Take-Two Earnings: Narrative Flips Past 2024 to 2025 With Strong Guidance and GTA VI Launch Hint

Take-Two TTWO posted a mixed end to a transformative yet investment-focused fiscal 2023 as non-GAAP fourth-quarter revenue beat, and EBITDA missed FactSet consensus estimates. Despite the mixed results and flattish top line guidance for fiscal 2024, shares moved up sharply by 9.5% in afterhours trading due to aggressive fiscal 2025 bookings guidance of over $8 billion, implying over 44% growth versus next year. While the firm does have a robust development pipeline, the size of the guidance implies that the highly anticipated Grand Theft Auto VI will launch between April 2024 and March 2025, roughly one year after our previous expectation.

We are maintaining our $165 fair value estimate as the impact of the delayed GTA VI launch will be offset by growth in the post-launch year versus our previous projection of a top line decline.

Non-GAAP revenue or net bookings of $1,394 million came in slightly ahead of the firm’s guidance of $1,310 million-$1,360 million. Recurrent consumer spending improved 115% year over year (management did not provide pro forma number for comparison), ahead of the 105% guidance, and generated 78% of total net bookings. Digitally delivered net bookings improved by 76%, above guidance of 70%, and created 98% of non-GAAP net bookings, up from 91% a year ago. On consoles, full game downloads for the full year increased from 68% in fiscal 2022 to 74% in fiscal 2023. We expect the percentage to continue to increase to well over 80% in the next few years though the release of GTA VI could spark a one-year downturn.