Net revenue grew 21% to $420.2 million
GAAP net income was $0.39 per diluted share
Non-GAAP net income was $0.45 per diluted
share
Bookings grew 28% to $452.8 million
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
strong results for its fiscal second quarter 2017, ended September
30, 2016. In addition, the Company provided its initial financial
outlook for its fiscal third quarter 2017, ending December 31,
2016, and updated its financial outlook for its fiscal year ending
March 31, 2017.
Financial Results
For fiscal second quarter 2017, net revenue grew 21% to $420.2
million, as compared to $347.0 million for fiscal second quarter
2016. The largest contributors to net revenue in fiscal second
quarter 2017 were NBA® 2K16, Grand Theft Auto V® and Grand Theft
Auto Online, BioShock®: The Collection, and XCOM® 2.
The change in deferred net revenue, which represents revenue
recognized during the current period that was deferred in prior
periods, net of revenue that is being deferred into future periods,
was $59.3 million in fiscal second quarter 2017 versus $18.0
million in fiscal second quarter 2016.
Digitally-delivered net revenue grew 14% to $230.8 million, as
compared to $202.4 million for fiscal second quarter 2016.
Recurrent consumer spending (virtual currency, downloadable add-on
content and online games) accounted for 56% of digitally-delivered
net revenue, or 31% of total net revenue. The largest contributors
to digitally-delivered net revenue in fiscal second quarter 2017
were NBA 2K16, and Grand Theft Auto V and Grand Theft Auto
Online.
The change in deferred digitally-delivered net revenue was $3.4
million in fiscal second quarter 2017 versus ($61.4) million in
fiscal second quarter 2016.
GAAP cost of goods sold was $205.6 million, as compared to
$143.9 million for fiscal second quarter 2016.
Non-GAAP cost of goods sold was $200.0 million, as compared to
$139.8 million for fiscal second quarter 2016.
The change in deferred cost of goods sold, which represents cost
of goods sold recognized during the current period that were
deferred in prior periods, net of cost of goods sold that are being
deferred into future periods, was $28.8 million in fiscal second
quarter 2017 versus $49.0 million in fiscal second quarter
2016.
GAAP net income was $36.4 million, or $0.39 per diluted share,
as compared to $54.7 million, or $0.55 per diluted share, for the
year-ago period.
Non-GAAP net income was $50.7 million, or $0.45 per diluted
share, as compared to $56.2 million, or $0.51 per diluted share,
for the year-ago period.
The net effect from deferral of net revenue and related cost of
goods sold, which represents the after-tax net effect on net income
(loss) from the change in deferred revenue and the change in
deferred cost of goods sold, was $23.4 million (including tax
expense of $7.1 million) in fiscal second quarter 2017 versus
($23.5) million (including tax benefit of $7.6 million) in fiscal
second quarter 2016.
As of September 30, 2016, the Company had cash and short-term
investments of $1.175 billion.
Operational Metric -
Bookings
During fiscal second quarter 2017, total bookings, which
represents the total amount billed by the Company from sales of
physical product sold-in to retail and available to consumers, net
of allowances, plus product digitally-delivered to consumers during
the period, grew 28% to $452.8 million, as compared to $353.0
million during fiscal second quarter 2016. The largest contributors
to bookings were NBA 2K17 and NBA 2K16, Grand Theft Auto V and
Grand Theft Auto Online, BioShock: The Collection, and XCOM 2.
Catalog accounted for $193.7 million of bookings led by Grand Theft
Auto and NBA 2K. Digitally-delivered bookings grew 59% to $210.8
million, as compared to $132.4 million in last year’s fiscal second
quarter, led by NBA 2K17 and NBA 2K16, and Grand Theft Auto V and
Grand Theft Auto Online. Bookings from recurrent consumer spending
(virtual currency, downloadable add-on content and online games)
grew 63% year-over-year and accounted for 52% of
digitally-delivered bookings, or 24% of total bookings.
Management Comments
“Take-Two’s business continued to outperform during the second
quarter, enabling us to deliver strong net revenue and
better-than-expected bookings growth,” said Strauss Zelnick,
Chairman and CEO of Take-Two. “Our outstanding results were
highlighted by the series' record-breaking launch of NBA 2K17,
ongoing robust demand for Grand Theft Auto V, and increased
recurrent consumer spending, including year-over-year bookings
growth from Grand Theft Auto Online.
“Our holiday season is off to a great start with a diverse array
of successful new releases, including Mafia III, WWE 2K17 and Sid
Meier’s Civilization VI, as well as our first virtual reality
offering – Carnival Games VR. We intend to support our titles with
innovative offerings designed to promote ongoing engagement and
drive recurrent consumer spending, including additional free
content for Grand Theft Auto Online. Looking ahead, fiscal 2018 is
poised to be another strong year for our Company. We expect to grow
both bookings and net cash provided by operating activities driven
by our release slate led by Rockstar Games’ highly anticipated
launch of Red Dead Redemption 2.”
Business and Product
Highlights
Since July 1, 2016:
Rockstar Games:
- Released new free content updates for
Grand Theft Auto Online, including:
- Bikers, which brings underground
Motorcycle Clubs to the forefront of the Los Santos and Blaine
County criminal underworld with a range of all new competitive and
co-operative gameplay, as well as new modes, vehicles, weapons,
clothing and much more.
- Cunning Stunts, which features a total
of 27 brand-new, high-octane Stunt Races utilizing ramps, loops,
wall rides, tubes, raised tracks and dynamic objects for a radical
new take on Grand Theft Auto Online racing, along with 19 new
vehicles, clothing and the launch of the Stunt Race Creator tools,
which allow the community to make and share their own custom stunt
races. Also added on August 2, 2016 was the Entourage Adversary
Mode.
- Made Red Dead Redemption available as
part of Microsoft’s Xbox One Backward Compatibility program,
enabling owners of the Xbox 360 versions of Red Dead Redemption,
Red Dead Redemption Undead Nightmare, and Red Dead Redemption: Game
of the Year Edition to play on Xbox One. In addition, Red Dead
Redemption is now available for purchase through digital download
from the Games Store on Xbox One.
- Announced that the highly-anticipated
Red Dead Redemption 2® is planned for release worldwide in Fall
2017 for PlayStation 4 and Xbox One. Developed by the creators of
Grand Theft Auto V and Red Dead Redemption, Red Dead Redemption
2 is an epic tale of life in America’s unforgiving heartland.
The game's vast and atmospheric open world will also provide the
foundation for a brand new online multiplayer experience.
2K:
- Launched Sid Meier’s Civilization® VI
for PC. Developed by Firaxis Games, Sid Meier’s Civilization VI is
the next entry in the award-winning turn-based strategy franchise
that has sold-in over 37 million units. The title has received
outstanding reviews from critics, including 9.5 out of 10 from Game
Informer, 9.4 out of 10 from IGN, 93 out of 100 from PC Gamer, and
90 out of 100 from GameSpot.
- Launched WWE® 2K17 for PlayStation 4,
PlayStation 3, Xbox One and Xbox 360. Developed collaboratively by
Yuke's and Visual Concepts, WWE 2K17 is being supported with
downloadable add-on content, including a Season Pass.
- Launched Mafia III, the next
installment in 2K’s successful organized crime series, for Xbox
One, PlayStation 4 and PC. Developed by Hangar 13, Mafia III is the
fastest-selling game in 2K’s history, generating week one sell-in
of more than 4.5 million units. Mafia III is being supported with
downloadable add-on content, including a Season Pass, as well as a
free-to-play mobile battle RPG game, Mafia III Rivals, for iOS and
Android devices.
- Released XCOM 2 on PlayStation 4 and
Xbox One. XCOM 2 initially launched for PC in February 2016 and
received outstanding review scores, with Game Informer Magazine,
GameSpot and IGN each scoring the title in the 9-out-of-10
range.
- Launched NBA 2K17 on PlayStation 4,
PlayStation 3, Xbox One, Xbox 360 and PC, as well as on iOS and
Android devices. The title received stellar reviews, becoming the
highest-rated annual sports game of the current console generation
and the highest-rated title in the history of the NBA 2K series.*
NBA 2K17 delivered record first week sell-in for the series and has
continued to grow versus the prior-year’s release, with sell-in to
date of more than 4.5 million units.
- Released BioShock: The Collection for
PlayStation 4, Xbox One, and PC**. BioShock: The Collection
includes BioShock, BioShock 2, and BioShock Infinite completely
remastered for new-generation consoles in full high-resolution and
up to 60 frames per second, complete with all single-player DLC and
a never-before-seen video series, “Director’s Commentary: Imagining
BioShock,” which includes insights from series creator Ken
Levine.
- Released Carnival Games® VR for HTC
Vive™ and PlayStation®VR. A new take on the hit franchise created
by Cat Daddy Games that has sold-in more than 9 million copies
worldwide, Carnival Games VR is 2K’s first virtual reality
offering. The title will also be available on December 6, 2016 for
Oculus Rift.
- Released NHL SuperCard 2K17 for iOS and
Android devices. Developed by Cat Daddy Games, NHL SuperCard 2K17
is a free-to-play NHL collectible card-battling game that includes
more than 400 cards with current NHL players, season-based action,
exhibition games and more.
- Announced that WWE SuperCard - Season 3
will be available for iOS and Android devices in November 2016.
Developed by Cat Daddy Games, WWE SuperCard Season 3 will be a free
update to the popular WWE collectible card-battling game that has
been downloaded more than 11 million times, featuring new modes of
play, Superstars and more.
* According to Metacritic.com.
** BioShock: The Collection is only available for PC through
digital-download.
Financial Outlook for Fiscal
2017
Take-Two is providing its initial financial outlook for its
fiscal third quarter ending December 31, 2016 and is updating its
financial outlook for its fiscal year ending March 31, 2017,
including maintaining its outlook for net revenue and increasing
its outlook for bookings. Additional details regarding the
Company's financial outlook are available by visiting
http://ir.take2games.com.
Third Quarter
Fiscal Year
Ending 12/31/2016 (1)
Ending 3/31/2017 (1)
Net revenue
$475 to $525 million
$1.75 to $1.85 billion
GAAP Net income
$17 to $30 million
$180 to $213 million
Stock-based compensation expense (2)
$20 million $71 million
Non-cash amortization of discount on
convertible notes
$5 million $22 million
Gain on long-term investment, net
- $1 million
Income tax adjustment
($8) to ($10) million
($48) to ($52) million
Non-GAAP net income
$34 to $45 million
$226 to $255 million
GAAP Net income per diluted
share
$0.18 to $0.32
$1.80 to $2.09
Non-GAAP net income per diluted
share
$0.30 to $0.40
$2.00 to $2.25
Net cash provided by operating
activities
$300 million
Capital expenditures $50 million
Deferred Net
Revenue and Cost of Goods Sold
Change in deferred net revenue $200 million ($80) million Net
effect from deferral of net revenue and related cost of goods sold
$62 million (3) ($49) million (4)
Operational
Metric
Bookings
$650 to $700 million
$1.6 to $1.7 billion
1) 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. 2) The
Company's stock-based compensation expense for the periods above
includes the cost of approximately 0.9 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. 3) Includes tax impact of
$18 million. 4) Includes tax impact of ($14) million.
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 July 1, 2016:
Label
Title
Platforms
Release Date
2K
Evolve Stage 2
PC July 7, 2016 2K
MyNBA 2K17
iOS and Android devices September 8, 2016 2K
BioShock: The Collection
PS4, Xbox One, PC* September 13, 2016 2K
NBA 2K17
PS4, PS3, Xbox One, Xbox 360, PC
September 20, 2016 2K
NBA 2K17
iOS and Android Devices September 22, 2016 2K
XCOM 2
PS4, Xbox One September 27, 2016** 2K
Mafia III
PS4, Xbox One, PC October 7, 2016 2K
Mafia III Rivals
iOS and Android Devices October 7, 2016 2K
WWE 2K17
PS4, PS3, Xbox One, Xbox 360 October 11, 2016 2K
NHL SuperCard 2017
iOS and Android Devices October 13, 2016 2K
Sid Meier’s Civilization VI
PC October 21, 2016 2K
Carnival Games VR
HTC Vive, PlayStation VR October 28, 2016
* BioShock: The Collection is only
available for PC through digital-download.
** North American release date;
international followed three days later.
Take-Two's lineup of future titles
announced to date includes:
Label
Title
Platforms
Release Date
2K
WWE SuperCard - Season 3
iOS and Android Devices November 2016 2K
Carnival Games VR
Oculus Rift December 6, 2016 Rockstar Games
Red Dead Redemption 2
PS4, Xbox One Fall 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. These Non-GAAP
financial measures are not intended to be considered in isolation
from, as a substitute for, or superior to, the corresponding GAAP
financial measures, and may be different from similarly titled
measures used by other companies. Management believes that the
presentation of these Non-GAAP financial measures facilitates
comparison of the Company’s operating performance between periods
and helps 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,
such as stock-based compensation and non-cash amortization of
discount on convertible notes; charges relating to business
reorganizations; and gains on strategic non-core business
investments. Internally, management makes Non-GAAP adjustments to
the Company’s financial measures as set forth below to assess the
company's operating results and in planning and forecasting. The
Non-GAAP adjustments to the Company’s financial measures are as
follows:
- Stock-based compensation – stock-based
compensation is a non-cash expense that is subject to stock price
volatility. 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. In addition, when considering the impact
of equity award grants, the Company places a greater emphasis on
overall shareholder dilution rather than the accounting charges
associates with such grants. 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 and circumstances. 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 recorded for coupon payments. The Company
believes the non-cash portion of the interest expense, which
represents the accretion of the bifurcated equity component of the
conversion option of our convertible notes, is not core to our
operations given our intent and ability to settle the notes in
shares of our common stock. The convertible notes are accounted for
under the assumption that they will be settled in shares, and the
Company includes the related underlying shares when calculating
if-converted net income per diluted share. Therefore, the exclusion
of the non-cash amortization from the Company’s non-GAAP financial
measures provides management with a consistent measure for
assessing financial results.
- Gain on long-term investment, net –
from time to time, the Company makes strategic non-core business
investments. Because the Company does not exercise significant
control over these investments, it excludes the impact of any gains
and losses on such investments from its Non-GAAP financial
measures.
- Income tax adjustment – the Company
calculates a provision/benefit for income taxes on a standalone,
Non-GAAP basis inclusive of the adjustments noted above. The income
tax adjustment reflects the difference between our GAAP and
Non-GAAP provision/benefit for income taxes.
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.
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 September 30,
2016.
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, 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 (Unaudited) (in
thousands, except per share amounts)
Three months ended September 30, Six months ended
September 30, 2016 2015
2016 2015
Net revenue
$ 420,167 $ 346,974
$ 731,719 $ 622,271 Cost of
goods sold: Internal royalties
77,425 54,918
137,098
160,747 Software development costs and royalties
45,194
40,014
108,853 90,507 Product costs
55,059 38,777
100,038 78,718 Licenses
27,927
10,231
50,996 16,583
Total cost of goods sold
205,605
143,940
396,985 346,555
Gross profit
214,562 203,034
334,734 275,716
Selling and marketing
80,187 54,876
151,321
100,443 General and administrative
49,685 49,961
96,428 98,996 Research and development
30,005 24,413
63,905 58,555 Depreciation and amortization
7,491 7,353
14,869
13,928 Total operating expenses
167,368
136,603
326,523
271,922 Income from operations
47,194 66,431
8,211 3,794 Interest and other, net
(7,078 )
(8,396 )
(11,584 ) (15,930 ) Gain on long-term
investment
- -
1,350 - Income (loss) before income
taxes
40,116 58,035
(2,023 ) (12,136 )
Provision for income taxes
3,684 3,300
112 152 Net income (loss)
$ 36,432 $ 54,735
$
(2,135 ) $ (12,288 ) Earnings (Loss) per
share: Basic earnings (loss) per share
$ 0.42
$ 0.63
$ (0.03 ) $ (0.15 ) Diluted
earnings (loss) per share
$ 0.39 $ 0.55
(0.03 ) $ (0.15 ) Weighted average shares
outstanding: Basic
87,176 87,560
84,990 83,280 Diluted
115,202 114,015
84,990
83,280
Computation of Basic EPS:
Net income (loss)
$ 36,432 $ 54,735
$
(2,135 ) $ (12,288 ) Less: net income allocated to
participating securities
(745 ) (2,320
)
- - Net income (loss) for
basic EPS calculation
$ 35,687 $ 52,415
$ (2,135 ) $ (12,288 ) Weighted average
shares outstanding - basic
87,176 87,560
$
84,990 83,280 Less: weighted average participating shares
outstanding
(1,783 ) (3,711 )
- - Weighted average common shares
outstanding - basic
85,393 83,849
84,990 83,280
Basic earnings (loss) per share
$
0.42 $ 0.63
$ (0.03 ) $
(0.15 )
Computation of Diluted EPS: Net income (loss)
$ 36,432 $ 54,735
$ (2,135 ) $
(12,288 ) Less: net income allocated to participating securities
(564 ) (1,782 )
- - Add: interest expense, net
of tax, on Convertible Notes
8,669
7,994
- - Net income
(loss) for diluted EPS calculation
$ 44,537 $
60,947
$ (2,135 ) $ (12,288 )
Weighted average common shares outstanding - basic
85,393
83,849
84,990 83,280 Add: dilutive effect of common stock
equivalents
29,809 30,166
- - Total weighted average shares
outstanding - diluted
115,202 114,015
84,990 83,280
Less: weighted average participating shares outstanding
(1,783 ) (3,711 )
-
- Weighted average common shares outstanding -
diluted
113,419 110,304
84,990 83,280
Diluted earnings (loss) per share
$ 0.39
$ 0.55
$ (0.03 ) $ (0.15 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in
thousands, except per share amounts) September
30, March 31, 2016
2016 ASSETS (Unaudited) Current
assets: Cash and cash equivalents
$ 770,003 $ 798,742
Short-term investments
404,591 470,820 Restricted cash
368,109 261,169
Accounts receivable, net of allowances of
$70,480 and $45,552 at September 30, 2016 and March 31, 2016,
respectively
381,587 168,527 Inventory
77,561 15,888 Software
development costs and licenses
178,629 178,387 Deferred cost
of goods sold
129,396 98,474 Prepaid expenses and other
60,894 53,269 Total current
assets
2,370,770 2,045,276
Fixed assets, net
68,531 77,127 Software development
costs and licenses, net of current portion
300,340 214,831
Deferred cost of goods sold, net of current portion
3,033
17,915 Goodwill
215,658 217,080 Other intangibles, net
4,609 4,609 Other assets
16,139
13,439 Total assets
$ 2,979,080 $
2,590,277
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable
$ 144,756 $
30,448 Accrued expenses and other current liabilities
753,069 607,479 Deferred revenue
821,409
582,484 Total current liabilities
1,719,234 1,220,411 Long-term
debt
511,636 497,935 Non-current deferred revenue
54,741 216,319 Other long-term liabilities
110,716 74,227 Total liabilities
2,396,327 2,008,892
Stockholders' equity: Preferred stock, $.01 par value, 5,000 shares
authorized
- - Common stock, $.01 par value, 200,000 shares
authorized; 104,558 and 103,765 shares issued and 87,366 and 86,573
outstanding at September 30, 2016 and March 31, 2016, respectively
1,046 1,038 Additional paid-in capital
1,097,098
1,088,628 Treasury stock, at cost; 17,192 common shares at
September 30, 2016 and March 31, 2016, respectively
(303,388
) (303,388 ) Accumulated deficit
(169,132 )
(166,997 ) Accumulated other comprehensive loss
(42,871 ) (37,896 ) Total stockholders' equity
582,753 581,385 Total
liabilities and stockholders' equity
$ 2,979,080
$ 2,590,277
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six months ended September 30, 2016
2015
Operating activities:
Net loss
$ (2,135 ) $ (12,288 ) Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: Amortization and impairment of software development
costs and licenses
63,459 40,719 Depreciation and
amortization
14,869 13,928 Amortization and impairment of
intellectual property
- 160 Stock-based compensation
33,333 35,406 Deferred income taxes
(15 ) 68
Amortization of discount on Convertible Notes
12,981 11,544
Amortization of debt issuance costs
779 792 Other, net
(2,897 ) 1,102 Changes in assets and liabilities:
Restricted cash
(106,940 ) (45,548 ) Accounts
receivable
(212,032 ) (22,668 ) Inventory
(62,555 ) (3,755 ) Software development costs and
licenses
(148,512 ) (117,959 ) Prepaid expenses,
other current and other non-current assets
(8,560 )
(13,250 ) Deferred revenue
80,913 113,042 Deferred cost of
goods sold
(17,287 ) (38,440 ) Accounts payable,
accrued expenses and other liabilities
303,790
57,161 Net cash (used in) provided by operating
activities
(50,809 ) 20,014
Investing activities:
Change in bank time deposits
66,841 (162,401 ) Proceeds from
available-for-sale securities
72,387 - Purchases of
available-for-sale securities
(74,552 ) (4,987 )
Purchases of fixed assets
(8,283 ) (25,793 ) Proceeds
from sale of long-term investments
1,350 - Purchase of
long-term investments
(1,885 ) -
Net cash provided by (used in) investing activities
55,858 (193,181 )
Financing activities:
Excess tax benefit from stock-based compensation
1,143 9,529
Tax payment related to net share settlements on restricted stock
awards
(30,621 ) (10,386 ) Repurchase of common stock
- (26,552 ) Net cash used in financing
activities
(29,478 ) (27,409 )
Effects of foreign exchange rates on cash and cash equivalents
(4,310 ) 1,169 Net
decrease in cash and cash equivalents
(28,739 )
(199,407 ) Cash and cash equivalents, beginning of year
798,742 911,120 Cash and cash
equivalents, end of period
$ 770,003 $ 711,713
TAKE-TWO
INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES RECONCILIATION
OF GAAP TO Non-GAAP MEASURES (Unaudited) (in thousands,
except per share amounts) Three months ended
September 30, Six months ended September 30,
2016 2015 2016
2015 Cost of Goods Sold
GAAP Cost of Goods Sold $ 205,605 $ 143,940
$ 396,985 $ 346,555 Stock-based compensation
(5,566 ) (4,110 )
(9,952
) (8,804 )
Non-GAAP Cost of Goods Sold
200,039 $ 139,830
387,033
$ 337,751
Gross Profit GAAP Gross
Profit $ 214,562 $ 203,034
$
334,734 $ 275,716 Stock-based compensation
5,566 4,110
9,952
8,804
Non-GAAP Gross Profit
220,128 $ 207,144
344,686
$ 284,520
Income (Loss) from Operations
GAAP Income from Operations $ 47,194 $ 66,431
$ 8,211 $ 3,794 Stock-based compensation
18,233 16,320
33,333 35,406 Business reorganization,
restructuring and related expenses
- -
- 1,228
Non-GAAP
Income from Operations $ 65,427 $ 82,751
$ 41,544 $ 40,428
Net
Income (Loss) GAAP Net Income (Loss) $
36,432 $ 54,735
$ (2,135 ) $ (12,288 )
Stock-based compensation
18,233 16,320
33,333 35,406
Business reorganization, restructuring and related expenses
- -
- 1,228 Non-cash amortization of discount on
Convertible Notes
6,882 5,817
12,981 11,544 Gain on
long-term investment
- -
(1,350 ) - Income tax
adjustment
(10,826 ) (20,704 )
(9,693 ) (12,895 )
Non-GAAP Net Income
$ 50,721 $ 56,168
$
33,136 $ 22,995
Diluted Earnings
(Loss) Per Share GAAP earnings (loss) per share
$
0.39 $ 0.55
$ (0.03 ) $ (0.15 )
Non-GAAP earnings per share
$ 0.45 $ 0.51
$
0.31 $ 0.23 Number of diluted shares used in
computation GAAP
115,202 114,015
84,990 83,280
Non-GAAP
115,202 114,015
115,105 114,157
Computation of Diluted GAAP EPS: Net income (loss)
$ 36,432 $ 54,735
$ (2,135 ) $
(12,288 ) Less: net income allocated to participating securities
(564 ) (1,782 )
- - Add: interest expense, net
of tax, on Convertible Notes
8,669
7,994
- - Net income
(loss) for diluted EPS calculation
$ 44,537 $
60,947
$ (2,135 ) $ (12,288 )
Weighted average shares outstanding - diluted
85,393 83,849
84,990 82,833 Add: dilutive effect of common stock
equivalents
29,809 30,166
- - Total weighted average shares
outstanding - diluted
115,202 114,015
84,990 82,833
Less: weighted average participating shares outstanding
(1,783 ) (3,711 )
-
- Weighted average common shares outstanding -
diluted
113,419 110,304
84,990 82,833
Diluted earnings (loss) per share
$
0.39 $ 0.55
$ (0.03 ) $
(0.15 )
Computation of Diluted Non-GAAP EPS:
Non-GAAP net income
$ 50,721 $ 56,168
$
33,136 $ 22,995 Less: net income allocated to participating
securities
(785 ) (1,828 )
(570 ) (891
) Add: interest expense, net of tax, on Convertible Notes
1,518 1,370
3,031
2,742 Net income for diluted earnings per share
calculation
$ 51,454 $ 55,710
$
35,597 $ 24,846 Weighted average shares
outstanding - diluted
85,393 83,849
88,650 83,280
Add: dilutive effect of common stock equivalents
29,809 30,166
26,455
30,877 Total weighted average shares
outstanding - diluted
115,202 114,015
115,105 114,157
Less: weighted average participating shares outstanding
(1,783 ) (3,711 )
(1,979
) (4,422 ) Weighted average common shares outstanding
- diluted
113,419 110,304
113,126 109,735
Diluted earnings per share
$
0.45 $ 0.51
$ 0.31 $ 0.23
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
SELECTED DATA
(in thousands)
Three Months Ended September 30, Six Months
Ended September 30, 2016
2015 2016 2015
Net Revenues $ 420,167 $ 346,974
$ 731,719 $ 622,271 Change in deferred net revenues
59,274 17,956
20,277 109,051
Cost of Goods
Sold $ 205,605 $ 143,940
$ 396,985
$ 346,555 Non-GAAP Cost of Goods Sold
$ 200,039 $
139,830
$ 387,033 $ 337,751 Change in deferred cost
of goods sold (1)
28,779 49,031
4,155 49,161
Net Income (Loss) $ 36,432 $ 54,735
$
(2,135 ) $ (12,288 ) Non-GAAP Net Income
50,721 56,168
33,136 22,995 Net effect from deferral
of net revenue and related cost of goods sold, net of taxes (2)
23,407 (23,468 )
12,099 43,913 (1) Changes in
deferred cost of goods sold Change in deferred software development
costs
$ 4,796 $ 8,992
$ 2,069 $ 10,229
Change in deferred product costs
11,689 18,210
2,799
16,114 Change in deferred licenses
12,294
21,829
(713 ) 22,818
Total change in deferred cost of goods sold
28,779
49,031
4,155 49,161 (2) Net effect from
deferral of net revenue and related cost of goods sold, net of
taxes Change in deferred net revenues
$ 59,274 $
17,956
$ 20,277 $ 109,051 Change in deferred cost of
goods sold
(28,779 ) (49,031 )
(4,155 )
(49,161 ) Tax (benefit)/expense
7,088
(7,607 )
4,023 15,977 Net effect
from deferral of net revenue and related cost of goods sold, net of
taxes
23,407 (23,468 )
12,099 43,913
Bookings
Total Bookings
$ 452,835 $ 353,013
$
706,336 $ 706,844 Digital Bookings
$ 210,806 $
132,369
$ 383,506 $ 377,576
TAKE-TWO
INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES Net Revenue by
Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
Three Months Ended
September 30, 2016
Three Months Ended
September 30, 2015
Amount % of Total Amount % of Total
Net Revenues by Geographic Region United States
$ 252,483 60 % $ 185,102 53 %
International
167,684 40 %
161,872 47 % Total net revenues
420,167
100 % 346,974 100 %
Change in Deferred Net Revenues United States
$
45,486 $ 33,740 International
13,788
(15,784 ) Total changes in deferred net revenues
59,274 17,956
Three Months
Ended
September 30, 2016
Three Months Ended
September 30, 2015
Amount % of Total Amount % of Total
Net Revenues by Distribution Channel Digital online
$ 230,759 55 % $ 202,426 58 % Physical
retail and other
189,408 45 %
144,548 42 % Total net revenues
420,167
100 % 346,974 100 %
Change in Deferred Net Revenues Digital online
$
3,419 $ (61,414 ) Physical retail and other
55,855 79,370 Total changes in deferred
net revenues
59,274 17,956
Three Months Ended
September 30, 2016
Three Months Ended
September 30, 2015
Amount % of Total Amount % of Total
Net Revenues by Platform Mix Console
$ 230,759
55 % $ 301,029 87 % PC and other
189,408 45 % 45,945 13 %
Total net revenues
420,167 100 %
346,974 100 %
Change in Deferred Net
Revenues Console
$ 190,625 $ 15,621 PC and other
(131,351 ) 2,335 Total changes
in deferred net revenues
59,274 17,956
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES Net Revenue by Geographic Region, Distribution
Channel, and Platform Mix (in thousands)
Six Months Ended
September 30, 2016
Six Months Ended
September 30, 2015
Amount % of Total Amount % of Total
Net Revenues by Geographic Region United States
$ 445,584 61 % $ 328,540 53 %
International
286,135 39 %
293,731 47 % Total net revenues
731,719
100 % 622,271 100 %
Change in Deferred Net Revenues United States
$
(4,375 ) $ 41,658 International
24,652
67,393 Total changes in deferred net revenues
20,277 109,051
Six
Months Ended
September 30, 2016
Six Months Ended
September 30, 2015
Amount % of Total Amount % of Total
Net Revenues by Distribution Channel Digital online
$ 402,837 55 % $ 356,411 57 % Physical
retail and other
328,882 45 %
265,860 43 % Total net revenues
731,719
100 % 622,271 100 %
Change in Deferred Net Revenues Digital online
$
22,504 $ 38,564 Physical retail and other
(2,227 ) 70,487 Total changes in
deferred net revenues
20,277 109,051
Six Months Ended
September 30, 2016
Six Months Ended
September 30, 2015
Amount % of Total Amount % of Total
Net Revenues by Platform Mix Console
$ 607,064
83 % $ 523,603 84 % PC and other
124,655 17 % 98,668 16 %
Total net revenues
731,719 100 %
622,271 100 %
Change in Deferred Net
Revenues Console
$ 28,165 $ (21,684 ) PC and
other
(7,887 ) 130,735 Total
changes in deferred net revenues
20,277
109,051
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161102006444/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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