2QFY3/24 net bookings beat, eyes on big title “Grand Theft Auto VI” release
- TTWO’s net bookings declined by 3% y-o-y decline to US$1.4bn in 2QFY3/24, above consensus
- Net loss further widened to US$553m (from US$257m loss in 2QFY3/23) vs consensus of US$170m loss, mainly due to one-time impairments charges
- FY3/24 net bookings guidance remains unchanged at 2-3% y-o-y growth, while net loss widens to US$957m and US$910m after considering the impact of impairments
2QFY3/24 net bookings beat. Net bookings decreased by 3% y-o-y to US$1.4bn in 2QFY3/24, better than consensus of 11% y-o-y decline. The outperformance reflects better-than-expected results from Grand Theft Auto V and Grand Theft Auto Online etc. Gross margin contracted by 17ppt y-o-y to 32% in 2QFY3/24. This was primarily due to (1) impairment charge of US$237m related to acquired intangibles and (2) US$161m of goodwill impairment. Operating expense was flat y-o-y due to disciplined marketing expenses. Net loss further widened by 112% to US$553m vs consensus of US$170m loss, due to lower gross margin resulting from one-time impairment. If excluding impairment impact, the earnings were largely in line with consensus.
Full-year net bookings guidance intact, awaiting new game release. Management maintains net bookings guidance of 2-3% y-o-y growth or US$5.2bn-5.3bn for FY3/24. Management is confident that strong game user engagement will continue into the upcoming holiday season, and the launch of blockbuster Grand Theft Auto VI will support sustainable revenue growth. Net loss is expected to be between US$957m and US$910m, revised downward from the previous guidance of US$545m to US$501m. This revision takes into account the impact of the impairments.