Take-Two Q3 Highlighted by Strong Digital Booking Growth; GTA VI Appears on The Near-Term Horizon

Take-Two reported a slightly better than expected fiscal 2022 third quarter as non-GAAP revenue met and EBITDA beat FactSet consensus expectations. The launch of Grand Theft Auto: The Trilogy, growth of NBA 2K22, and the continued strength in catalog titles contributed to the top line growth and EBITDA beat. Management reiterated that it expects the Zynga transaction to close in the first quarter of fiscal 2023. Given U.S. regulators’ relatively quick decision to review Microsoft’s acquisition of Activision Blizzard, we think a six-month closing period may be somewhat aggressive but do expect that the deal will close well before the end of 2022. We are maintaining our narrow moat rating and our $200 fair value estimate, which incorporates our outlook for the Zynga acquisition.