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    Take-Two Interactive Software Inc (TTWO)

    Q4 2024 Summary

    Published Jan 10, 2025, 5:10 PM UTC
    Initial Price$160.14December 31, 2023
    Final Price$148.49March 31, 2024
    Price Change$-11.65
    % Change-7.27%

    What went well

    • Take-Two expects to release Grand Theft Auto VI in fall 2025, with growing confidence in its commercial impact due to high market anticipation and ongoing strong sales of Grand Theft Auto V. , ,
    • Sequential growth in net bookings is anticipated for fiscal 2025, 2026, and 2027, driven by a robust pipeline of titles, including contributions from the GTA ecosystem, other major releases, and expansion into underpenetrated markets like Asia, India, and Africa. ,
    • Mobile gaming is back in growth mode, with successful titles like Match Factory! performing exceptionally well, contributing to expected high single-digit growth in mobile recurrent consumer spending. ,

    What went wrong

    • Potential delays and uncertainty in the release schedule, including GTA VI shifted to fall 2025. This narrowing of the release window may indicate possible development challenges or risks of further delays.
    • Heavy investment in mobile user acquisition without specified payback periods. The company is increasing spending on mobile titles like Match Factory! and Toon Blast, but the return on this investment remains uncertain.
    • Challenges in transitioning NBA 2K from Gen 8 to Gen 9 consoles, affecting revenue growth. The Gen 8 platform is underperforming, and while Gen 9 is performing well, the overall growth in recurrent consumer spending for NBA 2K is projected to be only a slight increase.

    Q&A Summary

    1. GTA VI Release Date and Confidence
      Q: How confident are you in the fall 2025 release of GTA VI?
      A: Strauss Zelnick expressed strong confidence in the fall 2025 release date for GTA VI, emphasizing that they feel really good about the timing and the title to come.

    2. Sequential Growth Post-GTA VI Release
      Q: How will you achieve growth in fiscal '27 after GTA VI's launch?
      A: Strauss explained that despite the tough comparison with fiscal '26, they expect sequential growth in fiscal '27 driven by a diversified pipeline, ongoing robust sales of GTA V, other powerful releases, a growing mobile business, and geographical expansion opportunities in underpenetrated markets like Asia, India, and Africa.

    3. GTA VI Commercial Expectations
      Q: What's driving increased expectations for GTA VI's impact?
      A: Confidence stems from GTA V's continued success, with over 200 million units sold and engagement up significantly. The market's anticipation for GTA VI is at a "fever pitch," and they expect GTA VI to perform exceptionally well.

    4. Mobile Growth and Investment Payback
      Q: When will mobile investments turn profitable?
      A: Strauss stated that their mobile division is already profitable. They tailor user acquisition spending to achieve a positive lifetime value and expect investments to yield meaningful returns without specifying exact payback periods.

    5. NBA 2K Growth Amid Console Transition
      Q: Is low single-digit growth for NBA 2K RCS the new normal?
      A: Karl Slatoff expects growth in NBA 2K's recurring consumer spending and full game sales. The transition from Gen 8 to Gen 9 consoles presents challenges, but Gen 9 is outperforming expectations with significant growth, and they anticipate strong RCS growth as more players engage deeply with the game.

    6. Cost Savings Realization
      Q: How much cost savings will be seen in fiscal '25?
      A: Lainie Goldstein explained that they will start seeing cost savings in fiscal '25, with full annualization in fiscal '26. The majority of the plan was executed in Q4 and Q1, with pieces coming through this year.

    7. Gearbox Acquisition Opportunities
      Q: What opportunities come with owning all of Gearbox?
      A: Strauss expressed enthusiasm for acquiring Gearbox, praising Randy Pitchford and his team as hit makers with the ability to bring AAA products to market reliably. He highlighted the success of Tiny Tina and the strength of Borderlands, stating they are thrilled to have Gearbox in the family.

    8. Mobile Strategy and Advertising
      Q: Any updates on mobile advertising growth?
      A: Strauss noted that they have restructured their mobile business, shifting from hyper-casual to hybrid casual, incorporating in-app purchases alongside advertising. Advertising is expected to be a meaningful growth area as they've added ad units to games that previously didn't have them.

    9. Pipeline Reevaluation and Resource Allocation
      Q: What are the key learnings from reevaluating your pipeline?
      A: Karl highlighted that focusing on projects with the highest chance of commercial and critical success is essential. They made tough choices to cancel some projects as part of their normal process and will continue refining their pipeline, including investing in new IPs.

    10. Impact of Console Install Base on GTA VI
      Q: Do you expect GTA VI to boost console sales?
      A: Strauss mentioned using IDG's projections, noting substantial growth in Gen 9 consoles, expected to reach 175 million by end of 2027. They anticipate a significant attach rate for GTA VI but did not specifically attribute it to boosting console sales.

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