Take-Two Interactive, the video game publisher behind Grand Theft Auto, missed Wall Street estimates in its latest earning report, but showed significant overall growth, despite strong headwinds facing the video game industry. Net revenue increased 36 percent to $1.1 billion, which is up from $813.3 million in the same quarter last year.
Net bookings, meanwhile, which account for all products sold physically and digitally, grew 41 percent to $1 billion, compared to $711.4 million in the same period last year. The company also revised its revenue outlook for the current fiscal year to between $5.7 and $5.8 billion, which is almost double last year's net revenue.
In other words, Take-Two is feeling pretty confident, and one of the main reasons is its recent acquisition of Zynga. The game developer is behind such hits as Farmville and Words with Friends, and the publisher is banking on the merger to help drive more growth in its mobile category.
“We remain exceedingly optimistic about the long-term growth potential for the mobile industry, as well as our ability to create greater shareholder value as a combined entity with Zynga," said CEO Strauss Zelnick in a statement. He added during the earnings call that revenue from Zynga "complimented our results significantly for the period."
Indeed, the combination is already pushing Take-Two toward relying on what's called recurrent consumer spending, or income that comes from players' continued engagement with a game. According to Take-Two, "virtual currency, add-on content, in-game purchases, and in-game advertising" increased 44 percent in the quarter and accounted for 75 percent of net revenue, while digitally-delivered revenue increased 40 percent and accounted for 94 percent.
That kind of recurrent revenue is crucial for the company, which is known for taking a long time to produce major titles that then generate revenue for several years after their release. One of its largest revenue generators, Grand Theft Auto V, for instance, came out in 2013 — though the company is continually updating and releasing new content for the popular game. The company also confirmed the title has sold 170 million units total, with five million selling in the last quarter.
The only major release planned for the rest of this fiscal year is NBA 2K23, but Take-Two stressed that it will continue to roll out new offerings apart from its Triple-A releases.
"Our pipeline for the year continues to look very strong, and we are excited to expand significantly our mobile presence with a best-in-class platform," said Zelnick.