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Share Name | Share Symbol | Market | Type |
---|---|---|---|
TakeTwo Interactive Software Inc | NASDAQ:TTWO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.81 | 1.96% | 145.88 | 49.00 | 180.00 | 146.28 | 143.95 | 144.42 | 1,075,139 | 05:00:04 |
Non-GAAP Net Revenue Grew 142% to $366.4 Million
Non-GAAP Net Revenue from Digitally-Delivered Content Grew 139% to $254.0 Million
Non-GAAP Net Income Increased to $0.31 Per Diluted Share
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong financial results for fiscal first quarter 2016, ended June 30, 2015. In addition, the Company reiterated its financial outlook for the fiscal year ending March 31, 2016, and provided its initial financial outlook for the fiscal second quarter 2016, ending September 30, 2015.
GAAP Financial Results
For fiscal first quarter 2016, GAAP net revenue grew 119% to $275.3 million, as compared to $125.4 million for fiscal first quarter 2015. GAAP net loss was $67.0 million, or $0.81 per diluted share, as compared to $35.4 million, or $0.45 per diluted share, for the year-ago period. GAAP results for fiscal first quarter 2016 reflect the deferral of net revenue and cost of goods sold related to sell-in of certain titles during the quarter.
During fiscal first quarter 2016, the Company’s cash and short-term investments balance increased to $1.191 billion as of June 30, 2015, up from $1.098 billion as of March 31, 2015.
Non-GAAP Financial Results
For fiscal first quarter 2016, Non-GAAP net revenue grew 142% to $366.4 million, as compared to $151.6 million for the year-ago period. Non-GAAP net income increased to $34.2 million, or $0.31 per diluted share, as compared to Non-GAAP net loss of $11.2 million, or $0.14 per diluted share, for the year-ago period.
The largest contributors to Non-GAAP net revenue in fiscal first quarter 2016 were Grand Theft Auto® V and Grand Theft Auto Online, NBA® 2K15, Borderlands®: The Handsome Collection and WWE® 2K15. Non-GAAP net revenue from digitally-delivered content grew 139% year-over-year to $254.0 million. The largest contributors to Non-GAAP net revenue from digitally-delivered content were the Grand Theft Auto, NBA 2K, Borderlands and WWE 2K series, and Evolve™. Revenue from recurrent consumer spending (virtual currency, downloadable add-on content and online games) grew 47% year-over-year and accounted for 36% of Non-GAAP net revenue from digitally-delivered content, or 25% of total Non-GAAP net revenue. Catalog sales accounted for $67.5 million of Non-GAAP net revenue led by the Grand Theft Auto and Borderlands series.
Management Comments
“Our business continued its positive momentum during the fiscal first quarter, enabling Take-Two to deliver significant growth in revenue, Non-GAAP earnings and cash flow,” said Strauss Zelnick, Chairman and CEO of Take-Two. “These results were driven by strong consumer demand for Grand Theft Auto V, NBA 2K15 and an array of other titles, along with better-than-expected growth in recurrent consumer spending.
“Fiscal 2016 is off to a solid start and promises to be another year of meaningful Non-GAAP profits for our organization. We have a robust development pipeline and are well-positioned to generate revenue growth and margin expansion in future years, and returns for our shareholders over the long-term.”
Business and Product Highlights
Since April 1, 2015:
Rockstar Games:
2K:
*According to Gamerankings.com.
Financial Outlook for Fiscal 2016
Take-Two is providing its initial financial outlook for the fiscal second quarter ending September 30, 2015, and reiterating its financial outlook for the fiscal year ending March 31, 2016 as follows:
Second Quarter
Fiscal Year
Ending 9/30/2015
Ending 3/31/2016
Non-GAAP net revenue
$275 to $325 Million
$1.3 to $1.4 Billion
Non-GAAP net income per diluted share (1)
$0.05 to $0.15
$0.75 to $1.00
GAAP to Non-GAAP Reconciling Items (2):
Net effect from deferral in net revenues and related cost of goods sold ($0.51) ($0.51) Stock-based compensation expense (3) $0.11 $0.46 Business reorganization, restructuring and related expenses $0.00 $0.01 Non-cash amortization of discount on convertible notes $0.04 $0.15 Non-cash tax expense $0.00 $0.021)
For the fiscal second quarter ending September 30, 2015 and fiscal year ending March 31, 2016, our Non-GAAP net income per diluted share outlook is calculated using the “if-converted” method as a result of the issuances of our 1.75% Convertible Notes in November 2011 and 1.00% Convertible Notes in June 2013, and Non-GAAP diluted net income for the second quarter and fiscal year is adjusted by adding-back $1.4 million and $5.5 million, respectively, related to coupon interest and debt issuance costs, net of tax. Shares used to calculate our Non-GAAP net income per diluted share outlook are as follows:
Weighted average basic shares
84.5 Million
84.5 Million
Add: Weighted average participating shares
4.0 Million
4.0 Million
Add: Potential Dilution from convertible notes
26.5 Million
26.5 Million
Total weighted average diluted shares
115.0 Million
115.0 Million
2)
All GAAP to Non-GAAP reconciling items are net of tax and per share.
3)
The Company's stock-based compensation expense for the periods above includes the cost of approximately 1.1 million restricted stock units previously granted to ZelnickMedia that are subject to variable accounting. Actual expense to be recorded in connection with these shares is dependent upon several factors, including future changes in Take-Two's stock price.
Key assumptions and dependencies underlying the Company’s financial outlook include: the timely delivery of the titles included in this financial outlook; continued consumer acceptance of the Xbox One and PlayStation 4; the ability to develop and publish products that capture market share for these new-generation systems while continuing to leverage opportunities on the Xbox 360, PlayStation 3 and PC; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.
Product Releases
The following titles were released since April 1, 2015:
Label
Title
Platforms
Release Date
Rockstar Games
Grand Theft Auto V
PC April 14, 2015 2KWWE 2K
iOS and Android Devices April 16, 2015 2KWWE 2K15
PC April 28, 2015 2KEvolve: Hunting Season 2 (DLC)
Xbox One, PS4, PC June 24, 2015Take-Two's lineup of future titles announced to date includes:
Label
Title
Platforms
Release Date
2KNBA 2K16
Xbox 360, Xbox One, PS3, PS4, PC, Mobile September 29, 2015 2KWWE 2K16
Xbox 360, Xbox One, PS3, PS4 October 27, 2015* 2KXCOM 2
PC, Mac, Linux November 2015 2KSid Meier’s Civilization Beyond Earth – Rising Tide (expansion pack)
PC Fall 2015 2K
Battleborn
Xbox One, PS4, PC February 9, 2016 2KMafia III
Xbox One, PS4, PC Fiscal Year 2017*North American release date; international release date followed three days after.
Conference Call
Take-Two will host a conference call today at 4:30 p.m. Eastern Time to review these results and discuss other topics. The call can be accessed by dialing (877) 407-0984 or (201) 689-8577. A live listen-only webcast of the call will be available by visiting http://ir.take2games.com and a replay will be available following the call at the same location.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses Non-GAAP measures of financial performance. The Company believes that these Non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, are important in gaining an understanding of the Company’s ongoing business. These Non-GAAP financial measures also provide for comparative results from period to period. Therefore, the Company believes it is appropriate to exclude the following Non-GAAP items, net of applicable taxes, as discussed below:
These Non-GAAP financial measures are not intended to be considered in isolation from, as a substitute for, or superior to, GAAP results. These Non-GAAP financial measures may be different from similarly titled measures used by other companies.
Final Results
The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Quarterly Report on Form 10-Q for the period ended June 30, 2015.
About Take-Two Interactive Software
Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, publisher and marketer of interactive entertainment for consumers around the globe. The Company develops and publishes products through its two wholly-owned labels Rockstar Games and 2K. Our products are designed for console systems and personal computers, including smartphones and tablets, and are delivered through physical retail, digital download, online platforms and cloud streaming services. The Company’s common stock is publicly traded on NASDAQ under the symbol TTWO. For more corporate and product information please visit our website at http://www.take2games.com.
All trademarks and copyrights contained herein are the property of their respective holders.
Cautionary Note Regarding Forward-Looking Statements
The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws and may be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects," "seeks," "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for the Company's future business and financial performance. Such forward-looking statements are based on the current beliefs of our management as well as assumptions made by and information currently available to them, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may vary materially from these forward-looking statements based on a variety of risks and uncertainties including: our dependence on key management and product development personnel, our dependence on our Grand Theft Auto products and our ability to develop other hit titles, the timely release and significant market acceptance of our games, the ability to maintain acceptable pricing levels on our games, our ability to raise capital if needed and risks associated with international operations. Other important factors and information are contained in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2015, including the risks summarized in the section entitled "Risk Factors," and the Company's other periodic filings with the SEC, which can be accessed at www.take2games.com. All forward-looking statements are qualified by these cautionary statements and apply only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) Three months ended June 30, 2015 2014 Net revenue $ 275,297 $ 125,425 Cost of goods sold: Internal royalties 105,829 8,298 Software development costs and royalties 50,493 20,306 Product costs 39,941 18,592 Licenses 6,352 6,960 Total cost of goods sold 202,615 54,156 Gross profit 72,682 71,269 General and administrative 49,035 39,352 Selling and marketing 45,567 36,846 Research and development 34,142 24,132 Depreciation and amortization 6,575 4,148 Total operating expenses 135,319 104,478 Loss from operations (62,637 ) (33,209 ) Interest and other, net (7,534 ) (7,719 ) Loss from operations before income taxes (70,171 ) (40,928 ) Benefit for income taxes (3,148 ) (5,525 ) Net loss $ (67,023 ) $ (35,403 ) Net loss per share: Basic and diluted net loss per share $ (0.81 ) $ (0.45 ) Diluted net loss per share Weighted average shares outstanding: Basic and diluted 82,833 79,369 Computation of Basic and Diluted EPS: Net loss $ (67,023 ) $ (35,403 ) Weighted average shares outstanding - basic and diluted 82,833 79,369 Basic and diluted loss per share $ (0.81 ) $ (0.45 ) Three months ended June 30,OTHER INFORMATION
2015 2014 Geographic revenue mix United States 52 % 52 % International 48 % 48 % Platform revenue mix Console 81 % 67 % PC and other 19 % 33 % Net revenue by distribution channel: Digital online 56 % 64 % Physical retail and other 44 % 36 % TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) June 30, March 31, 2015 2015 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 815,784 911,120 Short-term investments 375,013 186,929 Restricted cash 229,993 169,678 Accounts receivable, net of allowances of $63,456 and $70,471 at June 30, 2015 and March 31, 2015, respectively 130,915 217,860 Inventory 12,453 20,051 Software development costs and licenses 201,014 163,385 Deferred cost of goods sold 66,041 56,779 Prepaid expenses and other 76,763 55,506 Total current assets 1,907,976 1,781,308 Fixed assets, net 83,089 69,792 Software development costs and licenses, net of current portion 109,406 124,329 Deferred cost of goods sold, net of current portion 15,230 19,869 Goodwill 219,036 217,288 Other intangibles, net 4,737 4,769 Other assets 13,130 13,745 Total assets $ 2,352,604 2,231,100 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 29,531 38,789 Accrued expenses and other current liabilities 504,329 444,738 Deferred revenue 572,440 482,733 Total current liabilities 1,106,300 966,260 Long-term debt 481,784 476,057 Non-current deferred revenue 172,727 164,618 Other long-term liabilities 64,954 61,077 Total liabilities 1,825,765 1,668,012 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value, 5,000 shares authorized - - Common stock, $.01 par value, 200,000 shares authorized; 104,570 and 104,594 shares issued and 88,332 and 88,356 outstanding at June 30, 2015 and March 31, 2015, respectively 1,046 1,046 Additional paid-in capital 1,049,910 1,028,197 Treasury stock, at cost (16,238 common shares at June 30, 2015 and March 31, 2015) (276,836 ) (276,836 ) Accumulated deficit (225,718 ) (158,695 ) Accumulated other comprehensive loss (21,563 ) (30,624 ) Total stockholders' equity 526,839 563,088 Total liabilities and stockholders' equity $ 2,352,604 2,231,100 TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three months ended June 30, 2015 2014 Operating activities: Net loss $ (67,023 ) $ (35,403 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization and impairment of software development costs and licenses 23,590 7,255 Depreciation and amortization 6,575 4,148 Amortization and impairment of intellectual property 32 105 Stock-based compensation 19,086 9,979 Amortization of discount on Convertible Notes 5,727 5,377 Amortization of debt issuance costs 398 431 Other, net 183 134 Changes in assets and liabilities: Restricted cash (60,315 ) 132,002 Accounts receivable 87,198 9,978 Inventory 8,341 6,633 Software development costs and licenses (43,131 ) (42,990 ) Prepaid expenses, other current and other non-current assets (20,693 ) (2,622 ) Deferred revenue 91,903 26,176 Deferred cost of goods sold 1,243 225 Accounts payable, accrued expenses and other liabilities 52,368 (208,944 ) Net cash provided (used) by operating activities 105,482 (87,516 ) Investing activities: Purchase of fixed assets (18,769 ) (8,392 ) Purchases of short-term investments (187,489 ) (19,415 ) Net cash used in investing activities (206,258 ) (27,807 ) Financing activities: Excess tax benefit from stock-based compensation 8,066 - Tax payment related to net share settlements on restricted stock awards (6,541 ) - Net cash provided by financing activities 1,525 - Effects of foreign exchange rates on cash and cash equivalents 3,915 1,923 Net decrease in cash and cash equivalents (95,336 ) (113,400 ) Cash and cash equivalents, beginning of year 911,120 935,400 Cash and cash equivalents, end of period $ 815,784 $ 822,000 TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES RECONCILIATION OF GAAP TO Non-GAAP MEASURES (Unaudited) (in thousands, except per share amounts) Three months ended June 30, 2015 2014 Net Revenues GAAP Net Revenues $ 275,297 $ 125,425 Net effect from deferral in net revenues 91,095 26,186 Non-GAAP Net Revenues $ 366,392 $ 151,611 Digital Online Revenues (included in Net Revenues above) GAAP Digital Online Revenues $ 153,985 $ 80,201 Net effect from deferral in digital online revenues 99,978 26,186 Non-GAAP Digital Online Revenues $ 253,963 $ 106,387 Gross Profit GAAP Gross Profit $ 72,682 $ 71,269 Net effect from deferral in net revenues and related cost of goods sold 90,965 15,318 Stock-based compensation 4,694 1,471 Non-GAAP Gross Profit 168,341 $ 88,058 Income (Loss) from Operations GAAP Loss from Operations $ (62,637 ) $ (33,209 ) Net effect from deferral in net revenues and related cost of goods sold 90,965 15,318 Stock-based compensation 19,086 9,979 Business reorganization, restructuring and related 1,228 195 Non-GAAP Income (Loss) from Operations $ 48,642 $ (7,717 ) Net Income (Loss) GAAP Net Loss $ (67,023 ) $ (35,403 ) Net effect from deferral in net revenues and related cost of goods sold 85,164 11,757 Stock-based compensation 11,327 7,659 Business reorganization, restructuring and related 773 156 Non-cash amortization of discount on Convertible Notes 3,603 4,127 Non-cash tax expense 364 473 Non-GAAP Net Income (Loss) $ 34,208 $ (11,231 ) Diluted Earnings (Loss) Per Share GAAP loss per share $ (0.81 ) $ (0.45 ) Non-GAAP earnings (loss) per share $ 0.31 $ (0.14 ) Number of diluted shares used in computation GAAP 82,833 79,369 Non-GAAP 114,442 79,369 Computation of Diluted GAAP EPS: Net loss $ (67,023 ) $ (35,403 ) Net income (loss) for diluted EPS calculation $ (67,023 ) $ (35,403 ) Weighted average shares outstanding - diluted 82,833 79,369 Diluted earnings (loss) per share $ (0.81 ) $ (0.45 ) Computation of Diluted Non-GAAP EPS: Non-GAAP net earnings (loss) $ 34,208 $ (11,231 ) Less: net income (loss) allocated to participating securities (1,541 ) - Add: interest expense, net of tax, on Convertible Notes 1,372 - Net income (loss) for diluted earnings per share calculation $ 34,039 $ (11,231 ) Weighted average shares outstanding - basic 82,833 79,369 Add: dilutive effect of common stock equivalents 31,609 - Total weighted average shares outstanding - diluted 114,442 79,369 Less: weighted average participating shares outstanding 5,154 Weighted average common shares outstanding - diluted 109,288 79,369 Diluted earnings (loss) per share $ 0.31 $ (0.14 )
View source version on businesswire.com: http://www.businesswire.com/news/home/20150810006006/en/
Take-Two Interactive Software, Inc.Investor Relations:Henry A. Diamond, 646-536-3005Senior Vice PresidentInvestor Relations & Corporate CommunicationsHenry.Diamond@take2games.comorCorporate Press:Alan Lewis, 646-536-2983Vice PresidentCorporate Communications & Public AffairsAlan.Lewis@take2games.com
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