GAAP net revenue grew to $2.668 billion
GAAP net income increased to $2.90 per diluted
share
GAAP net cash provided by operating activities
increased 71% to $843.5 million
Adjusted Operating Cash Flow (Non-GAAP)
increased 82% to $715.5 million
Net Bookings grew 47% to $2.929 billion
Repurchased 3.72 million shares of common stock
for $362.4 million during fiscal year 2019, including 1.12 million
shares for $100.0 million during the fiscal fourth quarter
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
strong results for its fourth quarter and fiscal year 2019, ended
March 31, 2019, and provided its initial outlook for its fiscal
first quarter 2020, ending June 30, 2019, and fiscal year 2020,
ending March 31, 2020.
Fiscal Fourth Quarter 2019 Financial
Highlights
On April 1, 2018, the Company adopted FASB ASU 2014-09 (Topic
606), Revenue from Contracts with Customers. Topic 606
significantly changes how the Company recognizes and reports net
revenue and net income; however, it does not materially impact Net
Bookings (our operational metric). Financial data for periods prior
to April 1, 2018 have not been restated.
GAAP net revenue grew to $539.0 million, as compared to $450.3
million in last year’s fiscal fourth quarter. Recurrent consumer
spending (virtual currency, add-on content and in-game purchases)
increased and accounted for 54% of total GAAP net revenue. The
largest contributors to GAAP net revenue in fiscal fourth quarter
2019 were NBA® 2K19, Grand Theft Auto® Online and Grand Theft Auto
V, Red Dead Redemption 2 and Red Dead Online, Sid Meier’s
Civilization® VI, Dragon City and Monster Legends, and WWE®
SuperCard and WWE 2K19.
Digitally-delivered GAAP net revenue grew to $413.5 million, as
compared to $301.4 million in last year’s fiscal fourth quarter,
and accounted for 77% of total GAAP net revenue. The largest
contributors to digitally-delivered GAAP net revenue in fiscal
fourth quarter 2019 were NBA 2K19, Grand Theft Auto Online and
Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Sid
Meier’s Civilization VI, Dragon City and Monster Legends, and WWE
SuperCard and WWE 2K19.
GAAP net income was $56.8 million, or $0.50 per diluted share,
as compared to $90.9 million, or $0.77 per diluted share, for the
year-ago period.
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 March 31,
2019
Financial Data
$ in thousands
Statement of operations
Change in deferred net revenue
and related cost of goods sold
Stock-based compensation
Impact of business
reorganization
Amortization & impairment
of acquired intangible assets
Net revenue $
539,007 (50,596 ) Cost of goods sold 258,915
(17,606 ) (41,335 )
(3,919 )
Gross profit 280,092
(32,990 ) 41,335 3,919 Operating
expenses 222,031 (27,754
) (1,214 ) (1,702 )
Income
from operations 58,061 (32,990 )
69,089 1,214 5,621 Interest and other, net
6,466 3,419
Income before income
taxes 64,527 (29,571 ) 69,089
1,214
5,621
In order to calculate net income per diluted share for
management reporting purposes, the Company uses its fully diluted
share count of 113.9 million.
Fiscal Fourth Quarter 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.
Total Net Bookings grew 19% to $488.4 million, as compared to
$411.4 million during last year’s fiscal fourth quarter. Net
Bookings from recurrent consumer spending grew 27% year-over-year
and accounted for 62% of total Net Bookings. The largest
contributors to Net Bookings were NBA 2K19, Grand Theft Auto Online
and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online,
Sid Meier’s Civilization VI, Dragon City and Monster Legends, and
WWE SuperCard and WWE 2K19.
Catalog accounted for $254.5 million of Net Bookings led by
Grand Theft Auto, Sid Meier’s Civilization VI, and Dragon City and
Monster Legends.
Digitally-delivered Net Bookings grew 26% to $419.0 million, as
compared to $333.1 million in last year’s fiscal fourth quarter,
and accounted for 86% of total Net Bookings. The largest
contributors to digitally-delivered Net Bookings in fiscal fourth
quarter 2019 were NBA 2K19, Grand Theft Auto Online and Grand Theft
Auto V, Red Dead Redemption 2 and Red Dead Online, Sid Meier’s
Civilization VI, Dragon City and Monster Legends, and WWE SuperCard
and WWE 2K19.
Fiscal Year 2019 Financial
Highlights
GAAP net revenue grew to $2.668 billion, as compared to $1.793
billion in fiscal year 2018. Recurrent consumer spending increased
and accounted for 40% of total GAAP net revenue. The largest
contributors to GAAP net revenue in fiscal year 2019 were Red Dead
Redemption 2 and Red Dead Online, Grand Theft Auto Online and Grand
Theft Auto V, NBA 2K19 and NBA 2K18, WWE 2K19 and WWE SuperCard,
Dragon City and Monster Legends, and Sid Meier’s Civilization
VI.
Digitally-delivered GAAP net revenue grew to $1.682 billion, as
compared to $1.131 billion in fiscal year 2018, and accounted for
63% of total GAAP net revenue. The largest contributors to
digitally-delivered GAAP net revenue in fiscal year 2019 were Grand
Theft Auto Online and Grand Theft Auto V, NBA 2K19 and NBA 2K18,
Red Dead Redemption 2 and Red Dead Online, Monster Legends and
Dragon City, WWE SuperCard and WWE 2K19, and Sid Meier’s
Civilization VI.
GAAP net income increased to $333.8 million, or $2.90 per
diluted share, as compared to $173.5 million, or $1.54 per diluted
share, in fiscal year 2018. GAAP net income for fiscal year 2019
included a favorable impact from the release of certain valuation
allowances on the Company's deferred tax assets resulting in the
recognition of a $107.1 million tax benefit.
GAAP net cash provided by operating activities increased 71% to
$843.5 million, as compared to $493.5 million in fiscal year 2018.
Adjusted Operating Cash Flow (Non-GAAP), which is defined as GAAP
net cash from operating activities, adjusted for changes in
restricted cash, increased 82% to $715.5 million, as compared to
$393.9 million in the same period last year (please see the section
below titled “Non-GAAP Financial Measure” for additional
information). As of March 31, 2019, the Company had cash and
short-term investments of $1.571 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:
Twelve Months Ended March 31,
2019
Financial Data
$ in thousands
Statement of operations
Change in deferred
net revenue and related cost of
goods sold
Stock-based compensation
Impact of business
reorganization
Amortization &
impairment of acquired intangible
assets
Non-cash amounts related
to convertible notes
Net
revenue $ 2,668,394 260,330 Cost of goods sold 1,523,644
66,614 (149,075 )
(16,290 )
Gross
profit 1,144,750 193,716 149,075
16,290 Operating expenses 938,078
(98,625 ) 4,958
(6,943 )
Income from
operations 206,672 193,716 247,700
(4,958 ) 23,233 Interest and other, net
26,113 2,508
91
Income before
income taxes 232,785 196,224 247,700
(4,958
)
23,233
91
In order to calculate net income per diluted share for
management reporting purposes, the Company uses its fully diluted
share count of 115.2 million.
Fiscal Year 2019 Operational Metric –
Net Bookings
Total Net Bookings grew 47% to $2.929 billion, as compared to
$1.991 billion in fiscal year 2018. Net Bookings from recurrent
consumer spending grew 20% and accounted for 39% of total Net
Bookings. The largest contributors to Net Bookings were Red Dead
Redemption 2 and Red Dead Online, NBA 2K19 and NBA 2K18, Grand
Theft Auto Online and Grand Theft Auto V, WWE 2K19 and WWE
SuperCard, Dragon City and Monster Legends, and Sid Meier’s
Civilization VI.
Digitally-delivered Net Bookings grew 33% to $1.802 billion, as
compared to $1.350 billion in fiscal year 2018, and accounted for
62% of total Net Bookings. The largest contributors to
digitally-delivered Net Bookings in fiscal year 2019 were NBA 2K19
and NBA 2K18, Grand Theft Auto Online and Grand Theft Auto V, Red
Dead Redemption 2 and Red Dead Online, Dragon City and Monster
Legends, WWE SuperCard and WWE 2K19, and Sid Meier’s Civilization
VI.
Management Comments
“Take-Two finished a stellar year with strong fourth quarter
operating results highlighted by the outperformance of Grand Theft
Auto Online and Grand Theft Auto V, as well as NBA 2K19, and
significant ongoing sales of our blockbuster hit, Red Dead
Redemption 2,” said Strauss Zelnick, Chairman and CEO of Take-Two.
“For the full fiscal year, our Company delivered record Net
Bookings and Adjusted Operating Cash Flow, which exceeded our
outlook at the start of the year, along with strong earnings growth
driven by the record-breaking launch of Red Dead Redemption 2, the
outstanding performance of NBA 2K, and better-than expected results
from Grand Theft Auto Online and Grand Theft Auto V.
“We expect fiscal 2020 to be another strong year for Take-Two,
with operating results currently forecasted to be lower than fiscal
2019, due to the extraordinary success of Red Dead Redemption 2,
and growing as compared to fiscal 2018.
“Take-Two has the strongest development pipeline in its history,
including sequels from our biggest franchises as well as exciting
new IP. In addition, we are actively investing in emerging
opportunities such as Private Division, mobile games, eSports and
geographic expansion that have the potential to be enormous drivers
of growth. We are exceedingly well positioned to generate
significant growth and margin expansion over the long-term.”
Business and Product
Highlights
Since January 1, 2019:
Take-Two:
- During fiscal year 2019, the Company
repurchased 3.72 million shares of common stock for $362.4 million,
including 1.12 million shares for $100.0 million during the fiscal
fourth quarter.
Rockstar Games:
- Continued to update the Red Dead Online
Beta with new content, gameplay balancing and bug fixes, including
the following:
- Showdown Modes, including Plunder, Up
in Smoke and Spoils of War. These player-versus-player modes are
tight, dramatic competitive matches that allow for quick structured
gameplay sessions;
- Target Races, where players shoot
targets while on horseback to pass checkpoints while racing and be
first to finish;
- Fishing Challenge, a new Competitive
Challenge to the Free Roam Event rotation, in which players compete
to catch the most weight in fish;
- Gun Rush, where players gather weapons
and ammunition while the play area shrinks in this mode for up to
32 players. Available to play in Free-for-All and Team variations,
where the last one standing wins;
- Numerous new Weapons, Clothing, Emotes
and more.
- Released new numerous new missions,
vehicles, weapons and other content for Grand Theft Auto
Online.
2K:
- Announced that Borderlands® 3, the
next installment in the critically acclaimed shooter-looter series
from Gearbox Software, will launch worldwide on September 13, 2019
for PlayStation 4, Xbox One and Windows PC. At launch, Borderlands
3 will be available for PC exclusively through the Epic Games store
and will be available on additional PC digital storefronts in April
2020. The franchise, which combines the exhilarating action of a
first-person shooter with the rich progression and loot systems of
a role-playing game, has sold-in more than 43 million units
worldwide, and Borderlands 2 still draws in more than one million
unique monthly users more than six years after the game’s initial
release in 2012.
- Launched the Borderlands: Game of the
Year Edition on PlayStation 4, Xbox One, and Windows PC. This brand
new definitive version of the original game boasts ultra HD
remastered graphics, significant quality-of-life content updates,
and includes all add-on content. In addition, Gearbox and 2K
released an Ultra HD Texture Pack that increases the visual
fidelity of Borderlands: The Handsome Collection on consoles, and
provides a visual upgrade for Borderlands 2, Borderlands: The
Pre-Sequel, and all the game add-ons for both titles on PC.
- Launched Sid Meier’s Civilization
VI: Gathering Storm for Windows PC. Developed by Firaxis Games,
Gathering Storm is the largest and most financially successful
expansion pack ever created for a Civilization game, and the second
pack for the critically-acclaimed and award-winning Sid
Meier’s Civilization VI.
- Released NBA 2K Mobile as a free
download for Android devices. Previously launched on iOS phones and
tablets, NBA 2K Mobile enables players to experience console
quality graphics on the go while they collect their favorite NBA
players, build dream teams, and step onto the court in lifelike 5v5
match-ups.
- Announced that video game industry
veteran Michael Condrey has joined 2K as President of the label’s
new game development studio based in Silicon Valley. Condrey is
best known for co-founding Sledgehammer Games and leading
development for the renowned Call of Duty franchise, including Call
of Duty: Modern Warfare 3. Condrey also served as Chief Operating
Officer and Director at Visceral Games in establishing the popular
Dead Space franchise. In his new role with 2K, Condrey will build
and lead a new development team to work on an unannounced
project.
- Announced, together with
The National Basketball Association (NBA)
and National Basketball Players Association (NBPA), a
significant, multiyear global partnership extension. The agreement
expands upon the success of NBA 2K, the top-rated and
top-selling NBA video game simulation series for the past
17 years* that has sold-in over 90 million units worldwide.
Private Division:
- Revealed that The Outer Worlds, a
new intellectual property created by Obsidian Entertainment, and
Ancestors: The Humankind Odyssey, the debut title from Panache
Digital Games, which are both planned for launch in calendar 2019
on PC, PlayStation 4 and Xbox One, will be available for PC
exclusively through Epic Games store for 12-months. The Outer
Worlds can also be purchased at the Microsoft Windows store.
Social Point:
- Launched Word Life, our latest
free-to-play mobile offering, for iOS and Android devices. The game
brings a new dimension to traditional word puzzle games, boasting a
multiplayer mode where players can battle with words in exciting
match-offs to see who is the most-skilled competitor.
- Launched Tasty Town for iOS and Android
devices. This all-new free-to-play mobile game enables players to
fulfill their culinary dreams of designing and managing their own
restaurant
* According to 2000 -
2019 Metacritic.com and Gamerankings.com.
Outlook for Fiscal 2020
Take-Two is providing its initial outlook for its fiscal first
quarter ending June 30, 2019 and its fiscal year ending March 31,
2020:
First Quarter Ending June 30, 2019
- GAAP net revenue is expected to range
from $485 to $535 million
- GAAP net income is expected to range
from $74 to $86 million
- GAAP diluted net income per share is
expected to range from $0.65 to $0.75
- Share count used to calculate GAAP
diluted net income per share is expected to be 113.7 million
(1)
- Share count used to calculate
management reporting diluted net income per share is expected to be
112.7 million (2)
- Net Bookings (operational metric) are
expected to range from $310 to $360 million
The Company is also providing selected data and its management
reporting tax rate of 17%, which 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 June 30,
2019
Financial Data
$ in millions
GAAP outlook (3)
Change in deferred net
revenue and related cost of goods sold
Stock-based compensation
Amortization of acquired
intangible assets
Net revenue $485 to
$535 ($175) Cost of goods sold $165 to
$191 ($30) ($18) ($2) Operating
Expenses $246 to $256 ($24) ($2)
Interest and other, net ($11) Income before
income taxes $85 to $99 ($145) $42
$4
Fiscal Year Ending March 31, 2020
- GAAP net revenue is expected to range
from $2.7 to $2.8 billion
- GAAP net income is expected to range
from $389 to $418 million
- GAAP diluted net income per share is
expected to range from $3.39 to $3.65
- Share count used to calculate both GAAP
and management reporting diluted net income per share is expected
to be 114.6 million (4)
- Net cash provided by operating
activities is expected to be over $430 million
- Adjusted Operating Cash Flow (Non-GAAP)
is expected to be over $450 million (5)
- Capital expenditures are expected to be
approximately $90 million
- Net Bookings (operational metric) are
expected to range from $2.5 to $2.6 billion
The Company is also providing selected data and its management
reporting tax rate of 17%, which 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,
2020
Financial Data
$ in millions
GAAP outlook (3)
Change in deferred net
revenue and related cost of goods sold
Stock-based compensation
Amortization of acquired
intangible assets
Net revenue $2,700 to
$2,800 ($200) Cost of goods sold $1,241
to $1,287 ($100) ($75) ($10)
Operating Expenses $1,056 to $1,076 ($79)
($7) Interest and other, net ($44)
Income before income taxes $447 to $481
($100) $154 $17 1)
Includes 112.7 million basic shares and 1.0 million shares
representing the potential dilution from unvested employee stock
grants. 2) Includes 112.7 million basic shares. 3) 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.
4) Includes 113.1 million basic shares and 1.5 million shares
representing the potential dilution from unvested employee stock
grants. 5) Includes a $20.0 million net decrease in restricted cash
for fiscal 2020.
Key assumptions and dependencies underlying the Company’s
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 PC, mobile and other platforms;
and stable foreign exchange rates. See also “Cautionary Note
Regarding Forward Looking Statements” below.
Product Releases
The following titles were released since January 1, 2019:
Label
Title
Platforms
Release Date
2K
WWE 2K19: Rising Stars Pack (DLC)
PS4, Xbox One, PC January 22, 2019
Social Point
Tasty Town
iOS, Android January 31, 2019 2K
Sid Meier’s Civilization VI: Gathering
Storm (Expansion Pack)
PC February 14, 2019 Private Division
Kerbal Space Program: History & Parts
Pack (DLC)
PS4, Xbox One March 28, 2019 2K
Borderlands: Game of the Year Edition
PS4, Xbox One, PC April 3, 2019 2K
NBA 2K Mobile
Android April 17,2019 Social Point
Word Life
iOS, Android May 9, 2019 Take-Two's lineup of future titles
announced to date includes:
Label
Title
Platforms
Release Date
Private Division
Kerbal Space Program: Breaking Ground
(DLC)
PC May 30, 2019 2K
Borderlands 3
PS4, Xbox One, PC September 13, 2019 2K
NBA 2K20
TBA TBA 2K
WWE 2K20
TBA TBA Private Division
Ancestors: The Humankind Odyssey
PS4, Xbox One, PC (digital only) 2019 (fiscal 2020) Private
Division
The Outer Worlds
PS4, Xbox One, PC 2019 (fiscal 2020)
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 Annual
Report on Form 10-K for the period ended March 31, 2019.
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 March 31, Twelve months ended March 31,
2019 2018 2019
2018 Net revenue
$
539,007 $ 450,274
$ 2,668,394 $
1,792,892 Cost of goods sold: Internal royalties
74,142 88,271
610,804 383,020 Software development
costs and royalties
111,596 26,981
449,198 191,400
Product costs
44,914 47,177
322,148 203,301 Licenses
28,263 26,782
141,494
120,590 Total cost of goods sold
258,915 189,211
1,523,644
898,311 Gross profit
280,092 261,063
1,144,750 894,581 Selling and marketing
77,607
47,451
391,400 256,092 General and administrative
75,541 60,450
281,234 247,828 Research and
development
56,588 54,128
230,170 196,373
Depreciation and amortization
11,081 9,479
40,232
43,969 Business reorganization
1,214 1,730
(4,958 ) 14,742 Total
operating expenses
222,031 173,238
938,078 759,004 Income from
operations
58,061 87,825
206,672 135,577 Interest and
other, net
6,466 3,451
26,113 1,048 Income before income taxes
64,527 91,276
232,785 136,625 Provision for (benefit
from) income taxes
7,698 423
(101,052 ) (36,908 ) Net income
$
56,829 $ 90,853
$ 333,837 $
173,533 173,533 Earnings per share: Basic earnings per share
$ 0.50 $ 0.80
$ 2.95 $ 1.57 Diluted
earnings per share
$ 0.50 $ 0.77
$ 2.90
$ 1.54 Weighted average shares outstanding: Basic
112,614 113,330
113,176 110,210 Diluted
113,939 118,675
115,198 112,864
Computation
of Basic EPS: Net income
$ 56,829 $ 90,853
$ 333,837 $ 173,533 Less: net income allocated to
participating securities
- (82 )
- (159 ) Net income for basic EPS calculation
$ 56,829 $ 90,771
$ 333,837
$ 173,374 Weighted average shares outstanding
- basic
112,614 113,330
113,176 110,210 Less:
weighted average participating shares outstanding
-
(102 )
- (101 ) Weighted average
common shares outstanding - basic
112,614
113,228
113,176 110,109
Basic earnings per share
$ 0.50 $ 0.80
$ 2.95 $ 1.57
Computation of Diluted
EPS: Net income
$ 56,829 $ 90,853
$
333,837 $ 173,533 Less: net income allocated to
participating securities
- (78 )
- (155 ) Add:
interest expense, net of tax, on Convertible Notes
-
249
- - Net income
for diluted EPS calculation
$ 56,829 $ 91,024
$ 333,837 $ 173,378 Weighted
average common shares outstanding - basic
112,614 113,228
113,176 110,109 Add: dilutive effect of common stock
equivalents
1,325 5,447
2,022 2,755 Total weighted average
shares outstanding - diluted
113,939 118,675
115,198
112,864 Less: weighted average participating shares outstanding
- (102 )
- (101 )
Weighted average common shares outstanding - diluted
113,939 118,573
115,198
112,763 Diluted earnings per share
$
0.50 $ 0.77
$ 2.90 $ 1.54
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per
share amounts) March 31, March 31,
2019 2018
ASSETS Current assets: Cash and cash equivalents
$
826,525 $ 808,973 Short-term investments
744,485
615,406 Restricted cash
565,461 437,398
Accounts receivable, net of allowances of
$995 and $54,290 at March 31, 2019 and 2018, respectively
395,729 247,649 Inventory
28,200 15,162 Software
development costs and licenses
28,880 33,284 Deferred cost
of goods sold
51,867 117,851 Prepaid expenses and other
186,688 133,454 Total current
assets
2,827,835 2,409,177
Fixed assets, net
127,882 102,478 Software
development costs and licenses, net of current portion
603,436 639,369 Deferred cost of goods sold, net of current
portion
1,028 26,719 Goodwill
381,717 399,530 Other
intangibles, net
73,115 103,681 Deferred tax assets
134,732 4,930 Other assets
93,320
51,957 Total assets
$ 4,243,065
$ 3,737,841
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable
$
72,797 $ 35,029 Accrued expenses and other current
liabilities
1,035,695 914,748 Deferred revenue
843,302 777,152 Total current
liabilities
1,951,794 1,726,929
Long-term debt
- 8,068 Non-current deferred revenue
21,058 355,589 Other long-term liabilities
229,633 158,285 Total liabilities
2,202,485 2,248,871
Stockholders' equity: Preferred stock, $.01 par value, 5,000
shares authorized
- — Common stock, $.01 par value, 200,000
shares authorized; 134,602 and 132,743 shares issued and 112,181
and 114,038 outstanding at March 31, 2019 and, 2018, respectively
1,346 1,327 Additional paid-in capital
2,019,369
1,888,039 Treasury stock, at cost; 22,421 and 18,705 common shares
at March 31, 2019 and, 2018, respectively
(820,572 )
(458,180 ) Retained earnings
877,626 73,516 Accumulated
other comprehensive loss
(37,189 )
(15,732 ) Total stockholders' equity
2,040,580
1,488,970 Total liabilities and stockholders' equity
$ 4,243,065 $ 3,737,841
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
Twelve months ended March 31, 2019
2018
(as adjusted) (1)
Operating activities:
Net income
$ 333,837 $ 173,533 Adjustments to
reconcile net income to net cash provided by operating activities:
Amortization and impairment of software development costs and
licenses
201,221 77,887 Depreciation
39,726 32,202
Amortization of intellectual property
23,879 34,830
Impairment of in-process research and development
- 11,257
Stock-based compensation
247,700 116,349 Deferred income
taxes
110,603 (32,523 ) Amortization of discount on
Convertible Notes
91 15,662 Gain on redemption of
Convertible Notes
- (4,900 ) Amortization of debt issuance
costs
809 578 Other, net
(225 ) 6,375 Changes
in assets and liabilities, net of impact of adoption of Topic 606:
Accounts receivable
(98,075 ) (26,998 ) Inventory
(14,403 ) 3,917 Software development costs and
licenses
(206,831 ) (225,269 ) Prepaid expenses and
other current and other non-current assets
(275,800 )
(74,544 ) Deferred revenue
304,713 198,397 Deferred cost of
goods sold
(24,882 ) (11,959 ) Accounts payable,
accrued expenses and other liabilities
201,152
198,733 Net cash provided by operating activities
843,515 493,527
Investing activities:
Change in bank time deposits
(171,057 ) (40,918 )
Proceeds from available-for-sale securities
325,133 241,012
Purchases of available-for-sale securities
(282,534 )
(369,998 ) Purchases of fixed assets
(66,969 )
(61,557 ) Purchase of long-term investments
- (5,000 ) Asset
acquisition
- (25,965 ) Business acquisition
(28,149 ) (9,401 ) Net cash used in investing
activities
(223,576 ) (271,827 )
Financing activities:
Tax payment related to net share settlements on restricted stock
awards
(101,293 ) (112,884 ) Repurchase of common
stock
(362,392 ) (154,792 ) Other
-
(13,791 ) Net cash used in financing activities
(463,685 ) (281,467 ) Effects of
foreign currency exchange rates on cash and cash equivalents
(10,639 ) 24,924 Net change in
cash and cash equivalents and restricted cash
145,615
(34,843 ) 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
$
1,391,986 $ 1,246,371 (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
$128.1 million in FY19 and a decrease of $99.6 million in 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
March 31, 2019
Three Months Ended
March 31, 2018
Amount % of Total Amount % of Total
Net
revenue by geographic region United States
$
274,621 51% $ 255,710 57% International
264,386 49% 194,564 43% Total net revenue
$ 539,007 100% $ 450,274 100%
Net
bookings by geographic region United States
$
284,209 58% $ 232,272 56% International
204,201 42% 179,096 44% Total net bookings
$ 488,410 100% $ 411,369 100%
Three Months Ended
March 31, 2019
Three Months Ended
March 31, 2018
Amount % of Total Amount % of Total
Net
revenue by distribution channel Digital online
$
413,469 77% $ 301,382 67% Physical retail and other
125,538 23% 148,892 33% Total net
revenue
$ 539,007 100% $ 450,274 100%
Net bookings by distribution channel Digital online
$
418,993 86% $ 333,135 81% Physical retail and other
69,417 14% 78,233 19% Total net
bookings
$ 488,410 100% $ 411,369 100%
Three Months Ended
March 31, 2019
Three Months Ended
March 31, 2018
Amount % of Total Amount % of Total
Net revenue by
platform mix Console
$ 422,432 78% $
363,464 81% PC and other
116,575 22%
86,810 19% Total net revenue
$ 539,007 100% $
450,274 100%
Net bookings by platform mix Console
$ 364,873 75% $ 313,368 76% PC and other
123,537 25% 98,000 24% Total net
bookings
$ 488,410 100% $ 411,368 100%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue and Net Bookings by Geographic Region, Distribution
Channel, and Platform Mix (in thousands)
Twelve Months Ended
March 31, 2019
Twelve Months Ended
March 31, 2018
Amount % of Total Amount % of Total
Net
revenue by geographic region United States
$
1,426,907 53% $ 1,052,313 59% International
1,241,487 47% 740,579 41% Total net revenue
$ 2,668,394 100% $ 1,792,892 100%
Net bookings by geographic region United States
$
1,606,675 55% $ 1,161,502 58% International
1,322,049 45% 829,100 42% Total net bookings
$ 2,928,724 100% $ 1,990,602 100%
Twelve Months Ended
March 31, 2019
Twelve Months Ended
March 31, 2018
Amount % of Total Amount % of Total
Net
revenue by distribution channel Digital online
$
1,681,609 63% $ 1,130,946 63% Physical retail and
other
986,785 37% 661,946 37% Total net
revenue
$ 2,668,394 100% $ 1,792,892 100%
Net bookings by distribution channel Digital online
$ 1,801,710 62% $ 1,349,508 68% Physical
retail and other
1,127,014 38% 641,094
32% Total net bookings
$ 2,928,724 100% $
1,990,602 100%
Twelve Months Ended
March 31, 2019
Twelve Months Ended
March 31, 2018
Amount % of Total Amount % of Total
Net revenue by
Platform Mix Console
$ 2,233,861 84% $
1,463,307 82% PC and other
434,533 16%
329,586 18% Total net revenue
$ 2,668,394 100%
$ 1,792,892 100%
Net bookings by platform mix Console
$ 2,497,157 85% $ 1,611,625 81% PC and other
431,567 15% 378,977 19% Total net
bookings
$ 2,928,724 100% $ 1,990,602 100%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES ADDITIONAL DATA (in thousands)
Three Months Ended March 31,
2019
Net revenue
Cost of goods sold- Internal
royalties
Cost of goods sold- Software
development costs and royalties
Cost of goods sold- Product
costs
Cost of goods sold-
Licenses
Selling and marketing
As reported $ 539,007 $ 74,142 $ 111,596 $ 44,914 $
28,263 $ 77,607 Net effect from deferral and related cost of
goods sold (50,596 ) (5,455 ) (12,205 ) 54 Stock-based compensation
(41,335 ) (7,363 ) Amortization and impairment of acquired
intangibles (3,919 )
Three Months Ended March 31,
2019
General and
administrative
Research and development
Depreciation and
amortization
Business reorganization
Interest and other, net
As reported $ 75,541 $ 56,588 $ 11,081 $ 1,214 $
6,466 Net effect from deferral and related cost of goods sold 3,419
Stock-based compensation (13,669 ) (6,722 ) Amortization and
impairment of acquired intangibles (1,578 ) (124 ) Impact of
business reorganization (1,214 )
Three Months Ended March 31,
2018
Net revenue
Cost of goods sold- Internal
royalties
Cost of goods sold- Software
development costs and royalties
Cost of goods sold- Product
costs
Cost of goods sold-
Licenses
Selling and marketing
As reported $ 450,274 $ 88,271 $ 26,981 $ 47,177 $
26,782 $ 47,451 Net effect from deferral and related cost of goods
sold (38,905 ) (3,244 ) (12,397 ) (9,020 ) Stock-based compensation
(1,325 ) (4,471 ) Amortization and impairment of acquired
intangibles (5,292 ) (852 )
Three Months Ended March 31,
2018
General and
administrative
Research and development
Depreciation and
amortization
Business reorganization
Interest and other, net
As reported $ 60,450 $ 54,128 $ 9,479 $ 1,730 $ 3,451
Stock-based compensation (9,408 ) (5,030 ) (3 ) Amortization and
impairment of acquired intangibles (1,705 ) (134 ) Non-cash amounts
related to convertible notes 193 Impact of business reorganization
(1,727 ) Acquisition related expenses 142
TAKE-TWO
INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES ADDITIONAL
DATA (in thousands)
Twelve Months Ended March 31,
2019
Net revenue
Cost of goods sold- Internal
royalties
Cost of goods sold- Software
development costs and royalties
Cost of goods sold- Product
costs
Cost of goods sold-
Licenses
Selling and marketing
As reported $ 2,668,394 $ 610,804 $ 449,198 $ 322,148
$ 141,494 $ 391,400 Net effect from deferral and related cost of
goods sold 260,330 40,943 24,882 789 Stock-based compensation
(149,075 ) (23,685 ) Amortization and impairment of acquired
intangibles (16,290 )
Twelve Months Ended March 31,
2019
General and
administrative
Research and development
Depreciation and
amortization
Business reorganization
Interest and other, net
As reported $ 281,234 $ 230,170 $ 40,232 ($ 4,958 ) $
26,113 Net effect from deferral and related cost of goods sold
2,508 Stock-based compensation (51,903 ) (23,037 ) Non-cash amounts
related to convertible notes 91 Non-cash (gain) loss on redemption
of Convertible Notes Amortization and impairment of acquired
intangibles (6,437 ) (506 ) Impact of business reorganization 4,958
Twelve Months Ended March 31,
2018
Net Revenue
Cost of goods sold- Internal
royalties
Cost of goods sold- Software
development costs and royalties
Cost of goods sold- Product
costs
Cost of goods sold-
Licenses
Selling and marketing
As reported $ 1,792,892 $ 383,020 $ 191,400 $ 203,301
$ 120,590 $ 256,092 Net effect from deferral and related cost of
goods sold 197,710 (5,812 ) 6,912 5,900 Stock-based compensation
(24,610 ) (13,258 ) Amortization of intangibles (19,719 ) (8,107 )
Twelve Months Ended March 31,
2018
General and
administrative
Research and development
Depreciation and
amortization
Business reorganization
Interest and other, net
As reported $ 247,828 $ 196,373 $ 43,969 $ 14,742 $
1,048 Stock-based compensation (58,037 ) (18,020 ) (2,424 )
Non-cash amounts related to convertible notes 10,762 Acquisition
related expenses 7,080 Amortization and impairment of acquired
intangibles (6,494 ) (11,767 ) Impact of business reorganization
(12,318 ) Other, net (93 )
TAKE-TWO
INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES RECONCILIATION
OF GAAP TO NON-GAAP MEASURE (in thousands)
Twelve months ended March 31, 2019
2018 Net cash provided by operating
activities $ 843,515 $ 493,527 Net change in
Restricted cash (1)
(128,063 ) (99,580
)
Adjusted Operating Cash Flow $ 715,452
$ 393,947
FY 2019 FY 2018
Restricted cash beginning of period (4/1)
$ 437,398 $
337,818 Restricted cash end of period (3/31)
565,461
437,398 (1) Net change in Restricted cash
$ (128,063 ) ($ 99,580 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190513005780/en/
(Investor Relations)Henry A. DiamondSenior Vice
PresidentInvestor Relations & Corporate
CommunicationsTake-Two Interactive Software, Inc.(646)
536-3005Henry.Diamond@take2games.com(Corporate Press)Alan LewisVice
PresidentCorporate Communications & Public AffairsTake-Two
Interactive Software, Inc.(646)
536-2983Alan.Lewis@take2games.com
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