Take-Two's Growth Slows Down Following Zynga Acquisition Anniversary

Take-Two Interactive has released its quarterly financial results, which indicate a slowdown in top-line growth due to the anniversary of the Zynga acquisition. Despite significant losses, the company posted a 17% increase in net revenue to $1.28 billion and a 20% rise in net bookings to $1.2 billion. The net losses nearly doubled to $206 million from the previous year's $104 million. Take-Two's CEO Strauss Zelnick attributed the growth slowdown to the comparison with the combined Take-Two and Zynga performance, rather than Take-Two's standalone results. Recurrent consumer spending showed a 38% year-over-year increase, driven by the company's focus on expanding its virtual currency, DLC, and in-game ads. Zelnick emphasized that the goal is to reach a broad audience and provide a great entertainment experience while ensuring sound economics for consumers. He noted that the company is still below the limit of what consumers can spend and aims to entertain and reach as many consumers as possible. The company expects to finish the current year with significant losses but forecasts $8 billion in net bookings for fiscal 2025, potentially driven by the release of Grand Theft Auto 6. Zelnick expressed optimism about the industry's growth prospects, citing Newzoo's Global Gaming Market report, and noted that the company is positioning itself for a significant inflection point in fiscal 2025. The CEO also discussed the trade-offs of short gaps between game announcements and releases, stating that it depends on the title and the need to keep it front-of-mind for consumers. During the quarter, Grand Theft Auto 5 and Red Dead Redemption 2 continued to perform well, with shipments reaching 185 million and 55 million units, respectively. NBA 2K23 has shipped 13 million copies, up 11% from its predecessor. Zelnick provided an update on the company's cost reduction plan, announcing that it had overachieved its $50 million target and does not expect further layoffs. Finally, he discussed the impact of backward compatibility on software sales for new systems, emphasizing the importance of delivering features that optimize the consumer experience.