Take-Two’s Financials Are In — Is the House of Grand Theft Auto Wobbling?

[Music] We mentioned a couple things about take 2. So they actually had their quarterly results. So overall on a high level the revenue by platform this is the interesting one. 52% of their revenue at the moment actually naturally because they haven't launched GTA 5% comes from mobile consoles 37 and other PC and other make 11% of their revenue. Their net revenue is almost $3 billion and that was up from 2.7. the total net revenue was 5.6 and it used to be 5.4. So pretty much the same one. But what's interesting is that they reported that they earned, you know, half of the revenue coming from mobile during the financial years and hailed two of the Rolic hits driving the growth. So Color Block Jam and Match Factory both made in Istanbul. In the PR they talk about these as Zinga games, which they technically are, but we've been at Rolex Studios. We know where the magic is being made. It's it's over there. And then they also told about another game which is match factory also from

Istanbul and that it continues to perform really well and CEO Strauss Selnic was also bullish on Zingga's direct to consumer business aka web shops aka dom can roll the clip and let people know what the best in the business looks like. Anyways, so Tech 2 did say that they expect mobile revenue to be overall fairly flat. It plans to launch five new games in the next fiscal year, including WWE 2K, and that will be launched on Netflix games. So, that's the one that's going to break the bank. Well, also they announced a billion dollar equity financing, a follow on to pay down. But the other thing that was kind of buried in this report is something that clearly focusing on way too much on the negative, but like so they have written down their acquisition of Zinga for the second time. So, they put together a $3.7 billion impairment charge against or write down of the Zinga acquisition,

which is coupled with another $2.5 billion from last year, an impairment charge against this acquisition, which is a whopping $6.21 billion writedown of the Zinga acquisition. Right? So almost half of the value of what they did on the acquisition was a $12 billion acquisition was written down over the last two or three years. So it is exactly what I said when this thing was announced that they should have waited like a few months and they would have got this thing for half as much as they purchased it for. So my question to Mr. JP Morgan and Mr. Goldman Sachs, are you going to take half of the fees and bring that back to the shareholders after justifying this valuation for this company? Right? Their transaction fee should be cut in half because they wrote fairness opinions to the board of directors of each of these companies that this was a fair value for this

company when it was clearly not. Now having said that, if I take a step back, I have to acknowledge the fact that since this deal was done, the market cap of Take 2 is up 33%. So they are benefiting somewhat from Zingga's predictable revenue stream and scale. But I think personally it's more related to the GTA thing than anything do with Zingga's business. But this is what the reality of this transaction. It was an absolute disaster. It is the second worst acquisition in the history of video games, which obviously Glue was the worst. And I think worst every single piece of value was gone within like 6 months on that deal, right? It was crazy, dude. That was criminal, dude. That was criminal. Just because I realize I'm not I'm not 100% sure I know what impairment of goodwill means. Let me see if I'm understanding this right. and crust, you can help educate me and through me the audience on what a goodwill impairment is. So, they bought Zinga for $12

billion and now you're saying they've done a goodwill impairment of about $6 billion. So, what that means is that when they bought Zinga, they thought it was justified that it would add $12 billion of value of revenue to their business over some period of time. And now they're saying, "Oh, well, it looks like maybe they'll deliver $6 billion over that period of time, and we're acknowledging now that we lost or we overpaid $6 billion on this transaction." How is that close? That's close enough. On the books, like they are now writing down the value of that acquisition, right? Because things on the ground have changed. The financial performance or market conditions have changed. Clearly, they overpaid for this asset and that's why they're writing it down, right? And so, it's possible they could continue to write down goodwill. Is there more down to go on this? It's possible. I actually I didn't look into

it if they have more on the balance sheet, but I think they're done, you know, like I would hope anyway. I think the glue acquisition was probably too small to justify, you know, writing it down, but maybe they did write it down. I actually don't know. I didn't look at EA. Okay, one more for Turkey. One more for Turkey. So, this was like a little piece of news and then I got curious. So, I feel like if Ethan, you're the king of rabbit holes, I feel like I'm the queen of puzzle rabbit holes. So, there is a mobile developer called Tail Monster and they raised 7 million in a seed round. And granted, I'm not a founder. I don't really understand like the series A, C, B, whatever. It sounded like a big number to I was like, "Oh, that's that's a lot of millions. That's pretty good for like a mobile studio." And they had launched a game called Match Valley and it was, you know, a match three title. And I was like, I'm going to play this. So, I did and I wanted to see maybe after I give this summary of the gaming comment on whether it was a good amount,

large amount, small amount, whatever. But when I was complaining earlier about we need to see more innovation in the market, this is more what I'm talking about. So, I played the game. It's very early, you know, it's not huge amount of downloads. I think it was 8,000 downloads since it soft launched in September 2024. It's made about 10 grand. Small, very small. But the mechanic, they took merch, they took abilities that you find in like Archero, and they took the battles, not exactly as you would find them in a royal kingdom or a Clash Quest or, you know, Simon's cat match, but it was the most interesting game in terms of mechanics I've played in a while. And I thought, you know, if this is what Clash Quest from Supercell had been, I would have been a lot more excited. I think it has legs. depends what they do with that seven million once they receive it. It still needs a lot of work. But it's something for me that was very very different. So I got a little excited. I

hope I hope we see something from it. They must have had decent retention numbers to be able to raise that much money. Unless 7 million is mice nuts and then I take back everything I just said. No, it's a good raise. I I just don't The game is too early really to It's super early. Yeah. So we'll see. 7 million in seed is pretty nice. It's not 55 that Spike raised. It's possible maybe it has a soft launch somewhere under a different title that has bigger numbers and bigger metrics cuz 8,000 downloads is not a lot to prove six month. I mean I've done soft launches with like what 1500 just to get a retention number from specific countries. I mean you can do 3,000 at least gives you an early indication. I don't know if you can raise on that but I can certainly ask for UA investment on that. Right. And and the question is was that 8,000 over time or 8,000 all concentrated in September basically that's since September. So Aken Babet who's the founder of Triple Dot and he set up the Arcadia Gaming Advisors. Now that we cover the investments I think I

see him every week in like five different investments. He raised 100 million if I think he's gone like through 50 million already. Yeah. No. Yeah. He's really been active. Like I I've actually heard people talk about him like independently about like him being everywhere. So yeah, because he was in the dream in like early rounds. Money burns a hole in your pocket. That's what I tell myself when I go shopping. Especially if you have 100 mil. Not yet. [Music]