Take-Two Interactive Software TTWO incurred a third-quarter fiscal 2025 net loss of 72 cents per share, wider than a loss of 71 cents per share reported in the year-ago quarter. The Zacks Consensus Estimate for earnings was pegged at 57 cents per share. 

GAAP net revenues decreased 0.5% year over year to $1.36 billion. The Zacks Consensus Estimate for revenues was pegged at $1.39 billion. 

Revenues from the United States increased 0.9% year over year to $825.7 million and accounted for 60.7% of GAAP net revenues. The rest came from international, revenues of which decreased 2.5% year over year to $534.1 million.

Game revenues (91.4% of total revenues) rose 2.9% year over year to $1.24 billion. Advertising revenues (8.6% of total revenues) plunged 26.2% year over year to $116.7 million.

Bookings improved 2.7% year over year to $1.37 billion, driven by the continued success of the Grand Theft Auto and Borderlands franchises. Bookings from the United States increased 7% year over year to $841.8 million and accounted for 61.3% of GAAP bookings. The rest came from international bookings, which decreased 3.6% year over year to $531.6 million.

Post fiscal third-quarter results, TTWO shares rose 9.17% in the pre-market trading. In the year-to-date period, TTWO shares have lost 0.6%, underperforming the Zacks Toys – Games – Hobbies industry’s return of 3.5%.

Quarterly Details

Recurrent consumer spending rose 9% for the period, which was in line with the company’s guidance and accounted for 79% of net bookings. Mobile increased 6%, driven by the addition of Match Factory and strong growth in June Blast and Toy Blast, which was partially offset by underperformance in the hyper-casual mobile portfolio and Empires and Puzzles. NBA 2K grew over 30%, while Grand Theft Auto Online declined.

In terms of distribution channels, Digital online revenues grew 1% year over year to $1.31 billion and accounted for 96.4% of GAAP net revenues. Physical retail and other revenues slumped 28.8% year over year to $49.1 million and accounted for 3.6% of GAAP net revenues.

Digital online bookings improved 4.4% year over year to $1.32 billion and accounted for 96.4% of bookings. Physical retail and other bookings declined 28.8% from the year-ago quarter to $49.4 million and contributed 3.6% of bookings.

In terms of platform, revenues from mobile, console, and PC and other accounted for 53.8%, 37.4% and 8.8% of GAAP net revenues, respectively. Mobile revenues increased 3.5% year over year to $731.6 million. Console revenues fell 7.2% year over year to $507.9 million. PC and other revenues increased 7.4% year over year to $120.3 million.

Bookings from mobile, console, and PC and other accounted for 51.7%, 39.2% and 9.2% of bookings, respectively. Mobile bookings increased 1.7% year over year to $709 million. PC and other revenues increased 8.9% year over year to $125.9 million. Console revenues inched up 2.6% year over year to $538 million.

Gaming Metric Details

During the quarter, sales of Grand Theft Auto V outperformed expectations, and, to date, the title has sold more than 210 million units worldwide. Grand Theft Auto Online delivered a strong quarter with solid engagement, led by its holiday update.

Momentum also continued within GTA+, as it grew its membership by 10% over last year. Red Dead Redemption posted another fantastic quarter. The title has sold more than 70 million units to date.

Rockstar Games was pleased to expand its audience further with the release of Red Dead Online’s fan-favorite Halloween pass featuring seasonal themes of bonuses and rewards.

Zynga delivered another quarter of solid results. Match Factory is scaling rapidly and is on track to become Zynga’s second-largest title by the end of this fiscal year in terms of projected annual Net Bookings.

Toon Blast and Toy Blast both delivered double-digit growth, led by engaging features, including new event types, improved player profiles and enhanced tuning.

Operating Details

Take-Two’s GAAP gross profit surged 12.1% year over year to $759.9 million. Gross margin expanded to 55.9% on a year-over-year basis from 49.6% in the year-ago quarter.

Operating expenses increased 10.5% year over year to $892 million. On a management basis, operating expenses rose 8% year over year.

Selling expenses rose 5.9% year over year to $388.9 million. General and administrative expenses increased 14.9% year over year to $189.6 million. Research & development expenses increased 3.8% year over year to $240.9 million.

Operating loss was $132.1 million compared with the year-ago quarter’s operating loss of $129.5 million.

TTWO’s Balance Sheet

As of Dec. 31, 2024, Take-Two had $1.21 billion in cash, cash equivalents and short-term investments compared with $879.6 million as of Sept. 30, 2024.

The company had a debt of $3.66 billion as of Dec. 31, 2024.

TTWO’s Q4 & FY25 Guidance

For the fourth quarter of fiscal 2025, Take-Two expects GAAP net revenues between $1.52 billion and $1.62 billion.

Operating expenses are expected to be between $899 million and $919 million. On a management basis, operating expenses are expected to fall by approximately 2% year over year, which is primarily driven by a more normalized level of marketing for Match Factory as well as savings from its cost reduction efforts.

It expects a loss per share between 13 cents and 20 cents. Per management, the reporting tax rate is anticipated to be 18%.

Net Bookings is expected to be in the range of $1.48-$1.58 billion compared with $1.35 billion in the year-ago quarter. The company’s release slate for the guided quarter includes Sider Civilization V, PGA Tour 2K25 and WWE 2K 25.

The largest contributors to Net Bookings are expected to be NBA 2K, the Grand Theft Auto series, Sid Meyer Civilzation VII, Match Factory, the hyper-casual mobile portfolio, Empires & Puzzles, and Words with Friends.

The company projects recurrent consumer spending to increase by approximately 3%, which assumes a high teens percentage increase for NBA 2K, partially offset by declines in both mobile and Grand Theft Auto Online.

For fiscal 2025, the company expects GAAP net revenues between $5.57 billion and $5.67 billion. The company expects net bookings in the range of $5.55-$5.65 billion, suggesting 5% growth compared with fiscal 2024.

Total operating expenses are now expected in the range of $3.77-$3.79 billion compared with $5.83 billion last year. It expects a loss per share between $4.17 and $4.50.

For fiscal 2025, net cash provided by operating activities is expected to be roughly $(200) million. Capital expenditures are expected to be approximately $140 million.

TTWO’s Zacks Rank & Stocks to Consider

TTWO currently carries a Zacks Rank #4 (Sell).

Amer Sports AS, Six Flags Entertainment Corporation FUN and Intercontinental Hotels Group IHG are some better-ranked stocks that investors can consider in the broader sector. AS, FUN and IHG carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Amer Sports have gained 11.5% year to date. AS is set to report fourth-quarter 2024 results on Feb. 25.

Shares of Six Flags Entertainment Corporation have dropped 7.9% year to date. FUN is slated to report fourth-quarter 2024 results on Feb. 27.

Shares of Intercontinental Hotels Group have gained 9.1% year to date. IHG is set to report fourth-quarter 2024 results on Feb. 18.

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