Sign up for the GI Daily here to get the biggest news straight to your inbox
Take-Two Interactive today reported its financial results for the fourth quarter and full year ended March 31, with the company continuing to show significant top-line growth driven by the Zynga acquisition, but continued losses.
The Numbers:Take-Two fiscal 2023 full year results
- Net revenue: Up 53% to $5.35 billion
- Net bookings: Up 55% to $5.28 billion
- Net losses: $1.12 billion, compared to net income of $418 million for the previous year
- Net revenue: Up 56% to $1.45 billion
- Net bookings: Up 65% to $1.39 billion
- Net losses: $610 million, compared to net income of $111 million for the previous year
- Net revenue: Flat to up 2%
- Net bookings: Up 3-5%
- Net losses: Between $518 million and $477 million
The biggest drivers for the fourth quarter were a string of familiar faces led by NBA 2K23, Grand Theft Auto Online/Grand Theft Auto 5, with help from hypercasual games, Empires & Puzzles, Toon Blast, Red Dead Redemption 2/Red Dead Online; WWE 2K23, Merge Dragons, and Words With Friends.
As for sales updates, Grand Theft Auto 5 has now shipped 180 million units worldwide, while Red Dead Redemption 2 is up to 53 million units.
NBA 2K23 has also hit 11 million units to date, a new record for the franchise at this point in the game's lifespan, boasting its highest-ever virtual currency sales as well.
While those games' performances helped push the company's Q4 net bookings above its forecast range of $1.31 billion to $1.36 billion, they could not keep Take-Two from similarly posting larger-than-expected losses.
Take-Two had forecast Q4 net losses of up to $214 million, but blew well past that with a reported net loss of $610 million.
The company attributed the deeper than expected losses to impairment charges of $465.3 million for acquisition-related intangible assets and $54.2 million in capitalized software development costs for unreleased and cancelled titles.
While the company forecast net losses for the current fiscal year as well, it gave investors something to look forward to, saying net bookings in fiscal 2025 would spike to $8 billion, with additional growth coming in fiscal 2026.
In a pre-briefing call with Take-Two CEO Strauss Zelnick, we ask if that $8 billion target is achievable without the release of a major new Grand Theft Auto title. (Grand Theft Auto 6 has been announced, but the company has given no release window for it as of yet.)
"We're not talking about specific titles," Zelnick says. "We believe it's highly achievable. As you know, it's exceedingly rare that we talk about out years. And when we do, it's because we have a high degree of confidence. It's a reflection of a pipeline we've been investing in for years. We're beginning to see that come to fruition in fiscal 24, and then in fiscal 25, we expect to see some great successes."
He notes that the company has 36 titles currently slated for release in fiscal 25 and 26.
As for fiscal 24, Take-Two expects to launch three "immersive core" games by the end of March 2024: NBA 2K24, WWE 2K24, and "an eagerly-anticipated new IP from one of our premier studios."
It also has two "midcore/arcade" titles in the works for this year, one of which (Lego 2K Drive) arrives this week.
Take-Two recently cancelled the Nintendo Switch release of Midnight Suns. Given growing speculation that Nintendo is readying a successor system for next year, we ask Zelnick if Take-Two plans to continue supporting the Switch beyond this year, when it already has Lego 2K Drive and Zynga's Star Wars Hunters still on the release slate.
"Yes, I think we'll continue to support it," he replies.
One other console question we put to Zelnick is that of mid-generation console refreshes. It was about this point in the last console cycle that Microsoft first announced what would be the Xbox One X, and Sony soon followed with the PlayStation 4 Pro. We ask if we should expect to see such iterative hardware this time around, and whether or how they impacted Take-Two's business in the previous generation.
"We probably will," Zelnick says, "and they did not affect the business very much."
While Take-Two's console and PC lineup gets much of the attention, the company's forecast for the current year also emphasized how much the Zynga acquisition reshaped the business since it closed a year ago this month.
For fiscal year 22, mobile represented just 12% of Take-Two's bookings. In fiscal 23, that was up to 47%, a mark the company expects to grow to 53% in the current year.
Zelnick acknowledges the shift but says it has required little in the way of adjustment from the top tier of the company.
"We've always had a very decentralized approach with our labels, and [Zynga president] Frank Gibeau continues to lead Zynga in an exceedingly independent manner," he says.
"We hope to be supportive and we do have centralized functions as you'd imagine, including data analytics and our consumer database, which can benefit all our labels. As an existential matter, Frank and his team lead and drive Zynga; we think that's the best way to create value in the mobile space."