Q3 2025 Summary
Published Feb 7, 2025, 7:58 PM UTC- The upcoming release of Grand Theft Auto VI in fall 2025 is expected to significantly boost Take-Two's performance and set new financial records. The company reaffirmed its release schedule and expressed high confidence in achieving sequential increases and record levels of net bookings in fiscal 2026 and 2027, attributing this to their creative teams seeking excellence.
- NBA 2K franchise is delivering outstanding performance, with recurrent consumer spending up over 30%, daily active users up nearly 20%, and monthly active users up nearly 10%. The significant innovation and enhancements in gameplay have led to substantial growth, and the company believes there's a lot of potential for further expansion in this franchise.
- Match Factory, a key mobile title, is expected to turn profitable towards the end of the fiscal year, contributing positively to the company's financials. The title is doing extremely well, and continued marketing efforts are leading to better performance as the game stays in the market.
- Take-Two's mobile division, Zynga, has faced challenges, including underperformance in some legacy titles like Empires & Puzzles and lower growth rates in the mobile market than desired, which could impact overall revenue growth.
- Anticipated synergies from the Zynga acquisition, specifically in bringing Take-Two's core IP to mobile platforms, may not be fully realized, raising concerns about the long-term strategic benefit of the acquisition.
- Leadership changes in key projects, such as the departure of Michael from 31st Union's Project Ethos, could disrupt development and affect the timely release and quality of upcoming titles.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -0.5% YoY | The near-flat performance stems from lower console revenues and declines in full-game sales balancing out growth in Recurrent Consumer Spending (RCS). Continuing macroeconomic uncertainty also contributed to cautious consumer spending, resulting in a modest overall drop. |
Console | -7% YoY | The decrement reflects fewer major console releases compared to the prior period and slower uptake of current-generation hardware. Additionally, lower engagement in select sports titles dampened console spending, though ongoing engagement in major franchises like Grand Theft Auto partially mitigated further declines. |
PC and Other | +7% YoY | This segment benefited from increased digital sales on PC, supported by the company’s efforts to enhance cross-platform accessibility. Larger player bases on PC and the continued shift to digital also helped offset weaker console performance in certain franchises. |
Recurrent Consumer Spending | +5% YoY | Growth in virtual currency, in-game purchases, and add-on content was driven by key titles like Grand Theft Auto Online and NBA 2K, as well as new mobile offerings. This improvement reflects ongoing player engagement and monetization strategies despite volatile market conditions. |
Full Game and Other | -18% YoY | Fewer blockbuster releases and soft launches in the quarter resulted in lower full-game sales. Some earlier high-profile titles had already passed their initial sales peaks, creating a tougher comparison against last year’s figures and leading to the YoY decline. |
Physical Retail | -29% YoY | The substantial drop is consistent with the industry-wide shift to digital distribution. This ongoing trend, alongside fewer physical console bundles, contributed to the marked downturn in physical retail revenues. |
Net Change in Cash | 89% YoY Improvement | Moving from -$96.4 million to -$10.7 million reflects tightened cost management, lack of large acquisitions compared to prior periods, and steady operating inflows from recurrent digital sales. While still negative, the significant improvement demonstrates more efficient cash usage and a healthier balance sheet position. |
Capital Expenditures (CapEx) | +22% YoY | The rise in CapEx is primarily attributed to infrastructure expansions, including office build-outs and investments in new development tools. The company expects these expenditures to support future game launches and sustain growth in existing franchises, positioning it for longer-term operational efficiencies. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Bookings | FY 2025 | $5.55–$5.65B | $5.55–$5.65B | no change |
Recurrent Consumer Spending Growth | FY 2025 | 4% | 5% | raised |
GAAP Net Revenue | FY 2025 | $5.57–$5.67B | $5.57–$5.67B | no change |
Operating Expenses | FY 2025 | $3.77–$3.79B | $3.77–$3.79B | no change |
Cost of Revenue | FY 2025 | $2.40–$2.42B | $2.41–$2.44B | raised |
Non-GAAP Adj. Unrestricted Operating CF | FY 2025 | Outflow of $150M | Outflow of $150M | no change |
Capital Expenditures | FY 2025 | $140M | $140M | no change |
Geographic Net Bookings Split | FY 2025 | 60% U.S., 40% Int’l | 60% U.S., 40% Int’l | no change |
Net Bookings Breakdown by Label (Zynga) | FY 2025 | 51% | 49% | lowered |
Net Bookings Breakdown by Label (2K) | FY 2025 | 32% | 34% | raised |
Net Bookings Breakdown by Label (Rockstar) | FY 2025 | 17% | 17% | no change |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
GAAP Net Revenue | Q3 2025 | $1.36B to $1.41B | $1.3598B | Missed |
Recurrent Consumer Spending (yoy) | Q3 2025 | ↑ ~9% vs. prior Q3 | +5% yoy (from $1,034.7M in Q3 2024To $1,087.5M in Q3 2025) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Grand Theft Auto VI release timeline | Confirmed for a fall 2025 launch in Q4 2024, Q1 2025, and Q2 2025, consistently viewed as a major growth catalyst with no specific mention of delays. | Reaffirmed for fall 2025 launch with expected transformative impact. No mention of delays. | Consistently reaffirmed, remains a core growth driver. |
Strong pipeline for fiscal 2026 and 2027 | Emphasized across Q4 2024, Q1 2025, and Q2 2025 with record net bookings ambitions, citing major releases (e.g., Borderlands 4, Mafia: The Old Country). | Management reiterated confidence in record net bookings, citing titles like Grand Theft Auto VI and Sid Meier’s Civilization VII for transformative long-term growth. | Consistent bullish outlook with ongoing emphasis on multiyear growth. |
NBA 2K franchise performance | Moved from net bookings concerns in Q1 2025 to strong recurrent spending in Q2 2025. Initially, net bookings had declined, but engagement and RCS showed solid upside. | Achieved over 30% growth, with RCS up 30% and daily active users up 20%, serving as a major performance driver. | Shift from worries to strong RCS growth, now a key upside contributor. |
Mobile gaming (Zynga, Match Factory) | Consistently mentioned in Q4 2024, Q1 2025, and Q2 2025 with mixed performance: bullish on new titles like Match Factory, but underperforming legacy games and synergy challenges. | Match Factory continues to perform exceptionally, expected to turn profitable soon. Some legacy titles underperformed, with high UA costs impacting near-term results. | Consistent discussion of mixed results despite optimism around new titles and synergy. |
Partnerships with streaming platforms | Q4 2024 and Q1 2025 contain no mentions. Q2 2025 briefly notes Netflix partnerships, but with limited details. | Management again mentioned Netflix as a potential distribution partner, focusing on consumer benefits but providing no major updates. | Intermittent references, not a sustained focal point. |
Rising costs and complexity of development | Q4 2024, Q1 2025, and Q2 2025 repeatedly cite cost-reduction programs and margin concerns due to complex development. Efficiencies are pursued to mitigate impacts. | No direct mention of rising development costs impacting margins, though cost management around operating expenses was noted. | Ongoing but less explicitly addressed in the current period. |
Leadership changes in key projects | No mentions in Q4 2024, Q1 2025, and Q2 2025. | Leadership turnover on Project Ethos at 31st Union, with the previous lead moving to an advisory role. Management expressed confidence despite the change. | New topic introduced, could pose development risks. |
Console generation transitions | Highlighted across Q4 2024, Q1 2025, and Q2 2025 as they affect sales and technical optimization (e.g., Xbox Series S). | Transition from Gen 8 to Gen 9 is no longer a headwind, with management stating it now benefits the company. | Remains intermittent, recent view is more positive than earlier caution. |
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GTA VI Launch
Q: How big could GTA VI's audience be?
A: Strauss Zelnick expects strong engagement for GTA VI but avoids predicting exact numbers. He noted that GTA V sold over 210 million units, and GTA Online, over 10 years old, still has enormous engagement. They focus on delivering great content and let outcomes take care of themselves. -
Future Net Bookings
Q: Are you reaffirming guidance for future net bookings?
A: Lainie Goldstein confirmed they remain highly confident in achieving sequential increases and record levels of net bookings in fiscal 2026 and 2027. Specific guidance will be provided during their May call. -
Zynga Synergies
Q: How are revenue synergies from Zynga acquisition progressing?
A: Strauss Zelnick stated that building their direct-to-consumer business within mobile, a combined project with Zynga, has turned into a very significant business generating meaningful incremental contribution. -
Mobile Challenges
Q: Is mobile gaming becoming more competitive?
A: Strauss Zelnick remarked that while mobile growth is slower than desired, there's still opportunity beyond just the biggest games. He noted challenges like development costs not being capitalized and marketing expenses burdening current results, but expects titles like Match Factory to become profitable and benefit future periods. -
Capital Allocation
Q: How are you thinking about cash flow and capital allocation?
A: Lainie Goldstein said that with strong cash flow expected, their capital allocation plans include paying down some debt over the next couple of years. However, potential acquisitions could adjust this timing. -
Capitalized Software
Q: Should we view the $1.9B capitalized software as indicative of upcoming releases?
A: Lainie Goldstein confirmed their accounting policies haven't changed. The capitalized software reflects games that have reached technological feasibility and will be amortized over their lifetimes. -
NBA 2K Rebound
Q: What's driving NBA 2K's strong performance?
A: Karl Slatoff credited innovative features like new shooting and dribbling mechanics, a new badge progression system, a smaller city layout, and an overhaul of the MyTeam mode for the game's success. They continue to see upside potential. -
Project Ethos Leadership
Q: How does leadership change impact Project Ethos?
A: Strauss Zelnick expressed gratitude to Michael for his contributions and stated that leadership will transition to a combination of 31st Union and 2K executives. They remain highly confident in delivering a great project and are fully committed to Ethos. -
Marketing Spend
Q: How will marketing expenses ramp with new launches?
A: Lainie Goldstein explained that marketing is usually concentrated around the launch but increasingly spread over the title's life cycle. Budgets remain similar in size, focusing on digital marketing and analytics to reach consumers. -
Nintendo Switch 2
Q: Will you support Nintendo Switch 2?
A: Strauss Zelnick indicated they would fully expect to support Switch, noting their long-standing relationship with Nintendo and that the Switch can support any audience. -
Netflix Partnership
Q: How material is the Netflix partnership for WWE?
A: Strauss Zelnick said they evaluate opportunities like Netflix to benefit consumers and are open to various platforms. Lainie Goldstein mentioned they haven't provided details on the deal's economics but such arrangements are accounted for over the deal's value.