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    Earnings call· Mar 2025(Q4 FY25)

    TAKE TWO INTERACTIVE SOFTWARE Q4 FY25 earnings call TTWO

    May 15, 2025 Source

    Executive summary

    Take-Two Interactive Q4 FY25 — Strong Performance Across Labels, Record Net Bookings Outlook for FY26

    Take-Two concluded FY25 with strong performance across its portfolio, driven by key franchises and mobile hits, achieving record net bookings. The company anticipates continued growth into FY26, setting the stage for a significant inflection point in FY27 with the launch of Grand Theft Auto VI, despite a large goodwill impairment charge in the current quarter. Management remains optimistic about long-term profitability and growth.

    Highlights

    5

    • Q4 net bookings reached $1.58 billion, at the top of the company's guidance range.

    • Recurrent consumer spending grew 14% year-over-year in Q4, accounting for 77% of net bookings.

    • NBA 2K25 sold in nearly 10 million units, a 7% increase year-over-year, with daily active users up 30%.

    • Grand Theft Auto V sold in over 215 million units, with recurrent consumer spending up 5% year-over-year.

    • Zynga outperformed, with Match Factory! and Color Block Jam becoming profitable and contributing significantly to Mobile net bookings.

    Concerns

    4

    • Operating expenses increased 44% to $4.6 billion in Q4 due to a $3.6 billion goodwill and acquired intangible assets impairment.

    • FY25 operating cash flow was an outflow of $45 million, despite being better than the forecast outflow of $200 million.

    • Mobile recurrent consumer spending is forecast to decline in FY26, affecting overall recurrent consumer spending growth.

    • Grand Theft Auto Online recurrent consumer spending is forecast to decline modestly in FY26.

    Guidance & targets

    17
    CategoryTargetConfidence
    Net Bookings
    $5.9 billion to $6 billion
    high materiality
    High
    Grand Theft Auto VI Release Date
    May 26, 2026
    high materiality
    High
    Total Titles in Pipeline
    approximately 38 titles
    medium materiality
    High
    FY26 Titles in Pipeline
    13 titles
    medium materiality
    High
    FY27 and FY28 Titles in Pipeline
    25 titles
    medium materiality
    High
    Recurrent Consumer Spending (RCS)
    flat
    high materiality
    Medium
    Recurrent Consumer Spending as % of Net Bookings
    76%
    medium materiality
    Medium
    Operating Cash Flow
    approximately $130 million
    high materiality
    Medium
    Capital Expenditures
    approximately $140 million
    medium materiality
    Medium
    GAAP Net Revenue
    $5.95 billion to $6.05 billion
    high materiality
    High
    Cost of Revenue
    $2.52 billion to $2.55 billion
    medium materiality
    High
    Total Operating Expenses
    $3.78 billion to $3.8 billion
    high materiality
    High
    Net Bookings
    $1.25 billion to $1.3 billion
    high materiality
    High
    Recurrent Consumer Spending Growth
    approximately 7%
    medium materiality
    Medium
    GAAP Net Revenue
    $1.35 billion to $1.4 billion
    medium materiality
    High
    Cost of Revenue
    $544 million to $562 million
    medium materiality
    High
    Operating Expenses
    $908 million to $918 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    2K
    2K posted a fantastic quarter with successful launches of Sid Meier's Civilization VII, WWE 2K25, and PGA TOUR 2K25. NBA 2K delivered near-record performance and exceeded forecasts, with significant engagement growth across its metrics.
    FY26 Net Bookings Contribution: 39%NBA 2K25 Units Sold: nearly 10 million (7% YoY increase)NBA 2K25 Daily Active Users: 30% increaseNBA 2K25 MyCareer Daily Players: 40% increaseNBA 2K25 Average Games Per User: 80% increaseWWE 2K25 Metacritic Score (Xbox Series X): 84WWE 2K Recurrent Consumer Spending: 20% increasePGA TOUR 2K25 Metacritic Score (PlayStation 5): 80
    		————
    Rockstar Games
    Rockstar Games excelled, with the Grand Theft Auto and Red Dead Redemption series surpassing forecasts. GTA Online recurrent consumer spending outperformed, driven by new modes, rewards, and GTA+ memberships, while Red Dead Redemption 2 also outperformed.
    FY26 Net Bookings Contribution: 16%GTA V Units Sold: over 215 millionGTA Online Recurrent Consumer Spending: 5% YoY increaseRed Dead Redemption 2 Net Bookings: 23% YoY growth
    		————
    Zynga
    Zynga outperformed during the period, with momentum continuing into fiscal 2026. Match Factory! exceeded expectations and is profitable, while Toon Blast achieved its largest quarter of net bookings since acquisition. Rollic's Color Block Jam is scaling rapidly and is profitable within four months.
    FY26 Net Bookings Contribution: 45%Toon Blast Net Bookings: 7% YoY growthMatch Factory! Profitability: profitableColor Block Jam Profitability: profitable (in 4 months)
    		————

    Operational metrics

    34
    Net Bookings
    $1.58 billiontop of guidance range
    Q4 FY25

    Achieved the top of the guidance range of $1.48 billion to $1.58 billion.

    Net Bookings
    $5.65 billiontop of guidance range
    FY25

    Achieved the top of the guidance range of $5.55 billion to $5.65 billion.

    Recurrent Consumer Spending Growth
    14%YoY
    Q4 FY25

    Exceeded outlook.

    Recurrent Consumer Spending as % of Net Bookings
    77%
    Q4 FY25

    Proportion of net bookings from recurrent consumer spending.

    Recurrent Consumer Spending Growth
    7%YoY
    FY25

    Exceeded outlook.

    Recurrent Consumer Spending as % of Net Bookings
    80%
    FY25

    Proportion of net bookings from recurrent consumer spending.

    NBA 2K Recurrent Consumer Spending Growth
    over 40%YoY
    Q4 FY25

    Greatly exceeded forecast.

    GTA Online & Mobile Recurrent Consumer Spending Growth
    mid-single digitsYoY
    Q4 FY25

    Both greatly exceeded forecast.

    NBA 2K Recurrent Consumer Spending Growth
    high teensYoY
    FY25

    Growth for the full fiscal year.

    Mobile Recurrent Consumer Spending Growth
    mid-single digitsYoY
    FY25

    Growth for the full fiscal year.

    GTA Online Recurrent Consumer Spending Growth
    modestly declinedYoY
    FY25

    Decline for the full fiscal year.

    GAAP Net Revenue
    $1.58 billion13% increase
    Q4 FY25

    Year-over-year increase.

    Cost of Revenue
    $779 million16% decline
    Q4 FY25

    Year-over-year decline, primarily due to lower impairment of acquired intangibles and timing of development credits.

    Operating Expenses (GAAP)
    $4.6 billion44% increase
    Q4 FY25

    Year-over-year increase due to a $3.6 billion impairment expense related to goodwill and acquired intangible assets.

    Operating Expenses (Management Basis) Growth
    3%YoY increase
    Q4 FY25

    Above guidance due to higher development costs for titles not technologically feasible.

    GAAP Net Revenue
    $5.63 billion5% increase
    FY25

    Year-over-year increase.

    Cost of Revenue
    $2.6 billion17% decrease
    FY25

    Year-over-year decrease, primarily due to lower impairment of acquired intangibles and timing of development credits.

    Operating Expenses (GAAP)
    $7.5 billion28% increase
    FY25

    Year-over-year increase due to impairment charges recorded in Q4.

    Operating Expenses (Management Basis) Growth
    11%YoY increase
    FY25

    Slightly above guidance due to higher development costs for titles not technologically feasible.

    Goodwill and Acquired Intangible Assets Impairment
    $3.6 billion
    Q4 FY25

    Impairment expense recorded during the fourth quarter.

    Capital Expenditures
    $169 millionabove forecast of $140 million
    FY25

    Primarily due to higher game technology expenses.

    Grand Theft Auto VI Trailer Two Views
    475 millionshattering records
    24 hours

    Cross-platform debut, becoming the biggest video launch of all time.

    Grand Theft Auto VI Trailer One Views
    93 millionrecord-breaking
    24 hours

    Debut on YouTube alone.

    Spotify Streams of Hot Together (The Pointer Sisters) Surge
    182,000%
    after Trailer Two debut

    Surge in streams of the track featured in the trailer.

    NBA 2K25 Arcade Edition Performance
    top 5 performing title
    current

    Remains a top 5 performing title on Apple Arcade.

    NBA 2K Online (China) Performance
    #1 PC sports game
    current

    Continues to hold its place as the #1 PC sports game in the country.

    NBA 2K All-Star Mobile (China) Performance
    #1 iOS sports game
    current

    Maintaining the #1 spot on the iOS sports game chart for both downloads and revenue in China.

    Color Block Jam Download Rank
    top 10 downloaded game
    current

    Currently a top 10 downloaded game in the U.S. Apple app store.

    Color Block Jam Grossing Rank
    among top grossing titles
    current

    Among the top grossing titles in the U.S. Apple app store.

    Total Titles in Pipeline
    approximately 38
    through FY28

    Upcoming pipeline of titles.

    FY26 Titles in Pipeline
    13
    FY26

    Planned releases for fiscal 2026.

    FY27 and FY28 Titles in Pipeline
    25
    FY27 and FY28

    Planned releases for fiscal 2027 and 2028.

    Direct-to-Consumer Business Performance
    record performance
    current

    Driven by new offers, events, and enhanced personalization.

    Internal Royalties
    —
    Q4 FY25

    Breakdown is driven by product mix and changes from quarter-to-quarter and year-to-year based on mix of the business on the top line.

    Industry KPIs

    1
    MetricValueDetails
    Content spend title performance475 millionviews

    Product announcements

    8
    ProductTypeDetails
    Mafia: The Old Countrylaunch
    Borderlands 4launch
    WWE 2K for Netflixlaunch
    Civilization VII VRlaunch
    Civilization VII for Switch 2launch
    WWE 2K for Switch 2launch
    Next NBA 2Klaunch
    Next WWE 2Klaunch

    Deals & partnerships

    6
    GearboxAcquisition of Gearbox Entertainment.

    Successfully acquired Gearbox, contributing to the development of key releases like Borderlands 4.

    NetflixPartnership for game distribution and potential media IP transformation.

    Netflix is a distribution partner for games (e.g., WWE 2K Mobile) and there is an ongoing BioShock movie project. The partnership is seen as very serious about gaming and offers significant marketing power.

    NBAPartnership for the NBA 2K franchise.

    Extraordinary partnership and support from Adam Silver of the NBA and Andre Iguodala of the NBA Players Association for the NBA 2K franchise.

    TKOPartnership for the WWE 2K franchise.

    Immense support from Nick Khan and his team at TKO for the WWE 2K franchise, including integration into televised programming and co-sponsorship of WrestleMania 41.

    PGAPartnership for the PGA TOUR 2K franchise.

    Partnership with PGA for creating the PGA TOUR 2K golf experience.

    TencentPartnership for NBA 2K All-Star Mobile in China.

    Developed NBA 2K All-Star Mobile in partnership with Tencent, which launched on March 25 and is maintaining the #1 spot on iOS sports game chart in China.

    Risks & headwinds

    4
    Goodwill and Acquired Intangible Assets ImpairmentQ4 FY25

    $3.6 billion

    Mitigation: The impairment was a result of updating long-term expectations and is a required annual test; management is implementing cost reduction programs and efficiency efforts to build scale and improve margins.

    Mobile Segment ModerationFY26

    expected moderation of trends

    Mitigation: Zynga's continued ability to create new native mobile hits (e.g., Match Factory!, Color Block Jam) and strong live operations execution are expected to drive ongoing momentum despite the challenging broader mobile gaming space.

    Increased Development Costsongoing

    hampering gross margins

    Mitigation: The company is implementing structural changes and cost reduction programs to offset these costs and improve efficiency, aiming to reach higher operating margins.

    Tariff Impact on Console Pricingnext 10 months (FY26)

    potential impact on guide

    Mitigation: Management feels reasonably confident that the guide would not be meaningfully affected unless tariffs move in a very different direction, citing a substantial installed base for all target platforms (except Switch 2, which is yet to launch).

    What to watch in Q1 FY26

    5

    Mobile Recurrent Consumer Spending Growth

    Q1 FY26
    Currentmid-single digits growth (FY25)
    Targetstabilization or return to growth

    Why it matters

    Zynga's momentum is key, but FY26 forecast is for decline/flat, making its actual performance a critical indicator.

    We expect recurrent consumer spending to be flat compared to fiscal 2025 and to represent 76% of net bookings. Our recurrent consumer spending forecast assumes high single-digit growth for NBA 2K and declined from Mobile and Grand Theft Auto Online.

    Q&A highlights

    7

    Why was Mafia: The Old Country priced at $50-$60, and will future games have variable pricing?

    Strauss Zelnick stated that Take-Two has always employed variable pricing, focusing on delivering more value to consumers than the price charged. For Mafia: The Old Country, the goal is to get the extraordinary game into as many hands as possible, believing revenue will follow a hit.

    “We've always had variable pricing. And the rubric that we employ is one of delivering way more value to consumers than what we charge.”

    asked by Eric Handler · answered by Strauss Zelnick

    2 min read6 chapters

    Detailed Narrative

    01

    Fiscal 2025 Performance Overview

    Take-Two concluded fiscal year 2025 with net bookings at the top of its guidance range, driven by strong contributions from 2K, Rockstar Games, and Zynga. Recurrent consumer spending significantly outperformed, increasing 14% year-over-year in Q4 and accounting for 77% of net bookings, highlighting the success of live services and ongoing engagement across the portfolio.

    02

    Grand Theft Auto VI Anticipation

    The upcoming release of Grand Theft Auto VI in May 2026 (FY27) is generating unprecedented🌐 consumer anticipation, with Trailer Two breaking records with over 475 million views in 24 hours. Management views the additional development time as a worthy investment for a groundbreaking project poised to exceed expectations and establish a new baseline for the business.

    03

    NBA 2K Franchise Strength

    NBA 2K25 delivered near-record performance, selling in nearly 10 million units, a 7% increase over the prior iteration during the same timeframe. Engagement metrics, including daily active users, MyCareer daily players, and average games per user, saw significant growth, reinforcing the franchise's strong position and the success of its brand extensions in various markets, including China.

    04

    Zynga's Mobile Momentum

    Zynga continued its strong momentum, with Match Factory! and Color Block Jam quickly becoming profitable and significant contributors to Mobile net bookings. The company attributes this success to talented creative and publishing teams, effective live operations, and a multi-studio approach, enabling hit launches in a highly competitive mobile gaming market.

    05

    Strategic Pipeline and Platform Expansion

    Take-Two plans to release approximately 38 titles through fiscal 2028, including 13 in FY26, such as Mafia: The Old Country and Borderlands 4. The company is also expanding its presence on new platforms like Nintendo Switch 2 and Meta Quest 3/3S, bringing key franchises like Civilization VII and WWE 2K to a broader audience and demonstrating optimism for these platforms.

    06

    Direct-to-Consumer Growth and Court Rulings

    The direct-to-consumer business achieved record performance, driven by new offers, events, and personalization. Management noted that recent beneficial court rulings regarding third-party distribution are positive signs that could further expand this highly accretive channel, which has already become a material part of the business since the Zynga acquisition.

    AI-generated summary of the company’s earnings call. Not investment advice.