A look at what worked and what did not for Take-Two Interactive Software (TTWO) in Q3 2024

Shares of Take-Two Interactive Software, Inc. (NASDAQ: TTWO) were up over 1% on Monday. The stock has gained 40% over the past 12 months. The company delivered lower revenues for the third quarter of 2024 although its losses narrowed from the previous year. It also lowered its outlook for the full year due to softness in mobile advertising as well as higher marketing spend for its new mobile game.

Lower revenues, narrower loss

Take-Two saw revenues decline in Q3 2024 but its losses narrowed from last year. Net revenues declined 3% to $1.37 billion. Net bookings fell 3% to $1.34 billion. Recurrent consumer spending, which is generated from consumer engagement and includes virtual currency and in-game purchases, decreased 7%. The company delivered a net loss of $0.54 per share for the quarter, which was narrower than the loss of $0.91 per share reported in the year-ago period.

Franchises

During the third quarter, Take-Two saw strong performances from its popular franchises Grand Theft Auto V, Grand Theft Auto Online, and Red Dead Redemption 2. Grand Theft Auto V has sold-in more than 195 million units and Red Dead Redemption 2 has sold-in over 61 million units worldwide to-date. There is a lot of excitement over Grand Theft Auto VI, which when released, is expected to drive significant growth for the series. 

The company also benefited from Zynga’s in-app purchases, which exceeded expectations in the quarter, led by Toon Blast. Zynga’s new launches Match Factory and Top Troops are performing well and TTWO remains bullish on the long-term potential of Match Factory. However, it recorded lower-than-expected ad revenues from Zynga in Q3, due to the roll-out of some changes in the hyper-casual business.

Take-Two also saw softness in its NBA 2K24 sales during the quarter. On its quarterly call, the company said that unit sales for the Gen 9 version of the game are growing double-digits year-over-year and the migration to Gen 9 platforms has been causing a significant decline in demand for the Gen 8 offering.  

Guidance cut

Take-Two lowered its guidance for the full year of 2024 to reflect the softness it is seeing in mobile advertising and sales for NBA 2K24, as well as a planned release moving out of the fourth quarter and increased marketing for its new mobile title Match Factory.

The company now expects revenue to be $5.27-5.32 billion for FY2024. Net bookings is expected to be $5.25-5.30 billion. Net loss per share is expected to range between $5.95-5.85. Recurrent consumer spending is expected to grow 1% year-over-year.

For the fourth quarter of 2024, TTWO expects net revenue to be $1.32-1.37 billion. Net bookings is estimated to be $1.27-1.32 billion. Net loss is expected to range between $1.00-0.90 per share. Recurrent consumer spending is expected to decrease by approx. 5%.