Company Reports

Take-Two Interactive’s fiscal 2025 started well as GAAP revenue and net bookings fell well within the range of guidance. Zynga continues to be critical to overall success, driving 58% of bookings in the quarter. Console and PC platforms struggled to retain players as Grand Theft Auto V and NBA 2K24 near the end of their lifecycles. Console and PC stand to gain heavily from GTA VI, but that title remains at least a year out. Management gave no indication GTA VI was being delayed further, but wouldn’t discuss guidance for 2026 or 2027. Before then, Take-Two has a strong release slate with a new title in nearly every major franchise except for the Red Dead series. We are maintaining our $155 fair value estimate.

Take-Two is one of the larger video game publishers and owns one of the most well-known video game franchises in Grand Theft Auto. With the acquisition of Zynga, the company is also one of the largest mobile game publishers, with mobile games currently accounting for about half of sales. Like several of its peers, Take-Two is trimming the number of games in development to focus resources where financial returns are likely to be strongest, which we think will play to the firm's competitive advantages. While all eyes are now on the release of GTA 6, currently planned for the fall of 2025, we believe patience is warranted, given this title will likely serve as a sales platform far into the future.

Take-Two pushed out the expected release date for Grand Theft Auto 6 to the fall of 2025, well into the firm's fiscal 2026. With a year and a half to release, further delays are certainly possible. As predecessor GTA 5 continues to sell around 5 million units per quarter a decade after its initial release, GTA 6 will likely serve as a platform to drive revenue far into the future. While continuing delays are a concern, getting the release right is also critical to Take-Two's long-term value. After incorporating management's new fiscal 2025 outlook and shifting GTA 6 sales further into the future, we have lowered our fair value estimate to $155 from $165.

Take-Two’s fiscal third-quarter results largely met expectations, but the firm’s outlook for the remainder of fiscal 2024 and fiscal 2025 point to some pockets of weakness amid uncertain timing around new releases. Most critically, management expects fiscal 2025 bookings will come in slightly above $7 billion, down from initial expectations of above $8 billion and revised expectations last quarter of just below $8 billion. The firm stated that the lifetime value of its game portfolio hasn’t changed but expected release dates have shifted out. We may adjust our estimates to reflect weakness in other franchises, which have contributed to the reduced fiscal 2024 outlook, but we don’t expect to significantly change our $165 fair value estimate.

Take-Two’s fiscal second-quarter results were broadly in line with expectations, with net bookings at the high end of management’s forecast while impairment charges hit net income. Management modestly dialed back expectations for fiscal 2025, saying it now expects bookings will come in just below $8 billion rather than above that mark. With Rockstar Games co-founder Sam Houser announcing that the first trailer for Grand Theft Auto 6 will debut in early December, we suspect the game is still slated to launch soon, but maybe a bit later than Take-Two previously expected. Regardless of exactly when GTA 6 is released, we expect the title will generate significant value for Take-Two shareholders. Our fair value estimate remains $165.

Take-Two is one of the larger video game publishers and owns one of the largest most well-known video game franchises in Grand Theft Auto. With the acquisition of Zynga, the company is also one of the largest mobile game publishers. We believe the firm is well positioned not only to capitalize on the success of GTA, but also to continue diversifying its revenue beyond its signature franchise.

Take-Two started off fiscal 2024 on a weak note as non-GAAP first-quarter revenue met and adjusted EBITDA missed FactSet consensus estimates. Despite the mixed results, management held to its flattish top line guidance for fiscal 2024 and aggressive fiscal 2025 bookings guidance of over $8 billion. This implies that the highly anticipated Grand Theft Auto VI remains on track to launch between April 2024 and March 2025. We are maintaining our $165 fair value estimate.

Take-Two 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.

Take-Two is one of the larger third-party video game publishers and owns one of the largest most well-known video game franchises in Grand Theft Auto. With the acquisition of Zynga, the company is now also one of the largest mobile game publishers. We believe the firm is well positioned not only to capitalize on the success of GTA, but also to continue diversifying its revenue beyond its signature franchise. We expect Take-Two to continue to benefit from the high demand for consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Take-Two Interactive Software reported a fiscal 2023 third quarter slightly below expectations and lowered its full-year guidance, which includes 10 months of contribution from Zynga. The lower guidance was due to decreased mobile expectations along with the secular shift toward blockbuster franchises that both Ubisoft and EA previously called out. Management remains optimistic about the long-term growth potential for the combined business even with the advertising headwinds for Zynga. We are maintaining our $165 fair value estimate as we expect Take-Two's extensive game pipeline and proven franchises to overcome the current challenges.

Take-Two posted its second straight weak quarter for fiscal 2023 and management lowered its already relatively underwhelming fiscal 2023 top-line guidance that includes 10 months of contribution from Zynga. The lower guidance was due to game release shifts and lower mobile expectations along with currency headwinds and the impact from the economy. Even with the recent hiccups, management remains very optimistic about the long-term growth potential for the combined business. We largely agree with this take as we expect the extensive game pipeline and proven franchises on console, PC, and mobile to overcome the current challenges facing Take-Two. However, we are lowering our fair value estimate to $165 from $185 to account for lower 2023 projections and slightly lower revenue in 2024.

Take-Two is one of the larger third-party video game publishers and owns one of the largest most well-known video game franchises in Grand Theft Auto. With the acquisition of Zynga, the company is now also one of the largest mobile game publishers. We believe the firm is well positioned not only to capitalize on the success of GTA, but also to continue diversifying its revenue beyond its signature franchise. We expect Take-Two to continue to benefit from the high demand for consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Take-Two posted a weak start to fiscal 2023 as non-GAAP first-quarter revenue and EBITDA missed FactSet consensus estimates. With the Zynga merger completed, management provided relatively weak fiscal 2023 top-line guidance that includes 10 months of contribution from Zynga. Some of the revenue weakness is the result from two more game delays, Marvel’s Midnight Sun from 2K Games and Zynga’s Star War Hunters. While the mobile Star Wars game will be pushed into fiscal 2024, Midnight Sun will be released in the fiscal fourth quarter instead of prior to the holiday season. While delaying games does not always fix all the issues, we generally view game delays as a necessary evil in order to provide more time to developers to potentially save a game. We are maintaining our $185 fair value estimate.

While mobile gaming now generates over half of global video game industry revenue, many of the traditional Western video game publishers remain underexposed to the segment, with the notable exception of Activision Blizzard. Much as it did for console and PC gaming, the pandemic boosted revenue for mobile gaming as consumers turned to their phones and tablets for entertainment. Spending on mobile games increased 57% from 2018 to 2021, while downloads grew over 30% during the same period.

Take-Two is one of the larger third-party video game publishers and owns one of the largest most well-known video game franchises in Grand Theft Auto. With the acquisition of Zynga, the company is now also one of the largest mobile game publishers. We believe the firm is well positioned not only to capitalize on the success of GTA, but also to continue diversifying its revenue beyond its signature franchise. We expect Take-Two to continue to benefit from the high demand for consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Take-Two reported a mixed end to a challenging fiscal 2022 as non-GAAP fourth-quarter revenue missed and EBITDA beat FactSet consensus estimates. As expected, net bookings for the year fell for the first time since fiscal 2015. However, management remains optimistic for a bounce back in fiscal 2023, with standalone top-line guidance of $3.75 billion-$3.85 billion, implying growth of 10%-13%, in line with our projections. With the Zynga transaction expected to close by the end of May, the pro forma growth rate may come slightly below the standalone one as the mobile firm posted a slight decline in its first-quarter results. Management expects to provide updated guidance with the fiscal first-quarter earnings release in August. We keep our $200 fair value estimate, which incorporates our outlook for the Zynga acquisition, and view the stock as attractive with shares trading in 5-star territory.

Take-Two is one of the larger third-party video game publishers and owns one of the largest most well-known video game franchises in Grand Theft Auto. We believe the firm is well positioned not only to capitalize on the success of GTA, but also to continue diversifying its revenue beyond its signature franchise. We expect Take-Two to continue to benefit from the high demand for consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

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.

Take-Two announced an agreement on Jan. 10 to purchase Zynga, a mobile game publisher, in a deal valued at $12.7 billion, or $9.86 per share, based on Take-Two’s closing price on Jan. 7. The deal is for $3.50 in cash and $6.36 in equity depending on the closing price of Take-Two. The deal price represents a 64% premium to the unaffected price of Zynga and 20% below the 52-week high. Take-Two will fund the cash portion with cash on hand and a new debt offering. Due to the price collar, Take-Two shareholders will own between 67% and 70% of the combined company post-closing. Zynga does have a go-shop provision for 45 days, which could attract a higher bid.

Take-Two posted a strong fiscal 2022 second quarter as non-GAAP revenue and EBITDA beat FactSet consensus expectations. The beat was due to the launch of NBA 2K22 and the continued growth in core titles of Red Dead Redemption 2, Borderlands 3, and Grand Theft Auto V. With the beat, management modestly increased its fiscal 2022 guidance. While the fiscal third quarter will see the launch of the GTA: The Trilogy, a remaster GTA 3, San Andreas, and Vice City, there is little else on the docket for the holiday season.