Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Take-Two Interactive Software Inc (TTWO, Financial) reported first-quarter net bookings of $1.2 billion, in line with expectations.
- The Grand Theft Auto series exceeded expectations, with Grand Theft Auto V selling over 200 million units to date.
- NBA 2K24 delivered a solid quarter with close to 11 million units sold and strong user engagement.
- Zynga's Match Factory! showed significant growth, contributing to a 50% increase in net bookings over the last quarter.
- The acquisition of Gearbox Entertainment is expected to provide growth opportunities for the Borderlands series and Gearbox's catalog.
Negative Points
- Recurrent consumer spending was flat for the period, accounting for 83% of net bookings.
- Grand Theft Auto Online and NBA 2K experienced declines in net bookings.
- Operating expenses increased by 8% year-over-year, driven by higher marketing and personnel costs.
- The company expects a non-GAAP adjusted unrestricted operating cash flow outflow of $150 million for the fiscal year.
- The increase in operating expenses is partly due to the acquisition of Gearbox and higher marketing costs.
Q & A Highlights
Q: Your largest peer just released a successful college football game. Are there any thoughts about adding a college basketball feature to NBA 2K?
A: Karl Slatoff, President: We've noticed the success of college football and are always listening to our community's interests. While we have a history with college sports, there's nothing to announce at this time, but we are aware of the opportunity.
Q: With the development of the next GTA, can you outline the current stage of production? Also, what is driving the increase in OpEx guidance?
A: Strauss Zelnick, CEO: The development stage varies by title, and we don't provide specific insights on this. Lainie Goldstein, CFO: The increase in OpEx is mainly due to the acquisition of Gearbox and higher marketing, personnel, and occupancy expenses.
Q: How are you adapting to the potential impact of strikes on game development?
A: Strauss Zelnick, CEO: We value our talent relationships and are working towards a resolution. We don't expect any impact on our titles in development unless the strike is prolonged, which we hope to avoid.
Q: Are you seeing any impact on NBA 2K sales from the crowded sports category?
A: Karl Slatoff, President: We aren't seeing any significant impact on NBA 2K from other sports titles. We always compete for consumer mindshare across all titles, but we don't anticipate any effect on NBA 2K25.
Q: Does Star Wars: Hunters provide a blueprint for bringing more AAA content to mobile?
A: Strauss Zelnick, CEO: Star Wars: Hunters is off to a good start and could inform future titles, but each title stands alone. We prefer to focus on intellectual properties that we own.
Q: Can you provide an updated view on your approach to user-generated content (UGC) across different franchises?
A: Strauss Zelnick, CEO: We are open-minded and excited about user engagement with our titles. While UGC can be a positive addition, we don't believe it will define our company or the industry.
Q: How do you view the macroeconomic environment's impact on your business?
A: Strauss Zelnick, CEO: We don't see a consumer recession on the horizon. The entertainment business is generally resilient, and our industry is back in growth mode. We are well-positioned with a strong pipeline.
Q: What is your perspective on the opportunity for a second soccer simulation game in the market?
A: Strauss Zelnick, CEO: Building a great sim experience for console is challenging and takes time. The FIFA license doesn't include rights to players, teams, or leagues, making it complex. We have a strong sports portfolio and will make more announcements in due course.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
