GAAP net revenue grew 11% to $492.7 million
GAAP net income increased to $0.22 per diluted
share
Net Bookings grew 1% to $583.4 million
Company raises financial outlook for fiscal
year 2019
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
strong results for its fiscal second quarter 2019 ended September
30, 2018. In addition, the Company provided its initial financial
outlook for its fiscal third quarter ending December 31, 2018, and
raised its financial outlook for its fiscal year ending March 31,
2019. For additional information, please see the fiscal second
quarter 2019 results slide deck posted to the Company’s investor
relations website at http://ir.take2games.com.
Fiscal Second Quarter 2019 GAAP
Financial Highlights
Net revenue grew 11% to $492.7 million, as compared to $443.6
million in last year’s fiscal second quarter. Recurrent consumer
spending (virtual currency, add-on content and in-game purchases)
grew 12% and accounted for 49% of total net revenue. The largest
contributors to net revenue in fiscal second quarter 2019 were NBA®
2K19 and NBA 2K18, Grand Theft Auto® Online and Grand Theft Auto V,
NBA 2K Online 2, Dragon City and Monster Legends, and WWE®
SuperCard.
Digitally-delivered net revenue grew 18% to $358.4 million, as
compared to $302.9 million in last year’s fiscal second quarter,
and accounted for 73% of total net revenue. The largest
contributors to digitally-delivered net revenue in fiscal second
quarter 2019 were Grand Theft Auto Online and Grand Theft Auto V,
NBA 2K18 and NBA 2K19, NBA 2K Online 2, Monster Legends and Dragon
City, and WWE SuperCard.
Net income increased to $25.4 million, or $0.22 per diluted
share, as compared to a net loss of $2.7 million, or $0.03 per
diluted share, for the comparable period last year.
As of September 30, 2018, the Company had cash and short-term
investments of $1.025 billion.
The following data, together with a management reporting tax
rate of 20%, are used internally by the Company’s management and
Board of Directors to adjust the Company’s GAAP financial results
in order to facilitate comparison of its operating performance
between periods and to better understand its core business and
future outlook:
Three Months Ended September 30,
2018
Financial Data
$ in thousands
Statement of operations
Change in deferred net revenue
and related cost of goods sold
Stock-based compensation
Amortization & impairment
of acquired intangible assets
Net revenue $ 492,667 90,754
Cost of goods sold 234,880 5,622
(7,688 ) (3,670 )
Gross profit
257,787 85,132 7,688 3,670
Operating expenses 231,801
(22,654 ) (1,742 )
Income from
operations 25,986 85,132 30,342
5,412 Interest and other, net 4,975 (3
)
Income before income
taxes 30,961 85,129 30,342 5,412
In order to calculate net income per diluted share for
management reporting purposes, the Company uses its fully diluted
share count of 116.1 million.
Operational Metric – Net
Bookings
Net Bookings is defined as the net amount of products and
services sold digitally or sold-in physically during the period,
and includes licensing fees, merchandise, in-game advertising,
strategy guides and publisher incentives.
During fiscal second quarter 2019, total Net Bookings grew 1% to
$583.4 million, as compared to $577.0 million during last year’s
fiscal second quarter. Net Bookings from recurrent consumer
spending grew 28% and accounted for 53% of total Net Bookings. The
largest contributors to Net Bookings in fiscal second quarter 2019
were NBA 2K19 and NBA 2K18, Grand Theft Auto Online and Grand Theft
Auto V, Dragon City and Monster Legends, WWE SuperCard, and NBA 2K
Online 2.
Catalog accounted for $287.8 million of Net Bookings led by
Grand Theft Auto, Dragon City and Monster Legends, and NBA 2K.
Digitally-delivered Net Bookings grew 20% to $426.2 million, as
compared to $355.7 million in last year’s fiscal second quarter,
and accounted for 73% of total Net Bookings. The largest
contributors to digitally-delivered Net Bookings in fiscal second
quarter 2019 were NBA 2K19 and NBA 2K18, Grand Theft Auto Online
and Grand Theft Auto V, Dragon City and Monster Legends, WWE
SuperCard, and NBA 2K Online 2.
New Non-GAAP Financial
Measure
Starting in fiscal second quarter 2019, the Company is reporting
a Non-GAAP measure of financial performance: Adjusted Operating
Cash Flow, which is defined as GAAP net cash from operating
activities, adjusted for changes in restricted cash. Please see the
section below titled “Non-GAAP Financial Measure” for additional
information.
Management Comments
“Take-Two delivered better-than-expected operating results,
including growth in Net Bookings, during the fiscal second
quarter,” said Strauss Zelnick, Chairman and CEO of Take-Two. “This
outperformance was driven primarily by Grand Theft Auto V and Grand
Theft Auto Online, as well as the successful launch of NBA
2K19.
“On October 26th, Rockstar Games launched its highly-anticipated
Red Dead Redemption 2, the label’s first game built from the ground
up for the current console generation. Red Dead Redemption 2 has
received outstanding reviews, with numerous critics awarding the
title a perfect score. The title is now tied with Grand Theft Auto
V as the highest rated title on PlayStation 4 and Xbox One, with a
97 Metacritic score. A massive commercial success, Red Dead
Redemption 2 has set numerous records, including achieving the
biggest opening weekend in the history of entertainment, with over
$725 million in retail sell-through during its first three days.
Red Dead Redemption 2 sold-in more units in its first 8 days than
the original blockbuster Red Dead Redemption sold in its first
8 years and, as of today, the title has sold-in over 17 million
units worldwide.
“As a result of our strong second quarter performance and
outstanding early results from Red Dead Redemption 2, we are
raising our financial outlook for fiscal 2019, which is also poised
to be a record year for Net Bookings and Adjusted Operating Cash
Flow. Looking ahead, we have a strong development pipeline across
our labels and are exceedingly well positioned for long-term growth
and margin expansion.”
Business and Product
Highlights
Since July 1, 2018:
Rockstar Games:
- Launched Red Dead Redemption 2 for
PlayStation 4 and Xbox One. Told across the deepest and most
expansive Rockstar world to date, Red Dead Redemption 2 is
Rockstar’s first game built from the ground up for the current
console generation. The title has received outstanding reviews,
with numerous influential critics awarding Red Dead Redemption 2 a
perfect score, including IGN, The Guardian, Game Informer, The
Telegraph, Digital Trends and others. Following are some highlights
from reviews:
- The Washington Post: “Jaw-dropping at
every level.”
- The Hollywood Reporter: “What Rockstar
has delivered in Red Dead Redemption 2 is not just the best game of
the year, but the best game of the decade.”
- CNET: "Red Dead Redemption 2 has
undoubtedly raised the bar for narrative open-world games and will
likely have a lasting impact on how they are made in the
future.”
- GQ UK: "Red Dead Redemption 2 is
Rockstar’s best game; a grand, magnificent adventure that’s vast
yet intimate... It's a landmark moment for the open world genre,
and for the medium as a whole."
Red Dead Redemption 2 has also been a massive commercial success
and has set numerous records. The title’s list of initial
benchmarks includes:
- Biggest opening weekend in retail
sell-through across all entertainment releases (over $725
million);
- Second biggest launch (three days) in
retail sell-through across all entertainment releases (next to
Grand Theft Auto V);
- Biggest entertainment launch of
2018;
- Most pre-ordered full game ever on
PlayStation Network;
- Biggest day one full game sales ever on
PlayStation Network;
- Biggest first three days full game
sales ever on PlayStation Network.
Red Dead Redemption 2 sold-in more units in its first 8 days
than the original blockbuster Red Dead Redemption sold in its
first 8 years and, as of today, the title has sold-in over 17
million units worldwide.
- Released new free content updates for
Grand Theft Auto Online, including:
- Sumo (Remix) Adversary Mode, in which
players try to reach a safe zone to avoid going up in flames before
the timer runs out while pieces of the track may or may not
disappear at random.
- Running Back (Remix) Adversary Mode,
where players attempt to drive an undersized Panto hatchback Runner
into the end zone while being both flanked and opposed by an
upgraded fleet of 5-star recruits in Tezeracts.
- Trading Places (Remix) mode, a menacing
collision of super-human agility and devastating firepower.
- Hunting Pack (Remix) mode, which
challenges a Runner to prevent an onboard bomb from detonating,
while a team of Defenders must protect the Runner at all
costs.
- GTA Online: After Hours, which enables
players to partner with legendary club impresario Tony Prince to
open and operate a top-shelf nightclub featuring world-class DJ
acts and use that club as a front for a network of criminal
enterprises.
- Numerous new vehicles, weapons and
more.
2K:
- Released Carnival Games®, for
Nintendo Switch. Built from the ground up for Nintendo
Switch, Carnival Games can be played alone or with up to
four players simultaneously, leveraging the unique accessibility of
the console’s Joy-Con controllers. Carnival Games was also released
for PlayStation 4 and Xbox One.
- Launched Saber Interactive’s
arcade-action sports game, NBA 2K Playgrounds 2, for Xbox One,
PlayStation 4, Nintendo Switch and PC. This over-the-top,
two-on-two basketball experience complements 2K’s top-selling NBA
2K series and expands the label’s footprint in the basketball video
game space.
- Launched WWE 2K19, the next release
from our flagship WWE video game franchise, for PlayStation 4, Xbox
One and Windows PC. For the first time ever, 2K introduced the WWE
2K19 Million Dollar Challenge, where eligible entrants participate
in an international contest in which the finalist will compete
one-on-one in WWE 2K19 against AJ Styles for the chance to win $1
million. WWE 2K19 is being supported with a series of downloadable
content, including a Season Pass.
- Launched NBA 2K19, the latest iteration
of our top-rated and top-selling NBA video game simulation
series for the past 17 years, for PlayStation 4, Xbox One, Nintendo
Switch and Windows PC. 2K also released the NBA 2K19 20th
Anniversary Edition, featuring three-time NBA Champion, four-time
NBA MVP and avid NBA 2K gamer LeBron James on
the cover. NBA 2K19 received positive reviews from influential
critics:
- Forbes noted, “There is no such thing
as a perfect sports game, but this is as close as it gets”;
- IGN called the title “the best of the
series”;
- Game Informer said it “isn’t just a
game, it’s a lifestyle.”
According to The NPD Group, based on combined physical and digital
sales in the U.S.:
- NBA 2K19 achieved the highest launch
month dollar sales of any Sports genre game released since it began
tracking the industry in 1995;
- NBA 2K19 represents the biggest launch
of any game in the NBA 2K franchise;
- NBA 2K19 is the best-selling Sports
game of 2018 year-to-date.
- Published The Golf Club 2019
Featuring PGA TOUR®, the latest entry in the award-winning
golf simulation series, for digital download on PlayStation 4, Xbox
One and PC. Developed by HB Studios, The Golf Club 2019
Featuring PGA TOUR marks the franchise’s first release
featuring the official PGA TOUR license and, after its
first two months in market, has experienced more than a 30%
increase in units sold over last year’s entry, The Golf Club 2.
Physical versions of the game will be available at participating
retailers on November 13, 2018 in North America and November 16,
2018 internationally.
- Announced that Borderlands 2 VR will
launch for PlayStation VR on December 14, 2018. For the first time
ever, Borderlands 2 VR enables players to immerse themselves
virtually in the mayhem-filled world of Borderlands, the popular
shooter-looter developed by Gearbox Software.
- Announced that Sid Meier’s
Civilization® VI, winner of The Game Awards’ and DICE Awards’
Best Strategy Game 2016, is coming to Nintendo Switch
on November 16, 2018. Additionally, 2K and Firaxis Games have
partnered with Aspyr Media to bring Civilization VI to
Nintendo Switch and ensure the experience meets the same high
standards of the beloved series.
Financial Outlook for Fiscal
2019
Take-Two is providing its initial financial outlook for its
fiscal third quarter ending December 31, 2018 and is raising its
financial outlook for its fiscal year ending March 31, 2019, as
follows:
Third Quarter Ending December 31, 2018
- GAAP net revenue is expected to range
from $1.10 to $1.15 billion
- GAAP net income is expected to range
from $36 to $48 million
- GAAP diluted net income per share is
expected to range from $0.31 to $0.41
- Share count used to calculate both GAAP
and management reporting diluted net income per share is expected
to be 117.1 million (1)
- Net Bookings (operational metric) are
expected to range from $1.40 to $1.45 billion
The Company is also providing selected data and its management
reporting tax rate of 20% that are used internally by its
management and Board of Directors to adjust the Company’s GAAP
financial outlook in order to facilitate comparison of its
operating performance between periods and to better understand its
core business and future outlook:
Three Months Ending December 31,
2018
Financial Data
$ in millions
GAAP outlook (2)
Change in deferred net
revenue and related cost of goods sold
Stock-based compensation
Amortization of acquired
intangible assets
Net revenue $1,100 to $1,150 $300
Cost of goods sold $773 to
$799 $100 ($98) ($2) Operating
Expenses $290 to $300 ($20) ($2)
Interest and other, net ($7) Income before
income taxes $44 to $58 $200 $118
$4
Fiscal Year Ending March 31, 2019
- GAAP net revenue is expected to range
from $2.55 to $2.65 billion
- GAAP net income is expected to range
from $202 to $232 million
- GAAP diluted net income per share is
expected to range from $1.73 to $1.98
- Share count used to calculate both GAAP
and management reporting diluted net income per share is expected
to be 116.9 million (3)
- Net cash provided by operating
activities is expected to be approximately $663 million, which
includes a decrease of $67 million recorded in the first 6-months
of fiscal 2019 due to the Company’s adoption of Accounting
Standards Update 2016-18, Statement of Cash Flows (Topic 230):
Restricted Cash
- Adjusted Operating Cash Flow (Non-GAAP)
is expected to be approximately $730 million
- Capital expenditures are expected to be
approximately $60 million
- Net Bookings (operational metric) are
expected to range from $2.80 to $2.90 billion
The Company is also providing selected data and its management
reporting tax rate of 20% that are used internally by its
management and Board of Directors to adjust the Company’s GAAP
financial outlook in order to facilitate comparison of its
operating performance between periods and to better understand its
core business and future outlook:
Twelve Months Ending March 31,
2019
Financial Data
$ in millions
GAAP outlook (2)
Change in deferred net
revenue and related cost of goods sold
Stock-based compensation
Amortization of acquired
intangible assets
Net revenue $2,550 to
$2,650 $250 Cost of goods sold $1,450
to $1,474 $90 ($155) ($10)
Operating Expenses $890 to $930 ($90)
($7) Interest and other, net ($25)
Income before income taxes $236 to 272
$160 $245 $17
1) For the fiscal third quarter ending December 31,
2018, the Company’s fully diluted share count used for both GAAP
and management reporting purposes is expected to be 117.1 million,
which includes 114.0 million basic shares and 3.1 million shares
representing the potential dilution from unvested employee stock
grants. 2) The individual components of the financial outlook may
not foot to the totals, as the Company does not expect actual
results for every component to be at the low end or high end of the
outlook range simultaneously. 3) For the fiscal year ending March
31, 2019, the Company’s fully diluted share count used for both
GAAP and management reporting purposes is expected to be 116.9
million, which includes 113.7 million basic shares and 3.2 million
shares representing the potential dilution from unvested employee
stock grants.
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 Xbox One and PlayStation 4; the ability to develop and publish
products that capture market share for these current generation
systems while also leveraging opportunities on Nintendo Switch,
Xbox 360, PlayStation 3, PC and mobile platforms; and stable
foreign exchange rates. See also “Cautionary Note Regarding Forward
Looking Statements” below.
Product Releases
The following titles were released since July 1, 2018:
Label
Title
Platforms
Release Date
2K
NBA 2K Online 2
Tencent (China only) August 2,
2018 2K
The Golf Club 2019 Featuring PGA TOUR
(Digital SKU)
PS4, Xbox One, PC August 28, 2018 2K
NBA 2K19 20th Anniversary Edition
PS4, Xbox One, Switch, PC September 7, 2018 2K
NBA 2K19 Standard Edition
PS4, Xbox One, Switch, PC September 11, 2018 2K
WWE 2K19 Deluxe and Wooooo! Editions
PS4, Xbox One, PC October 5, 2018 2K
WWE 2K19 Standard Edition
PS4, Xbox One, PC October 9, 2018 2K
NBA 2K Playgrounds 2
PS4, Xbox One, Switch, PC October 16, 2018 Rockstar Games
Red Dead Redemption 2
PS4, Xbox One October 26, 2018 2K
Carnival Games
PS4, Xbox One, Switch November 6, 2018
Take-Two's lineup of future titles
announced to date includes:
Label
Title
Platforms
Release Date
2K
The Golf Club 2019 Featuring PGA TOUR
(Physical SKU)
PS4, Xbox One, PC November 13, 2018 * 2K
Sid Meier’s Civilization VI
Switch November 16, 2018 2K
Borderlands 2 VR
PS VR December 14, 2018
* North American release date.
International release date is 3 days later.
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
Measure
In addition to reporting financial results in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses a Non-GAAP measure of financial performance: Adjusted
Operating Cash Flow, which is defined as GAAP net cash from
operating activities, adjusted for changes in restricted cash. The
Company’s management believes it is important to consider Adjusted
Operating Cash Flow, in addition to net cash from operating
activities, as it provides more transparency into current business
trends without regard to the timing of payments from restricted
cash, which is primarily related to a dedicated account limited to
the payment of certain internal royalty obligations.
This Non-GAAP financial measure is not intended to be considered
in isolation from, as a substitute for, or superior to, GAAP
results. This Non-GAAP financial measure 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 this Non-GAAP financial measure used by the
Company. Management believes that the presentation of this Non-GAAP
financial measure provides investors with additional useful
information to measure Take-Two's financial and operating
performance. In particular, this measure facilitates comparison of
our operating performance between periods and may help investors to
understand better the operating results of Take-Two. Internally,
management uses this Non-GAAP financial measure in assessing the
Company's operating results and in planning and forecasting. A
reconciliation of this Non-GAAP financial measure to the most
comparable GAAP measure is contained in the financial tables to
this press release.
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,
2018.
About Take-Two Interactive
Software
Headquartered in New York City, Take-Two Interactive Software,
Inc. is a leading developer, publisher and marketer of interactive
entertainment for consumers around the globe. The Company develops
and publishes products principally through its wholly-owned labels
Rockstar Games and 2K, as well as its Private Division label and
Social Point, a leading developer of mobile games. Our products are
designed for console systems and personal computers, including
smartphones and tablets, and are delivered through physical retail,
digital download, online platforms and cloud streaming services.
The Company’s common stock is publicly traded on NASDAQ under the
symbol TTWO. For more corporate and product information please
visit our website at http://www.take2games.com.
All trademarks and copyrights contained herein are the property
of their respective holders.
Cautionary Note Regarding
Forward-Looking Statements
The statements contained herein which are not historical facts
are considered forward-looking statements under federal securities
laws and may be identified by words such as "anticipates,"
"believes," "estimates," "expects," "intends," "plans,"
"potential," "predicts," "projects," "seeks," “should,” "will," or
words of similar meaning and include, but are not limited to,
statements regarding the outlook for the Company's future business
and financial performance. Such forward-looking statements are
based on the current beliefs of our management as well as
assumptions made by and information currently available to them,
which are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and
results may vary materially from these forward-looking statements
based on a variety of risks and uncertainties including: our
dependence on key management and product development personnel, our
dependence on our Grand Theft Auto products and our ability to
develop other hit titles, the timely release and significant market
acceptance of our games, the ability to maintain acceptable pricing
levels on our games, and risks associated with international
operations. Other important factors and information are contained
in the Company's most recent Annual Report on Form 10-K, including
the risks summarized in the section entitled "Risk Factors," the
Company’s most recent Quarterly Report on Form 10-Q, and the
Company's other periodic filings with the SEC, which can be
accessed at www.take2games.com. All forward-looking statements are
qualified by these cautionary statements and apply only as of the
date they are made. The Company undertakes no obligation to update
any forward-looking statement, whether as a result of new
information, future events or otherwise.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except per share amounts) Three
months ended September 30, Six months ended September
30, 2018 2017 2018
2017 Net revenue
$
492,667 $ 443,562
$ 880,649 $
861,778 Cost of goods sold: Internal royalties
82,113 104,049
135,280 181,753 Product costs
55,885 42,563
94,026 86,632 Software development
costs and royalties
42,648 66,782
72,436 110,411
Licenses
54,234 33,154
64,503 62,321 Total cost of goods sold
234,880 246,548
366,245
441,117 Gross profit
257,787
197,014
514,404 420,661 Selling and marketing
94,165 76,914
152,471 129,128 General and
administrative
67,320 60,824
135,055 121,427 Research
and development
60,565 49,999
111,277 92,268
Depreciation and amortization
9,751 18,883
19,011
26,626 Business reorganization
- 1,713
(242 ) 12,312 Total operating
expenses
231,801 208,333
417,572 381,761 Income (loss) from
operations
25,986 (11,319 )
96,832 38,900 Interest
and other, net
4,975 (2,969 )
11,576 (5,777 ) Income (loss) before income
taxes
30,961 (14,288 )
108,408 33,123 Provision for
(benefit from) income taxes
5,594 (11,552 )
11,348 (24,417 ) Net income (loss)
$ 25,367 $ (2,736 )
$ 97,060 $
57,540 Earnings (loss) per share: Basic earnings
(loss) per share
$ 0.22 $ (0.03 )
$
0.86 $ 0.54 Diluted earnings (loss) per share
$
0.22 $ (0.03 )
$ 0.84 $ 0.53 Weighted
average shares outstanding: Basic
113,735 109,430
113,339 107,232 Diluted
116,095 109,430
115,801 109,356
Computation of Basic EPS: Net
income (loss)
$ 25,367 $ (2,736 )
$
97,060 $ 57,540 Less: net income allocated to participating
securities
- -
-
(487 ) Net income (loss) for basic EPS calculation
$
25,367 $ (2,736 )
$ 97,060 $ 57,053
Weighted average shares outstanding - basic
113,735 105,494
113,339 107,232 Less: weighted
average participating shares outstanding
- -
- (908 ) Weighted average common
shares outstanding - basic
113,735 105,494
113,339 106,324
Basic earnings (loss) per share
$ 0.22 $ (0.03 )
$ 0.86 $ 0.54
Computation of Diluted
EPS: Net income (loss)
$ 25,367 $ (2,736 )
$ 97,060 $ 57,540 Less: net income allocated to
participating securities
- -
- (478 ) Net income (loss) for diluted EPS
calculation
$ 25,367 $ (2,736 )
$
97,060 $ 57,062 Weighted average common
shares outstanding - basic
113,735 105,494
113,339
106,324 Add: dilutive effect of common stock equivalents
2,360 -
2,462
3,032 Total weighted average shares outstanding - diluted
116,095 105,494
115,801 109,356 Less: weighted
average participating shares outstanding
- -
- (908 ) Weighted average common
shares outstanding - diluted
116,095 105,494
115,801 108,448
Diluted earnings (loss) per share
$ 0.22 $ (0.03 )
$ 0.84 $ 0.53
TAKE-TWO INTERACTIVE
SOFTWARE, INC. and SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (in thousands, except per share amounts)
September 30,
March
31,
2018 2018
ASSETS (Unaudited) Current assets: Cash and cash
equivalents
$ 462,347 $ 808,973 Short-term
investments
562,952 615,406 Restricted cash
370,747
437,398
Accounts receivable, net of allowances of
$350 and $54,290 at September 30, 2018 and March 31, 2018,
respectively
534,633 247,649 Inventory
40,541 15,162 Software
development costs and licenses
36,912 33,284 Deferred cost
of goods sold
20,957 117,851 Prepaid expenses and other
162,647 133,454 Total current
assets
2,191,736 2,409,177
Fixed assets, net
110,900 102,478 Software
development costs and licenses, net of current portion
794,120 639,369 Deferred cost of goods sold, net of current
portion
489 26,719 Goodwill
389,816 399,530 Other
intangibles, net
87,318 103,681 Other assets
80,810 56,887 Total assets
$
3,655,189 $ 3,737,841
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$ 77,298 $ 35,029 Accrued expenses and other current
liabilities
853,467 914,748 Deferred revenue
559,024 777,152 Total current
liabilities
1,489,789 1,726,929
Long-term debt
- 8,068 Non-current deferred revenue
15,407 355,589 Other long-term liabilities
205,554 158,285 Total liabilities
1,710,750 2,248,871
Stockholders' equity: Preferred stock, $.01 par value, 5,000
shares authorized
- — Common stock, $.01 par value, 200,000
shares authorized; 134,106 and 132,743 shares issued and 113,804
and 114,038 outstanding at September 30, 2018 and March 31, 2018,
respectively
1,341 1,327 Additional paid-in capital
1,951,128 1,888,039 Treasury stock, at cost; 20,302 and
18,705 common shares at September 30, 2018 and March 31, 2018,
respectively
(611,680 ) (458,180 ) Retained earnings
640,849 73,516 Accumulated other comprehensive loss
(37,199 ) (15,732 ) Total stockholders' equity
1,944,439 1,488,970 Total
liabilities and stockholders' equity
$ 3,655,189
$ 3,737,841
TAKE-TWO INTERACTIVE
SOFTWARE, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS (in thousands) Six months
ended September 30, 2017 2018
(as adjusted) (1) Operating activities:
Net income
$ 97,060 $ 57,540 Adjustments to
reconcile net income to net cash provided by operating activities:
Amortization and impairment of software development costs and
licenses
20,269 38,862 Depreciation
18,753 15,369
Amortization of intellectual property
12,272 17,286
Impairment of in-process research and development
- 11,257
Stock-based compensation
54,941 83,083 Amortization of
discount on Convertible Notes
91 13,915 Gain on redemption
of Convertible Notes
- (4,141 ) Amortization of debt
issuance costs
32 482 Other, net
(1,737 )
1,194 Changes in assets and liabilities, net of impact of adoption
of Topic 606: Accounts receivable
(233,236 ) (209,198
) Inventory
(25,925 ) (18,721 ) Software development
costs and licenses
(133,008 ) (146,009 ) Prepaid
expenses and other current and other non-current assets
(6,681 ) (45,089 ) Deferred revenue
12,601
65,671 Deferred cost of goods sold
6,867 4,379 Accounts
payable, accrued expenses and other liabilities
(28,334 ) 246,472 Net cash (used in)
provided by operating activities
(206,035 )
132,352
Investing activities: Change in
bank time deposits
33,604 (40,000 ) Proceeds from
available-for-sale securities
114,266 111,480 Purchases of
available-for-sale securities
(95,888 ) (134,273 )
Purchases of fixed assets
(29,144 ) (32,717 ) Asset
acquisition
- (25,965 ) Business acquisition
(3,149 ) - Net cash provided by (used
in) investing activities
19,689
(121,475 )
Financing activities: Tax payment related
to net share settlements on restricted stock awards
(63,967
) (86,125 ) Repurchase of common stock
(153,500 ) - Net cash used in financing
activities
(217,467 ) (86,125 )
Effects of foreign currency exchange rates on cash and cash
equivalents
(9,464 ) 12,761
Net change in cash and cash equivalents and restricted cash
(413,277 ) (62,487 ) Cash and cash equivalents and
restricted cash, beginning of year
1,246,371
1,281,214 Cash and cash equivalents and restricted
cash, end of period
$ 833,094 $ 1,218,727
(1) During Q1 FY19, the Company adopted Accounting
Standards Update 2016-18, Statement of Cash Flows (Topic 230):
Restricted Cash and applied that standard retroactively. The
application of this new standard resulted in a decrease to net cash
from operating activities of $66.7 million in Q2 FY19 and an
increase of $131.3 million in Q2 FY18, which are reflected herein.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES Net Revenue and Net Bookings by Geographic
Region, Distribution Channel, and Platform Mix (in
thousands) Three Months
Ended
September 30, 2018
Three Months Ended
September 30, 2017
Amount % of Total Amount % of Total
Net
revenue by geographic region United States
$
279,306 57% $ 276,005 62% International
213,361 43% 167,557 38% Total net revenue
$ 492,667 100% $ 443,562 100%
Net
bookings by geographic region United States
$
362,477 62% $ 348,082 60% International
220,944 38% 228,907 40% Total net bookings
$ 583,421 100% $ 576,989 100%
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Amount % of Total Amount % of Total
Net
revenue by distribution channel Digital online
$
358,371 73% $ 302,886 68% Physical retail and other
134,296 27% 140,676 32% Total net
revenue
$ 492,667 100% $ 443,562 100%
Net bookings by distribution channel Digital online
$
426,180 73% $ 355,736 62% Physical retail and other
157,241 27% 221,253 38% Total net
bookings
$ 583,421 100% $ 576,989 100%
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Amount % of Total Amount % of Total
Net revenue by
platform mix Console
$ 372,240 76% $
360,465 81% PC and other
120,427 24%
83,097 19% Total net revenue
$ 492,667 100% $
443,562 100%
Net bookings by platform mix Console
$ 477,970 82% $ 485,864 84% PC and other
105,451 18% 91,125 16% Total net
bookings
$ 583,421 100% $ 576,989 100%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES Net Revenue and Net Bookings by Geographic
Region, Distribution Channel, and Platform Mix (in
thousands) Six Months Ended
September 30, 2018
Six Months Ended
September 30, 2017
Amount % of Total Amount % of Total
Net
revenue by geographic region United States
$
500,717 57% $ 534,265 62% International
379,932 43% 327,513 38% Total net revenue
$ 880,649 100% $ 861,778 100%
Net
bookings by geographic region United States
$
519,125 60% $ 547,953 59% International
352,621 40% 377,341 41% Total net bookings
$ 871,746 100% $ 925,294 100%
Six Months Ended
September 30, 2018
Six Months Ended
September 30, 2017
Amount % of Total Amount % of Total
Net
revenue by distribution channel Digital online
$
673,418 76% $ 571,122 66% Physical retail and other
207,231 24% 290,656 34% Total net
revenue
$ 880,649 100% $ 861,778 100%
Net bookings by distribution channel Digital online
$
678,941 78% $ 636,650 69% Physical retail and other
192,805 22% 288,644 31% Total net
bookings
$ 871,746 100% $ 925,294 100%
Six Months Ended
September 30, 2018
Six Months Ended
September 30, 2017
Amount % of Total Amount % of Total
Net revenue by
Platform Mix Console
$ 666,970 76% $
705,382 82% PC and other
213,679 24%
156,396 18% Total net revenue
$ 880,649 100% $
861,778 100%
Net bookings by platform mix Console
$ 677,890 78% $ 751,614 81% PC and other
193,856 22% 173,680 19% Total net
bookings
$ 871,746 100% $ 925,294 100%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands) Three Months Ended September 30,
2018 Net revenue
Cost of goods sold- internal
royalties
Cost of goods sold- product
costs
Cost of goods sold- software
development costs and royalties
Cost of goods sold-
licenses
Selling and marketing
As reported $ 492,667 $ 82,113 $ 55,885 $ 42,648 $
54,234 $ 94,165 Net effect from deferral and related cost of goods
sold 90,754 1,534 3,492 596 Stock-based compensation (7,688 )
(4,874 ) Amortization and impairment of acquired intangibles (3,670
)
Three Months Ended September 30, 2018
General and
administrative
Research and development
Depreciation and
amortization
Interest and other, net
As reported $ 67,320 $ 60,565 $ 9,751 $ 4,975 Net
effect from deferral and related cost of goods sold (3 )
Stock-based compensation (12,926 ) (4,854 ) Non-cash amounts
related to convertible notes Amortization and impairment of
acquired intangibles (1,615 ) (127 )
Three Months Ended
September 30, 2017 Net revenue
Cost of goods sold- internal
royalties
Cost of goods sold- product
costs
Cost of goods sold- software
development costs and royalties
Cost of goods sold-
licenses
Selling and marketing
As reported $ 443,562 $ 104,049 $ 42,563 $ 66,782 $
33,154 $ 76,914 Net effect from deferral and related cost of goods
sold 133,427 16,538 4,604 12,788 Stock-based compensation (28,065 )
(3,186 ) Amortization and impairment of acquired intangibles (4,899
) (2,470 )
Three Months Ended September 30, 2017
General and
administrative
Research and development
Depreciation and
amortization
Business reorganization
Interest and other, net As reported $
60,824 $ 49,999 $ 18,883 $ 1,713 $ (2,969 ) Stock-based
compensation (19,458 ) (8,302 ) Amortization and impairment of
acquired intangibles (38 ) (1,630 ) (11,385 ) Acquisition related
expenses 7,012 Non-cash amounts related to convertible notes 5,640
Impact of business reorganization (1,713 ) Other, net (93 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA (in thousands) Six Months
Ended September 30, 2018 Net Revenue
Cost of Goods Sold- Internal
Royalties
Cost of Goods Sold- Product
Costs
Cost of goods sold- software
development costs and royalties
Cost of Goods Sold-
Licenses
Selling and Marketing
As reported $ 880,649 $ 135,280 $ 94,026 $ 72,436 $
64,503 $ 152,471 Net effect from deferral and related cost of goods
sold (8,903 ) (6,871 ) 3,483 596 Stock-based compensation (11,658 )
(9,648 ) Amortization and impairment of acquired intangibles (8,742
)
Six Months Ended September 30, 2018
General and
Administrative
Research and Development
Depreciation and
Amortization
Business Reorganization
Interest and Other, net As reported $
135,055 $ 111,277 $ 19,011 ($ 242 ) $ 11,576 Net effect from
deferral and related cost of goods sold (598 ) Stock-based
compensation (24,444 ) (9,191 ) Non-cash amounts related to
convertible notes 91 Amortization and impairment of acquired
intangibles (3,274 ) (257 ) Impact of business reorganization 242
Six Months Ended September 30, 2017
Net Revenue
Cost of Goods Sold- Internal
Royalties
Cost of Goods Sold- Software
Development Costs and Royalties
Cost of Goods Sold- Software
Development Costs and Royalties
Cost of Goods Sold-
Licenses
Selling and Marketing
As reported $ 861,778 $ 181,753 $ 86,632 $ 110,411 $
62,321 $ 129,128 Net effect from deferral and related cost of goods
sold 63,516 (1,268 ) (3,052 ) (2,043 ) Stock-based compensation
(31,546 ) (5,772 ) Amortization and impairment of acquired
intangibles (9,140 ) (4,778 )
Six Months Ended September
30, 2017
General and
Administrative
Research and Development
Depreciation and
Amortization
Interest and Other, net As reported $
121,427 $ 92,268 $ 26,626 $ (5,777 ) Stock-based compensation
(32,578 ) (10,766 ) Non-cash amounts related to convertible notes
9,774 Acquisition related expenses 6,956 Amortization and
impairment of acquired intangibles (3,153 ) (11,505 ) Other, net
(93 )
TAKE-TWO INTERACTIVE SOFTWARE, INC.
and SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP
MEASURE (in thousands) Six months ended
September 30, 2018 2017
Net cash (used in) provided by operating activities
$ (206,035 ) $ 132,352 Net change in
Restricted cash (1)
66,651 (131,283 )
Adjusted Operating Cash Flow $ (139,384
) $ 1,069
FY 2019 FY 2018
Restricted cash beginning of period (4/1)
$ 437,398 $
337,818 Restricted cash end of period (9/30)
370,747
469,101 (1) Net change in Restricted cash
$ 66,651 ($ 131,283 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181107005801/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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