Here’s a look at Take-Two Interactive Software’s (TTWO) expectations for the coming year

Shares of Take-Two Interactive Software (NASDAQ: TTWO) were down over 2% on Friday. The stock has dropped 32% year-to-date and 35% over the past 12 months. Earlier this week, the company delivered better-than-expected revenue and earnings results for the fourth quarter of 2022. Here’s a look at its expectations for the coming year:

Revenue

In the fourth quarter of 2022, net revenue increased 11% year-over-year to $930 million, driven mainly by franchises such as NBA 2K22 and NBA 2K21, Grand Theft Auto, Red Dead Redemption, and Tiny Tina’s Wonderlands, among others. Digitally-delivered net revenue rose 9% YoY and made up 90% of total revenue. Recurrent consumer spending grew 1% and made up 63% of total revenue. For the first quarter of 2023, net revenue is expected to range between $810-860 million and for the full year it is estimated to be $3.67-3.77 billion.

Profitability

Net income for the fourth quarter was down 49% to $111 million, or $0.95 per share, versus the year-ago period but EPS managed to surpass analysts’ projections. For the first quarter of 2023, net income is expected to range between $94-105 million while EPS is expected to be $0.80-0.90. Net income in FY2022 is estimated to be $223-252 million while EPS is projected to be $1.90-2.15.

Bookings

Net bookings in Q4 grew 8% YoY to $845.8 million, driven by franchises like NBA 2K22, Grand Theft Auto, Tiny Tina’s Wonderlands, and Red Dead Redemption, among others. Digitally-delivered net bookings were up 4% while bookings from recurrent consumer spending was down 6%.

For the first quarter of 2023, net bookings are expected to range between $700-750 million with the largest contributions coming from NBA 2K22, Grand Theft Auto Online and Grand Theft Auto 5, Tiny Tina’s Wonderlands, Red Dead Redemption 2 and Red Dead Online, The Quarry, and WWE 2K22. Take-Two expects digitally-delivered net bookings to increase 2% and 78% of console game sales to be delivered digitally versus 73% in the year-ago period. Recurrent consumer spending is expected to drop 10%.

For the full year of 2023, net bookings are expected to range between $3.75-3.85 billion, representing a growth of 11% at the midpoint. The biggest contributors to net bookings are expected to be NBA 2K, Grand Theft Auto Online and Grand Theft Auto 5, Red Dead Redemption 2 and Red Dead Online, Tiny Tina’s Wonderlands, Marvel’s Midnight Sun, and PGA TOUR 2K23.  

Take-Two expects 2K to make up 60% of its bookings, Rockstar Games to make up 30% and Private Division and T2 mobile games to make up the remaining 10%. Geographically, 60% of net bookings will come from the US and 40% from international markets. Recurrent consumer spending is projected to be flat YoY while digitally-delivered net bookings is projected to grow 10%. The company expects 71% of console game sales to be delivered digitally, which is up from 68% last year.

Pipeline

Take-Two’s FY2023 pipeline includes 18 planned releases. The company expects to deliver six immersive core offerings, including The Quarry which will launch next month. TTWO will release Marvel’s Midnight Suns, one of its much-anticipated games, in the latter half of calendar year 2022.

The company plans to release eight mobile titles, four each from its new and existing franchises, and three mid-core RK titles. Excluding the Zynga acquisition, Take-Two expects to deliver 51 titles throughout FY2024 and FY2025, which it believes will help drive growth in net bookings and profitability.

Click here to read more on gaming stocks