TTWO
$180.06
Take-Two Interacti
($.45)
(.25%)
Earnings Details
2nd Quarter September 2020
Thursday, November 5, 2020 4:05:00 PM
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Summary

Take-Two Interacti Beats

Take-Two Interacti (TTWO) reported 2nd Quarter September 2020 earnings of $2.22 per share on revenue of $841.1 million. The consensus earnings estimate was $1.48 per share on revenue of $843.1 million. The Earnings Whisper number was $1.74 per share. Revenue fell 1.9% compared to the same quarter a year ago.

The company said it expects third quarter GAAP earnings of $1.10 to $1.21 per share on revenue of $760.0 million to $810.0 million. The current consensus earnings estimate is $0.28 per share on revenue of $651.73 million for the quarter ending December 31, 2020. The company also said it now expects fiscal 2021 earnings of $3.22 to $3.49 per share on revenue of $3.05 billion to $3.15 billion. The company's previous guidance was earnings of $3.04 to $3.30 per share on revenue of $2.80 billion to $2.90 billion and the current consensus earnings estimate is $3.45 per share on revenue of $2.99 billion for the year ending March 31, 2021.

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
$2.22
Earnings Whisper
$1.74
Consensus Estimate
$1.48
Reported Revenue
$841.1 Mil
Revenue Estimate
$843.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal Second Quarter 2021

GAAP net revenue was $841.1 million

GAAP net income per diluted share increased 37% to $0.86

GAAP net cash provided by operating activities for the six-months ended September 30, 2020 increased 335% to $626.7 million

Adjusted Unrestricted Operating Cash Flow (Non-GAAP) for the six-months ended September 30, 2020 increased 1135% to $509.4 million

Net Bookings grew to $957.5 million

Company raises outlook for fiscal year 2021, including record Net Bookings

NEW YORK--(BUSINESS WIRE)--Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong results for its fiscal second quarter 2021 ended September 30, 2020. In addition, the Company provided its initial outlook for its fiscal third quarter ending December 31, 2020 and increased its outlook for the fiscal year 2021, ending March 31, 2021. For additional information, please see the fiscal second quarter 2021 results slide deck posted to the Company’s investor relations website at http://ir.take2games.com.

Fiscal Second Quarter 2021 Financial Highlights

GAAP net revenue was $841.1 million, as compared to $857.8 million in last year’s fiscal second quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 56% and accounted for 59% of total GAAP net revenue. The largest contributors to GAAP net revenue in fiscal second quarter 2021 were NBA® 2K20 and NBA 2K21; Grand Theft Auto® Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands® 3; PGA TOUR® 2K21; Social Point’s mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; Sid Meier’s Civilization VI; and the WWE® series.

Digitally-delivered GAAP net revenue increased 16% to $711.3 million, as compared to $615.8 million in last year’s fiscal second quarter, and accounted for 85% of total GAAP net revenue. The largest contributors to GAAP digitally-delivered net revenue in fiscal second quarter 2021 were NBA 2K20 and NBA 2K21; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; Social Point’s mobile offerings; PGA TOUR 2K21; the Mafia Definitive Editions and Mafia: Trilogy; the WWE series; and Sid Meier’s Civilization VI.

GAAP net income increased 38% to $99.3 million, or $0.86 per diluted share, as compared to $71.8 million, or $0.63 per diluted share, for the comparable period last year.

During the six-month period ended September 30, 2020, GAAP net cash provided by operating activities increased 335% to $626.7 million, as compared to $144.2 million in the same period last year. During the six-month period ended September 30, 2020, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, increased 1135% to $509.4 million, as compared to $41.2 million in the same period last year (please see the section below titled “Non-GAAP Financial Measure” for additional information). As of September 30, 2020, the Company had cash and short-term investments of $2.386 billion.

The following data, together with a management reporting tax rate of 16%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

Three Months Ended September 30, 2020

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

 

 

 

 

Business

acquisition

 

Amortization

& impairment

of acquired

intangible

assets

 

Loss on

long-term

investments

 

 

 

 

Net revenue

$841,142

116,392

 

 

 

 

 

Cost of goods sold

432,505

13,450

 

(19,396

)

 

 

 

(4,411

 

)

 

Gross Profit

408,637

102,942

 

19,396

 

 

 

 

4,411

 

 

 

Operating expenses

293,270

(25,912

)

 

(239

 

)

 

(2,512

 

)

 

(2,364

 

)

 

Income from operations

115,367

102,942

 

45,308

 

239

 

2,512

 

6,775

 

 

Interest and other, net

2,706

(1,669

)

 

 

 

 

Loss on long-term investments

655

 

 

 

 

 

 

(655

 

)

Income before income taxes

117,418

101,273

 

45,308

 

 

239

 

 

 

2,512

 

 

 

6,775

 

 

 

655

 

 

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 115.4 million.

Operational Metric – Net Bookings

Net Bookings is defined as the net amount of products and services sold digitally or sold-in physically during the period, and includes licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.

During fiscal second quarter 2021, total Net Bookings grew to $957.5 million, as compared to $950.5 million during last year’s fiscal second quarter. Net Bookings from recurrent consumer spending grew 43% and accounted for 64% of total Net Bookings. The largest contributors to Net Bookings in fiscal second quarter 2021 were NBA 2K21 and NBA 2K20; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; PGA TOUR 2K21; Borderlands 3; Social Point’s mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; the WWE series; and Sid Meier’s Civilization VI.

Catalog accounted for $587.3 million of Net Bookings led by Grand Theft Auto; NBA 2K; Red Dead Redemption; Borderlands; Social Point’s mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; and the WWE series.

Digitally-delivered Net Bookings grew 14% to $791.7 million, as compared to $695.3 million in last year’s fiscal second quarter, and accounted for 83% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal second quarter 2021 were NBA 2K21 and NBA 2K20; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; PGA TOUR 2K21; Social Point’s mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; Sid Meier’s Civilization VI; and the WWE series.

Management Comments

“Our positive momentum continued in the fiscal second quarter with operating results that significantly exceeded our expectations,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Our terrific results were highlighted by the outperformance of NBA 2K, PGA TOUR 2K21, and the Mafia: Definitive Editions and Mafia: Trilogy, reflecting our ability to deliver consistently the highest quality entertainment experiences to consumers.

“As a result of our better-than-expected second quarter operating results and increased forecast for the balance of the year, we are raising our fiscal 2021 outlook, and we now expect record Net Bookings of over $3 billion.

“With the strongest development pipeline in the history of the Company and our ongoing investment in emerging markets, platforms and business models, Take-Two is exceedingly well positioned to capitalize on the many positive trends in our industry and to generate growth and margin expansion over the long-term.”

COVID-19 Response

At Take-Two, our number one priority is the health and safety of our employees and their families. After moving to work-from-home environments by mid-March, several of our offices have re-opened on a voluntary basis. With more people staying at home, we have experienced, and are continuing to experience, heightened levels of engagement and Net Bookings growth-to-date. The full extent of the impact of the COVID-19 pandemic to our business, operations and financial results will depend on numerous evolving factors that we are not able to predict. The key risks to our business are set forth under the heading “Cautionary Note Regarding Forward-Looking Statements” in this release and in Take-Two’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

Business and Product Highlights

Since July 1, 2020:

Take-Two:

  • Acquired privately-held Playdots, Inc. for final consideration of $196 million, comprised of $98 million in cash and the balance in newly issued shares of Take-Two common stock. Founded in 2013 and based in New York City, Playdots builds mobile games with unique and thoughtful designs. They are best known for Two Dots, which has been downloaded over 80 million times since its launch six years ago and that continues to deeply engage audiences throughout the world. Playdots is led by Nir Efrat, who came to Playdots in March 2018 and serves as its Chief Executive Officer. Prior to Playdots, Efrat was Head of Franchises and Studios at King, the creator of the widely successful Candy Crush mobile game series. He will continue to lead Playdots and its approximately 70 employees. Playdots has a robust development pipeline with a number of innovative puzzle games planned for launch over the coming years.

Rockstar Games:

  • Acquired Ruffian Games. Based in Dundee, Scotland, the studio will operate under the new name of Rockstar Dundee. Terms of the acquisition were not disclosed. Founded in 2008 by Gary Liddon and Billy Thomson, Ruffian partnered with Microsoft to work on the Crackdown series, and with 343 Industries on Halo: Reach from the Halo Master Chief Collection, among many other projects. Ruffian’s talented team of just over 40 have a depth of development experience that even includes work on some early Rockstar titles from the Grand Theft Auto and Manhunt series. Both Liddon and Thomson will remain on-board as Co-Studio Directors of Rockstar Dundee.
  • Released new free content updates for Red Dead Online including:
    • The Naturalist, a massive new update to Red Dead Online featuring the latest specialist Role: The Naturalist, giving players the opportunity to track, study and sample animals for Naturalist Harriet Davenport, or hunt them for the trapper Gus MacMillan. The update also featured Legendary Animals, Legendary Animal Sighting Missions, Poaching Missions, new Free Roam Events, two new weapons, a new variant of the Varmint Rifle, the Advanced Camera, new clothing, and an assortment of unique items and rewards in the latest edition of Outlaw Pass: The Outlaw Pass No. 3.
  • Released new free content updates for Grand Theft Auto Online, including The Los Santos Summer Special Update, which introduced six Superyacht Life Co-Op Missions, 15 new Vehicles, nine Open Wheel Race Tracks and the new Open Wheel Race Creator, new Business Battles, the Diamond Adversary Series, two new Arcade Cabinets, new collectibles, clothing and Ambient Events, plus multiple gameplay improvements.
  • Both Grand Theft Auto Online and Red Dead Online will receive major updates later this fiscal year, featuring an extension to existing Frontier Pursuits for Red Dead Online, as well as Grand Theft Auto Online’s biggest update ever, featuring a new take on Heists in a new location.

2K:

  • Launched NBA 2K21, the next iteration of the top-rated and top-selling NBA video game simulation series, for current-generation platforms worldwide. With its release, NBA 2K21 offers one-of-a-kind immersion into all facets of NBA basketball and basketball culture, including exciting improvements upon its best-in-class gameplay, competitive and community online features and deep, varied game modes. Featuring Portland Trail Blazers’ superstar Damian Lillard on the cover, the current-gen version of NBA 2K21 is available for $59.99 on Xbox One, PlayStation 4, Switch, PC and Stadia. The NBA 2K21 Mamba Forever Edition for current-gen features basketball legend Kobe Bryant on a unique custom cover with his No. 8 jersey and is available for $99.99. Of note, the Mamba Forever Edition includes dual-access to NBA 2K21 for current and next-gen versions of the game on either PlayStation or Xbox consoles, providing purchasers with a copy of the standard edition of the game on the other generation within the same console family. NBA 2K21 will be available for PlayStation 5 and Xbox Series X when they launch in November 2020.
  • Launched Mafia: Definitive Edition for PlayStation 4, Xbox One, and PC. Developed by 2K and Hangar 13, Mafia: Definitive Edition is a comprehensive, built-from-the-ground-up remake of the original Mafia. The remake features an updated script, additional cutscenes, all-new gameplay sequences and features, a re-recorded orchestral score, and other enhancements.
  • Launched WWE 2K Battlegrounds, the arcade-style brawler that will bring over-the-top WWE action to a new level of intensity, for PlayStation 4, Xbox One, PC , Switch and Stadia. Developed by Saber Interactive, WWE 2K Battlegrounds brings fast-paced action and an assortment of power-ups, special moves, unconventional melee items and interactive environments to take the brawl to the next level. Players can take on the challenges alone or compete with friends and family in person or online in cooperative and competitive multiplayer modes.
  • Launched PGA TOUR 2K21 from HB Studios for PlayStation 4, Xbox One, Switch (digital), PC and Stadia. The game features PGA TOUR professional Justin Thomas as its cover athlete; officially licensed pro players, courses and gear; the most realistic course scanning to date; play-by-play commentary by Luke Elvy and Rich Beem; a new PGA TOUR Career Mode, online and local multiplayer; course and player customization; and online societies.
  • Announced that Borderlands 3 will be available for PlayStation 5 and Xbox Series X when they launch in November 2020. In addition, 2K announced a second Season Pass for Borderlands 3 will be available on November 10, 2020 for all previously released and next-gen versions of the game. Season Pass 2 will include two brand new content add-ons - Designer’s Cut, which will add all new ways to play Borderlands 3 by introducing a new Skill Tree for each Vault Hunter, a new standalone mode called Arms Race, and more; and the Director’s Cut, which is planned for release in spring of next year.
  • Announced that Season 7 of WWE SuperCard, the newest addition to the action-packed collectible card-battling game, is scheduled to launch in November 2020 as a free, downloadable update for iOS, Android™ and Facebook Gaming.
  • The NBA 2K League concluded its third season on August 28, 2020 with Wizards District Gaming winning the 2020 League Championship. Games were simulcast live on the NBA 2K League’s Twitch and YouTube channels, as well as ESPN's platforms and Sportsnet (Canada). The NBA 2K League has begun the tryout process for its fourth season, set to take place in 2021.
  • Announced a partnership with OneTeam Partners and the National Football League Players Association that will allow the label to include the names, numbers, images and likenesses for over 2,000 current NFL players in multiple, non-simulation football games that are currently in development and set to launch starting in calendar year 2021, during fiscal 2022.

Private Division:

  • Released, along with Obsidian Entertainment, The Outer Worlds: Peril on Gorgon, the first narrative-led expansion for the critically acclaimed, darkly humorous sci-fi RPG for the PlayStation 4, Xbox One and PC. The expansion will be coming later to Nintendo Switch. The Outer Worlds: Peril on Gorgon is available individually or at a discount as part of The Outer Worlds Expansion Pass, which will also include The Outer Worlds: Murder on Eridanos, the second expansion set to launch in the first half of calendar 2021.
  • Announced three new publishing agreements with top independent developers Moon Studios, League of Geeks, and Roll7. In collaboration with these developers, Private Division will announce more details about each specific project in the future. The first of these titles is expected to launch in fiscal year 2022.

Outlook for Fiscal 2021

Take-Two is providing its initial outlook for its fiscal third quarter ending December 31, 2020 and increasing its outlook for the fiscal year ending March 31, 2021:

Third Quarter Ending December 31, 2020

  • GAAP net revenue is expected to range from $760 to $810 million
  • GAAP net income is expected to range from $128 to $140 million
  • GAAP diluted net income per share is expected to range from $1.10 to $1.21
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 115.9 million (1)
  • Net Bookings (operational metric) are expected to range from $675 to $725 million

The Company is also providing selected data and its management reporting tax rate of 16%, 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 December 31, 2020

Financial Data

$ in millions

GAAP outlook (2)

Change in

deferred net

revenue and

related cost of

goods sold

Stock-based

compensation

Amortization of

acquired

intangible

assets

 

Net revenue

$760 to $810

 

($85)

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$291 to $317

 

$46

 

($55)

 

($5)

 

 

 

 

 

 

 

Operating Expenses

$325 to $335

 

 

 

($26)

 

($3)

 

Interest and other, net

($1)

 

 

 

 

 

 

 

Income before income taxes

$145 to $159

 

($131)

 

$81

 

$8

Fiscal Year Ending March 31, 2021

  • GAAP net revenue is expected to range from $3.05 to $3.15 billion
  • GAAP net income is expected to range from $372 to $403 million
  • GAAP diluted net income per share is expected to range from $3.22 to $3.49
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 115.5 million (3)
  • Net cash provided by operating activities is expected to be over $690 million
  • Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is expected to be over $650 million (4)
  • Capital expenditures are expected to be approximately $75 million
  • Net Bookings (operational metric) are expected to range from $3.15 to $3.25 billion

The Company is also providing selected data and its management reporting tax rate of 16%, 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, 2021

Financial Data

$ in millions

GAAP outlook (2)

Change in

deferred net

revenue and

related cost

of goods

sold

Stock-based

compensation

 

 

 

 

Loss on

long-term

investments

Amortization

of acquired

intangible

assets

Reorganization

& Acquisition

 

 

Net revenue

$3,050 to $3,150

 

$100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$1,441 to $1,487

 

$12

 

($83)

 

 

 

($17)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

$1,205 to $1,225

 

 

 

($97)

 

 

 

($11)

 

($3)

Interest and other, net

($14)

 

$3

 

 

 

 

($1)

 

 

 

 

 

Income before income taxes

$418 to $452

 

$85

 

$180

 

 

$1

 

$28

 

 

$3

1)

Includes 115.0 million basic shares and 0.9 million shares representing the potential dilution from unvested employee stock grants.

2)

The individual components of the financial outlook may not foot to the totals, as the Company does not expect actual results for every component to be at the low end or high end of the outlook range simultaneously.

3)

Includes 114.6 million basic shares and 0.9 million shares representing the potential dilution from unvested employee stock grants.

4)

Includes a $40 million net increase in restricted cash for fiscal 2021.

Key assumptions and dependencies underlying the Company’s outlook include: the timely delivery of the titles included in this financial outlook; a stable economic environment; 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 PlayStation 5 and Xbox Series X, PC, mobile and other platforms; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.

Product Releases

The following titles have been released since July 1, 2020:

Label

Title

Platforms

Release Date

Private Division

Kerbal Space Program: Shared Horizons (free update)

PC

July 1, 2020

2K

Sid Meier's Civilization VI – New Frontier Pass: Ethiopia Pack (DLC)

PS4, Xbox One, Switch, PC

July 23, 2020

Rockstar Games

Red Dead Online: The Naturalist

PS4, Xbox One, PC, Stadia

July 28, 2020

2K

PGA TOUR 2K21

PS4, Xbox One, Switch, PC, Stadia

August 21, 2020

2K

NBA 2K21

PS4, Xbox One, Switch, PC, Stadia

September 4, 2020

Private Division

The Outer Worlds: Peril on Gorgon (DLC)

PS4, Xbox One, PC

September 9, 2020

2K

Borderlands 3: Psycho Krieg and the Fantastic Flustercluck (DLC)

PS4, Xbox One, Switch, PC, Stadia

September 10, 2020

2K

WWE 2K Battlegrounds

PS4, Xbox One, Switch, PC, Stadia

September 18, 2020

2K

Sid Meier's Civilization VI – New Frontier Pass: Byzantium & Gaul Pack (DLC)

PS4, Xbox One, Switch, PC

September 24, 2020

2K

Mafia I Definitive Edition

PS4, Xbox One, PC

September 25, 2020

2K

PGA TOUR 2K21 - 3-Hole Match Types Update (DLC)

PS4, Xbox One, Switch, PC, Stadia

October 2, 2020

Private Division

Kerbal Space Program: Shared Horizons (free update)

PS4, Xbox One

October 14, 2020

2K

PGA TOUR 2K21 - Halloween Update (DLC)

PS4, Xbox One, Switch, PC, Stadia

October 20, 2020

2K

WWE 2K Battlegrounds DLC (free update)

PS4, Xbox One, Switch, PC, Stadia

November 4, 2020

 

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

 

Label

Title

Platforms

Release Date

2K

Borderlands 3

Xbox Series X (digital only)

November 10, 2020

2K

NBA 2K21

Xbox Series X

November 10, 2020

2K

Borderlands 3 - Season Pass 2

PS4, PS5, Xbox One, Xbox Series X, PC, Stadia

November 10, 2020

2K

Borderlands 3

PS5 (digital only)

November 12, 2020

2K

NBA 2K21

PS5

November 12, 2020

2K

WWE SuperCard: Season 7

iOS, Android, Facebook Gaming

November 2020

Private Division

The Outer Worlds: Murder on Eridanos (DLC)

PS4, Xbox One, PC

1st Half Calendar 2021

Rockstar Games

Grand Theft Auto V

PS5, Xbox Series X

Fiscal 2022

Private Division

Kerbal Space Program 2

PS4, Xbox One, PC

Fiscal 2023

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 Unrestricted 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 Unrestricted Operating Cash Flow, in addition to net cash from operating activities, as it provides more transparency into current business trends without regard to the timing of payments from restricted cash, which is primarily related to a dedicated account limited to the payment of certain internal royalty obligations.

This Non-GAAP financial measure is not intended to be considered in isolation from, as a substitute for, or superior to, GAAP results. This Non-GAAP financial measure may be different from similarly titled measures used by other companies. In the future, Take-Two may also consider whether other items should also be excluded in calculating this Non-GAAP financial measure used by the Company. Management believes that the presentation of this Non-GAAP financial measure provides investors with additional useful information to measure Take-Two's financial and operating performance. In particular, this measure facilitates comparison of our operating performance between periods and may help investors to understand better the operating results of Take-Two. Internally, management uses this Non-GAAP financial measure in assessing the Company's operating results and in planning and forecasting. A reconciliation of this Non-GAAP financial measure to the most comparable GAAP measure is contained in the financial tables to this press release.

Final Results

The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Quarterly Report on Form 10-Q for the period ended September 30, 2020.

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. We develop and publish products principally through Rockstar Games, 2K, Private Division, and Social Point. 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: the uncertainty of the impact of the COVID-19 pandemic and measures taken in response thereto; the effect that measures taken to mitigate the COVID-19 pandemic have on our operations, including our ability to timely deliver our titles and other products, and on the operations of our counterparties, including retailers and distributors; the effects of the COVID-19 pandemic on consumer demand and the discretionary spending patterns of our customers; the impact of reductions in interest rates by the Federal Reserve and other central banks, including on our short-term investment portfolio; the impact of potential inflation; volatility in foreign currency exchange rates; our dependence on key management and product development personnel; our dependence on our Grand Theft Auto and NBA 2K products and our ability to develop other hit titles; our ability to leverage opportunities on PlayStation 5 and Xbox Series X; the timely release and significant market acceptance of our games; the ability to maintain acceptable pricing levels on our games; and risks associated with international operations.

Other important factors and information are contained in the Company's most recent Annual Report on Form 10-K, including the risks summarized in the section entitled "Risk Factors," the Company’s most recent Quarterly Report on Form 10-Q, and the Company's other periodic filings with the SEC, which can be accessed at www.take2games.com. All forward-looking statements are qualified by these cautionary statements and apply only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

  
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
Three months ended September 30,  Six months ended September 30,

2020

 

2019

 

2020

 

2019

 
 
Net revenue

$

841,142

$

857,841

$

1,672,452

$

1,398,300

 
Cost of goods sold:
Internal royalties

 

127,804

 

109,991

 

341,867

 

172,880

Software development costs and royalties

 

142,771

 

211,996

 

290,818

 

320,437

Licenses

 

92,944

 

59,693

 

148,963

 

82,197

Product costs

 

68,986

 

86,568

 

127,546

 

134,203

Total cost of goods sold

 

432,505

 

468,248

 

909,194

 

709,717

 
Gross profit

 

408,637

 

389,593

 

763,258

 

688,583

 
Selling and marketing

 

113,691

 

149,566

 

198,470

 

241,387

General and administrative

 

91,433

 

76,659

 

193,606

 

151,492

Research and development

 

74,216

 

76,197

 

147,324

 

145,160

Depreciation and amortization

 

13,691

 

12,024

 

26,109

 

23,281

Business reorganization

 

239

 

327

 

239

 

713

Total operating expenses

 

293,270

 

314,773

 

565,748

 

562,033

Income from operations

 

115,367

 

74,820

 

197,510

 

126,550

Interest and other, net

 

2,706

 

8,054

 

10,924

 

18,479

Loss on long-term investments

 

655

 

-

 

655

 

-

Income before income taxes

 

117,418

 

82,874

 

207,779

 

145,029

Provision for income taxes

 

18,097

 

11,059

 

19,953

 

26,934

Net income

$

99,321

$

71,815

$

187,826

$

118,095

 
Earnings per share:
Basic earnings per share

$

0.87

$

0.63

$

1.65

$

1.05

Diluted earnings per share

$

0.86

$

0.63

$

1.63

$

1.04

 
Weighted average shares outstanding:
Basic

 

114,444

 

113,117

 

114,153

 

112,869

Diluted

 

115,414

 

114,077

 

115,245

 

113,925

 
Computation of Basic EPS:
Net income

$

99,321

$

71,815

$

187,826

$

118,095

 
Weighted average shares outstanding - basic

 

114,444

 

113,117

 

114,153

 

112,869

 
Basic earnings per share

$

0.87

$

0.63

$

1.65

$

1.05

 
Computation of Diluted EPS:
Net income for diluted EPS calculation

$

99,321

$

71,815

$

187,826

$

118,095

 
Weighted average shares outstanding - basic

 

114,444

 

113,117

 

114,153

 

112,869

Add: dilutive effect of common stock equivalents

 

970

 

960

 

1,092

 

1,056

Weighted average common shares outstanding - diluted

 

115,414

 

114,077

 

115,245

 

113,925

 
Diluted earnings per share

$

0.86

$

0.63

$

1.63

$

1.04

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
 
September 30,March 31,

 

2020

 

 

2020

 

 
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents

$

1,345,099

 

$

1,357,664

 

Short-term investments

 

1,040,786

 

 

644,003

 

Restricted cash and cash equivalents

 

450,145

 

 

546,604

 

Accounts receivable, net of allowances of $448 and $443 at September 30, 2020 and March 31, 2020,
respectively

 

787,818

 

 

592,555

 

Inventory

 

26,934

 

 

19,108

 

Software development costs and licenses

 

73,714

 

 

40,316

 

Deferred cost of goods sold

 

15,410

 

 

19,598

 

Prepaid expenses and other

 

192,192

 

 

273,503

 

Total current assets

 

3,932,098

 

 

3,493,351

 

 
Fixed assets, net

 

133,404

 

 

131,888

 

Right-of-use assets

 

156,310

 

 

154,284

 

Software development costs and licenses, net of current portion

 

403,390

 

 

401,778

 

Goodwill

 

521,000

 

 

386,494

 

Other intangibles, net

 

126,392

 

 

51,260

 

Deferred tax assets

 

117,692

 

 

116,676

 

Long-term restricted cash and cash equivalents

 

289,536

 

 

89,124

 

Other assets

 

156,332

 

 

123,977

 

Total assets

$

5,836,154

 

$

4,948,832

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

85,103

 

$

65,684

 

Accrued expenses and other current liabilities

 

1,148,617

 

 

1,169,884

 

Deferred revenue

 

1,063,064

 

 

777,784

 

Lease liabilities

 

29,051

 

 

25,187

 

Total current liabilities

 

2,325,835

 

 

2,038,539

 

 
Non-current deferred revenue

 

32,880

 

 

28,339

 

Non-current lease liabilities

 

150,793

 

 

152,059

 

Non-current software development royalties

 

302,435

 

 

104,417

 

Other long-term liabilities

 

122,929

 

 

86,234

 

Total liabilities

 

2,934,872

 

 

2,409,588

 

 
 
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized

 

-

 

 

-

 

Common stock, $.01 par value, 200,000 shares authorized; 137,349 and 135,927 shares
issued and 114,928 and 113,506 outstanding at September 30, 2020 and March 31, 2020, respectively

 

1,373

 

 

1,359

 

Additional paid-in capital

 

2,285,394

 

 

2,134,748

 

Treasury stock, at cost; 22,421 common shares at September 30, 2020 and, March 31, 2020, respectively

 

(820,572

)

 

(820,572

)

Retained earnings

 

1,469,911

 

 

1,282,085

 

Accumulated other comprehensive loss

 

(34,824

)

 

(58,376

)

Total stockholders' equity

 

2,901,282

 

 

2,539,244

 

Total liabilities and stockholders' equity

$

5,836,154

 

$

4,948,832

 

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six months ended September 30,

 

2020

 

 

2019

 

 
Operating activities:
Net income

$

187,826

 

$

118,095

 

Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and impairment of software development costs and licenses

 

92,664

 

 

72,505

 

Depreciation

 

25,826

 

 

23,037

 

Amortization of intellectual property

 

11,801

 

 

10,627

 

Stock-based compensation

 

98,719

 

 

113,199

 

Other, net

 

(2,631

)

 

4,325

 

Changes in assets and liabilities:
Accounts receivable

 

(189,477

)

 

(463,019

)

Inventory

 

(7,266

)

 

(12,064

)

Software development costs and licenses

 

(127,290

)

 

(51,932

)

Prepaid expenses and other current and other non-current assets

 

65,296

 

 

(131,055

)

Deferred revenue

 

284,441

 

 

66,148

 

Deferred cost of goods sold

 

4,753

 

 

15,287

 

Accounts payable, accrued expenses and other liabilities

 

182,083

 

 

379,005

 

Net cash provided by operating activities

 

626,745

 

 

144,158

 

 
Investing activities:
Change in bank time deposits

 

(218,239

)

 

6,720

 

Proceeds from available-for-sale securities

 

260,729

 

 

137,071

 

Purchases of available-for-sale securities

 

(435,511

)

 

(141,244

)

Purchases of fixed assets

 

(25,021

)

 

(25,532

)

Purchases of long-term investments

 

(9,100

)

 

(4,500

)

Business acquisitions

 

(75,482

)

 

(8,715

)

Net cash used in investing activities

 

(502,624

)

 

(36,200

)

 
Financing activities:
Tax payment related to net share settlements on restricted stock awards

 

(48,202

)

 

(61,478

)

Issuance of common stock

 

6,503

 

 

-

 

Net cash used in financing activities

 

(41,699

)

 

(61,478

)

 
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents

 

8,966

 

 

(8,063

)

 
Net change in cash, cash equivalents, and restricted cash and cash equivalents

 

91,388

 

 

38,417

 

Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year

 

1,993,392

 

 

1,391,986

 

Cash, cash equivalents, and restricted cash and cash equivalents, end of period

$

2,084,780

 

$

1,430,403

 

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
 
Three Months Ended
September 30, 2020
Three Months Ended
September 30, 2019
Amount% of TotalAmount% of Total
 
Net revenue by geographic region
United States

$

503,583

60

%

$

494,661

58

%

International

 

337,559

40

%

 

363,180

42

%

Total net revenue

$

841,142

100

%

$

857,841

100

%

 
Net bookings by geographic region
United States

$

612,813

64

%

$

567,503

60

%

International

 

344,721

36

%

 

383,013

40

%

Total net bookings

$

957,534

100

%

$

950,516

100

%

 
 
Three Months Ended
September 30, 2020
Three Months Ended
September 30, 2019
Amount% of TotalAmount% of Total
 
Net revenue by distribution channel
Digital online

$

711,299

85

%

$

615,774

72

%

Physical retail and other

 

129,843

15

%

 

242,067

28

%

Total net revenue

$

841,142

100

%

$

857,841

100

%

 
Net bookings by distribution channel
Digital online

$

791,705

83

%

$

695,346

73

%

Physical retail and other

 

165,829

17

%

 

255,170

27

%

Total net bookings

$

957,534

100

%

$

950,516

100

%

 
 
Three Months Ended
September 30, 2020
Three Months Ended
September 30, 2019
Amount% of TotalAmount% of Total
Net revenue by platform mix
Console

$

641,269

76

%

$

651,818

76

%

PC and other

 

199,873

24

%

 

206,023

24

%

Total net revenue

$

841,142

100

%

$

857,841

100

%

 
Net bookings by platform mix
Console

$

761,450

80

%

$

737,085

78

%

PC and other

 

196,084

20

%

 

213,431

22

%

Total net bookings

$

957,534

100

%

$

950,516

100

%

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
 
Six Months Ended
September 30, 2020
Six Months Ended
September 30, 2019
Amount% of TotalAmount% of Total
 
Net revenue by geographic region
United States

$

974,073

58

%

$

825,140

59

%

International

 

698,379

42

%

 

573,160

41

%

Total net revenue

$

1,672,452

100

%

$

1,398,300

100

%

 
Net bookings by geographic region
United States

$

1,199,927

61

%

$

826,738

60

%

International

 

753,857

39

%

 

546,018

40

%

Total net bookings

$

1,953,784

100

%

$

1,372,756

100

%

 
 
Six Months Ended
September 30, 2020
Six Months Ended
September 30, 2019
Amount% of TotalAmount% of Total
 
Net revenue by distribution channel
Digital online

$

1,437,525

86

%

$

1,043,555

75

%

Physical retail and other

 

234,927

14

%

 

354,745

25

%

Total net revenue

$

1,672,452

100

%

$

1,398,300

100

%

 
Net bookings by distribution channel
Digital online

$

1,706,894

87

%

$

1,077,825

79

%

Physical retail and other

 

246,890

13

%

 

294,931

21

%

Total net bookings

$

1,953,784

100

%

$

1,372,756

100

%

 
 
Six Months Ended
September 30, 2020
Six Months Ended
September 30, 2019
Amount% of TotalAmount% of Total
Net revenue by Platform Mix
Console

$

1,252,954

75

%

$

1,086,632

78

%

PC and other

 

419,498

25

%

 

311,668

22

%

Total net revenue

$

1,672,452

100

%

$

1,398,300

100

%

 
Net bookings by platform mix
Console

$

1,484,249

76

%

$

1,049,716

76

%

PC and other

 

469,535

24

%

 

323,040

24

%

Total net bookings

$

1,953,784

100

%

$

1,372,756

100

%

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Three Months Ended September 30, 2020

Net revenue

 

Cost of goods sold-

Internal royalties

 

Cost of goods sold-

Software

development costs

and royalties

 

Cost of goods sold-

Licenses

 

Cost of goods sold-

Product costs

 

Selling and

marketing

 
As reported

$

841,142

 

$

127,804

 

$

142,771

 

$

92,944

 

$

68,986

 

$

113,691

 

Net effect from deferral and related cost of goods sold

 

116,392

 

 

16,209

 

 

(3,994

)

 

1,235

 

Stock-based compensation

 

(19,396

)

 

(4,439

)

Amortization and impairment of acquired intangibles

 

(4,411

)

 

(517

)

 
Three Months Ended September 30, 2020

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 

Loss on long-

term

investments

 
As reported

$

91,433

 

$

74,216

 

$

13,691

 

$

239

 

$

2,706

 

$

655

 

Net effect from deferral and related cost of goods sold

 

(1,669

)

Stock-based compensation

 

(13,830

)

 

(7,643

)

Amortization and impairment of acquired intangibles

 

(1,684

)

 

(163

)

Impact of business reorganization

 

(239

)

Loss on long-term investments

 

(655

)

Acquisition related expenses

 

(2,512

)

 
Three Months Ended September 30, 2019

Net revenue

 

Cost of goods sold-

Internal royalties

 

Cost of goods sold-

Software

development costs

and royalties

 

Cost of goods sold-

Licenses

 

Cost of goods sold-

Product costs

 

Selling and

marketing

 
As reported

$

857,841

 

$

109,991

 

$

211,996

 

$

59,693

 

$

86,568

 

$

149,566

 

Net effect from deferral and related cost of goods sold

 

92,675

 

 

(26,161

)

 

1,133

 

 

(1,904

)

Stock-based compensation

 

(27,832

)

 

(3,744

)

Amortization and impairment of acquired intangibles

 

(3,311

)

 
Three Months Ended September 30, 2019

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 
As reported

$

76,659

 

$

76,197

 

$

12,024

 

$

327

 

$

8,054

 

Net effect from deferral and related cost of goods sold

 

1,306

 

Stock-based compensation

 

(13,576

)

 

(10,616

)

Amortization and impairment of acquired intangibles

 

(1,546

)

 

(121

)

Impact of business reorganization

 

(327

)

Acquisition related expenses

 

(41

)

 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
 
Six Months Ended September 30, 2020

Net revenue

 

Cost of goods sold-

Internal royalties

 

Cost of goods sold-

Software

development costs

and royalties

 

Cost of goods sold-

Licenses

 

Cost of goods sold-

Product costs

 

Selling and

marketing

 
As reported

$

1,672,452

 

$

341,867

 

$

290,818

 

$

148,963

 

$

127,546

 

$

198,470

 

Net effect from deferral and related cost of goods sold

 

281,331

 

 

20,260

 

 

(4,444

)

 

(3,589

)

Stock-based compensation

 

(48,429

)

 

(9,167

)

Amortization and impairment of acquired intangibles

 

(7,694

)

 

(517

)

 
Six Months Ended September 30, 2020

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 

Loss on long-

term

investments

 
As reported

$

193,606

 

$

147,324

 

$

26,109

 

$

239

 

$

10,924

 

$

655

 

Net effect from deferral and related cost of goods sold

 

(2,430

)

Stock-based compensation

 

(27,030

)

 

(14,093

)

Amortization and impairment of acquired intangibles

 

(3,237

)

 

(283

)

Impact of business reorganization
Loss on long-term investments

 

(655

)

Acquisition related expenses

 

(2,512

)

 

(239

)

 
Six Months Ended September 30, 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

$

1,398,300

 

$

172,880

 

$

320,437

 

$

134,203

 

$

82,197

 

$

241,387

 

Net effect from deferral and related cost of goods sold

 

(25,544

)

 

(39,320

)

 

(17,553

)

 

344

 

Stock-based compensation

 

(58,630

)

 

(10,220

)

Amortization and impairment of acquired intangibles

 

(7,015

)

 
Six Months Ended September 30, 2019

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 
As reported

$

151,492

 

$

145,160

 

$

23,281

 

$

713

 

$

18,479

 

Net effect from deferral and related cost of goods sold

 

812

 

Stock-based compensation

 

(27,143

)

 

(17,206

)

Amortization and impairment of acquired intangibles

 

(3,106

)

 

(244

)

Impact of business reorganization

 

(713

)

Acquisition related expenses

 

(367

)

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURE
(in thousands)
 
Six months ended September 30,

 

2020

 

 

2019

 

Net cash from operating activities

$

626,745

 

$

144,158

 

Net change in Restricted cash related to Operations (1)

 

(117,393

)

 

(102,910

)

Adjusted Unrestricted Operating Cash Flow

$

509,352

 

$

41,248

 

 
 
FY 2021FY 2020
Restricted cash beginning of period (4/1)

$

635,728

 

$

565,461

 

Less Restricted cash end of period (9/30)

 

739,681

 

 

668,371

 

Less Restricted cash related to acquisitions

 

13,440

 

 

-

 

(1) Net change in Restricted cash realated to Operations

$

(117,393

)

($

102,910

)

 

 

(Investor Relations)
Henry A. Diamond
Senior Vice President
Investor Relations & Corporate Communications
Take-Two Interactive Software, Inc.
(646) 536-3005
Henry.Diamond@take2games.com

(Corporate Press)
Alan Lewis
Vice President
Corporate Communications & Public Affairs
Take-Two Interactive Software, Inc.
(646) 536-2983
Alan.Lewis@take2games.com

Source: Take-Two Interactive