities is expected to be approximately $90 million
• Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is expected to be approximately $100 million ⁽²⁾
• Capital expenditures are expected to be approximately $180 million
• Net Bookings (operational metric) are expected to range from $5.45 to $5.55 billion
• EBITDA (Non-GAAP) is expected to range from $427 to $479 million

The Company is also providing selected data and its management reporting tax rate of 18%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP and Non-GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

First Quarter Ending June 30, 2023

• GAAP net revenue is expected to range from $1.21 to $1.26 billion
• GAAP net loss is expected to range from $178 to $161 million
• GAAP net loss per share is expected to range from $1.05 to $0.95
• Share count used to calculate GAAP net loss per share is expected to be 169.4 million
• Share count used to calculate management reporting diluted net income per share is expected to be 170.8 million⁽⁴⁾
• Net Bookings (operational metric) are expected to range from $1.15 to $1.2 billion
• EBITDA (Non-GAAP) is expected to range from $82 to $103 million

The Company is also providing selected data and its management reporting tax rate of 18%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP and Non-GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

Key assumptions and dependencies underlying the Company’s outlook include: a continuation of the current economic backdrop; the timely delivery of the titles included in this financial outlook; continued consumer acceptance of Xbox One and PlayStation 4, as well as continued growth in the installed base of PlayStation 5 and Xbox Series X|S; the ability to develop and publish products that capture market share for these current generation systems while also leveraging opportunities on PC, mobile and other platforms; factors affecting our performance on mobile, such as player acquisition costs; our ongoing focus on our live services portfolio and new game pipeline; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.

Product Releases

The following have been released since January 1, 2023:

Take-Two’s future lineup announced to-date includes:

Contacts

(Investor Relations)
Nicole Shevins
Senior Vice President
Investor Relations & Corporate Communications
Take-Two Interactive Software, Inc.
(646) 536-3005
Nicole.Shevins@take2games.com

(Corporate Press)
Alan Lewis
Vice President
Corporate Communications & Public Affairs
Take-Two Interactive Software, Inc.
(646) 536-2983
Alan.Lewis@take2games.com

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