Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal First Quarter 2018
GAAP Net revenue grew 34% to $418.2 million
GAAP Net income increased to $0.56 per diluted share
Net Sales grew 28% to $348.3 million
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong results for its fiscal first quarter 2018, ended June
30, 2017. In addition, the Company provided its initial financial outlook for its fiscal second quarter ending September 30, 2017,
and updated its financial outlook for its fiscal year ending March 31, 2018.
Fiscal First Quarter 2018 GAAP Financial Highlights
Net revenue grew 34% to $418.2 million, as compared to $311.6 million in last year’s fiscal first quarter. The largest
contributors to net revenue in fiscal first quarter 2018 were NBA® 2K17, Grand Theft Auto V® and Grand Theft Auto
Online, WWE® 2K17 and WWE SuperCard, and Mafia III.
Digitally-delivered net revenue grew 56% to $268.2 million, as compared to $172.1 million in last year’s fiscal first quarter.
Recurrent consumer spending (virtual currency, downloadable add-on content and microtransactions) grew 72% year-over-year and
accounted for 63% of digitally-delivered net revenue, or 41% of total net revenue. The largest contributors to digitally-delivered
net revenue in fiscal first quarter 2018 were Grand Theft Auto Online and Grand Theft Auto V, NBA 2K17, and
WWE SuperCard and WWE 2K17.
Net income increased to $60.3 million, or $0.56 per diluted share, as compared to net loss of $38.6 million, or $0.46 per
diluted share, for the comparable period last year.
As of June 30, 2017, the Company had cash and short-term investments of $1.281 billion.
The following data, together with a management reporting tax rate of 22%, are used internally by the Company’s management and
Board of Directors to adjust the Company’s GAAP financial results in order to facilitate comparison of its operating performance
between periods and to better understand its core business and future outlook:
|
|
Three Months Ended June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data |
| $ in thousands |
|
Statement
of
Operations
|
|
Change in
deferred net
revenue and
related cost of
goods sold
|
|
Stock-based
compensation
|
|
Non-cash
amounts
related to
convertible
notes
|
|
Acquisition
related
expenses
|
|
Amortization
of intangible
assets
|
|
Business
reorganization
excluding
stock-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenue |
|
$ |
418,216 |
|
|
(69,911 |
) |
|
|
|
|
|
|
|
|
|
|
| Cost of goods sold |
|
|
194,569 |
|
|
(40,291 |
) |
|
(3,481 |
) |
|
|
|
|
|
(4,242 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
|
223,647 |
|
|
(29,620 |
) |
|
3,481 |
|
|
|
|
|
|
4,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
|
173,428 |
|
|
|
|
(20,590 |
) (1) |
|
|
|
(18 |
) |
|
(3,951 |
) |
|
(8,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations |
|
|
50,219 |
|
|
(29,620 |
) |
|
24,071 |
|
|
|
|
18 |
|
|
8,193 |
|
|
8,178 |
|
| Interest and other, net |
|
|
(2,808 |
) |
|
|
|
|
|
4,134 |
|
|
|
|
|
|
| Income before income taxes |
|
|
47,411 |
|
|
(29,620 |
) |
|
24,071 |
|
|
4,134 |
|
18 |
|
|
8,193 |
|
|
8,178 |
|
| 1) Includes $2,421 of stock-based compensation related to business
reorganization. |
| |
In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share
count of 118.8 million and adds back to net income the interest expense, net of tax, on the convertible notes of $0.4 million.
Operational Metric – Net Sales
Starting with fiscal first quarter 2018, Take-Two has replaced Bookings with Net Sales as an operational metric. The Company has
made this change in order to increase transparency and to be consistent with operational metrics provided by its peers. Net Sales
is defined as the net amount of products and services sold digitally or sold-in physically during the period. Unlike Bookings, Net
Sales includes licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.
During fiscal first quarter 2018, total Net Sales grew 28% to $348.3 million, as compared to $272.6 million during last year’s
fiscal first quarter. The largest contributors to Net Sales were Grand Theft Auto Online and Grand Theft Auto V,
NBA 2K17, Dragon City and Monster Legends, WWE 2K17 and WWE SuperCard, Mafia III, and
Sid Meier’s Civilization VI. Catalog accounted for $326.2 million of Net Sales led by Grand Theft Auto and NBA
2K. Digitally-delivered Net Sales grew 47% to $280.9 million, as compared to $191.2 million in last year’s fiscal first
quarter, led by Grand Theft Auto Online and Grand Theft Auto V, NBA 2K17, Monster Legends and Dragon
City, WWE SuperCard and WWE 2K17, and Mafia III. Net Sales from recurrent consumer spending grew 71%
year-over-year and accounted for 72% of digitally-delivered Net Sales, or 58% of total Net Sales.
Management Comments
“Fiscal 2018 is off to an excellent start, with our business’s positive momentum continuing to exceed our expectations in the
first quarter,” said Strauss Zelnick, Chairman and CEO of Take-Two. “We delivered growth in both Net Sales and net revenue, as well
as margin expansion. Our results were led by the ongoing extraordinary performance of Grand Theft Auto V and Grand Theft
Auto Online, strong demand for NBA 2K17 – which is now our highest-selling sports title ever – and increased recurrent
consumer spending.
“As a result of our stronger-than-expected first quarter operating results and improved outlook for the remainder of the year,
we are increasing our fiscal 2018 outlook for Net Sales and net cash provided by operating activities. Looking ahead, we expect
fiscal 2019 to be a record year for Net Sales and net cash provided by operating activities led by the launches of Rockstar Games’
Red Dead Redemption 2 and a highly anticipated new title from one of 2K’s biggest franchises. We have a robust development
pipeline and are better positioned than ever for long-term growth and margin expansion.”
Business and Product Highlights
Since April 1, 2017:
Take-Two:
- Further diversified its industry-leading portfolio of owned intellectual property through the
acquisition of Kerbal Space Program, the critically acclaimed physics-based space simulation game. Created by independent
developer Squad, Kerbal Space Program was originally released on PC in April 2015* and has sold over two million units to
date. The title has been widely popular with the media and consumers alike, earning a Metacritic rating of 88** and a Steam user
score of 97%***. The Kerbal Space Program: Making History Expansion is planned to launch for PC later this calendar
year.
|
*Game became available through Steam Early Access in March 2013, and launched in April
2015.
|
|
**Metacritic score for PC as of July 31, 2017.
|
|
***Steam user score as of July 31, 2017.
|
| |
Rockstar Games:
- Released new free content updates for Grand Theft Auto Online, including:
- Gunrunning, a massive update offering new opportunities in illegal weapons trafficking
gameplay and featuring tactical, full-service Mobile Operation Centers complete with new weapon upgrades and deep
customization, all new Weaponized Vehicles and much more.
- Dawn Raid, a two-team race under the cover of darkness to track down highly coveted
contraband involving parachutes, Night and Thermal Vision Goggles and the Trackify app to locate the correct package.
- Overtime Rumble, a new team-based fan favorite mode that pits up to 10 players in a
vehicular remix of Darts as players try to land the Ruiner 2000 on platforms of various sizes.
- Power Mad, a point-based battle where players on each team fight for the right to control
the minigun-toting Juggernaut.
- Announced that Red Dead Redemption 2 ® is planned for release worldwide
in spring 2018 (fiscal year 2019) for PlayStation®4 and Xbox One.
2K:
- Released two downloadable add-on packs for Mafia III – Stones Unturned and Sign of
the Times – which are available for individual purchase or as part of the title’s Season Pass.
- Announced Seth Rollins as the cover Superstar for WWE 2K18, the next release from its flagship
WWE video game franchise, which will launch on October 17, 2017 for PlayStation 4 and Xbox One. Players who purchase the WWE
2K18 Deluxe Edition or WWE 2K18 Collector’s Edition from participating retailers will receive Early
Access to their game copies and in-game bonuses beginning four days early on October 13, 2017. In addition, WWE
2K18 will be released for Nintendo Switch™ during fall 2017, marking the first time in five years that a WWE game has been
available on a Nintendo platform. The title will be supported with a series of post-launch content, including a Season Pass.
- Announced that Cleveland Cavaliers point guard, Kyrie Irving, will be the cover athlete
of NBA 2K18, the next iteration of its top-rated and top-selling NBA video game simulation series, which will
launch on September 19, 2017 for PlayStation 4, PlayStation 3, Xbox One, Xbox 360, Nintendo Switch, and Windows PC platforms. In
addition, Hall of Famer Shaquille O’Neal will be on the cover of the NBA 2K18 Legend Edition. This special edition will
place a spotlight on “The Big Aristotle” with special Shaq-themed memorabilia and content, extending his legacy as the
most dominant center in NBA history. NBA 2K18 will also debut the series’ first-ever Canadian cover, featuring Toronto
Raptors’ shooting guard DeMar DeRozan.
- Announced that XCOM® 2: War of the Chosen, the expansion pack for the 2016 award-winning
strategy title from Firaxis Games, will be available for Windows PC, PlayStation 4 and Xbox One on August 29, 2017.
Financial Outlook for Fiscal 2018
Take-Two is providing its initial financial outlook for its fiscal second quarter ending September 30, 2017, and updating its
financial outlook for its fiscal year ending March 31, 2018, as follows:
Second Quarter Ending September 30, 2017
- GAAP net revenue is expected to range from $400 to $450 million
- GAAP net income is expected to range from $17 to $27 million
- GAAP diluted net income per share is expected to range from $0.15 to $0.25
- Share count used to calculate GAAP diluted net income per share is expected to be 109.9 million
(1)
- Net Sales (operational metric) are expected to range from $465 to $515 million
The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its
management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating
performance between periods and to better understand its core business and future outlook:
|
|
Three Months Ending September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Financial Data |
| $ in millions |
|
GAAP
outlook (2)
|
|
Change in
deferred net
revenue and
related cost of
goods sold
|
|
Stock-based
compensation (3)
|
|
Non-cash
amounts related to
convertible
notes
|
|
Amortization
of intangible
assets
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenue |
|
$400 to $450 |
|
$65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of goods sold |
|
$194 to $222 |
|
$22 |
|
($8) |
|
|
|
($4) |
|
|
|
|
|
|
|
|
|
|
|
| Operating Expenses |
|
$185 to $195 |
|
|
|
($18) |
|
|
|
($4) |
|
|
|
|
|
|
|
|
|
|
|
| Interest and other, net |
|
$2 |
|
|
|
|
|
($3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
$19 to $31 |
|
$43 |
|
$26 |
|
$3 |
|
$8 |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ending March 31, 2018
As a result of its better-than-expected fiscal first quarter 2018 operating performance and improved outlook for the remainder
of the fiscal year, Take-Two is increasing its fiscal year 2018 outlook for Net Sales and net cash provided by operating
activities. In addition, due to the continued success of Grand Theft Auto Online and other factors, the Company has
determined that it is necessary to extend the life of Grand Theft Auto V and Grand Theft Auto Online for purposes of
calculating deferrals. As a result, and also due to higher expected internal royalties driven by the strong performance of Grand
Theft Auto V and Grand Theft Auto Online, the Company is reducing its outlook for GAAP net revenue and GAAP net
income.
- GAAP net revenue is expected to range from $1.62 to $1.72 billion
- GAAP net income is expected to range from $112 to $140 million
- GAAP diluted net income per share is expected to range from $1.00 to $1.25
- Share count used to calculate GAAP diluted net income per share is expected to be 111.8 million
(4)
- Net cash provided by operating activities is expected to be approximately $200 million
- Capital expenditures are expected to be approximately $60 million
- Net Sales (operational metric) are expected to range from $1.65 to $1.75 billion
The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its
management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating
performance between periods and to better understand its core business and future outlook:
|
|
Twelve Months Ending March 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data |
| $ in millions |
|
GAAP
outlook (2)
|
|
Change in
deferred net
revenue and
related cost of
goods sold
|
|
Stock-based
compensation (3)
|
|
Non-cash
amounts
related to
convertible
notes
|
|
Amortization
of
intangible assets
|
|
Business
reorganization
excluding
stock-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenue |
|
$1,620 to $1,720 |
|
$30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of goods sold |
|
$732 to $781 |
|
($13 |
) |
|
($21 |
) |
|
|
|
($18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Expenses |
|
$770 to $790 |
|
|
|
($74
|
) (5)
|
|
|
|
($16 |
) |
|
($8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest and other, net |
|
$9 |
|
|
|
|
|
($14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
$109 to $141 |
|
$43 |
|
|
$95 |
|
|
$14 |
|
|
$34 |
|
|
$8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
1) |
|
For the fiscal second quarter ending September 30, 2017, the Company’s fully diluted
share count used for management reporting purposes is expected to be 120.3 million, which includes 109.0 million basic shares,
0.9 million participating shares and 10.4 million shares representing the potential dilution from convertible notes. The
interest expense, net of tax, on the convertible notes, which is added back to net income to calculate diluted net income per
share for management reporting purposes is $0.4 million. Take-Two’s GAAP net income per diluted share outlook is calculated
using a diluted share count of 109.9 million (basic shares plus participating shares), because using the “if-converted” method
and the Company’s fully diluted share count of 120.3 million would have been anti-dilutive. |
|
|
2) |
|
The individual components of the financial outlook may not foot to the totals as the
Company does not expect actual results for every component to be at the low end or high end of the outlook range
simultaneously. |
|
|
3) |
|
The Company's stock-based compensation expense for the periods above includes the
cost of approximately 0.6 million restricted stock units previously granted to ZelnickMedia that are subject to variable
accounting. Actual expense to be recorded in connection with these shares is dependent upon several factors, including future
changes in Take-Two's stock price. |
|
|
4) |
|
For the fiscal year ending March 31, 2018, the Company’s fully diluted share count
used for management reporting purposes is expected to be 121.9 million, which includes 110.9 million basic shares, 0.8 million
participating shares and 10.2 million shares representing the potential dilution from convertible notes. The interest expense,
net of tax, on the convertible notes, which is added back to net income to calculate diluted net income per share for
management reporting purposes is $1.8 million. Take-Two’s GAAP net income per diluted share outlook is calculated using a
diluted share count of 111.8 million (basic shares plus participating shares), because using the “if-converted” method and the
Company’s fully diluted share count of 121.9 million would have been anti-dilutive. |
|
|
5) |
|
Includes $2.4 million of stock-based compensation related to business
reorganization. |
|
|
|
|
|
Key assumptions and dependencies underlying the Company’s financial outlook include: the timely delivery of the titles included
in this financial outlook; continued consumer acceptance of the Xbox One and PlayStation 4; the ability to develop and publish
products that capture market share for these new-generation systems while continuing to leverage opportunities on the Xbox 360,
PlayStation 3 and PC; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.
Product Releases
The following titles were released since April 1, 2017:
|
Label
|
|
|
Title
|
|
|
Platforms
|
|
|
Release Date
|
| 2K |
|
|
Mafia III: Stones Unturned (DLC)
|
|
|
PS4, Xbox One, PC |
|
|
May 30, 2017 |
| 2K |
|
|
Mafia III: Sign of the Times (DLC)
|
|
|
PS4, Xbox One, PC |
|
|
July 25, 2017 |
| |
|
Take-Two's lineup of future titles announced to date includes:
|
| |
|
Label
|
|
|
Title
|
|
|
Platforms
|
|
|
Release Date
|
| 2K |
|
|
XCOM 2: War of the Chosen (DLC)
|
|
|
PS4, Xbox One, PC |
|
|
August 29, 2017 |
| 2K |
|
|
NBA 2K18
|
|
|
PS4, PS3, Xbox One, Xbox 360, Switch (digital), PC |
|
|
September 19, 2017 |
| 2K |
|
|
WWE 2K18
|
|
|
PS4, Xbox One |
|
|
October 17, 2017 |
| 2K |
|
|
NBA 2K18
|
|
|
Switch (physical) |
|
|
Fall 2017 |
| 2K |
|
|
WWE 2K18
|
|
|
Switch |
|
|
Fall 2017 |
| Take-Two |
|
|
Kerbal Space Program: Making History Expansion
|
|
|
PC |
|
|
Calendar 2017 |
| Rockstar Games |
|
|
Red Dead Redemption 2
|
|
|
PS4, Xbox One |
|
|
Spring 2018 |
|
|
|
|
|
|
|
|
|
|
Conference Call
Take-Two will host a conference call today at 4:30 p.m. Eastern Time to review these results and discuss other topics. The call
can be accessed by dialing (877) 407-0984 or (201) 689-8577. A live listen-only webcast of the call will be available by visiting
http://ir.take2games.com and a replay will be available following the call at the same location.
Final Results
The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Quarterly
Report on Form 10-Q for the period ended June 30, 2017.
About Take-Two Interactive Software
Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, publisher and
marketer of interactive entertainment for consumers around the globe. The Company develops and publishes products principally
through its two wholly-owned labels Rockstar Games and 2K. Our products are designed for console systems and personal computers,
including smartphones and tablets, and are delivered through physical retail, digital download, online platforms and cloud
streaming services. The Company’s common stock is publicly traded on NASDAQ under the symbol TTWO. For more corporate and product
information please visit our website at http://www.take2games.com.
All trademarks and copyrights contained herein are the property of their respective holders.
Cautionary Note Regarding Forward-Looking Statements
The statements contained herein which are not historical facts are considered forward-looking statements under federal
securities laws and may be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans,"
"potential," "predicts," "projects," "seeks," “should,” "will," or words of similar meaning and include, but are not limited to,
statements regarding the outlook for the Company's future business and financial performance. Such forward-looking statements are
based on the current beliefs of our management as well as assumptions made by and information currently available to them, which
are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and
results may vary materially from these forward-looking statements based on a variety of risks and uncertainties including: our
dependence on key management and product development personnel, our dependence on our Grand Theft Auto products and our
ability to develop other hit titles, the timely release and significant market acceptance of our games, the ability to maintain
acceptable pricing levels on our games, and risks associated with international operations. Other important factors and information
are contained in the Company's most recent Annual Report on Form 10-K, including the risks summarized in the section entitled "Risk
Factors," the Company’s most recent Quarterly Report on Form 10-Q, and the Company's other periodic filings with the SEC, which can
be accessed at www.take2games.com. All forward-looking statements are qualified by these cautionary statements and apply only
as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of
new information, future events or otherwise.
| |
| TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
| Net revenue |
|
|
$ |
418,216 |
|
|
$ |
311,552 |
|
|
|
|
|
|
|
| Cost of goods sold: |
|
|
|
|
|
| Internal royalties |
|
|
|
77,704 |
|
|
|
59,673 |
|
| Software development costs and royalties |
|
|
|
43,629 |
|
|
|
63,659 |
|
| Product costs |
|
|
|
44,069 |
|
|
|
44,979 |
|
| Licenses |
|
|
|
29,167 |
|
|
|
23,069 |
|
| Total cost of goods sold |
|
|
|
194,569 |
|
|
|
191,380 |
|
|
|
|
|
|
|
| Gross profit |
|
|
|
223,647 |
|
|
|
120,172 |
|
|
|
|
|
|
|
| General and administrative |
|
|
|
60,603 |
|
|
|
46,743 |
|
| Selling and marketing |
|
|
|
52,214 |
|
|
|
71,134 |
|
| Research and development |
|
|
|
42,269 |
|
|
|
33,900 |
|
| Business reorganization |
|
|
|
10,599 |
|
|
|
- |
|
| Depreciation and amortization |
|
|
|
7,743 |
|
|
|
7,378 |
|
| Total operating expenses |
|
|
|
173,428 |
|
|
|
159,155 |
|
| Income (loss) from operations |
|
|
|
50,219 |
|
|
|
(38,983 |
) |
| Interest and other, net |
|
|
|
(2,808 |
) |
|
|
(4,506 |
) |
| Gain on long-term investments, net |
|
|
|
- |
|
|
|
1,350 |
|
| Income (loss) before income taxes |
|
|
|
47,411 |
|
|
|
(42,139 |
) |
| Benefit from income taxes |
|
|
|
12,865 |
|
|
|
3,572 |
|
| Net income (loss) |
|
|
$ |
60,276 |
|
|
$ |
(38,567 |
) |
|
|
|
|
|
|
| Earnings (loss) per share: |
|
|
|
|
|
| Basic earnings (loss) per share |
|
|
$ |
0.57 |
|
|
$ |
(0.46 |
) |
| Diluted earnings (loss) per share |
|
|
$ |
0.56 |
|
|
$ |
(0.46 |
) |
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
| Basic |
|
|
|
104,465 |
|
|
|
84,588 |
|
| Diluted |
|
|
|
117,753 |
|
|
|
84,588 |
|
|
|
|
|
|
|
| Computation of Basic EPS: |
|
|
|
|
|
| Net income (loss) |
|
|
$ |
60,276 |
|
|
$ |
(38,567 |
) |
| Less: net income allocated to participating securities |
|
|
|
(588 |
) |
|
|
- |
|
| Net loss for basic and diluted EPS calculation |
|
|
$ |
59,688 |
|
|
$ |
(38,567 |
) |
|
|
|
|
|
|
| Weighted average shares outstanding - basic |
|
|
|
105,494 |
|
|
|
84,588 |
|
| Less: weighted average participating shares outstanding |
|
|
|
(1,029 |
) |
|
|
- |
|
| Weighted average common shares outstanding - basic |
|
|
|
104,465 |
|
|
|
84,588 |
|
|
|
|
|
|
|
| Basic earnings (loss) per share |
|
|
$ |
0.57 |
|
|
$ |
(0.46 |
) |
|
|
|
|
|
|
| Computation of Diluted EPS: |
|
|
|
|
|
| Net income (loss) |
|
|
$ |
60,276 |
|
|
$ |
(38,567 |
) |
| Less: net income allocated to participating securities |
|
|
|
(522 |
) |
|
|
- |
|
| Add: interest expense, net of tax, on Convertible Notes |
|
|
|
5,750 |
|
|
|
- |
|
| Net income (loss) for diluted EPS calculation |
|
|
$ |
65,504 |
|
|
$ |
(38,567 |
) |
|
|
|
|
|
|
| Weighted average common shares outstanding - basic |
|
|
|
105,494 |
|
|
|
84,588 |
|
| Add: dilutive effect of common stock equivalents |
|
|
|
13,288 |
|
|
|
- |
|
| Total weighted average shares outstanding - diluted |
|
|
|
118,782 |
|
|
|
84,588 |
|
| Less: weighted average participating shares outstanding |
|
|
|
(1,029 |
) |
|
|
- |
|
| Weighted average common shares outstanding - diluted |
|
|
|
117,753 |
|
|
|
84,588 |
|
|
|
|
|
|
|
| Diluted earnings (loss) per share |
|
|
$ |
0.56 |
|
|
$ |
(0.46 |
) |
|
|
|
|
|
|
|
|
|
|
| |
| TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| (in thousands, except per share amounts) |
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
|
|
2017 |
|
|
|
2017 |
|
|
|
|
|
|
| ASSETS |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
828,112 |
|
|
$ |
943,396 |
|
| Short-term investments |
|
|
452,949 |
|
|
|
448,932 |
|
| Restricted cash |
|
|
406,336 |
|
|
|
337,818 |
|
|
Accounts receivable, net of allowances of $52,262 and $66,483 at June 30, 2017 and March 30, 2017,
respectively
|
|
|
229,197 |
|
|
|
219,558 |
|
| Inventory |
|
|
11,636 |
|
|
|
16,323 |
|
| Software development costs and licenses |
|
|
20,181 |
|
|
|
41,721 |
|
| Deferred cost of goods sold |
|
|
79,902 |
|
|
|
127,901 |
|
| Prepaid expenses and other |
|
|
84,823 |
|
|
|
59,593 |
|
| Total current assets |
|
|
2,113,136 |
|
|
|
2,195,242 |
|
|
|
|
|
|
| Fixed assets, net |
|
|
76,613 |
|
|
|
67,300 |
|
| Software development costs and licenses, net of current portion |
|
|
462,877 |
|
|
|
381,910 |
|
| Deferred cost of goods sold, net of current portion |
|
|
17,021 |
|
|
|
- |
|
| Goodwill |
|
|
369,622 |
|
|
|
359,115 |
|
| Other intangibles, net |
|
|
133,330 |
|
|
|
110,262 |
|
| Other assets |
|
|
46,971 |
|
|
|
35,325 |
|
| Total assets |
|
$ |
3,219,570 |
|
|
$ |
3,149,154 |
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
$ |
36,934 |
|
|
$ |
31,892 |
|
| Accrued expenses and other current liabilities |
|
|
809,685 |
|
|
|
750,875 |
|
| Deferred revenue |
|
|
619,439 |
|
|
|
903,125 |
|
| Total current liabilities |
|
|
1,466,058 |
|
|
|
1,685,892 |
|
|
|
|
|
|
| Long-term debt |
|
|
212,864 |
|
|
|
251,929 |
|
| Non-current deferred revenue |
|
|
231,526 |
|
|
|
10,406 |
|
| Other long-term liabilities |
|
|
209,367 |
|
|
|
197,199 |
|
| Total liabilities |
|
|
2,119,815 |
|
|
|
2,145,426 |
|
|
|
|
|
|
|
|
|
|
|
| Stockholders' equity: |
|
|
|
|
| Preferred stock, $.01 par value, 5,000 shares authorized |
|
|
- |
|
|
|
- |
|
| Common stock, $.01 par value, 200,000 shares authorized; 123,027 and 119,813
shares |
|
|
|
|
| issued and 105,835 and 102,621 outstanding at June 30, 2017 and March 31, 2017,
respectively |
|
|
1,230 |
|
|
|
1,198 |
|
| Additional paid-in capital |
|
|
1,479,143 |
|
|
|
1,452,754 |
|
| Treasury stock, at cost; 17,192 common shares at June 30, 2017 and March 31, 2017,
respectively |
|
|
(303,388 |
) |
|
|
(303,388 |
) |
| Accumulated deficit |
|
|
(39,648 |
) |
|
|
(99,694 |
) |
| Accumulated other comprehensive loss |
|
|
(37,582 |
) |
|
|
(47,142 |
) |
| Total stockholders' equity |
|
|
1,099,755 |
|
|
|
1,003,728 |
|
| Total liabilities and stockholders' equity |
|
$ |
3,219,570 |
|
|
$ |
3,149,154 |
|
|
|
|
|
|
|
|
|
|
| |
| TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (in thousands) |
| |
|
|
|
Three months ended June 30, |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
| Operating activities: |
|
|
|
|
|
|
Net income (loss) |
|
|
$ |
60,276 |
|
|
$ |
(38,567 |
) |
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
Amortization and impairment of software development costs and licenses |
|
|
|
18,206 |
|
|
|
41,034 |
|
|
Depreciation and amortization |
|
|
|
7,743 |
|
|
|
7,378 |
|
|
Amortization and impairment of intellectual property |
|
|
|
8,181 |
|
|
|
- |
|
|
Stock-based compensation |
|
|
|
24,071 |
|
|
|
15,100 |
|
|
Amortization of discount on Convertible Notes |
|
|
|
5,237 |
|
|
|
6,098 |
|
|
Gain on conversions of Convertible Notes |
|
|
|
(1,103 |
) |
|
|
- |
|
|
Amortization of debt issuance costs |
|
|
|
188 |
|
|
|
381 |
|
|
Other, net |
|
|
|
(9,669 |
) |
|
|
(3,171 |
) |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
Restricted cash |
|
|
|
(68,518 |
) |
|
|
(57,335 |
) |
|
Accounts receivable |
|
|
|
(9,294 |
) |
|
|
28,226 |
|
|
Inventory |
|
|
|
5,451 |
|
|
|
2,696 |
|
|
Software development costs and licenses |
|
|
|
(71,829 |
) |
|
|
(62,392 |
) |
|
Prepaid expenses and other assets |
|
|
|
(23,199 |
) |
|
|
(3,867 |
) |
|
Deferred revenue |
|
|
|
(67,883 |
) |
|
|
(36,446 |
) |
|
Deferred cost of goods sold |
|
|
|
32,233 |
|
|
|
17,223 |
|
|
Accounts payable, accrued expenses and other liabilities |
|
|
|
71,281 |
|
|
|
36,394 |
|
|
Net cash used in operating activities |
|
|
|
(18,628 |
) |
|
|
(47,248 |
) |
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
|
Change in bank time deposits |
|
|
|
(24,999 |
) |
|
|
78,691 |
|
|
Proceeds from available-for-sale securities |
|
|
|
45,705 |
|
|
|
29,795 |
|
|
Purchases of available-for-sale securities |
|
|
|
(33,158 |
) |
|
|
(30,836 |
) |
|
Purchases of fixed assets |
|
|
|
(16,092 |
) |
|
|
(4,230 |
) |
|
Purchases of commercial paper |
|
|
|
(7,989 |
) |
|
|
- |
|
|
Proceeds from commercial paper |
|
|
|
16,500 |
|
|
|
- |
|
|
Proceeds from sale of long-term investments |
|
|
|
- |
|
|
|
1,350 |
|
|
Purchase of long-term investments |
|
|
|
- |
|
|
|
(1,885 |
) |
|
Asset acquisition |
|
|
|
(25,381 |
) |
|
|
- |
|
|
Net cash (used in) provided by investing activities |
|
|
|
(45,415 |
) |
|
|
72,885 |
|
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
|
Excess tax benefit from stock-based compensation |
|
|
|
- |
|
|
|
887 |
|
|
Tax payment related to net share settlements on restricted stock
awards |
|
|
|
(57,689 |
) |
|
|
(25,166 |
) |
|
Net cash used in financing activities |
|
|
|
(57,689 |
) |
|
|
(24,279 |
) |
|
|
|
|
|
|
|
|
Effects of foreign exchange rates on cash and cash equivalents |
|
|
|
6,448 |
|
|
|
(3,772 |
) |
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
|
(115,284 |
) |
|
|
(2,414 |
) |
|
Cash and cash equivalents, beginning of year |
|
|
|
943,396 |
|
|
|
798,742 |
|
|
Cash and cash equivalents, end of period |
|
|
$ |
828,112 |
|
|
$ |
796,328 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
| Net Revenue and Net Sales by Geographic Region, Distribution Channel,
and Platform Mix |
| (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2017
|
|
|
Three Months Ended
June 30, 2016
|
|
|
|
Amount |
|
% of Total |
|
|
Amount |
|
% of Total |
|
|
|
|
|
|
|
|
|
|
|
| Net revenue by geographic region |
|
|
|
|
|
|
|
|
|
|
| United States |
|
|
$ |
258,260 |
|
62 |
% |
|
|
$ |
193,101 |
|
62 |
% |
| International |
|
|
|
159,956 |
|
38 |
% |
|
|
|
118,451 |
|
38 |
% |
| Total net revenue |
|
|
|
418,216 |
|
100 |
% |
|
|
|
311,552 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
| Net sales by geographic region |
|
|
|
|
|
|
|
|
|
|
| United States |
|
|
$ |
199,871 |
|
57 |
% |
|
|
$ |
143,240 |
|
53 |
% |
| International |
|
|
|
148,434 |
|
43 |
% |
|
|
|
129,316 |
|
47 |
% |
| Total net sales |
|
|
$ |
348,305 |
|
100 |
% |
|
|
$ |
272,556 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2017
|
|
|
Three Months Ended
June 30, 2016
|
|
|
|
Amount |
|
% of Total |
|
|
Amount |
|
% of Total |
|
|
|
|
|
|
|
|
|
|
|
| Net revenue by distribution channel |
|
|
|
|
|
|
|
|
|
|
| Digital online |
|
|
$ |
268,235 |
|
64 |
% |
|
|
$ |
172,078 |
|
55 |
% |
| Physical retail and other |
|
|
|
149,981 |
|
36 |
% |
|
|
|
139,474 |
|
45 |
% |
| Total net revenue |
|
|
|
418,216 |
|
100 |
% |
|
|
|
311,552 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
| Net sales by distribution channel |
|
|
|
|
|
|
|
|
|
|
| Digital online |
|
|
$ |
280,914 |
|
81 |
% |
|
|
$ |
191,164 |
|
70 |
% |
| Physical retail and other |
|
|
|
67,391 |
|
19 |
% |
|
|
|
81,392 |
|
30 |
% |
| Total net sales |
|
|
$ |
348,305 |
|
100 |
% |
|
|
$ |
272,556 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2017
|
|
|
Three Months Ended
June 30, 2016
|
|
|
|
Amount |
|
% of Total |
|
|
Amount |
|
% of Total |
| Net revenue by platform mix |
|
|
|
|
|
|
|
|
|
|
| Console |
|
|
$ |
344,917 |
|
82 |
% |
|
|
$ |
254,026 |
|
82 |
% |
| PC and other |
|
|
|
73,299 |
|
18 |
% |
|
|
|
57,526 |
|
18 |
% |
| Total net revenue |
|
|
|
418,216 |
|
100 |
% |
|
|
|
311,552 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
| Net sales by platform mix |
|
|
|
|
|
|
|
|
|
|
| Console |
|
|
$ |
265,750 |
|
76 |
% |
|
|
$ |
213,845 |
|
78 |
% |
| PC and other |
|
|
|
82,555 |
|
24 |
% |
|
|
|
58,711 |
|
22 |
% |
| Total net sales |
|
|
$ |
348,305 |
|
100 |
% |
|
|
$ |
272,556 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
| ADDITIONAL DATA |
| (in thousands) |
|
Three Months Ended June 30, 2017 |
|
Net Revenue |
|
Cost of Goods Sold-
Internal Royalties
|
|
Cost of Goods Sold-
Software
Development Costs
and Royalties
|
|
Cost of Goods Sold-
Product Costs
|
|
Cost of Goods Sold-
Licenses
|
|
General and
Administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As reported |
|
$ |
418,216 |
|
|
$ |
77,704 |
|
|
$ |
43,629 |
|
|
$ |
44,069 |
|
|
$ |
29,167 |
|
|
$ |
60,603 |
|
|
Net effect from deferral and related cost of goods sold |
|
|
(69,911 |
) |
|
|
|
|
(7,654 |
) |
|
|
(17,806 |
) |
|
|
(14,831 |
) |
|
|
|
Stock-based compensation |
|
|
|
|
|
|
(3,481 |
) |
|
|
|
|
|
|
(13,120 |
) |
|
Amortization of intangibles |
|
|
|
|
|
|
(4,242 |
) |
|
|
|
|
|
|
|
Acquisition related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017 |
|
Selling and
Marketing
|
|
Research and
Development
|
|
Business
Reorganization
|
|
Depreciation and
Amortization
|
|
Interest and
Other, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As reported |
|
|
$ |
52,214 |
|
|
$ |
42,269 |
|
|
$ |
10,599 |
|
|
$ |
7,743 |
|
|
$ |
(2,808 |
) |
|
|
|
Stock-based compensation |
|
|
(2,585 |
) |
|
|
(2,464 |
) |
|
|
(2,421 |
) |
|
|
|
|
|
|
|
Non-cash amortization of discount on Convertible Notes |
|
|
|
|
|
|
|
|
|
|
5,237 |
|
|
|
|
Non-cash (gain) loss on redemption of Convertible Notes |
|
|
|
|
|
|
|
|
|
|
(1,103 |
) |
|
|
|
Amortization of intangibles |
|
|
(2,308 |
) |
|
|
(1,523 |
) |
|
|
|
|
(120 |
) |
|
|
|
|
|
Impact of business reorganization |
|
|
|
|
|
|
(8,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
|
Net Revenue |
|
Cost of Goods Sold-
Internal Royalties
|
|
Cost of Goods Sold-
Software
Development Costs
and Royalties
|
|
Cost of Goods Sold-
Product Costs
|
|
Cost of Goods Sold-
Licenses
|
|
General and
Administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As reported |
|
$ |
311,552 |
|
|
$ |
59,673 |
|
|
$ |
63,659 |
|
|
$ |
44,979 |
|
|
$ |
23,069 |
|
|
$ |
46,743 |
|
|
Net effect from deferral and related cost of goods sold |
|
|
(38,996 |
) |
|
|
|
|
(2,727 |
) |
|
|
(8,889 |
) |
|
|
(13,007 |
) |
|
|
(6,705 |
) |
|
Stock-based compensation |
|
|
|
|
|
|
(4,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
|
Selling and
Marketing
|
|
Research and
Development
|
|
Depreciation and
Amortization
|
|
Interest and Other, net
|
|
Gain on long-term
investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As reported |
|
|
$ |
71,134 |
|
|
$ |
33,900 |
|
|
$ |
7,378 |
|
|
$ |
(4,506 |
) |
|
$ |
1,350 |
|
|
|
|
Stock-based compensation |
|
|
(2,549 |
) |
|
|
(1,459 |
) |
|
|
|
|
|
|
|
|
|
Non-cash amortization of discount on Convertible Notes |
|
|
|
|
|
|
|
|
6,099 |
|
|
|
|
|
|
Impact of business reorganization |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of long-term investments |
|
|
|
|
|
|
|
|
|
|
(1,350 |
) |
|
|
Take-Two Interactive Software, Inc.
Investor Relations:
Henry A. Diamond, 646-536-3005
Senior Vice President
Investor Relations & Corporate Communications
Henry.Diamond@take2games.com
or
Corporate Press:
Alan Lewis, 646-536-2983
Vice President
Corporate Communications & Public Affairs
Alan.Lewis@take2games.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170802006214/en/