TTWO Q2 2023 Earnings

Call Details

• Call Title: Take-Two Interactive Q2 2023 Earnings Call
• Date: November 8, 2022 at 1:30 PM UTC
• Management Team:
  • Strauss Zelnick (Chairman and Chief Executive Officer)
  • Karl Slatoff (President)
  • Lainie Goldstein (Chief Financial Officer)
  • Nicole Shevins (Senior Vice President of Investor Relations and Corporate Communications)

Call Summary

Financial Performance

• Net bookings for Q2 FY2023 were $1.5B and were within the prior guidance range.
• GAAP net revenue increased 62% year-over-year to $1.4B during the quarter.
• Cost of revenue increased 56% year-over-year to $714M in the quarter.
• Operating expenses increased 144% year-over-year to $932M, primarily driven by the addition of Zynga and business acquisition costs.
• GAAP net loss was $257M, or $1.54 per share, and included $320M of amortization of acquired intangibles and $37M of business acquisition costs.
• Movement in foreign currency exchange rates negatively affected net bookings by approximately 1% in the quarter.
• The company ended the quarter with over $1.3B in cash and short-term investments and $3.3B of debt on the balance sheet.
• Digitally delivered net bookings increased 62% and accounted for 94% of total net bookings in the quarter.

Guidance

• Fiscal 2023 net bookings guidance was revised to $5.4B to $5.5B for the year.
• Approximately 70% of the downward revision to the prior forecast reflects lowered expectations for the mobile business and shifts in the release schedule, and the guidance includes a $50M FX headwind.
• The company expects label net bookings mix of approximately 45% Zynga, 36% 2K, 18% Rockstar Games, and 1% Private Division for FY2023.
• Geographic net bookings are forecast at roughly 60% United States and 40% international for FY2023.
• The company expects recurring consumer spending to grow by approximately 90% and represent 77% of total net bookings for FY2023.
• Digitally delivered net bookings are expected to grow by approximately 70% and represent 96% of total net bookings for FY2023.
• FY2023 non-GAAP adjusted unrestricted operating cash flow is expected to exceed $650M and planned capital expenditures are approximately $150M.
• GAAP net revenue for FY2023 is forecast at $5.41B to $5.51B, cost of revenue $2.61B to $2.64B (including approximately $694M of amortization), total operating expenses $3.4B to $3.42B, and GAAP net loss $631M to $674M or $3.95 to $4.22 per share.