Non-GAAP Net Revenue was $486.8 Million
Non-GAAP Net Income was $0.89 Per Diluted
Share
Raises Financial Outlook for Fiscal 2016
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
stronger-than-expected financial results for fiscal third quarter
2016, ended December 31, 2015. In addition, the Company increased
its financial outlook for the fiscal year ending March 31, 2016,
and provided its initial financial outlook for the fiscal fourth
quarter 2016, ending March 31, 2016.
GAAP Financial Results
For fiscal third quarter 2016, GAAP net revenue was $414.2
million, as compared to $531.1 million for fiscal third quarter
2015. GAAP net loss was $42.4 million, or $0.51 per diluted share,
as compared to net income of $40.1 million, or $0.42 per diluted
share, for the year-ago period. GAAP net loss for fiscal third
quarter 2016 reflects business reorganization charges of $71.2
million, partially offset by approximately $25 million in tax
benefits related to video game development costs.
During fiscal third quarter 2016, the Company’s cash and
short-term investments balance increased to $1.215 billion as of
December 31, 2015.
Non-GAAP Financial
Results
For fiscal third quarter 2016, Non-GAAP net revenue was $486.8
million, as compared to $954.0 million for the year-ago period,
which had benefited from the launches of Grand Theft Auto V® for
PlayStation®4 and Xbox One, Borderlands®: The Pre-Sequel, and Sid
Meier’s Civilization®: Beyond Earth. Non-GAAP net income was $99.7
million, or $0.89 per diluted share, as compared to $211.6 million,
or $1.87 per diluted share, for the year-ago period. Non-GAAP net
income for fiscal third quarter 2016 reflects approximately $32
million in tax benefits related to video game development
costs.
The largest contributors to Non-GAAP net revenue in fiscal third
quarter 2016 were Grand Theft Auto V and Grand Theft Auto Online,
NBA® 2K16, WWE® 2K16, and the Borderlands series. Non-GAAP net
revenue from digitally-delivered content was $213.6 million and
accounted for 44% of total Non-GAAP net revenue. The largest
contributors to Non-GAAP net revenue from digitally-delivered
content were the Grand Theft Auto, NBA 2K, WWE 2K, and Sid Meier’s
Civilization series. Revenue from recurrent consumer spending
(virtual currency, downloadable add-on content and online games)
grew 45% year-over-year and accounted for 54% of Non-GAAP net
revenue from digitally-delivered content, or 24% of total Non-GAAP
net revenue. Catalog sales accounted for $235.3 million of Non-GAAP
net revenue led by the Grand Theft Auto and Borderlands series.
Management Comments
“During the holiday season, Take-Two enjoyed immense consumer
demand for its recent releases and catalog, enabling the Company to
deliver another quarter of strong revenue, Non-GAAP earnings and
cash flow,” said Strauss Zelnick, Chairman and CEO of Take-Two.
“These outstanding results were driven by robust sales of Grand
Theft Auto V, NBA 2K16 and WWE 2K16, along with our highest-ever
revenue from recurrent consumer spending.
“As a result of our third quarter outperformance and solid
forecast for the balance of the year, we are once again raising our
financial outlook for fiscal 2016, which is poised to be another
year of meaningful profits for Take-Two. Looking ahead, we have an
extensive development pipeline that positions our Company for
revenue growth and margin expansion over the long-term. We are
excited about this Friday’s release of XCOM 2, which has received
stellar early review scores, and anticipation already is building
for the fiscal 2017 launches of Battleborn and Mafia III.”
Business and Product
Highlights
Since October 1, 2015:
Rockstar Games:
- Grand Theft Auto V has now sold-in over
60 million units worldwide across all platforms.
- Released new free content updates for
Grand Theft Auto Online, including:
- A January 28, 2016 update featuring the
new ‘Drop Zone’ Adversary Mode, two new high-end vehicles and
additional improvements to Grand Theft Auto Online.
- Festive Surprise 2015, featuring
holiday-themed attire, Christmas trees, snowball fights, and new
holiday-themed adversary modes;
- Executives and Other Criminals, which
offers players the chance to run their own criminal organizations
and face off against rival operations across Freemode. The update
also includes new customizable real estate, super yachts, armored
vehicles, weapons and much more;
- Lowriders, which adds new and upgraded
vehicles including specific lowrider customization options such as
hydraulics, new Adversary Modes, new Lowrider-themed Contact
Missions, an array of new clothing, tattoo and accessory options,
as well as upgrades to both Freemode and the Rockstar Editor’s
Director Mode; and
- Halloween Surprise, featuring a new
Halloween-themed adversary mode plus special vehicles, masks and
more.
- Released Grand Theft Auto: Liberty City
Stories for select iOS devices. Originally designed with mobile
gameplay in mind, Grand Theft Auto: Liberty City
Stories returns with significant enhancements for iOS and also
will be coming soon to Android.
2K:
- Entered into a new multi-year
partnership agreement with WWE granting 2K the exclusive worldwide
rights to develop and publish WWE video game properties across all
major platforms and distribution channels.
- Launched WWE 2K16 on Xbox One, Xbox
360, PlayStation 4 and PlayStation 3. Developed collaboratively by
Yukes and Visual Concepts, the title received significantly
improved review scores and has generated growth in sales versus
last-year’s release. WWE 2K16 is being supported with downloadable
add-on content, including a Season Pass.
- Released Sid Meier’s Civilization:
Beyond Earth™ – Rising Tide for PC. Developed by Firaxis Games,
Rising Tide is a massive expansion pack for the 2014
turn-based strategy title, Civilization: Beyond Earth.
- Released The Borderlands Triple Pack
for Xbox 360 and PlayStation 3, which includes Borderlands,
Borderlands 2 and Borderlands: The Pre-Sequel, plus all of the
games’ previously-released downloadable add-on content.
- Released Evolve Ultimate Edition for
Xbox One and PlayStation 4, which includes the 2014 Electronic
Entertainment Expo and Gamescom “Game of Show” award-winning title
along with its Monster Expansion Pack, Hunting Season 1 and Hunting
Season 2 downloadable add-on content packs.
- Expanded the Company’s online offerings
in Asia with the commercial launch in Korea of Civilization Online,
a free-to-play, massively multiplayer online game developed in
partnership with renowned South Korean studio XLGAMES. 2K also
plans to bring Civilization Online to Taiwan, Hong Kong, Macau and
China through publishing partnerships with Game First and Qihoo
360.
- Expanded the Company’s offerings for
tablets and smartphones with the releases of NBA 2K16, My NBA 2K16
and NHL SuperCard for tablets and smartphones.
- 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 May 3, 2016.
- Announced that XCOM® 2, which is the
sequel to the Game of the Year award-winning strategy title XCOM:
Enemy Unknown and is currently in development at Firaxis Games, is
planned for release on February 5, 2016 for PC. XCOM 2 has received
outstanding early review scores, with Game Informer Magazine,
GameSpot and IGN each scoring the title in the 9-out-of-10 range.
According to IGN, “XCOM 2 is an amazing game,” while Game Informer
Magazine called it “one of the deepest and most rewarding strategy
games on the market.”
- Announced that Mafia® III, the next
installment in 2K’s successful organized crime series, 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).
Financial Outlook for Fiscal
2016
Take-Two is increasing its financial outlook for fiscal year
2016 to reflect its better-than-expected fiscal third quarter
results and strong forecast for the balance of the fiscal year. In
addition, the Company is providing its initial financial outlook
for the fiscal fourth quarter ending March 31, 2016 as follows:
Fourth Quarter
Fiscal Year
Ending 3/31/2016
Ending 3/31/2016
Non-GAAP net revenue
$260 to $310 Million
$1.48 to $1.53 Billion
Non-GAAP net income per diluted
share (1)
$0.15 to $0.25
$1.65 to $1.75
GAAP to Non-GAAP
Reconciling Items (2):
Net effect from deferral in net revenues
and related cost of goods sold
($0.67) $0.20
Stock-based compensation expense (3)
$0.13 $0.50
Business reorganization
$0.00 $0.51
Non-cash amortization of discount on
convertible notes
$0.04 $0.17
Non-cash tax expense
$0.00 $0.00
Gain on long-term investment, net
($0.02) ($0.02)
1)
For the fiscal fourth quarter 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 fourth 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
83.5 Million
83.5 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
114.0 Million
114.0 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 October 1, 2015:
Label
Title
Platforms
Release Date
2K
My NBA2K16
iOS and Android October 1, 2015 2K
NHL SuperCard
iOS and Android October 8, 2015 2K
Sid Meier’s Civilization Beyond Earth –
Rising Tide (expansion pack)
PC October 9, 2015 2K
NBA 2K16
iOS and Android October 15, 2015 2K
WWE 2K16
Xbox 360, Xbox One, PS3, PS4 October 27, 2015* 2K
WWE 2K16: Accelerator (DLC)
Xbox 360, Xbox One, PS3, PS4 October 27, 2015 2K
WWE 2K16: MyPlayer Kickstart (DLC)
Xbox One, PS4 October 27, 2015 2K
Evolve Ultimate Edition
Xbox One, PS4 November 3, 2015 2K
Borderlands Triple Pack
Xbox 360, PS3 November 17, 2015 2K
WWE 2K16: New Moves Pack (DLC)
Xbox 360, Xbox One, PS3, PS4 November 24, 2015 Rockstar Games
Grand Theft Auto: Liberty City Stories
iOS
December 17, 2015
2K
WWE 2K16: Legends Pack (DLC)
Xbox 360, Xbox One, PS3, PS4 December 22, 2015 2K
WWE 2K16: Future Stars Pack (DLC)
Xbox 360, Xbox One, PS3, PS4 January 26, 2016
*North American release date;
international release date followed three days after.
Take-Two's lineup of future titles announced to date
includes:
Label
Title
Platforms
Release Date
2K
XCOM 2
PC, Mac, Linux February 5, 2016 2K
WWE 2K16: 2015 Hall of Fame Showcase
(DLC)
Xbox 360, Xbox One, PS3, PS4 February 23, 2016 Rockstar Games
Grand Theft Auto: Liberty City Stories
Android February 2016 2K
Civilization Revolution 2 Plus
PlayStation Vita Fiscal 4Q 2016 2K
Battleborn
Xbox One, PS4, PC May 3, 2016 2K
Mafia III
Xbox One, PS4, PC Fiscal Year 2017
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 – 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.
- Gain on long-term investment, net –
from time to time, the Company makes strategic investments. The
Company excludes the impact of any gains and losses on such
investments 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. In the
future, Take-Two may also consider whether other items should also
be excluded in calculating the Non-GAAP financial measures used by
the Company. Management believes that the presentation of these
Non-GAAP financial measures provides investors with additional
useful information to measure Take-Two's financial and operating
performance. In particular, the measures facilitate comparison of
operating performance between periods and help investors to better
understand the operating results of Take-Two by excluding certain
items that may not be indicative of the Company's core business,
operating results or future outlook. Internally, management may use
these Non-GAAP financial measures in assessing the company's
operating results and in planning and forecasting. In addition to
the Non-GAAP financial measures provided in this press release, see
the Company’s website for additional information regarding our
non-GAAP results.
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 December 31,
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," the Company’s Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2015, 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 December 31, Nine months ended
December 31, 2015 2014
2015 2014
Net revenue
$ 414,221 $ 531,147
$ 1,036,492 $ 782,849 Cost of
goods sold: Internal royalties
95,311 14,099
256,058
34,810 Software development costs and royalties
61,653
108,214
152,160 144,863 Product costs
74,934 102,068
153,652 139,421 Licenses
25,963
53,632
42,546 65,091
Total cost of goods sold
257,861
278,013
604,416 384,185
Gross profit
156,360 253,134
432,076 398,664
Selling and marketing
59,846 96,892
160,289
182,874 General and administrative
49,061 53,564
148,057 136,891 Research and development
27,944
31,221
86,499 79,886 Business reorganization
71,172 -
71,172 - Depreciation and amortization
7,534
5,845
21,462
15,123 Total operating expenses
215,557
187,522
487,479 414,774
(Loss) income from operations
(59,197 ) 65,612
(55,403 ) (16,110 ) Interest and other, net
(8,018 ) (9,458 )
(23,948 ) (24,689 )
(Loss) gain on long-term investments, net
-
(1,500 )
- 17,476
(Loss) income from operations before income taxes
(67,215
) 54,654
(79,351 ) (23,323 ) Provision for
(benefit from) for income taxes
(24,802
) 14,561
(24,650 )
13,356 Net (loss) income
$ (42,413 ) $
40,093
$ (54,701 ) $ (36,679 )
(Loss) earnings per share: Basic (loss) earnings per share
$
(0.51 ) $ 0.46
$ (0.66 )
$ (0.46 ) Diluted (loss) earnings per share
$
(0.51 ) $ 0.42
(0.66 ) $
(0.46 ) Weighted average shares outstanding:
Basic
83,426 87,483
83,338 80,128
Diluted
83,426 113,938
83,338 80,128
Computation of
Basic EPS: Net (loss) income
$ (42,413 ) $
40,093
$ (54,701 ) $ (36,679 ) Less: net
income allocated to participating securities
-
(3,127 )
- - Net (loss)
income for basic EPS calculation
$ (42,413 ) $
36,966
$ (54,701 ) $ (36,679 )
Weighted average shares outstanding - basic
83,426 87,483
$ 83,338 80,128 Less: weighted average participating
shares outstanding
- (6,824 )
- - Weighted average common shares
outstanding - basic
83,426 80,659
$ 83,338 80,128
Basic EPS
$ (0.51 ) $
0.46
$ (0.66 ) $ (0.46 )
Computation of Diluted EPS: Net (loss) income
$
(42,413 ) $ 40,093
$ (54,701 ) $
(36,679 ) Less: net income allocated to participating securities
- (2,401 )
- - Add: interest expense, net of tax, on
Convertible Notes
- 7,199
- - Net (loss) income for diluted EPS
calculation
$ (42,413 ) $ 44,891
$ (54,701 ) $ (36,679 ) Weighted
average common shares outstanding - basic
83,426 80,659
83,338 80,128 Add: dilutive effect of common stock
equivalents
- 26,455
- - Total weighted average shares
outstanding - diluted
83,426 107,114
83,338 80,128
Diluted EPS
$ (0.51
) $ 0.42
$ (0.66 ) $ (0.46 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in
thousands, except per share amounts) December
31,
March
31,
2015 2015
ASSETS (Unaudited) Current assets: Cash and cash
equivalents
$ 835,241 $ 911,120 Short-term
investments
379,440 186,929 Restricted cash
204,089
169,678 Accounts receivable, net of allowances of $70,995 and
$70,471 at December 31, 2015 and March 31, 2015, respectively
263,690 217,860 Inventory
20,207 20,051 Software
development costs and licenses
214,540 163,385 Deferred cost
of goods sold
128,972 56,779 Prepaid expenses and other
60,129 54,057 Total current
assets
2,106,308 1,779,859
Fixed assets, net
76,661 69,792 Software development
costs and licenses, net of current portion
167,382 124,329
Deferred cost of goods sold, net of current portion
1,742
19,869 Goodwill
216,777 217,288 Other intangibles, net
4,609 4,769 Other assets
11,530
12,167 Total assets
$ 2,585,009 $
2,228,073
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable
$ 59,603 $
38,789 Accrued expenses and other current liabilities
603,613 444,738 Deferred revenue
791,758
482,733 Total current liabilities
1,454,974 966,260 Long-term debt
491,576 473,030 Non-current deferred revenue
39,885
164,618 Other long-term liabilities
71,600
61,077 Total liabilities
2,058,035
1,664,985 Commitments and contingencies
Stockholders' equity: Preferred stock, $.01 par value, 5,000 shares
authorized
- - Common stock, $.01 par value, 200,000 shares
authorized; 104,373 and 104,594 shares issued and 87,181 and 88,356
outstanding at December 31, 2015 and March 31, 2015, respectively
1,044 1,046 Additional paid-in capital
1,077,449
1,028,197 Treasury stock, at cost; 17,192 and 16,238 common shares
at December 31, 2015 and March 31, 2015, respectively
(303,388 ) (276,836 ) Accumulated deficit
(213,396 ) (158,695 ) Accumulated other comprehensive
loss
(34,735 ) (30,624 ) Total
stockholders' equity
526,974 563,088
Total liabilities and stockholders' equity
$
2,585,009 $ 2,228,073
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in
thousands) Nine months ended December 31,
2015 2014
Operating activities: Net loss
$ (54,701
) $ (36,679 ) Adjustments to reconcile net loss to
net cash provided by operating activities: Amortization and
impairment of software development costs and licenses
83,056
89,768 Depreciation and amortization
21,462 15,123
Amortization and impairment of intellectual property
160 320
Stock-based compensation
54,144 52,474 Deferred income taxes
- 641 Amortization of discount on Convertible Notes
17,454 16,389 Amortization of debt issuance costs
1,181 1,260
Gain on long-term investments, net
- (17,476 ) Other, net
2,573 2,262 Changes in assets
and liabilities: Restricted cash
(34,411 ) 162,538
Accounts receivable
(46,227 ) (382,566 ) Inventory
(374 ) 5,163 Software development costs and licenses
(170,074 ) (155,454 ) Prepaid expenses, other current
and other non-current assets
(6,514 ) (52,092 )
Deferred revenue
184,955 456,623 Deferred cost of goods sold
(54,418 ) (63,203 ) Accounts payable, accrued
expenses and other liabilities
190,557
(34,565 ) Net cash provided by operating activities
188,823 60,526
Investing
activities: Change in bank time deposits
(189,564
) - Purchase of fixed assets
(28,579 ) (36,579
) Sale and maturities of available-for-sale securities
19,014 - Purchase of available-for-sale securities
(25,768 ) (79,677 ) Cash received from the sale of
long-term investment
- 21,976 Purchase of long-term
investment
- (5,000 ) Net cash used in
investing activities
(224,897 ) (99,280
)
Financing activities: Excess tax benefit from
stock-based compensation
1,509 10,352 Tax payment related to
net share settlements on restricted stock awards
(14,506
) - Repurchase of common stock
(26,552
) - Net cash provided by (used in) financing
activities
(39,549 ) 10,352
Effects of foreign exchange rates on cash and cash
equivalents
(256 ) (9,546 ) Net
decrease in cash and cash equivalents
(75,879 )
(37,948 ) Cash and cash equivalents, beginning of year
911,120 935,400 Cash and cash
equivalents, end of period
$ 835,241 $ 897,452
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES RECONCILIATION OF GAAP TO Non-GAAP MEASURES
(Unaudited) (in thousands, except per share amounts)
Three months
ended December 31, Nine months ended December 31,
2015 2014 2015
2014 Net Revenues GAAP Net
Revenues $ 414,221 $ 531,147
$
1,036,492 $ 782,849 Net effect from deferral in net revenues
72,570 422,829
181,622 458,180
Non-GAAP Net
Revenues $ 486,791 $ 953,976
1,218,114 $ 1,241,029
Digital Online
Revenues (included in Net Revenues above) GAAP Digital
Online Revenues $ 146,449 $ 149,840
$
502,860 $ 310,687 Net effect from deferral in digital online
revenues
67,170 67,404
105,734 102,755
Non-GAAP Digital
Online Revenues $ 213,619 $ 217,244
$ 608,594 $ 413,442
Gross
Profit GAAP Gross Profit $ 156,360 $
253,134
$ 432,076 $ 398,664 Net effect from deferral
in net revenues and related cost of goods sold
57,684
174,390
117,574 193,539 Stock-based compensation
4,131 8,323
12,935
11,062
Non-GAAP Gross Profit
218,175 $ 435,847
$ 562,585
$ 603,265
(Loss) income from Operations
GAAP (Loss) Income from Operations $ (59,197
) $ 65,612
$ (55,403 ) $ (16,110 ) Net
effect from deferral in net revenues and related cost of goods sold
57,684 174,390
117,574 193,539 Stock-based
compensation
18,738 28,628
54,144 52,474 Impact of
business reorganization
71,172 -
72,400 195
Non-GAAP Income
from Operations $ 88,397 $ 268,630
$ 188,715 $ 230,098
Net
Income (Loss) GAAP Net Income (Loss) $
(42,413 ) $ 40,093
$ (54,701 ) $
(36,679 ) Net effect from deferral in net revenues and related cost
of goods sold
53,993 158,030
101,899 172,195
Stock-based compensation
12,388 7,015
34,952 24,756
Loss (gain) on long-term investments,
net
- 941
- (9,999 ) Impact of business reorganization
71,627 -
72,400 156 Non-cash amortization of discount
on Convertible Notes
3,719 5,062
10,982 13,127
Non-cash tax expense
361 459
1,051 1,404
Non-GAAP Net
Income $ 99,675 $ 211,600
$
166,583 $ 164,960
Diluted (Loss)
Earnings Per Share GAAP (loss) earnings per share
$
(0.51 ) $ 0.42
$ (0.66 ) $ (0.46
) Non-GAAP earnings per share
$ 0.89 $ 1.87
$
1.50 $ 1.50 Number of diluted shares used in
computation GAAP
83,426 113,938
83,338 80,128
Non-GAAP
113,290 113,938
113,952 113,922
Computation of Diluted GAAP EPS: Net (loss) income
$ (42,413 ) $ 40,093
$ (54,701
) $ (36,679 ) Less: net income allocated to participating
securities
- (2,401 )
- - Add: interest expense, net
of tax, on Convertible Notes
- 7,199
- - Net (loss) income for
diluted EPS calculation
$ (42,413 ) $ 44,891
$ (54,701 ) $ (36,679 ) Weighted
average shares outstanding - basic
83,426 87,483
83,338 80,128 Add: dilutive effect of common stock
equivalents
- 26,455
- - Total weighted average shares
outstanding - diluted
83,426 113,938
83,338 80,128
Less: weighted average participating shares outstanding
- (6,824 )
- -
Weighted average common shares outstanding - diluted
83,426 107,114
83,338 80,128
Diluted (loss) earnings per share
$ (0.51
) $ 0.42
$ (0.66 ) $ (0.46 )
Computation of Diluted Non-GAAP EPS: Non-GAAP
net income
$ 99,675 $ 211,600
$ 166,583
$ 164,960 Less: net income allocated to participating securities
(2,999 ) (12,673 )
(6,080 ) (10,627 )
Add: interest expense, net of tax, on Convertible Notes
1,367 1,686
4,109
5,069 Net income for diluted earnings per share
calculation
$ 98,043 $ 200,613
$
164,612 $ 159,402 Weighted average
shares outstanding - basic
86,835 87,483
87,497
87,467 Add: dilutive effect of common stock equivalents
26,455 26,455
26,455
26,455 Total weighted average shares
outstanding - diluted
113,290 113,938
113,952 113,922
Less: weighted average participating shares outstanding
(3,409 ) (6,824 )
(4,159
) (7,339 ) Weighted average common shares outstanding
- diluted
109,881 107,114
109,793 106,583
Diluted earnings per share
$
0.89 $ 1.87
$ 1.50 $ 1.50
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES Net Revenue by Geographic Region, Distribution
Channel, and Platform Mix (in thousands)
Three Months Ended
December 31, 2015
Three Months Ended
December 31, 2014
Amount % of Total Amount % of Total
GAAP Net Revenues by Geographic Region United States
$ 218,386 53 % $ 334,257 63 %
International
195,835 47 %
196,890 37 % Total GAAP net revenues
414,221
100 % 531,147 100 %
Change in
Deferred Net Revenues United States
$ 63,314 $
188,238 International
9,256 234,591 Total
changes in deferred net revenues
72,570
422,829
Non-GAAP Net Revenues by Geographic Region
United States
$ 281,700 58 % $ 522,495
55 % International
205,091 42 %
431,481 45 % Total non-GAAP net revenues
$ 486,791
100 % $ 953,976 100 %
Three Months Ended
December 31, 2015
Three Months Ended
December 31, 2014
Amount % of Total Amount % of Total
GAAP Net Revenues by Distribution Channel Physical
retail and other
$ 267,772 65 % $
381,307 72 % Digital online
146,449 35
% 149,840 28 % Total GAAP net revenues
414,221 100 % 531,147 100 %
Change in Deferred Net Revenues Physical retail and other
$ 5,400 $ 355,425 Digital online
67,170
67,404 Total changes in deferred net revenues
72,570 422,829
Non-GAAP Net Revenues by
Distribution Channel Physical retail and other
$
273,172 56 % $ 736,732 77 % Digital online
213,619 44 % 217,244 23 % Total
non-GAAP net revenues
$ 486,791 100 % $
953,976 100 %
Three Months Ended
December 31, 2015
Three Months Ended
December 31, 2014
Amount % of Total Amount % of Total
GAAP Net Revenues by Platform Mix Console
$
355,235 86 % $ 443,093 83 % PC and other
58,986 14 % 88,054 17 % Total
GAAP net revenues
414,221 100 %
531,147 100 %
Change in Deferred Net Revenues Console
$ 64,623 $ 419,303 PC and other
7,947
3,526 Total changes in deferred net revenues
72,570 422,829
Non-GAAP Net Revenues by
Platform Mix Console
$ 419,858 86 %
$ 862,396 90 % PC and other
66,933 14 %
91,580 10 % Total non-GAAP net revenues
$
486,791 100 % $ 953,976 100 %
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES Net
Revenue by Geographic Region, Distribution Channel, and Platform
Mix (in thousands)
Nine Months Ended
December 31, 2015
Nine Months Ended
December 31, 2014
Amount % of Total Amount % of Total
GAAP Net Revenues by Geographic Region United States
$ 546,926 53 % $ 458,423 59 %
International
489,566 47 %
324,426 41 % Total GAAP net revenues
1,036,492
100 % 782,849 100 %
Change in
Deferred Net Revenues United States
$ 101,929 $
207,408 International
79,693 250,772 Total
changes in deferred net revenues
181,622
458,180
Non-GAAP Net Revenues by Geographic Region
United States
$ 648,855 53 % $ 665,831
54 % International
569,259 47 %
575,198 46 % Total non-GAAP net revenues
$ 1,218,114
100 % $ 1,241,029 100 %
Nine Months
Ended
December 31, 2015
Nine Months Ended
December 31, 2014
Amount % of Total Amount % of Total
GAAP Net Revenues by Distribution Channel Physical
retail and other
$ 533,632 51 % $
472,162 60 % Digital online
502,860 49
% 310,687 40 % Total GAAP net revenues
1,036,492 100 % 782,849 100 %
Change in Deferred Net Revenues Physical retail and other
$ 75,888 $ 355,425 Digital online
105,734 102,755 Total changes in deferred net
revenues
181,622 458,180
Non-GAAP
Net Revenues by Distribution Channel Physical retail and other
$ 609,520 50 % $ 827,587 67 % Digital
online
608,594 50 % 413,442 33 %
Total non-GAAP net revenues
$ 1,218,114 100
% $ 1,241,029 100 %
Nine Months Ended
December 31, 2015
Nine Months Ended
December 31, 2014
Amount % of Total Amount % of Total
GAAP Net Revenues by Platform Mix Console
$
878,838 85 % $ 620,547 79 % PC and other
157,654 15 % 162,302 21 % Total
GAAP net revenues
1,036,492 100 %
782,849 100 %
Change in Deferred Net Revenues
Console
$ 42,940 $ 450,623 PC and other
138,682 7,557 Total changes in deferred net revenues
181,622 458,180
Non-GAAP Net
Revenues by Platform Mix Console
$ 921,778
76 % $ 1,071,170 86 % PC and other
296,336 24 % 169,859 14 % Total
non-GAAP net revenues
$ 1,218,114 100 %
$ 1,241,029 100 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160203006463/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
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