Take-Two's Q2 brings slight revenue gains, $53m game cancellation

UPDATE: Take-Two quietly disclosed a $53 million "impairment charge" after it chose not to continue development on an unannounced game from studio Hangar 13.

Take-Two has closed out the second quarter of its 2022 fiscal year with a slight increase in GAAP net revenue, $10.3 million in GAAP net income, and the cancellation of a $53 million project that never saw the light of day.

Exactly what that abandoned project is or was remains unknown. An impairment charge totaling $53 million was quietly called out under the Q2 report's financial highlights section, catching the eye of folks like business analyst Mike Futter on Twitter.

The only specifics offered in the actual document note that the charge was tied to "the company's decision not to proceed with further development on an unannounced title in its pipeline."

Despite that additional sum appearing in its "cost of goods sold" section, operating income came to $20.15 million for the quarter on Q2's $858.2 million of GAAP net revenue.

The usual suspects are credited for what amounts to a 2 percent year-over-year increase in net revenue, including NBA 2K22 and 2K21, Grand Theft Auto and Online, Red Dead Redemption 2 and Online, Borderlands 3, Civilization VI, as well as Two Dots and Dragon City.

"We experienced consistently strong engagement trends across our key franchises, underscoring the durability of our offerings and the deep relationships we have established with new, existing, and returning players," commented CEO Strauss Zelnick.

Treading into the waters of operational metrics, Take-Two's net bookings saw a 3 percent increase year-over-year, going from $957.5 million last year to this year's $957.5. million. This quarter, 89 percent of overall net bookings came from digital sources, with digital making up $876.1 million this time around. 

Perhaps unsurprisingly, back catalog titles brought in the majority of those net bookings, with $629.2 million of that whole coming from previous releases like Grand Theft Auto, NBA 2K, Red Dead Redemption, Top Eleven, Civilization, and Dragon City.

All in all, Q2 went better than expected for Take-Two and, much like in Q1, exceed the company's own forecasts. Following those gains, the company has increased its full year projections to anywhere from $3.3 billion to $3.4 billion. Previously, it expected the full year to land closer to the range of $3.14 billion to $3.24 billion.

UPDATE: Bloomberg reports that the cancelled game was a new property codenamed "Volt" from 2K studio Hangar 13, the studio behind Mafia III. Bloomberg said Hangar 13 employees will discuss the studio's future this week.

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