TTWO
$117.94
Take-Two Interacti
($1.08)
(.91%)
Earnings Details
2nd Quarter September 2017
Tuesday, November 07, 2017 4:05:02 PM
Tweet Share Watch
Summary

Take-Two Interacti Beats but Guides Lower

Take-Two Interacti (TTWO) reported 2nd Quarter September 2017 earnings of $0.96 per share on revenue of $443.6 million. The consensus earnings estimate was $0.74 per share on revenue of $512.9 million. The Earnings Whisper number was $0.85 per share. Revenue grew 5.6% on a year-over-year basis.

The company said it expects a third quarter GAAP loss of $0.35 to $0.25 per share on revenue of $440.0 million to $490.0 million. The current consensus earnings estimate is $0.74 per share on revenue of $547.0 million for the quarter ending December 31, 2017. The company also said it now expects fiscal 2018 earnings of $0.55 to $0.80 per share on revenue of $1.74 billion to $1.84 billion. The company's previous guidance was earnings of $1.00 to $1.25 per share on revenue of $1.62 billion to $1.72 billion and the current consensus earnings estimate is $1.53 per share on revenue of $1.77 billion for the year ending March 31, 2018.

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
$0.96
Earnings Whisper
$0.85
Consensus Estimate
$0.74
Reported Revenue
$443.6 Mil
Revenue Estimate
$512.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Take-Two Interactive Software, Inc. Reports Results for Fiscal Second Quarter 2018

GAAP net loss was $0.03 per diluted share

--Net Bookings grew 20% to $577.0 million

Take-Two Interactive Software, Inc. (TTWO) today reported results for its fiscal second quarter 2018, ended September 30, 2017. In addition, the Company provided its initial financial outlook for its fiscal third quarter ending December 31, 2017, and updated its financial outlook for its fiscal year ending March 31, 2018.

Fiscal Second Quarter 2018 GAAP Financial Highlights

Net revenue was $443.6 million, as compared to $420.2 million in last year’s fiscal second quarter. Recurrent consumer spending (virtual currency, add-on content and microtransactions) grew 66% year-over-year and accounted for 48% of total net revenue. The largest contributors to net revenue in fiscal second quarter 2018 were NBA(R) 2K17, Grand Theft Auto(R) Online and Grand Theft Auto V, WWE(R) SuperCard and WWE 2K17, and XCOM(R) 2.

Digitally-delivered net revenue grew 31% to $302.9 million, as compared to $230.8 million in last year’s fiscal second quarter, and accounted for 68% of total net revenue. The largest contributors to digitally-delivered net revenue in fiscal second quarter 2018 were NBA 2K17, Grand Theft Auto Online and Grand Theft Auto V, XCOM 2, and WWE SuperCard.

Net loss was $2.7 million, or $0.03 per diluted share, as compared to net income of $36.4 million, or $0.39 per diluted share, for the comparable period last year.

As of September 30, 2017, the Company had cash and short-term investments of $1.263 billion.

The following data, together with a management reporting tax rate of 22%, 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, 2017
Financial Data
$ in thousands
Statement
Change in
Stock-based
Non-cash
Acquisition
Amortization
Business
of
deferred
compensation
amounts
related
&
reorganization
Operations
net
related to
expenses
impairment
revenue
convertible
of
and related
notes
acquired
cost of
intangible
goods sold
assets
Other,
net
Net revenue
$ 443,562
133,427
Cost of goods sold
246,548
33,930
(28,065 )
(4,899 )
Gross profit
197,014
99,497
28,065
4,899
Operating expenses
208,333
(30,946 )
7,012
(15,523 )
(1,713 )
Income (loss) from operations
(11,319 )
99,497
59,011
(7,012 )
20,422
1,713
Interest and other, net
(2,969 )
5,640
(93 )
Income (loss) before income taxes
(14,288 )
99,497
59,011
5,640
20,422
1,713
(93 )
(7,012 )

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 118.1 million and adds back to net income the interest expense, net of tax, on the convertible notes of $0.3 million.

Operational Metric - Net Bookings

As previously announced, starting with fiscal second quarter 2018, Take-Two has changed the name of its operational metric from Net Sales to Net Bookings. The Company has made this change to avoid confusion with the net sales captions used by some companies in their GAAP financial statements, and to be consistent with operational metrics provided by its peers. 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. The Company’s definition of Net Bookings is identical to its previous definition of Net Sales.

During fiscal second quarter 2018, total Net Bookings grew 20% to $577.0 million, as compared to $479.4 million during last year’s fiscal second quarter. Net Bookings from recurrent consumer spending grew 84% year-over-year and accounted for 42% of total Net Bookings. The largest contributors to Net Bookings were NBA 2K18 and NBA 2K17, Grand Theft Auto Online and Grand Theft Auto V, Dragon City and Monster Legends, and XCOM 2.

Catalog accounted for $310.5 million of Net Bookings led by Grand Theft Auto, NBA 2K, Dragon City and Monster Legends, and XCOM 2.

Digitally-delivered Net Bookings grew 52% to $355.7 million, as compared to $234.2 million in last year’s fiscal second quarter, and accounted for 62% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal second quarter 2018 were Grand Theft Auto Online and Grand Theft Auto V, NBA 2K18 and NBA 2K17, Dragon City and Monster Legends, and XCOM 2.

Management Comments

"Our positive momentum continued in the second quarter, enabling Take-Two to deliver another period of better-than-expected operating results," said Strauss Zelnick, Chairman and CEO of Take-Two. "Grand Theft Auto Online delivered its best quarter yet, Net Bookings from Grand Theft Auto V grew year-over-year, and we enjoyed the successful launch of NBA 2K18, which generated growth in both units sold and recurrent consumer spending.

"As a result of our outperformance in the second quarter and increased forecast for the remainder of the fiscal year, we are raising our fiscal 2018 outlook for Net Bookings and net cash provided by operating activities. We now expect fiscal 2018 to be another year of Net Bookings growth, as well as strong cash flow. Looking ahead, we expect fiscal 2019 to be a record year for Net Bookings and net cash provided by operating activities led by the upcoming launches of Rockstar Games’ Red Dead Redemption 2 and a highly anticipated new title from one of 2K’s biggest franchises. We have a robust development pipeline and are better positioned than ever for long-term growth and margin expansion."

Business and Product Highlights

Since July 1, 2017:

Rockstar Games:

Grand Theft Auto V has now sold in more than 85 million units. According to The NPD Group, Grand Theft Auto V is now the all-time best-selling video game, both in revenues and units, based on combined U.S. digital and physical sales across PC, console and portable.

Released new free content updates for Grand Theft Auto Online, including: -- Smuggler’s Run, a major update focused on aerial vehicles and gameplay that introduces new smuggling-based business opportunities, a new Hangar property for storing a range of aircraft, including planes, choppers and ultralights for transporting criminal cargo across the state; and an array of themed content drops post-launch featuring: -- Motor Wars, a vehicle-based battle for survival in an ever-shrinking combat area.

The Bombushka military bomber and Bombushka Run Adversary Mode.

The Mammoth Mogul aircraft and Stockpile, a new, jet-fueled take on capture-the-flag.

Transform Races, a new form of Stunt Race where players switch vehicle classes instantly mid-race across land, air and sea.

Special Halloween content including the Vigilante weaponized vehicle, the Seabreeze aircraft and Condemned, a nightmarish version of tag where the only way to escape certain death is to take down another player.

Announced that new versions of the blockbuster detective thriller, L.A. Noire, are scheduled to release on November 14, 2017 for Nintendo Switch(TM), PlayStation(R)4 and Xbox One. These new versions include the original L.A. Noire game plus all of its additional downloadable content, with specific enhancements tailored to the unique capabilities of each platform. Following these in December, 2017, comes LA Noire: The VR Case Files, featuring seven select cases from the original game rebuilt specifically for a virtual reality experience on the HTC VIVE(TM) system.

2K:

Launched WWE 2K18 for PlayStation 4, Xbox One and PC. Developed collaboratively by Yuke’s and Visual Concepts, WWE 2K18 features Seth Rollins as its cover Superstar, along with the largest playable roster in franchise history, the new online-centric Road to Glory mode, notable gameplay improvements, and a powerful new graphics engine. In addition, WWE 2K18 will be released for Nintendo Switch during fall 2017, marking the first time in five years that a WWE game has been available on a Nintendo platform. WWE 2K18 is being supported with a series of downloadable content, including a Season Pass.

Launched NBA 2K18, the current iteration of our top-rated and top-selling NBA video game simulation series, for PlayStation4, PlayStation3, Xbox One, Xbox 360, Nintendo Switch and PC. Developed by Visual Concepts, NBA 2K18 received positive reviews from influential critics, including 91/100 from Forbes, 9/10 from Game Informer and 4.5/5 from Digital Trends. To date, NBA 2K18 has sold-in over 6 million units, and both sell-in and sell-through of the title have grown more than 20% over the prior year’s release, including a significant increase in digitally-delivered sales.

Released XCOM 2: War of the Chosen, the expansion pack for the 2016 award-winning strategy title from Firaxis Games, for PlayStation 4, Xbox One and PC. Fans and critics have been delighted by the new Chosen enemies and Faction Heroes, with Game Informer awarding the title 9.25 out of 10 calling it, "One of the most rewarding strategy games in years".

Released Sign of the Times - the third downloadable add-on content pack for Mafia III, which is available for individual purchase or as part of the title’s Season Pass, for PlayStation 4, Xbox One and PC.

Financial Outlook for Fiscal 2018

Take-Two is providing its initial financial outlook for its fiscal third quarter ending December 31, 2017, and updating its financial outlook for its fiscal year ending March 31, 2018, as follows:

Third Quarter Ending December 31, 2017

-- GAAP net revenue is expected to range from $440 to $490 million

-- GAAP net (loss) is expected to range from ($40) to ($29) million

GAAP diluted net (loss) per share is expected to range from ($0.35) to ($0.25)

Share count used to calculate GAAP diluted net loss per share is expected to be 113.6 million (1)

Net Bookings (operational metric) are expected to range from $610 to $660 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 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, 2017
Financial Data
$ in millions
GAAP
Change in
Stock-based
Non-cash
Amortization
outlook (2)
deferred net
compensation (3)
amounts
of acquired
revenue and
related to
intangible
related
convertible
assets
cost of
notes
goods sold
Net revenue
$440 to $490
$170
Cost of goods sold
$262 to $291
$40
($7)
($4)
Operating Expenses
$220 to $230
($26)
($4)
Interest and other, net
($1)
($1)
Income (loss) before income taxes
($41) to ($30)
$130
$33
$1
$8

Fiscal Year Ending March 31, 2018

As a result of its better-than-expected fiscal second quarter 2018 operating performance and increased outlook for the remainder of the fiscal year, Take-Two is raising its fiscal year 2018 outlook for Net Bookings and net cash provided by operating activities. In addition, due primarily to higher internal royalties driven by the strong performance of Grand Theft Auto V and Grand Theft Auto Online, as well as higher equity compensation expense, the Company is reducing its outlook for GAAP net income.

-- GAAP net revenue is expected to range from $1.74 to $1.84 billion

-- GAAP net income is expected to range from $63 to $91 million

GAAP diluted net income per share is expected to range from $0.55 to $0.80

Share count used to calculate GAAP diluted net income per share is expected to be 113.6 million (4)

Net cash provided by operating activities is expected to be approximately $300 million

-- Capital expenditures are expected to be approximately $60 million

Net Bookings (operational metric) are expected to range from $1.93 to $2.03 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 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, 2018
Financial Data
$ in millions
GAAP
Change in
Stock-based
Non-cash
Acquisition
Amortization &
Business
outlook (2)
deferred net
compensation (3)
amounts
related
impairment of
reorganization
revenue and
related to
expenses
acquired
excluding
related
convertible
intangible
stock-based
cost of
notes
assets
compensation
goods sold
Net revenue
$1,740 to $1,840
$194
Cost of goods sold
$893 to $944
$10
($44)
($16)
Operating Expenses
$805 to $825
($100) (5)
$7
($27)
($12)
Interest and other, net
$3
($11)
Income (loss) before income taxes
$39 to $68
$184
$144
$11
($7)
$43
$12
1)
For the fiscal third quarter ending December 31, 2017, the Company’s
fully diluted share count used for management reporting purposes is
expected to be 119.8 million, which includes 113.6 million basic
shares, 4.2 million shares representing the potential dilution from
unvested employee stock grants, and 2.0 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 $0.1 million. Take-Two’s GAAP net income per
diluted share outlook is calculated using its basic share count of
113.6 million because using the "if-converted" method and the
Company’s fully diluted share count of 119.8 million would have been
anti-dilutive.
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 0.6 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, 2018, the Company’s fully
diluted share count used for management reporting purposes is
expected to be 118.8 million, which includes 110.0 million basic
shares, 3.6 million shares representing the potential dilution from
unvested employee stock grants, and 5.2 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 $1.0 million. Take-Two’s GAAP net income per
diluted share outlook is calculated using a diluted share count of
113.6 million (basic shares plus unvested employee stock grants ),
because using the "if-converted" method and the Company’s fully
diluted share count of 118.8 million would have been anti-dilutive.
5)
Includes $2.4 million of stock-based compensation related to
business reorganization.

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 also leveraging opportunities on the Nintendo Switch, Xbox 360, PlayStation 3, PC and mobile platforms; and stable foreign exchange rates. See also "Cautionary Note Regarding Forward Looking Statements" below.

Product Releases

The following titles were released since July 1, 2017:

Label
Title
Platforms
Release Date
2K
Mafia III: Sign of the Times (DLC)
PS4, Xbox One, PC
July 25, 2017
2K
Sid Meier’s Civilization VI: Nubia Civilization/Scenario Pack
PC
July 27, 2017
(DLC)
2K
XCOM 2: War of the Chosen (DLC)
PC
August 29, 2017
2K
XCOM 2: War of the Chosen (DLC)
PS4, Xbox One
September 12, 2017
2K
NBA 2K18
PS4, PS3, Xbox One, Xbox 360, Switch (digital), PC
September 15, 2017
2K
NHL SuperCard
iOS, Android
October 4, 2017
2K
WWE 2K18
PS4, Xbox One
October 13, 2017
2K
NBA 2K18
Switch (physical)
October 17, 2017
2K
WWE 2K18
PC
October 17, 2017
2K
WWE 2K18: Accelerator (DLC)
PS4, Xbox One, PC
October 17, 2017
2K
WWE 2K18: MyPlayer Kickstarter (DLC)
PS4, Xbox One, PC
October 17, 2017
2K
Sid Meier’s Civilization VI: Khemer & Indonesia
PC
October 19, 2017
Civilization/Scenario Pack (DLC)
Take-Two’s lineup of future titles announced to date includes:
Label
Title
Platforms
Release Date
Rockstar Games
L.A. Noire
Xbox One, PS4, Switch
November 14, 2017
Rockstar Games
L.A. Noire: The VR Case Files
HTC Vive
December, 2017
2K
WWE 2K18
Switch
Fall 2017
Take-Two
Kerbal Space Program: Making History Expansion
PC
Fiscal 4th Quarter 2018
Rockstar Games
Red Dead Redemption 2
PS4, Xbox One
Spring 2018

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 September 30, 2017.

About Take-Two Interactive Software

Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, publisher and marketer of interactive entertainment for consumers around the globe. The Company develops and publishes products principally through its 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
(in thousands, except per share amounts)
Three months ended September 30,
Six Months Ended September 30,
2017
2016
2017
2016
Net revenue
$ 443,562
$ 420,167
$ 861,778
$ 731,719
Cost of goods sold:
Internal royalties
104,049
77,425
181,753
137,098
Software development costs and royalties
66,782
45,194
110,411
108,853
Product costs
42,563
55,059
86,632
100,038
Licenses
33,154
27,927
62,321
50,996
Total cost of goods sold
246,548
205,605
441,117
396,985
Gross profit
197,014
214,562
420,661
334,734
Selling and marketing
76,914
80,187
129,128
151,321
General and administrative
60,824
49,685
121,427
96,428
Research and development
49,999
30,005
92,268
63,905
Business reorganization
1,713
-
12,312
-
Depreciation and amortization
18,883
7,491
26,626
14,869
Total operating expenses
208,333
167,368
381,761
326,523
Income (loss) from operations
(11,319 )
47,194
38,900
8,211
Interest and other, net
(2,969 )
(7,078 )
(5,777 )
(11,584 )
Gain on long-term investments, net
-
-
-
1,350
Income (loss) before income taxes
(14,288 )
40,116
33,123
(2,023 )
(Benefit from) provision for income taxes
(11,552 )
3,684
(24,417 )
112
Net income (loss)
$
(2,736 )
$
36,432
$
57,540
$
(2,135 )
Earnings (loss) per share:
Basic earnings (loss) per share
$
(0.03 )
$
0.42
$
0.54
$
(0.03 )
Diluted earnings (loss) per share
$
(0.03 )
$
0.39
$
0.53
$
(0.03 )
Weighted average shares outstanding:
Basic
109,430
87,176
107,232
84,990
Diluted
109,430
115,202
109,356
84,990
Computation of Basic EPS:
Net income (loss)
$
(2,736 )
$
36,432
$
57,540
$
(2,135 )
Less: net income allocated to participating securities
-
(745 )
(487 )
-
Net loss for basic and diluted EPS calculation
$
(2,736 )
$
35,687
$
57,053
$
(2,135 )
Weighted average shares outstanding - basic
109,430
87,176
107,232
84,990
Less: weighted average participating shares outstanding
-
(1,783 )
(908 )
-
Weighted average common shares outstanding - basic
109,430
85,393
106,324
84,990
Basic earnings (loss) per share
$
(0.03 )
$
0.42
$
0.54
$
(0.03 )
Computation of Diluted EPS:
Net income (loss)
$
(2,736 )
$
36,432
$
57,540
$
(2,135 )
Less: net income allocated to participating securities
-
(564 )
(478 )
-
Add: interest expense, net of tax, on Convertible Notes
-
8,669
-
-
Net income (loss) for diluted EPS calculation
$
(2,736 )
$
44,537
$
57,062
$
(2,135 )
Weighted average common shares outstanding - basic
109,430
85,393
106,324
84,990
Add: dilutive effect of common stock equivalents
-
29,809
3,032
-
Total weighted average shares outstanding - diluted
109,430
115,202
109,356
84,990
Less: weighted average participating shares outstanding
-
(1,783 )
(908 )
-
Weighted average common shares outstanding - diluted
109,430
113,419
108,448
84,990
Diluted earnings (loss) per share
$
(0.03 )
$
0.39
$
0.53
$
(0.03 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
September 30,
March 31,
2017
2017
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
749,626
$
943,396
Short-term investments
513,516
448,932
Restricted cash
469,101
337,818
429,019
219,558
Accounts receivable, net of allowances of $50,109 and $66,483 at
September 30, 2017 and March 30, 2017, respectively
Inventory
36,431
16,323
Software development costs and licenses
41,983
41,721
Deferred cost of goods sold
115,135
127,901
Prepaid expenses and other
100,704
59,593
Total current assets
2,455,515
2,195,242
Fixed assets, net
86,689
67,300
Software development costs and licenses, net of current portion
595,076
381,910
Deferred cost of goods sold, net of current portion
10,820
-
Goodwill
381,359
359,115
Other intangibles, net
116,527
110,262
Other assets
50,394
35,325
Total assets
$ 3,696,380
$ 3,149,154
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
75,810
$
31,892
Accrued expenses and other current liabilities
952,568
750,875
Deferred revenue
822,126
903,125
Total current liabilities
1,850,504
1,685,892
Long-term debt
52,369
251,929
Non-current deferred revenue
167,070
10,406
Other long-term liabilities
153,991
197,199
Total liabilities
2,223,934
2,145,426
Stockholders’ equity:
Preferred stock, $.01 par value, 5,000 shares authorized
-
-
Common stock, $.01 par value, 200,000 shares authorized; 130,723 and
119,813 shares
issued and 113,531 and 102,621 outstanding at September 30, 2017 and
1,307
1,198
March 31, 2017, respectively
Additional paid-in capital
1,845,450
1,452,754
Treasury stock, at cost; 17,192 common shares at September 30, 2017
(303,388 )
(303,388 )
and March 31, 2017, respectively
Accumulated deficit
(42,451 )
(99,694 )
Accumulated other comprehensive loss
(28,472 )
(47,142 )
Total stockholders’ equity
1,472,446
1,003,728
Total liabilities and stockholders’ equity
$ 3,696,380
$ 3,149,154
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended September 30,
2017
2016
Operating activities:
Net income (loss)
$
57,540
$
(2,135 )
Adjustments to reconcile net loss to net cash provided by operating
activities:
Amortization and impairment of software development costs and
38,862
63,459
licenses
Depreciation
15,369
14,869
Amortization and impairment of intellectual property
17,286
-
Impairment of in-process research and development
11,257
-
Stock-based compensation
83,083
33,333
Amortization of discount on Convertible Notes
13,915
12,981
Gain on conversions of Convertible Notes
(4,141 )
-
Amortization of debt issuance costs
482
779
Other, net
1,194
(2,912 )
Changes in assets and liabilities:
Restricted cash
(131,283 )
(106,940 )
Accounts receivable
(209,198 )
(212,032 )
Inventory
(18,721 )
(62,555 )
Software development costs and licenses
(146,009 )
(148,512 )
Prepaid expenses and other assets
(45,089 )
(8,560 )
Deferred revenue
65,671
80,913
Deferred cost of goods sold
4,379
(17,287 )
Accounts payable, accrued expenses and other liabilities
246,472
303,790
Net cash provided by (used in) operating activities
1,069
(50,809 )
Investing activities:
Change in bank time deposits
(40,000 )
66,841
Proceeds from available-for-sale securities
111,480
72,387
Purchases of available-for-sale securities
(134,273 )
(74,552 )
Purchases of fixed assets
(32,717 )
(8,283 )
Proceeds from sale of long-term investments
-
1,350
Purchase of long-term investments
-
(1,885 )
Asset acquisition
(25,965 )
-
Net cash (used in) provided by investing activities
(121,475 )
55,858
Financing activities:
Excess tax benefit from stock-based compensation
-
1,143
Tax payment related to net share settlements on restricted stock
(86,125 )
(30,621 )
awards
Net cash used in financing activities
(86,125 )
(29,478 )
Effects of foreign exchange rates on cash and cash equivalents
12,761
(4,310 )
Net change in cash and cash equivalents
(193,770 )
(28,739 )
Cash and cash equivalents, beginning of year
943,396
798,742
Cash and cash equivalents, end of period
$
749,626
$
770,003
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue and Net Bookings by Geographic Region, Distribution
Channel, and Product Platform
(in thousands)
Three Months Ended
Three Months Ended
September 30, 2017
September 30, 2016
Amount
% of Total
Amount
% of Total
Net revenue by geographic region
United States
$ 276,005
62%
$ 252,483
60%
International
167,557
38%
167,684
40%
Total net revenue
$ 443,562
100%
$ 420,167
100%
Net bookings by geographic region
United States
$ 348,082
60%
$ 297,969
62%
International
228,907
40%
181,472
38%
Total net bookings
$ 576,989
100%
$ 479,441
100%
Three Months Ended
Three Months Ended
September 30, 2017
September 30, 2016
Amount
% of Total
Amount
% of Total
Net revenue by distribution channel
Digital online
$ 302,886
68%
$ 230,759
55%
Physical retail and other
140,676
32%
189,408
45%
Total net revenue
$ 443,562
100%
$ 420,167
100%
Net bookings by distribution channel
Digital online
$ 355,736
62%
$ 234,178
49%
Physical retail and other
221,253
38%
245,263
51%
Total net bookings
$ 576,989
100%
$ 479,441
100%
Three Months Ended
Three Months Ended
September 30, 2017
September 30, 2016
Amount
% of Total
Amount
% of Total
Net revenue by product platform
Console
$ 360,465
81%
$ 230,759
55%
PC and other
83,097
19%
189,408
45%
Total net revenue
$ 443,562
100%
$ 420,167
100%
Net bookings by product platform
Console
$ 485,864
84%
$ 421,384
88%
PC and other
91,125
16%
58,057
12%
Total net bookings
$ 576,989
100%
$ 479,441
100%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue and Net Bookings by Geographic Region, Distribution
Channel, and Product Platform
(in thousands)
Six Months Ended
Six Months Ended
September 30, 2017
September 30, 2016
Amount
% of Total
Amount
% of Total
Net revenue by geographic region
United States
$ 534,265
62%
$ 445,584
61%
International
327,513
38%
286,135
39%
Total net revenue
$ 861,778
100%
$ 731,719
100%
Net bookings by geographic region
United States
$ 547,953
59%
$ 441,209
59%
International
377,341
41%
310,787
41%
Total net bookings
$ 925,294
100%
$ 751,996
100%
Six Months Ended
Six Months Ended
September 30, 2017
September 30, 2016
Amount
% of Total
Amount
% of Total
Net revenue by distribution channel
Digital online
$ 571,122
66%
$ 402,837
55%
Physical retail and other
290,656
34%
328,882
45%
Total net revenue
$ 861,778
100%
731,719
100%
Net bookings by distribution channel
Digital online
$ 636,650
69%
$ 425,341
57%
Physical retail and other
288,644
31%
326,655
43%
Total net bookings
$ 925,294
100%
$ 751,996
100%
Six Months Ended
Six Months Ended
September 30, 2017
September 30, 2016
Amount
% of Total
Amount
% of Total
Net Revenues by product platform
Console
$ 705,382
82%
$ 607,064
83%
PC and other
156,396
18%
124,655
17%
Total net revenue
$ 861,778
100%
$ 731,719
100%
Net bookings by product platform
Console
$ 751,614
81%
$ 635,228
84%
PC and other
173,680
19%
116,768
16%
Total net bookings
$ 925,294
100%
$ 751,996
100%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Three Months Ended September 30, 2017
Net Revenue
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Selling and
Internal Royalties
Software
Product Costs
Licenses
Marketing
Development
Costs
and Royalties
As reported
$ 443,562
$ 104,049
$
66,782
$
42,563
$ 33,154
$
76,914
Net effect from deferral and related cost of goods sold
133,427
4,604
16,538
12,788
Stock-based compensation
(28,065 )
(3,186 )
Amortization and impairment of acquired intangibles
(4,899 )
(2,470 )
Three Months Ended September 30, 2017
General and
Research and
Business
Depreciation and
Interest and Other,
Administrative
Development
Reorganization
Amortization
net
As reported
$
60,824
$
49,999
$
1,713
$
18,883
$ (2,969 )
Stock-based compensation
(19,458 )
(8,302 )
Non-cash amounts related to Convertible Notes
5,640
Acquisition related expenses
7,012
Amortization and impairment of acquired intangibles
(38 )
(1,630 )
(11,385 )
Impact of business reorganization
(1,713 )
Other, net
(93 )
Three Months Ended September 30, 2016
Net Revenue
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Selling and
Internal Royalties
Software
Product Costs
Licenses
Marketing
Development
Costs
and Royalties
As reported
$ 420,167
$
77,425
$
45,194
$
55,059
$ 27,927
$
80,187
Net effect from deferral and related cost of goods sold
59,274
4,795
11,691
12,293
Stock-based compensation
(5,566 )
(2,279 )
Three Months Ended September 30, 2016
General and
Research and
Depreciation and
Interest and Other,
Administrative
Development
Amortization
net
As reported
$
49,685
$
30,005
$
7,491
$
(7,078 )
Stock-based compensation
(9,774 )
(614 )
Non-cash amortization of discount on Convertible Notes
6,882
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Six Months Ended September 30, 2017
Net Revenue
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Selling and
Internal Royalties
Software
Product Costs
Licenses
Marketing
Development
Costs
and Royalties
As reported
$ 861,778
$ 181,753
$ 110,411
$
86,632
$ 62,321
$ 129,128
Net effect from deferral and related cost of goods sold
63,516
(3,052 )
(1,268 )
(2,043 )
Stock-based compensation
(31,546 )
(5,772 )
Amortization and impairment of acquired intangibles
(9,140 )
(4,778 )
Six Months Ended September 30, 2017
General and
Research and
Business
Depreciation and
Interest and Other,
Administrative
Development
Reorganization
Amortization
net
As reported
$ 121,427
$
92,268
$
12,312
$
26,626
$ (5,777 )
Stock-based compensation
(32,578 )
(10,766 )
(2,421 )
Non-cash amounts related to Convertible Notes
9,774
Non-cash (gain) loss on redemption of Convertible Notes
Acquisition related expenses
6,956
Amortization and impairment of acquired intangibles
(3,153 )
(11,505 )
Impact of business reorganization
(9,891 )
Other, net
(93 )
Six Months Ended September 30, 2016
Net Revenue
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Cost of Goods Sold-
Selling and
Internal Royalties
Software
Product Costs
Licenses
Marketing
Development
Costs
and Royalties
As reported
$ 731,719
$ 137,098
$ 108,853
$ 100,038
$ 50,996
$ 151,321
Net effect from deferral and related cost of goods sold
20,277
2,069
2,799
(713 )
(4,828 )
Stock-based compensation
(9,952 )
Six Months Ended September 30, 2016
General and
Research and
Depreciation and
Interest and Other,
Gain on long-term
Administrative
Development
Amortization
net
investments
As reported
$
96,428
$
63,905
$
14,869
$ (11,584 )
$
1,350
Stock-based compensation
(16,479 )
(2,074 )
Non-cash amortization of discount on Convertible Notes
12,981
Impact of business reorganization
Gain on long-term investment
(1,350 )

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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