Non-GAAP Net Revenue Grew 142% to $366.4
Million
Non-GAAP Net Revenue from Digitally-Delivered
Content Grew 139% to $254.0 Million
Non-GAAP Net Income Increased to $0.31 Per
Diluted Share
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
strong financial results for fiscal first quarter 2016, ended June
30, 2015. In addition, the Company reiterated its financial outlook
for the fiscal year ending March 31, 2016, and provided its initial
financial outlook for the fiscal second quarter 2016, ending
September 30, 2015.
GAAP Financial Results
For fiscal first quarter 2016, GAAP net revenue grew 119% to
$275.3 million, as compared to $125.4 million for fiscal first
quarter 2015. GAAP net loss was $67.0 million, or $0.81 per diluted
share, as compared to $35.4 million, or $0.45 per diluted share,
for the year-ago period. GAAP results for fiscal first quarter 2016
reflect the deferral of net revenue and cost of goods sold related
to sell-in of certain titles during the quarter.
During fiscal first quarter 2016, the Company’s cash and
short-term investments balance increased to $1.191 billion as of
June 30, 2015, up from $1.098 billion as of March 31, 2015.
Non-GAAP Financial
Results
For fiscal first quarter 2016, Non-GAAP net revenue grew 142% to
$366.4 million, as compared to $151.6 million for the year-ago
period. Non-GAAP net income increased to $34.2 million, or $0.31
per diluted share, as compared to Non-GAAP net loss of $11.2
million, or $0.14 per diluted share, for the year-ago period.
The largest contributors to Non-GAAP net revenue in fiscal first
quarter 2016 were Grand Theft Auto® V and Grand Theft Auto Online,
NBA® 2K15, Borderlands®: The Handsome Collection and WWE® 2K15.
Non-GAAP net revenue from digitally-delivered content grew 139%
year-over-year to $254.0 million. The largest contributors to
Non-GAAP net revenue from digitally-delivered content were the
Grand Theft Auto, NBA 2K, Borderlands and WWE 2K series, and
Evolve™. Revenue from recurrent consumer spending (virtual
currency, downloadable add-on content and online games) grew 47%
year-over-year and accounted for 36% of Non-GAAP net revenue from
digitally-delivered content, or 25% of total Non-GAAP net revenue.
Catalog sales accounted for $67.5 million of Non-GAAP net revenue
led by the Grand Theft Auto and Borderlands series.
Management Comments
“Our business continued its positive momentum during the fiscal
first quarter, enabling Take-Two to deliver significant growth in
revenue, Non-GAAP earnings and cash flow,” said Strauss Zelnick,
Chairman and CEO of Take-Two. “These results were driven by strong
consumer demand for Grand Theft Auto V, NBA 2K15 and an array of
other titles, along with better-than-expected growth in recurrent
consumer spending.
“Fiscal 2016 is off to a solid start and promises to be another
year of meaningful Non-GAAP profits for our organization. We have a
robust development pipeline and are well-positioned to generate
revenue growth and margin expansion in future years, and returns
for our shareholders over the long-term.”
Business and Product
Highlights
Since April 1, 2015:
Rockstar Games:
- Launched Grand Theft Auto V and Grand
Theft Auto Online for PC. Grand Theft Auto V has now sold-in over
54 million units across PlayStation 4, PlayStation 3, Xbox One,
Xbox 360 and PC.
- Released new free content updates for
Grand Theft Auto Online, including The Ill-Gotten Gains Updates
Part One and Part Two for all five platforms.
2K:
- Brought WWE simulation video gaming to
the PC and mobile platforms for the first time ever with the
release of WWE 2K15 for PC and WWE 2K for iOS and Android.
- Announced that NBA 2K16, the next
iteration of our top-rated NBA video game simulation series*, will
define the ultimate intersection of sports and pop culture with
three unique game covers from NBA All-Stars Stephen Curry, James
Harden and Anthony Davis, as well as feature an all-new MyCAREER
mode written and directed by acclaimed filmmaker Spike Lee. NBA
2K16 is planned for launch on September 29, 2015 on the PlayStation
4, PlayStation 3, Xbox One, Xbox 360 and PC.
- Announced that WWE Hall of Famer Stone
Cold Steve Austin® will be the cover Superstar for WWE 2K16. In
addition, action movie icon Arnold Schwarzenegger will make his
series debut, and consumers who pre-order the game from
participating retailers will receive two playable characters based
on his famous film roles from The Terminator and Terminator 2:
Judgment Day. WWE 2K16 is planned to launch in North America on
October 27, 2015, and internationally on October 30, 2015, for Xbox
One, Xbox 360, PlayStation 4 and PlayStation 3.
- Announced that XCOM® 2, the sequel to
the Game of the Year award-winning strategy title XCOM: Enemy
Unknown, is currently in development at 2K’s Firaxis Games studio
for PC. XCOM 2 is planned for release in November 2015.
- Announced that Sid Meier’s
Civilization: Beyond Earth – Rising Tide, an expansion pack for the
popular PC title from Firaxis Games, is planned for release in fall
2015.
- Announced that Battleborn™, which is
currently in development for PlayStation 4, Xbox One and PC by the
creators of Borderlands at Gearbox Software, is planned for release
on February 9, 2016.
- Announced that Mafia® III, the next
installment in 2K’s successful organized crime franchise, is
currently in development for Xbox One, PlayStation 4 and PC at
Hangar 13, 2K’s new development studio. Mafia III is planned for
release during calendar 2016 (fiscal year 2017).
*According to Gamerankings.com.
Financial Outlook for Fiscal
2016
Take-Two is providing its initial financial outlook for the
fiscal second quarter ending September 30, 2015, and reiterating
its financial outlook for the fiscal year ending March 31, 2016 as
follows:
Second Quarter
Fiscal Year
Ending 9/30/2015
Ending 3/31/2016
Non-GAAP net revenue
$275 to $325 Million
$1.3 to $1.4 Billion
Non-GAAP net income per diluted
share (1)
$0.05 to $0.15
$0.75 to $1.00
GAAP to Non-GAAP
Reconciling Items (2):
Net effect from deferral in net revenues and related cost of
goods sold ($0.51) ($0.51) Stock-based compensation expense
(3) $0.11 $0.46 Business reorganization, restructuring and
related expenses $0.00 $0.01 Non-cash amortization of
discount on convertible notes $0.04 $0.15 Non-cash tax
expense $0.00 $0.02
1)
For the fiscal second quarter ending
September 30, 2015 and fiscal year ending March 31, 2016, our
Non-GAAP net income per diluted share outlook is calculated using
the “if-converted” method as a result of the issuances of our 1.75%
Convertible Notes in November 2011 and 1.00% Convertible Notes in
June 2013, and Non-GAAP diluted net income for the second quarter
and fiscal year is adjusted by adding-back $1.4 million and $5.5
million, respectively, related to coupon interest and debt issuance
costs, net of tax. Shares used to calculate our Non-GAAP net income
per diluted share outlook are as follows:
Weighted average basic shares
84.5 Million
84.5 Million
Add: Weighted average participating
shares
4.0 Million
4.0 Million
Add: Potential Dilution from convertible
notes
26.5 Million
26.5 Million
Total weighted average diluted
shares
115.0 Million
115.0 Million
2)
All GAAP to Non-GAAP reconciling items are
net of tax and per share.
3)
The Company's stock-based compensation
expense for the periods above includes the cost of approximately
1.1 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.
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, 2015:
Label
Title
Platforms
Release Date
Rockstar Games
Grand Theft Auto V
PC April 14, 2015 2K
WWE 2K
iOS and Android Devices April 16, 2015 2K
WWE 2K15
PC April 28, 2015 2K
Evolve: Hunting Season 2 (DLC)
Xbox One, PS4, PC June 24, 2015
Take-Two's lineup of future titles announced to date
includes:
Label
Title
Platforms
Release Date
2K
NBA 2K16
Xbox 360, Xbox One, PS3, PS4, PC, Mobile
September 29, 2015 2K
WWE 2K16
Xbox 360, Xbox One, PS3, PS4 October 27, 2015* 2K
XCOM 2
PC, Mac, Linux November 2015 2K
Sid Meier’s Civilization Beyond Earth –
Rising Tide (expansion pack)
PC Fall 2015 2K
Battleborn
Xbox One, PS4, PC February 9, 2016 2K
Mafia III
Xbox One, PS4, PC Fiscal Year 2017
*North American release date;
international release date followed three days after.
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.
Non-GAAP Financial
Measures
In addition to reporting financial results in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses Non-GAAP measures of financial performance. The Company
believes that these Non-GAAP financial measures, when taken into
consideration with the corresponding GAAP financial measures, are
important in gaining an understanding of the Company’s ongoing
business. These Non-GAAP financial measures also provide for
comparative results from period to period. Therefore, the Company
believes it is appropriate to exclude the following Non-GAAP items,
net of applicable taxes, as discussed below:
- Net effect from deferral in net
revenues and related cost of goods sold – the Company defers
revenue and related costs from the sale of certain titles that have
undelivered elements upon the sale of the game and recognizes that
revenue upon the delivery of the undelivered elements. The Company
also defers revenue and related costs for certain sales generated
from certain titles for which we have or expect to provide certain
additional add-on content. These amounts are deferred over the
estimated remaining life of the game to which they pertain. As
there is no impact to the Company’s operating cash flow, management
excludes the impact of deferred net revenue and related costs from
its Non-GAAP financial measures when evaluating the Company's
operating performance, when planning, forecasting and analyzing
future periods, and when assessing the performance of its
management team. In addition, we believe that these Non-GAAP
financial measures provide a more timely indication of trends in
our business, provide comparability with the way our business is
measured by analysts, and provide consistency with industry data
sources.
- Stock-based compensation – the Company
does not consider stock-based compensation charges when evaluating
business performance and management does not contemplate
stock-based compensation expense in its short- and long-term
operating plans. As a result, the Company has excluded such
expenses from its Non-GAAP financial measures.
- Business reorganization, restructuring
and related expenses – although the Company has incurred business
reorganization expenses in the past, each charge relates to a
discrete event based on a unique set of business objectives.
Management does not believe these charges reflect the Company's
primary business, ongoing operating results or future outlook. As
such, the Company believes it is appropriate to exclude these
expenses and related charges from its Non- GAAP financial
measures.
- Non-cash amortization of discount on
convertible notes – the Company records non-cash amortization of
discount on convertible notes as interest expense in addition to
the interest expense already recorded for coupon payments. The
Company excludes the non-cash portion of the interest expense from
its Non-GAAP financial measures because these amounts are unrelated
to its ongoing business operations.
- Non-cash tax expense for the impact of
deferred tax liabilities associated with tax deductible
amortization of goodwill – due to the nature of the adjustment as
well as the expectation that it will not have any cash impact in
the foreseeable future, the Company believes it is appropriate to
exclude this expense from its Non-GAAP financial measures.
These Non-GAAP financial measures are not intended to be
considered in isolation from, as a substitute for, or superior to,
GAAP results. These Non-GAAP financial measures may be different
from similarly titled measures used by other companies.
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,
2015.
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 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," "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, our ability to raise capital if needed and risks associated
with international operations. Other important factors and
information are contained in the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 2015, including the risks
summarized in the section entitled "Risk Factors," 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 (Unaudited) (in
thousands, except per share amounts)
Three months ended June 30, 2015
2014 Net revenue
$
275,297 $ 125,425 Cost of goods sold:
Internal royalties
105,829 8,298 Software development costs
and royalties
50,493 20,306 Product costs
39,941
18,592 Licenses
6,352 6,960
Total cost of goods sold
202,615 54,156
Gross profit
72,682 71,269 General and
administrative
49,035 39,352 Selling and marketing
45,567 36,846 Research and development
34,142 24,132
Depreciation and amortization
6,575
4,148 Total operating expenses
135,319
104,478 Loss from operations
(62,637 )
(33,209 ) Interest and other, net
(7,534 )
(7,719 ) Loss from operations before income taxes
(70,171 ) (40,928 ) Benefit for income taxes
(3,148 ) (5,525 ) Net loss
$
(67,023 ) $ (35,403 ) Net loss per share:
Basic and diluted net loss per share
$ (0.81 )
$ (0.45 ) Diluted net loss per share Weighted average shares
outstanding: Basic and diluted
82,833
79,369
Computation of Basic and Diluted
EPS: Net loss
$ (67,023 ) $ (35,403 )
Weighted average shares outstanding - basic and diluted
82,833 79,369 Basic and diluted loss
per share
$ (0.81 ) $ (0.45 )
Three months ended June 30,
OTHER
INFORMATION
2015 2014
Geographic revenue mix United States
52 % 52 %
International
48 % 48 % Platform revenue mix
Console
81 % 67 % PC and other
19 % 33
% Net revenue by distribution channel: Digital online
56 % 64 % Physical retail and other
44
% 36 %
TAKE-TWO INTERACTIVE SOFTWARE, INC.
and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in
thousands, except per share amounts)
June 30, March 31, 2015
2015 ASSETS (Unaudited) Current
assets: Cash and cash equivalents
$ 815,784 911,120
Short-term investments
375,013 186,929 Restricted cash
229,993 169,678 Accounts receivable, net of allowances of
$63,456 and $70,471 at June 30, 2015 and March 31, 2015,
respectively
130,915 217,860 Inventory
12,453 20,051
Software development costs and licenses
201,014 163,385
Deferred cost of goods sold
66,041 56,779 Prepaid expenses
and other
76,763 55,506 Total current
assets
1,907,976 1,781,308 Fixed
assets, net
83,089 69,792 Software development costs and
licenses, net of current portion
109,406 124,329 Deferred
cost of goods sold, net of current portion
15,230 19,869
Goodwill
219,036 217,288 Other intangibles, net
4,737
4,769 Other assets
13,130 13,745 Total
assets
$ 2,352,604 2,231,100
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable
$ 29,531 38,789 Accrued expenses and
other current liabilities
504,329 444,738 Deferred revenue
572,440 482,733 Total current
liabilities
1,106,300 966,260
Long-term debt
481,784 476,057 Non-current deferred revenue
172,727 164,618 Other long-term liabilities
64,954 61,077 Total liabilities
1,825,765 1,668,012 Commitments and
contingencies Stockholders' equity: Preferred stock, $.01
par value, 5,000 shares authorized
- - Common stock, $.01
par value, 200,000 shares authorized; 104,570 and 104,594 shares
issued and 88,332 and 88,356 outstanding at June 30, 2015 and March
31, 2015, respectively
1,046 1,046 Additional paid-in
capital
1,049,910 1,028,197 Treasury stock, at cost (16,238
common shares at June 30, 2015 and March 31, 2015)
(276,836
) (276,836 ) Accumulated deficit
(225,718 )
(158,695 ) Accumulated other comprehensive loss
(21,563 ) (30,624 ) Total stockholders' equity
526,839 563,088 Total liabilities and
stockholders' equity
$ 2,352,604 2,231,100
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands) Three months
ended June 30, 2015
2014 Operating activities: Net loss
$ (67,023 ) $ (35,403 ) Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: Amortization and impairment of software development
costs and licenses
23,590 7,255 Depreciation and
amortization
6,575 4,148 Amortization and impairment of
intellectual property
32 105 Stock-based compensation
19,086 9,979 Amortization of discount on Convertible Notes
5,727 5,377 Amortization of debt issuance costs
398
431 Other, net
183 134 Changes in assets and liabilities:
Restricted cash
(60,315 ) 132,002 Accounts receivable
87,198 9,978 Inventory
8,341 6,633 Software
development costs and licenses
(43,131 ) (42,990 )
Prepaid expenses, other current and other non-current assets
(20,693 ) (2,622 ) Deferred revenue
91,903
26,176 Deferred cost of goods sold
1,243 225 Accounts
payable, accrued expenses and other liabilities
52,368 (208,944 ) Net cash provided (used) by
operating activities
105,482 (87,516 )
Investing activities: Purchase of fixed assets
(18,769 ) (8,392 ) Purchases of short-term
investments
(187,489 ) (19,415 ) Net
cash used in investing activities
(206,258 )
(27,807 )
Financing activities: Excess tax
benefit from stock-based compensation
8,066 - Tax payment
related to net share settlements on restricted stock awards
(6,541 ) - Net cash provided by
financing activities
1,525 -
Effects of foreign exchange rates on cash and cash
equivalents
3,915 1,923
Net decrease in cash and cash equivalents
(95,336 )
(113,400 ) Cash and cash equivalents, beginning of year
911,120 935,400 Cash and cash
equivalents, end of period
$ 815,784 $ 822,000
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES RECONCILIATION OF GAAP TO Non-GAAP MEASURES
(Unaudited) (in thousands, except per share amounts)
Three months ended June
30, 2015 2014 Net
Revenues GAAP Net Revenues $ 275,297 $
125,425 Net effect from deferral in net revenues
91,095 26,186
Non-GAAP Net
Revenues $ 366,392 $ 151,611
Digital Online Revenues (included in Net Revenues above)
GAAP Digital Online Revenues $ 153,985 $
80,201 Net effect from deferral in digital online revenues
99,978 26,186
Non-GAAP Digital
Online Revenues $ 253,963 $ 106,387
Gross Profit GAAP Gross Profit $
72,682 $ 71,269 Net effect from deferral in net revenues and
related cost of goods sold
90,965 15,318 Stock-based
compensation
4,694 1,471
Non-GAAP Gross Profit 168,341 $ 88,058
Income (Loss) from Operations GAAP Loss
from Operations $ (62,637 ) $ (33,209 )
Net effect from deferral in net revenues and related cost of goods
sold
90,965 15,318 Stock-based compensation
19,086
9,979 Business reorganization, restructuring and related
1,228 195
Non-GAAP Income (Loss)
from Operations $ 48,642 $ (7,717 )
Net Income (Loss) GAAP Net Loss $
(67,023 ) $ (35,403 ) Net effect from deferral in net
revenues and related cost of goods sold
85,164 11,757
Stock-based compensation
11,327 7,659 Business
reorganization, restructuring and related
773 156 Non-cash
amortization of discount on Convertible Notes
3,603 4,127
Non-cash tax expense
364 473
Non-GAAP Net Income (Loss) $ 34,208 $
(11,231 )
Diluted Earnings (Loss) Per Share GAAP loss
per share
$ (0.81 ) $ (0.45 ) Non-GAAP
earnings (loss) per share
$ 0.31 $ (0.14 )
Number of diluted shares used in computation GAAP
82,833
79,369 Non-GAAP
114,442 79,369
Computation
of Diluted GAAP EPS: Net loss
$ (67,023 )
$ (35,403 ) Net income (loss) for diluted EPS calculation
$
(67,023 ) $ (35,403 ) Weighted average shares
outstanding - diluted
82,833 79,369 Diluted
earnings (loss) per share
$ (0.81 ) $ (0.45 )
Computation of Diluted Non-GAAP EPS: Non-GAAP
net earnings (loss)
$ 34,208 $ (11,231 ) Less: net
income (loss) allocated to participating securities
(1,541
) - Add: interest expense, net of tax, on Convertible Notes
1,372 - Net income (loss) for
diluted earnings per share calculation
$ 34,039
$ (11,231 ) Weighted average shares outstanding -
basic
82,833 79,369 Add: dilutive effect of common stock
equivalents
31,609 - Total
weighted average shares outstanding - diluted
114,442 79,369
Less: weighted average participating shares outstanding
5,154 Weighted average common shares
outstanding - diluted
109,288 79,369 Diluted
earnings (loss) per share
$ 0.31 $ (0.14 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150810006006/en/
Take-Two Interactive Software, Inc.Investor
Relations:Henry A. Diamond, 646-536-3005Senior Vice
PresidentInvestor Relations & Corporate
CommunicationsHenry.Diamond@take2games.comorCorporate Press:Alan
Lewis, 646-536-2983Vice PresidentCorporate Communications &
Public AffairsAlan.Lewis@take2games.com
TakeTwo Interactive Soft... (NASDAQ:TTWO)
Historical Stock Chart
From Mar 2024 to Apr 2024
TakeTwo Interactive Soft... (NASDAQ:TTWO)
Historical Stock Chart
From Apr 2023 to Apr 2024