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Take-Two beats financial expectations behind strength of NBA 2K

By Tobias Seck

Take-Two Interactive Software reported its financial results for its Q4 and FY '22, which ended March 31. The company’s profit significantly beat its guidance, driven by its top recurring consumer spending contributors, including the NBA 2K franchise. In its report, Take-Two revealed that its NBA 2K franchise, which has sold over 123 million copies, continued to be one of the top contributors to its recurrent consumer spending, which accounted for 65% of the developer's total net revenue. NBA 2K22 exceeded its predecessor’s sales, with more than 10 million copies sold to date as it continues to grow the franchise’s audience. Additionally, NBA 2K Mobile further catalyzed the franchise’s growth, as its downloads increased nearly 25% compared to FY '21. Take-Two's management analyzed there is “a significant opportunity to add unique and innovative experiences throughout the game and focus on expanding our player base,” a strategy that is supported by the company’s development studio staff headcount expansion to just over 6,000, which marks a year-over-year increase of almost 1,000. (Big video game companies continue to hire new workers, something that’s been a trend for several years now as games continue to get bigger and have larger persistent and online components.)

ESPORTS OPPORTUNITY: Take-Two also identified pursuing emerging opportunities, such as esports and expansion in underpenetrated markets (such as China), as one of its key business drivers. In line with that, Take-Two continues to grow the NBA 2K League, which was founded as a joint venture with the NBA in '18 and which counts sponsors such as AT&T, Bud Light, Champion, Coinbase, DoorDash, Google, SAP, Sony and Snickers. The NBA 2K League partnered with the city of Indianapolis to bring all Season 5 tournaments, including playoffs and finals, to its new home at The Pavilion at Pan Am. Furthermore, Take-Two shared that Season 5 features a new record prize pool of $2.5M. The NBA 2K franchise’s expansion into the Chinese market is on a promising path, as it is the most played online sports game for PC in the country. The market-specific NBA 2K Online 2 and its predecessor, NBA 2K Online, reached almost 57 million registered users by the end of FY '22.

UPSWING FOR GOLF GAME? While Take-Two's golf simulator, PGA Tour 2K21, was less of a sales hit with more than 3 million units sold to-date, the franchise gains the biggest name in golf as an ambassador. Last March, Take-Two secured an exclusive, long-term deal with Tiger Woods to appear exclusively in the franchise and serve as executive director and consultant. The upcoming PGA Tour 2K23 title will debut the golfing legend as the game’s executive director.

SUCCESS ON THE BOOKS: Financially, both Q4 and FY '22 were a success for Take-Two, per Monday's report. For the quarter ended March 31, the developer reported that net revenue increased by 11% to $930M, compared to $839.4M in last year’s Q4. Net income beat the company’s guidance range of $53-65M significantly, with Take-Two reporting a quarterly profit of $111M. For the FY, net revenue slightly increased by 4% to $3.50B, and Take-Two's annual profit was $418M. At presstime, shares of Take-Two were trading at $123.76, up 0.5% on the day.

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