TTWO
$57.58
Take-Two Interacti
$.98
1.73%
Earnings Details
3rd Quarter December 2016
Tuesday, February 07, 2017 4:05:01 PM
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Summary

Take-Two Interacti Beats

Take-Two Interacti (TTWO) reported 3rd Quarter December 2016 earnings of $1.44 per share on revenue of $476.5 million. The consensus earnings estimate was $0.97 per share on revenue of $714.8 million. The Earnings Whisper number was $1.05 per share. Revenue grew 15.0% on a year-over-year basis.

The company said it expects fourth quarter GAAP earnings of $1.23 to $1.31 per share on revenue of $542.0 million to $592.0 million. The current consensus earnings estimate is $1.45 per share on revenue of $274.4 million for the quarter ending March 31, 2017.

Take-Two Interactive Software, Inc. is a developer, marketer and publisher of interactive entertainment for consumers around the globe. The Company develops and publishes products through its two wholly-owned labels Rockstar Games and 2K.

Results
Reported Earnings
$1.44
Earnings Whisper
$1.05
Consensus Estimate
$0.97
Reported Revenue
$476.5 Mil
Revenue Estimate
$714.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal Third Quarter 2017

Net loss narrowed to $0.33 per diluted share

--Net cash provided by operating activities grew 72% to $291.0 million

--Bookings grew 51% to $719.0 million

Take-Two Interactive Software, Inc. (TTWO) today reported strong results for its fiscal third quarter 2017, ended December 31, 2016. In addition, the Company provided its initial financial outlook for its fiscal fourth quarter ending March 31, 2017, and updated its financial outlook for its fiscal year ending March 31, 2017.

Fiscal Third Quarter 2017 GAAP Financial Highlights

Net revenue grew 15% to $476.5 million, as compared to $414.2 million in last year’s fiscal third quarter. The largest contributors to net revenue in fiscal third quarter 2017 were Grand Theft Auto V(R) and Grand Theft Auto Online, WWE(R) 2K17, NBA(R) 2K17, and Sid Meier’s Civilization(R) VI.

Digitally-delivered net revenue grew 64% to $240.2 million, as compared to $146.4 million in last year’s fiscal third quarter. Recurrent consumer spending (virtual currency, microtransactions and downloadable add-on content) accounted for 39% of digitally-delivered net revenue, or 20% of total net revenue. The largest contributors to digitally-delivered net revenue in fiscal third quarter 2017 were Grand Theft Auto V and Grand Theft Auto Online, Sid Meier’s Civilization VI, and NBA 2K17.

Net loss narrowed to $29.8 million, or $0.33 per diluted share, as compared to $42.4 million, or $0.51 per diluted share, for the year-ago period.

Net cash provided by operating activities grew 72% to $291.0 million. As of December 31, 2016, the Company had cash and short-term investments of $1.444 billion.

As previously announced, starting with this quarter’s results, Take-Two will no longer report Non-GAAP Cost of Goods Sold, Non-GAAP Gross Profit, Non-GAAP Income from Operations, Non-GAAP Net Income, and Non-GAAP Net Income Per Share on either a historical basis or in its financial outlook. The Company will continue to disclose data, as set forth below, together with its management reporting tax rate of 22%, that are used internally by its management and Board of Directors to adjust its GAAP financial results in order to facilitate comparison of the Company’s operating performance between periods and to better understand its core business and future outlook:

Three Months Ended December 31, 2016
Financial Data
Statement of
Change in
Stock-based
Non-cash
Acquisition
Operations
deferred net
compensation
amortization
related
revenue and
of discount
expenses
related
on
cost of
Convertible
goods sold
Notes
Net revenue
$ 476,473
268,350
Cost of goods sold
311,074
118,126
(6,022 )
Gross profit
165,399
150,224
6,022
Total operating expenses
193,808
(16,067 )
(317 )
Loss from operations
(28,409 )
150,224
22,089
317
Interest and other, net
(3,715 )
4,922
Loss before income taxes
(32,124 )
150,224
22,089
4,922
317
Loss per share
Basic and diluted
$
(0.33 )

Take-Two’s basic and diluted net loss per share for fiscal third quarter 2017 was calculated using the Company’s basic share count of 90.4 million. For management reporting purposes, the Company calculates diluted net income per share using its fully diluted share count of 115.3 million and adds back to net income interest expense, net of tax, on the convertible notes of $1.2 million.

Operational Metric - Bookings

Total bookings grew 51% to $719.0 million, as compared to $475.5 million during last year’s fiscal third quarter. The largest contributors to bookings were Grand Theft Auto V and Grand Theft Auto Online, Mafia III, NBA 2K17, WWE 2K17 and Sid Meier’s Civilization VI. Catalog accounted for $261.6 million of bookings led by Grand Theft Auto. Digitally-delivered bookings grew 66% to $336.3 million, as compared to $203.0 million in last year’s fiscal third quarter, led by Grand Theft Auto V and Grand Theft Auto Online, NBA 2K17, Sid Meier’s Civilization VI and Mafia III. Bookings from recurrent consumer spending (virtual currency, microtransactions and downloadable add-on content) grew 55% year-over-year and accounted for 50% of digitally-delivered bookings, or 23% of total bookings.

Management Comments

"Take-Two had a highly-successful holiday quarter," said Strauss Zelnick, Chairman and CEO of Take-Two. "Consumer demand for our new releases and catalog titles was strong throughout the period, and players continued to engage significantly with our games after purchase. As a result, we delivered better-than-expected bookings, including our best-ever quarter for recurrent consumer spending, along with double-digit growth in both net revenue and net cash provided by operating activities.

"Last week, we deployed a portion of our Company’s cash on hand to acquire Social Point, a highly-successful free-to-play mobile game developer that has a proven track record of growing revenues and delivering multiple hits. We are incredibly excited about this acquisition, which reflects our strategy to deploy our capital resources prudently and to take measured risks that provide immediately accretive opportunities for our business and the potential for long-term growth.

"Looking ahead, our Company has a robust long-term development pipeline and is better positioned for success than at any time in its history. We expect to grow both bookings and net cash provided by operating activities in fiscal 2018, driven by our release slate led by Rockstar Games’ highly anticipated launch of Red Dead Redemption 2."

Business and Product Highlights

Since October 1, 2016:

Take-Two:

Acquired privately-held Social Point S.L. for $250 million, comprised of $175 million in cash and 1,480,168 unregistered shares of Take-Two common stock (calculated by dividing $75 million by the average closing price per share on the Nasdaq Global Select Market during the thirty trading day period ending on January 26, 2017), plus potential earn-out consideration of up to an aggregate of $25.9 million in cash and shares of Take-Two common stock. The cash portion was funded from Take-Two’s cash on hand. Founded in 2008 and headquartered in Barcelona, Spain, Social Point is a highly-successful free-to-play mobile game developer that focuses on delivering high-quality, deeply-engaging entertainment experiences. The transaction is expected to be immediately accretive to net revenue and net cash provided by operating activities, and to be accretive to net income per share, excluding transaction costs and amortization of intangible assets, in fiscal year 2018.

Rockstar Games:

Released new free content updates for Grand Theft Auto Online, including: -- Bikers, which allows players to form underground Motorcycle Clubs and run illicit business alongside a range of all new competitive and co-operative gameplay, as well as new modes, vehicles, weapons, clothing and much more.

Deadline, which allows players to turn the streets of Los Santos into a stylish electronic video game battle to the death with futuristic Nagasaki Shotaro motorcycles.

Import/Export, which introduces a whole new series of criminal pursuits as CEOs and their organizations steal, modify and resell the most wanted vehicles in the city for big profits.

Festive Surprise 2016, which featured holiday-themed items in stores across Los Santos, as well as the return of favorite items from past holiday seasons and more.

Released Bully: Anniversary Edition for iOS and Android devices. Bully: Anniversary Edition comes complete with everything from the original release and from Bully: Scholarship Edition. The game features enhanced high resolution graphics, improved lighting, textures and character models, controls redesigned for touch gameplay, physical controller support and more.

Announced that the highly-anticipated Red Dead Redemption 2(R) is planned for release worldwide in Fall 2017 for PlayStation4 and Xbox One. Developed by the creators of Grand Theft Auto V and Red Dead Redemption, Red Dead Redemption 2 is an epic tale of life in America’s unforgiving heartland. The game’s vast and atmospheric open world will also provide the foundation for a brand new online multiplayer experience.

2K:

Launched Sid Meier’s Civilization VI for PC. Developed by Firaxis Games, Sid Meier’s Civilization VI is the next entry in the award-winning turn-based strategy franchise that has sold-in nearly 40 million units. Sid Meier’s Civilization VI received stellar reviews and is fastest-selling release in the history of the series, with sell-in already surpassing 1.5 million units. Sid Meier’s Civilization VI is being supported with free and paid downloadable add-on content.

Launched WWE 2K17 for PlayStation 4, PlayStation 3, Xbox One and Xbox 360. In addition, WWE 2K17 was released today for PC. Developed collaboratively by Yuke’s and Visual Concepts, WWE 2K17 is being supported with downloadable add-on content, including a Season Pass.

Launched Mafia III, the next installment in 2K’s successful organized crime series, for Xbox One, PlayStation 4 and PC. Developed by Hangar 13, Mafia III had the highest first week sell-in of any title in 2K’s history, and to date has sold-in approximately 5 million units. Mafia III is being supported with downloadable add-on content, including a Season Pass, as well as a free-to-play mobile battle RPG game, Mafia III Rivals, for iOS and Android devices.

Released NBA2KVR Experience for HTC Vive(TM), PlayStation(R)VR and Oculus Rift. NBA2KVR Experience is the first virtual reality basketball game immersing players in a new, entertaining NBA environment filled with the sights and sounds of fun mini-games and challenges.

Released WWE SuperCard - Season 3 for iOS and Android devices. Developed by Cat Daddy Games, WWE SuperCard Season 3 is a free update to the popular WWE collectible card-battling game that has been downloaded more than 13 million times, featuring new modes of play, Superstars and more. WWE SuperCard is the highest grossing and most downloaded mobile game in 2K history.

Released Carnival Games(R) VR for HTC Vive, PlayStationVR and Oculus Rift. Developed by Cat Daddy Games, Carnival Games VR is 2K’s first virtual reality offering and was named one of the top VR titles of 2016 by the Official PlayStation Blog.

Released NHL SuperCard 2K17 for iOS and Android devices. Developed by Cat Daddy Games, NHL SuperCard 2K17 is a free-to-play NHL collectible card-battling game.

Announced that NBA 2K18 will be available for the Nintendo Switch in Fall 2017 when the title also launches for the PlayStation 4, PlayStation 3, Xbox One, Xbox 360, PC, and iOS and Android devices.

Financial Outlook for Fiscal 2017

Take-Two is providing its initial financial outlook for its fiscal fourth quarter ending March 31, 2017 and is updating its financial outlook for its fiscal year ending March 31, 2017:

Fourth Quarter Ending March 31, 2017

-- GAAP net revenue is expected to range from $542 to $592 million

-- GAAP net income is expected to range from $139 to $148 million

GAAP diluted net income per share is expected to range from $1.23 to $1.31

Share count used to calculate GAAP diluted net income per share is expected to be 116.4 million (1)

Bookings (operational metric) are expected to range from $295 to $345 million

The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its management and Board of Directors to adjust its GAAP financial outlook in order to facilitate comparison of the Company’s operating performance between periods and to better understand its core business and future outlook:

Three Months Ending March 31, 2017
$ in millions
GAAP
Change in
Stock-based
Non-cash
Amortization
Acquisition
Outlook (2)
deferred net
compensation (3)
amortization
of Intangible
related
revenue
of discount
Assets
expenses
and
on
related
Convertible
cost of
Notes
goods sold
Net revenue
$542 to $592
($225)
Cost of goods sold
$248 to $278
($120)
($1)
($3)
Operating Expenses
$140 to $150
($17)
($2)
($1)
Interest and other, net
$3
($3)
Income (loss) before income taxes
$151 to $161
($105)
$18
$3
$5
$1

Fiscal Year Ending March 31, 2017

-- GAAP net revenue is expected to range from $1.75 to $1.80 billion

-- GAAP net income is expected to range from $108 to $117 million

GAAP diluted net income per share is expected to range from $1.15 to $1.25

Share count used to calculate GAAP diluted net income per share is expected to be 93.6 million (4)

Net cash provided by operating activities is expected to be approximately $350 million

-- Capital expenditures are expected to be approximately $35 million

Bookings (operational metric) are expected to range from $1.72 to $1.77 billion

The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its management and Board of Directors to adjust its GAAP financial outlook in order to facilitate comparison of the Company’s operating performance between periods and to better understand its core business and future outlook:

Twelve Months Ending March 31, 2017
$ in millions
GAAP
Change in
Stock-based
Non-cash
Gain on
Amortization
Acquisition
Outlook (2)
deferred net
compensation (3)
amortization
Long-Term
of Intangible
related
revenue
of discount
Investment
Assets
expenses
and
on
related
Convertible
cost of
Notes
goods sold
Net revenue
$1,750 to $1,800
$65
Cost of goods sold
$956 to $986
$0
($17)
($3)
Operating Expenses
$660 to $670
($57)
($2)
($1.5)
Interest and other, net
$17
($21)
$2
Income (loss) before income taxes
$117 to $127
$65
$74
$21
($2)
$5
$1.5
1)
Includes 102.0 million basic shares, 1.4 million participating
shares and 13.0 million shares representing the potential dilution
from convertible notes. The interest expense, net of tax, on the
convertible notes, which is added back to net income to calculate
diluted net income per share for management reporting purposes is
$0.6 million.
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)
The Company’s stock-based compensation expense for the periods above
includes the cost of approximately 0.9 million restricted stock
units previously granted to ZelnickMedia that are subject to
variable accounting. Actual expense to be recorded in connection
with these shares is dependent upon several factors, including
future changes in Take-Two’s stock price.
4)
For the fiscal year ending March 31, 2017, the Company’s fully
diluted share count used for management reporting purposes is
expected to be 115.5 million, which includes 92.0 million basic
shares, 1.6 million participating shares and 21.9 million shares
representing the potential dilution from convertible notes. The
interest expense, net of tax, on the convertible notes, which is
added back to net income to calculate diluted net income per share
for management reporting purposes is $4.8 million. Take-Two’s GAAP
net income per diluted share outlook is calculated using a diluted
share count of 93.6 million (basic shares plus participating
shares), because using the "if-converted" method and the Company’s
fully diluted share count of 115.5 million would have been
anti-dilutive.

Key assumptions and dependencies underlying the Company’s financial outlook include: the timely delivery of the titles included in this financial outlook; continued consumer acceptance of the Xbox One and PlayStation 4; the ability to develop and publish products that capture market share for these new-generation systems while continuing to leverage opportunities on the Xbox 360, PlayStation 3 and PC; and stable foreign exchange rates. See also "Cautionary Note Regarding Forward Looking Statements" below.

Product Releases

The following titles were released since October 1, 2016:

Label
Title
Platforms
Release Date
2K
Mafia III
PS4, Xbox One, PC
October 7, 2016
2K
Mafia III Rivals
iOS, Android
October 7, 2016
2K
WWE 2K17
PS4, PS3, Xbox One, Xbox 360
October 11, 2016
2K
WWE 2K17: Accelerator (DLC)
PS4, PS3, Xbox One, Xbox 360
October 11, 2016
2K
WWE 2K17: MyPlayer Kickstart (DLC)
PS4, Xbox One
October 11, 2016
2K
WWE 2K17: NXT Legacy Pack (DLC)
PS3, Xbox 360
October 11, 2016
2K
NHL SuperCard 2017
iOS, Android
October 13, 2016
2K
Sid Meier’s Civilization VI
PC
October 21, 2016
2K
Carnival Games VR
HTC Vive, PlayStation VR
October 28, 2016
2K
WWE 2K17: NXT Enhancement Pack (DLC)
PS4, Xbox One
November 15, 2016
2K
WWE SuperCard - Season 3
iOS, Android
November 17, 2016
2K
WWE 2K17: Legends Pack (DLC)
PS4, PS3, Xbox One, Xbox 360
November 22, 2016
2K
NBA 2K VR Experience
HTC Vive, PlayStation VR, Oculus Rift
November 22, 2016
2K
Carnival Games VR
Oculus Rift
December 6, 2016
Rockstar Games
Bully: Anniversary Edition
iOS, Android
December 8, 2016
2K
WWE 2K17: New Moves Pack (DLC)
PS4, PS3, Xbox One, Xbox 360
December 13, 2016
2K
Sid Meier’s Civilization VI: Viking Scenario Pack (DLC)
PC
December 20, 2016
2K
Sid Meier’s Civilization VI: Poland Civilization & Scenario Pack
PC
December 20, 2016
(DLC)
2K
WWE 2K17: Future Stars Pack (DLC)
PS4, PS3, Xbox One, Xbox 360
January 17, 2017

Take-Two’s lineup of future titles announced to date includes:

Label
Title
Platforms
Release Date
2K
NBA 2K18
PS4, PS3, Xbox One, Xbox 360, Switch, PC, iOS, Android
Fall 2017
Rockstar Games
Red Dead Redemption 2
PS4, Xbox One
Fall 2017

Conference Call

Take-Two will host a conference call today at 4:30 p.m. Eastern Time to review these results and discuss other topics. The call can be accessed by dialing (877) 407-0984 or (201) 689-8577. A live listen-only webcast of the call will be available by visiting http://ir.take2games.com and a replay will be available following the call at the same location.

Final Results

The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Quarterly Report on Form 10-Q for the period ended December 31, 2016.

About Take-Two Interactive Software

Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, publisher and marketer of interactive entertainment for consumers around the globe. The Company develops and publishes products through its two wholly-owned labels Rockstar Games and 2K. Our products are designed for console systems and personal computers, including smartphones and tablets, and are delivered through physical retail, digital download, online platforms and cloud streaming services. The Company’s common stock is publicly traded on NASDAQ under the symbol TTWO. For more corporate and product information please visit our website at http://www.take2games.com.

All trademarks and copyrights contained herein are the property of their respective holders.

Cautionary Note Regarding Forward-Looking Statements

The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws and may be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects," "seeks," "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 (Unaudited)
(in thousands, except per share amounts)
Three months ended December 31,
Nine months ended December 31,
2016
2015
2016
2015
Net revenue
$ 476,473
$ 414,221
$ 1,208,192
$ 1,036,492
Cost of goods sold:
Internal royalties
103,613
95,311
240,711
256,058
Software development costs and royalties
109,900
61,653
218,753
152,160
Product costs
70,089
74,934
170,127
153,652
Licenses
27,472
25,963
78,468
42,546
Total cost of goods sold
311,074
257,861
708,059
604,416
Gross profit
165,399
156,360
500,133
432,076
Selling and marketing
95,820
59,846
247,141
160,289
General and administrative
52,939
49,061
149,367
148,057
Research and development
37,589
27,944
101,494
86,499
Business reorganization
-
71,172
-
71,172
Depreciation and amortization
7,460
7,534
22,329
21,462
Total operating expenses
193,808
215,557
520,331
487,479
Loss from operations
(28,409 )
(59,197 )
(20,198 )
(55,403 )
Interest and other, net
(3,715 )
(8,018 )
(15,298 )
(23,948 )
Gain on long-term investment
-
-
1,350
-
Loss before income taxes
(32,124 )
(67,215 )
(34,146 )
(79,351 )
Benefit from income taxes
(2,282 )
(24,802 )
(2,169 )
(24,650 )
Net loss
$ (29,842 )
$ (42,413 )
$
(31,977 )
$
(54,701 )
Loss per share:
Basic and diluted loss per share
$
(0.33 )
$
(0.51 )
$
(0.37 )
$
(0.66 )
Weighted average shares outstanding:
Basic and Diluted
90,428
83,426
86,796
83,338
Computation of Basic and Diluted EPS:
Net loss for basic and diluted EPS calculation
$ (29,842 )
$ (42,413 )
$
(31,977 )
$
(54,701 )
Weighted average common shares outstanding - basic and diluted
90,428
83,426
86,796
83,338
Basic and diluted loss per share
$
(0.33 )
$
(0.51 )
$
(0.37 )
$
(0.66 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31,
March 31,
2016
2016
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$ 1,039,430
$
798,742
Short-term investments
404,523
470,820
Restricted cash
278,541
261,169
327,430
168,527
Accounts receivable, net of allowances of $107,347 and $45,552 at
December 31, 2016 and March 31, 2016, respectively
Inventory
26,665
15,888
Software development costs and licenses
126,185
178,387
Deferred cost of goods sold
177,946
98,474
Prepaid expenses and other
70,456
53,269
Total current assets
2,451,176
2,045,276
Fixed assets, net
65,799
77,127
Software development costs and licenses, net of current portion
327,117
214,831
Deferred cost of goods sold, net of current portion
-
17,915
Goodwill
213,522
217,080
Other intangibles, net
3,211
4,609
Other assets
28,274
13,439
Total assets
$ 3,089,099
$ 2,590,277
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
54,248
$
30,448
Accrued expenses and other current liabilities
736,176
607,479
Deferred revenue
1,073,393
582,484
Total current liabilities
1,863,817
1,220,411
Long-term debt
258,876
497,935
Non-current deferred revenue
11,255
216,319
Other long-term liabilities
134,230
74,227
Total liabilities
2,268,178
2,008,892
Stockholders’ equity:
Preferred stock, $.01 par value, 5,000 shares authorized
-
-
Common stock, $.01 par value, 200,000 shares authorized; 117,990 and
103,765 shares
issued and 100,798 and 86,573 outstanding at December 31, 2016 and
1,180
1,038
March 31, 2016, respectively
Additional paid-in capital
1,370,278
1,088,628
Treasury stock, at cost; 17,192 common shares at December 31, 2016
(303,388 )
(303,388 )
and March 31, 2016, respectively
Accumulated deficit
(198,974 )
(166,997 )
Accumulated other comprehensive loss
(48,175 )
(37,896 )
Total stockholders’ equity
820,921
581,385
Total liabilities and stockholders’ equity
$ 3,089,099
$ 2,590,277
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Nine months ended December 31,
2016
2015
Operating activities:
Net loss
$
(31,977 )
$
(54,701 )
Adjustments to reconcile net loss to net cash provided by operating
activities:
Amortization and impairment of software development costs and
130,019
83,056
licenses
Depreciation and amortization
22,329
21,462
Amortization and impairment of intellectual property
1,398
160
Stock-based compensation
55,421
54,144
Amortization of discount on Convertible Notes
17,870
17,454
Amortization of debt issuance costs
1,078
1,181
Other, net
(3,604 )
2,573
Changes in assets and liabilities:
Restricted cash
(17,372 )
(34,411 )
Accounts receivable
(160,095 )
(46,227 )
Inventory
(15,876 )
(374 )
Software development costs and licenses
(194,422 )
(170,074 )
Prepaid expenses, other current and other non-current assets
(31,460 )
(6,514 )
Deferred revenue
302,728
184,955
Deferred cost of goods sold
(66,502 )
(54,418 )
Accounts payable, accrued expenses and other liabilities
230,067
190,557
Net cash provided by operating activities
239,602
188,823
Investing activities:
Change in bank time deposits
66,841
(189,564 )
Proceeds from available-for-sale securities
101,357
19,014
Purchases of available-for-sale securities
(104,357 )
(25,768 )
Purchases of fixed assets
(14,369 )
(28,579 )
Proceeds from sale of long-term investments
1,350
-
Purchase of long-term investments
(1,885 )
-
Business acquisitions, net of cash acquired
(750 )
-
Net cash provided by (used in) investing activities
48,187
(224,897 )
Financing activities:
Excess tax benefit from stock-based compensation
1,499
1,509
Tax payment related to net share settlements on restricted stock
(36,734 )
(14,506 )
awards
Repurchase of common stock
-
(26,552 )
Net cash used in financing activities
(35,235 )
(39,549 )
Effects of foreign exchange rates on cash and cash equivalents
(11,866 )
(256 )
Net increase (decrease) in cash and cash equivalents
240,688
(75,879 )
Cash and cash equivalents, beginning of year
798,742
911,120
Cash and cash equivalents, end of period
$ 1,039,430
$
835,241
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue by Geographic Region, Distribution Channel, and
Platform Mix
(in thousands)
Three Months Ended
Three Months Ended
December 31, 2016
December 31, 2015
Amount
% of Total
Amount
% of Total
Net Revenues by Geographic Region
United States
$ 257,504
54%
$ 218,386
53%
International
218,969
46%
195,835
47%
Total net revenues
476,473
100%
414,221
100%
Change in Deferred Net Revenues
United States
$ 139,410
$
63,314
International
128,940
9,256
Total changes in deferred net revenues
268,350
72,570
Three Months Ended
Three Months Ended
December 31, 2016
December 31, 2015
Amount
% of Total
Amount
% of Total
Net Revenues by Distribution Channel
Digital online
$ 240,213
50%
$ 146,449
35%
Physical retail and other
236,260
50%
267,772
65%
Total net revenues
476,473
100%
414,221
100%
Change in Deferred Net Revenues
Digital online
$ 117,222
$
67,170
Physical retail and other
151,128
5,400
Total changes in deferred net revenues
268,349
72,570
Three Months Ended
Three Months Ended
December 31, 2016
December 31, 2015
Amount
% of Total
Amount
% of Total
Net Revenues by Platform Mix
Console
$ 354,220
74%
$ 355,235
86%
PC and other
122,253
26%
58,986
14%
Total net revenues
476,473
100%
414,221
100%
Change in Deferred Net Revenues
Console
$ 246,223
$
64,623
PC and other
22,127
7,947
Total changes in deferred net revenues
268,350
72,570
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue by Geographic Region, Distribution Channel, and
Platform Mix
(in thousands)
Nine Months Ended
Nine Months Ended
December 31, 2016
December 31, 2015
Amount
% of Total
Amount
% of Total
Net Revenues by Geographic Region
United States
$
703,088
58%
$
546,926
53%
International
505,104
42%
489,566
47%
Total net revenues
1,208,192
100%
1,036,492
100%
Change in Deferred Net Revenues
United States
$
135,035
$
101,929
International
153,592
79,693
Total changes in deferred net revenues
288,627
181,622
Nine Months Ended
Nine Months Ended
December 31, 2016
December 31, 2015
Amount
% of Total
Amount
% of Total
Net Revenues by Distribution Channel
Digital online
$
643,051
53%
$
502,860
49%
Physical retail and other
565,141
47%
533,632
51%
Total net revenues
1,208,192
100%
1,036,492
100%
Change in Deferred Net Revenues
Digital online
$
139,726
$
105,734
Physical retail and other
148,901
75,888
Total changes in deferred net revenues
288,627
181,622
Nine Months Ended
Nine Months Ended
December 31, 2016
December 31, 2015
Amount
% of Total
Amount
% of Total
Net Revenues by Platform Mix
Console
$
961,285
80%
$
878,838
85%
PC and other
246,907
20%
157,654
15%
Total net revenues
1,208,192
100%
1,036,492
100%
Change in Deferred Net Revenues
Console
$
274,386
$
42,940
PC and other
14,241
138,682
Total changes in deferred net revenues
288,627
181,622
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
SELECTED DATA
(in thousands)
Three Months Ended December 31, 2016
Net Revenues
Cost of Goods Sold-
Cost of Goods
Cost of Goods Sold-
Cost of Goods
Internal Royalties
Sold- Software
Product Costs
Sold- Licenses
Development
Costs and
Royalties
As reported
$
476,473
$ 103,613
$ 109,900
$
70,089
$
27,472
Net effect from deferral and related cost of goods sold
268,350
-
58,902
47,271
11,953
Stock-based compensation
(6,022 )
Three Months Ended December 31, 2016
Selling and
General and
Research and
Depreciation and
Interest and
Marketing
Administrative
Development
Amortization
Other, net
As reported
$
95,820
$
52,939
$
37,589
$
7,460
$
(3,715 )
Stock-based compensation
(2,441 )
(10,382 )
(3,244 )
Non-cash amortization of discount on Convertible Notes
4,922
Acquisition related expenses
(317 )
Three Months Ended December 31, 2015
Net Revenues
Cost of Goods Sold-
Cost of Goods
Cost of Goods Sold-
Cost of Goods
Internal Royalties
Sold- Software
Product Costs
Sold- Licenses
Development
Costs and
Royalties
As reported
$
414,221
$
95,311
$
61,653
$
74,934
$
25,963
Net effect from deferral and related cost of goods sold
72,570
(1,864 )
6,186
10,564
Stock-based compensation
(4,131 )
Three Months Ended December 31, 2015
Selling and
General and
Research and
Business Reorganization
Depreciation and
Interest and
Marketing
Administrative
Development
Amortization
Other, net
As reported
$
59,846
$
49,061
$
27,944
$
71,172
$
7,534
$
(8,018 )
Stock-based compensation
(2,363 )
(11,761 )
(482 )
Non-cash amortization of discount on Convertible Notes
5,910
Impact of business reorganization
(71,172 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
SELECTED DATA
(in thousands)
Nine Months Ended December 31, 2016
Net Revenues
Cost of Goods Sold-
Cost of Goods
Cost of Goods Sold-
Cost of Goods
Internal Royalties
Sold- Software
Product Costs
Sold- Licenses
Development
Costs and
Royalties
As reported
$ 1,208,192
$ 240,711
$ 218,753
$ 170,127
$
78,468
Net effect from deferral and related cost of goods sold
288,627
-
60,971
50,071
11,239
Stock-based compensation
(15,974 )
Nine Months Ended December 31, 2016
Selling and
General and
Research and
Depreciation and
Interest and
Marketing
Administrative
Development
Amortization
Other, net
As reported
$
247,141
$ 149,367
$ 101,494
$
22,329
$ (15,298 )
Stock-based compensation
(7,269 )
(26,851 )
(5,317 )
Non-cash amortization of discount on Convertible Notes
17,903
Acquisition related expenses
(317 )
Nine Months Ended December 31, 2015
Net Revenues
Cost of Goods Sold-
Cost of Goods
Cost of Goods Sold-
Cost of Goods
Internal Royalties
Sold- Software
Product Costs
Sold- Licenses
Development
Costs and
Royalties
As reported
$ 1,036,492
$ 256,058
$ 152,160
$ 153,652
$
42,546
Net effect from deferral and related cost of goods sold
181,622
8,364
22,302
33,382
Stock-based compensation
(12,935 )
Nine Months Ended December 31, 2015
Selling and
General and
Research and
Business Reorganization
Depreciation and
Interest and
Marketing
Administrative
Development
Amortization
Other, net
As reported
$
160,289
$ 148,057
$
86,499
$
71,172
$
21,462
($ 23,948 )
Stock-based compensation
(6,859 )
(31,324 )
(3,026 )
Non-cash amortization of discount on Convertible Notes
17,454
Impact of business reorganization
(1,228 )
(71,172 )

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SOURCE: Take-Two Interactive

Take-Two Interactive Software, Inc.
Investor Relations:
Henry A. Diamond, 646-536-3005
Senior Vice President
Investor Relations & Corporate Communications
Henry.Diamond@take2games.com
or
Corporate Press:
Alan Lewis, 646-536-2983
Vice President
Corporate Communications & Public Affairs
Alan.Lewis@take2games.com