Take-Two News Release

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Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal First Quarter 2020

GAAP net revenue grew 39% to $540.5 million

GAAP net income per diluted share was $0.41

GAAP net cash provided by operating activities increased to $108.5 million

Adjusted Operating Cash Flow (Non-GAAP) increased to $46.6 million

Net Bookings grew 46% to $422.2 million

Company raises outlook for fiscal year 2020

NEW YORK--(BUSINESS WIRE)--Aug. 5, 2019-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong results for its fiscal first quarter 2020 ended June 30, 2019. In addition, the Company provided its initial outlook for its fiscal second quarter ending September 30, 2019, and raised its outlook for its fiscal year ending March 31, 2020. For additional information, please see the fiscal first quarter 2020 results slide deck posted to the Company’s investor relations website at http://ir.take2games.com.

Fiscal First Quarter 2020 Financial Highlights

GAAP Net revenue grew 39% to $540.5 million, as compared to $388.0 million in last year’s fiscal first quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 31% and accounted for 58% of total GAAP net revenue. The largest contributors to GAAP net revenue in fiscal first quarter 2020 were NBA® 2K19, Grand Theft Auto® Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, the Borderlands franchise, Social Point’s mobile offerings, WWE® SuperCard and WWE 2K19, and Sid Meier’s Civilization® VI.

Digitally-delivered GAAP net revenue grew 36% to $427.8 million, as compared to $315.0 million in last year’s fiscal first quarter, and accounted for 79% of total GAAP net revenue. The largest contributors to GAAP digitally-delivered net revenue in fiscal first quarter 2020 were NBA 2K19, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, the Borderlands franchise, Social Point’s mobile offerings, and Sid Meier’s Civilization VI.

GAAP net income was $46.3 million, or $0.41 per diluted share, as compared to $71.7 million, or $0.62 per diluted share, for the comparable period last year.

During the 3-month period ended June 30, 2019, GAAP net cash provided by (used in) operating activities increased to $108.5 million, as compared to ($11.2) million in the same period last year. During the 3-month period ended June 30, 2019, Adjusted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, increased to $46.6 million, as compared to ($83.2) million in the same period last year (please see the section below titled “Non-GAAP Financial Measure” for additional information). As of June 30, 2019, the Company had cash and short-term investments of $1.542 billion.

The following data, together with a management reporting tax rate of 17%, 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 June 30, 2019

 

Financial Data

$ in thousands

Statement of
operations

Change in deferred
net revenue and
related cost of
goods sold

Stock-based
compensation

 

 

Impact of
business
reorganization

 

 

 

Business
acquisition

Amortization
& impairment
of acquired
intangible
assets

 

 

 

Net revenue

$540,459

(118,220

)

 

 

 

Cost of goods sold

241,469

(29,597

)

(30,798

)

 

 

 

(3,705

 

)

Gross Profit

298,990

(88,623

)

30,798

 

 

 

 

3,705

 

 

Operating expenses

247,260

(26,634

)

 

(386

 

)

 

(326

 

)

 

(1,683

 

)

Income from operations

51,730

(88,623

)

57,432

 

 

386

 

 

 

326

 

 

 

5,388

 

 

 

Interest and other, net

10,425

(494

)

 

 

 

Income before income taxes

62,155

(89,117

)

57,432

 

 

386

 

 

 

326

 

 

 

5,388

 

 

 

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 113.7 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 first quarter 2020, total Net Bookings grew 46% to $422.2 million, as compared to $288.3 million during last year’s fiscal first quarter. Net Bookings from recurrent consumer spending grew 55% and accounted for 67% of total Net Bookings. The largest contributors to Net Bookings in fiscal first quarter 2020 were Grand Theft Auto Online and Grand Theft Auto V, NBA 2K19, the Borderlands franchise, Red Dead Redemption 2 and Red Dead Online, Social Point’s mobile offerings, WWE SuperCard and WWE 2K19, and Sid Meier’s Civilization VI.

Catalog accounted for $394.7 million of Net Bookings led by Grand Theft Auto, NBA 2K, Borderlands, and Social Point’s mobile offerings.

Digitally-delivered Net Bookings grew 51% to $382.5 million, as compared to $252.8 million in last year’s fiscal first quarter, and accounted for 91% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal first quarter 2020 were NBA 2K19, Grand Theft Auto Online and Grand Theft Auto V, the Borderlands franchise, Red Dead Redemption 2 and Red Dead Online, Social Point’s mobile offerings, and Sid Meier’s Civilization VI.

Management Comments

“Fiscal 2020 is off to a terrific start with first quarter operating results that beat our expectations,” said Strauss Zelnick, Chairman and CEO of Take-Two. “We delivered significant Net Bookings and cash flow growth driven by the performance of Grand Theft Auto Online and Grand Theft Auto V,NBA 2K19, the Borderlands franchise, and Red Dead Redemption 2 and Red Dead Online.

“As a result of our better-than-expected first quarter operating results and increased forecast for the balance of the year, we are raising our outlook for fiscal 2020, which is anticipated to be another great year for our organization. We aim to build on this strong start by delivering a robust array of titles throughout the year, including Ancestors: The Humankind Odyssey, NBA 2K20, Borderlands 3, WWE 2K20 and The Outer Worlds, as well as new and innovative ways for consumers to remain engaged with their favorite entertainment experiences.

“Looking ahead, Take-Two has the strongest development pipeline in its history, including sequels from our biggest franchises as well as exciting new IP. We are exceedingly well positioned to capitalize on the positive trends in our industry, and to generate significant growth and margin expansion over the long-term.”

Business and Product Highlights

Since April 1, 2019:

Rockstar Games:

  • Red Dead Online exited the Beta phase on May 14, 2019 with a massive update that brought a host of new gameplay including new cooperative story missions, Free Roam activities and the addition of Poker, along with a range of updates and improvements that strengthen and stabilize the foundational world of the Red Dead Online experience. In addition, throughout the period, Rockstar Games released additional content and gameplay for Red Dead Online as follows:
    • Showdown Modes, including Sport of Kings, Head for the Hills, Plunder, Up in Smoke, and Spoils of War. These player-versus-player modes are tight, dramatic competitive matches that allow for quick structured gameplay sessions;
    • Numerous new Weapons, Clothing, Emotes and more.

Starting this summer, players will be able to take on the first three of a series of new roles: track down wanted criminals as a bounty hunter; search the world for treasure and other exotic items to sell as a collector; or build a business at camp as a trader and more.

  • Released new free content updates for Grand Theft Auto Online, including:
    • The Diamond Casino & Resort, which enables players to try their luck at a variety of casino games or just stay in the most luxurious residence in all of Los Santos. More than just a place to let go of your inhibitions, The Diamond is the one-stop destination for quality entertainment, high-end living and a range of experiences you won’t find anywhere else. The Diamond Casino & Resort update was Grand Theft Auto Online’s biggest launch ever, delivering record player engagement in daily active users, weekly active users and monthly active users.
    • Numerous new missions, vehicles, weapons and other content.
  • Announced an exciting new program through which Rockstar Games Social Club members and Twitch Prime subscribers receive free in-game rewards, bonuses and exclusive discounts in both Grand Theft Auto Online and Red Dead Online simply by linking their Twitch Prime and Social Club accounts. Benefits continue for months to come and include special in-game benefits for both Red Dead Online and Grand Theft Auto Online.

2K:

  • Launched the Borderlands: Game of the Year Edition on PlayStation 4, Xbox One, and Windows PC. This brand new definitive version of the original game boasts ultra HD remastered graphics, significant quality-of-life content updates, and includes all add-on content. In addition, Gearbox Software and 2K released an Ultra HD Texture Pack that increases the visual fidelity of Borderlands: The Handsome Collection on consoles, and provides a visual upgrade for Borderlands 2, Borderlands: The Pre-Sequel, and all the game add-ons for both titles on PC.
  • Released the Sid Meier’s Civilization VI: Rise and Fall expansion pack for iOS through Aspyr. Developed by Firaxis Games, Rise and Fall was originally released for PC in February 2018. 2K also announced that they will bring all of the previously released add-on content for Civilization VI to both iOS and Nintendo Switch later this year.
  • Released NBA 2K Mobile as a free download for Android devices. Previously launched on iOS phones and tablets, NBA 2K Mobile enables players to experience console quality graphics on the go while they collect their favorite NBA players, build dream teams, and step onto the court in lifelike 5v5 match-ups.
  • Announced that current Raw® Women’s Champion Becky Lynch® and WWE Superstar Roman Reigns™ will be the cover Superstars for WWE 2K20, the forthcoming release in our flagship WWE video game franchise. WWE 2K20 is scheduled for worldwide release on October 22, 2019 for PlayStation 4, Xbox One and PC.
  • Announced the cover athletes for NBA 2K20, the next iteration of the top-rated and top-selling NBA video game simulation series*. Six-time NBA All-Star, three-time All-NBA First Team, three-time NBA All-Defensive Team and 2012 Olympic gold medalist Anthony Davis returns as cover star for the Standard and Deluxe Editions. Three-time NBA Champion, 13-time NBA All-Star, 2008 Olympic gold medalist and 2006 NBA Finals MVP Dwyane Wade will grace the cover of the Legend Edition. NBA 2K20 will be available worldwide on PlayStation4, Xbox One, Nintendo Switch and PC on September 6, 2019. NBA 2K20 will also be available on Google Stadia when it launches later this year.
  • Announced that Borderlands® 3, the next installment in the critically acclaimed shooter-looter series from Gearbox Software, will launch worldwide on September 13, 2019 for PlayStation 4, Xbox One and Windows PC. At launch, Borderlands 3will be available for PC exclusively through the Epic Games store and will be available on additional PC digital storefronts in April 2020. Borderlands 3 will also be available on Google Stadia when it launches later this year.

Private Division:

  • Released the Kerbal Space Program: Breaking Ground Expansion for PC. Developed by Squad, Kerbal Space Program: Breaking Ground Expansion is the second expansion for the critically acclaimed space simulation game.
  • Announced Disintegration, an upcoming sci-fi, first-person shooter that will be fully unveiled later this month at gamescom 2019. Disintegration is the debut title from V1 Interactive, the independent development studio co-founded in 2014 by Marcus Lehto, former creative director at Bungie and co-creator of Halo. Disintegration will be available in calendar 2020 (fiscal year 2021).
  • Announced that The Outer Worlds will launch on October 25, 2019 for Xbox One, PlayStation 4 and PC, and will come to Nintendo Switch following the release on the other platforms. Created by the renowned RPG developer, Obsidian Entertainment, The Outer Worlds is a dark and witty player-driven story set in a colony at the farthest reaches of the galaxy. The Outer Worlds will be available on PC through the Epic Games Store and Microsoft Windows Store for the first year, at which point it will come to additional digital PC retailers.
  • Announced that Ancestors: The Humankind Odyssey will launch digitally for PC on August 27, 2019, and digitally on PlayStation4 and Xbox One in December of 2019. Ancestors: The Humankind Odyssey is the debut title from Panache Digital Games, the studio co-founded in 2014 by Patrice Désilets, the original creative director of the Assassin’s Creed franchise. The title will be available for PC exclusively through the Epic Games Store for the first year, at which point it will come to additional digital PC retailers.

Social Point:

  • Launched Word Life, our latest free-to-play mobile offering, for iOS and Android devices. The game brings a new dimension to traditional word puzzle games, boasting a multiplayer mode where players can battle with words in exciting match-offs to see who is the most-skilled competitor.

* According to 2000 - 2019 Metacritic.com and Gamerankings.com.

Outlook for Fiscal 2020

Take-Two is providing its initial outlook for its fiscal second quarter ending September 30, 2019 and is raising its outlook for the fiscal year ending March 31, 2020:

Second Quarter Ending September 30, 2019

  • GAAP net revenue is expected to range from $855 to $905 million
  • GAAP net income is expected to range from $118 to $130 million
  • GAAP diluted net income per share is expected to range from $1.04 to $1.14
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 113.8 million (1)
  • Net Bookings (operational metric) are expected to range from $860 to $910 million

The Company is also providing selected data and its management reporting tax rate of 17%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

Three Months Ending September 30, 2019

 

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

$855 to $905

 

 

$5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$415 to $442

 

 

($10)

 

 

($23)

 

 

($2)

 

 

 

 

 

 

 

 

 

 

Operating Expenses

$312 to $322

 

 

 

 

 

($20)

 

 

($2)

 

Interest and other, net

($9)

 

 

 

 

 

 

 

 

 

 

Income before income taxes

$137 to $151

 

 

$15

 

 

$43

 

 

$4

Fiscal Year Ending March 31, 2020

  • GAAP net revenue is expected to range from $2.83 to $2.93 billion
  • GAAP net income is expected to range from $425 to $454 million
  • GAAP diluted net income per share is expected to range from $3.71 to $3.96
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 114.6 million (3)
  • Net cash provided by operating activities is expected to be over $430 million
  • Adjusted Operating Cash Flow (Non-GAAP) is expected to be over $450 million (4)
  • Capital expenditures are expected to be approximately $90 million
  • Net Bookings (operational metric) are expected to range from $2.6 to $2.7 billion

The Company is also providing selected data and its management reporting tax rate of 17%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

Twelve Months Ending March 31, 2020

 

Financial Data

$ in millions

GAAP outlook (3)

Change in
deferred net
revenue and
related cost of
goods sold

Stock-based
compensation

Amortization
of acquired
intangible assets

 

 

 

Reorganization
& acquisition

 

Net revenue

$2,830 to $2,930

 

 

($230)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$1,296 to $1,341

 

 

($110)

 

 

($90)

 

 

($10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

$1,072 to $1,092

 

 

 

 

 

($84)

 

 

($7)

 

 

($1)

 

Interest and other, net

($39)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

$501 to $536

 

 

($120)

 

 

$174

 

 

$17

 

 

 

$1

1)

Includes 113.1 million basic shares and 0.7 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 113.1 million basic shares and 1.5 million shares representing the potential dilution from unvested employee stock grants.

4)

Includes a $20.0 million net decrease in restricted cash for fiscal 2020.

 

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

Product Releases

The following titles were released since April 1, 2019:

 

Label

Title

Platforms

Release Date

2K

Borderlands: Game of the Year Edition

PS4, Xbox One, PC

April 3, 2019

2K

NBA 2K Mobile

Android

April 17,2019

Social Point

Word Life

iOS, Android

May 9, 2019

Rockstar Games

Red Dead Online Spring Update

PS4, Xbox One

May 14, 2019

Private Division

Kerbal Space Program: Breaking Ground (DLC)

PC

May 30, 2019

Rockstar Games

Grand Theft Auto Online: The Diamond Casino & Resort

PS4, Xbox One, PC

July 23, 2019

2K

Sid Meier’s Civilization VI: Rise and Fall (Expansion Pack)

iOS

July 23, 2019

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

Label

Title

Platforms

Release Date

Private Division

Ancestors: The Humankind Odyssey

PC (digital only)

August 27, 2019

2K

NBA 2K20

PS4, Xbox One, Switch, PC

September 6, 2019

2K

Borderlands 3

PS4, Xbox One, PC

September 13, 2019

2K

WWE 2K20

PS4, Xbox One, PC

October 22, 2019

Private Division

The Outer Worlds

PS4, Xbox One, PC

October 25, 2019

Private Division

The Outer Worlds

Switch

TBA

2K

NBA 2K20

Stadia

November 2019

2K

Borderlands 3

Stadia

November 2019

Private Division

Ancestors: The Humankind Odyssey

PS4, Xbox One (digital only)

December 2019

Private Division

Disintegration

TBA

2020 (fiscal 2021)

Conference Call

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

Non-GAAP Financial Measure

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses a Non-GAAP measure of financial performance: Adjusted Operating Cash Flow, which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash. The Company’s management believes it is important to consider Adjusted Operating Cash Flow, in addition to net cash from operating activities, as it provides more transparency into current business trends without regard to the timing of payments from restricted cash, which is primarily related to a dedicated account limited to the payment of certain internal royalty obligations.

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

Final Results

The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Quarterly Report on Form 10-Q for the period ended June 30, 2019.

About Take-Two Interactive Software

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

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

Cautionary Note Regarding Forward-Looking Statements

The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws and may be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects," "seeks," “should,” "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for the Company's future business and financial performance. Such forward-looking statements are based on the current beliefs of our management as well as assumptions made by and information currently available to them, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may vary materially from these forward-looking statements based on a variety of risks and uncertainties including: our dependence on key management and product development personnel, our dependence on our Grand Theft Auto products and our ability to develop other hit titles, the timely release and significant market acceptance of our games, the ability to maintain acceptable pricing levels on our games, and risks associated with international operations. Other important factors and information are contained in the Company's most recent Annual Report on Form 10-K, including the risks summarized in the section entitled "Risk Factors," the Company’s most recent Quarterly Report on Form 10-Q, and the Company's other periodic filings with the SEC, which can be accessed at www.take2games.com. All forward-looking statements are qualified by these cautionary statements and apply only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

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

2019

 

2018

 

 
 
Net revenue

$

540,459

$

387,982

 

 
Cost of goods sold:
Software development costs and royalties

 

108,441

 

29,788

 

Internal royalties

 

62,889

 

53,167

 

Product costs

 

47,635

 

38,141

 

Licenses

 

22,504

 

10,269

 

Total cost of goods sold

 

241,469

 

131,365

 

 
Gross profit

 

298,990

 

256,617

 

 
Selling and marketing

 

91,821

 

58,306

 

General and administrative

 

74,833

 

67,735

 

Research and development

 

68,963

 

50,712

 

Depreciation and amortization

 

11,257

 

9,260

 

Business reorganization

 

386

 

(242

)

Total operating expenses

 

247,260

 

185,771

 

Income from operations

 

51,730

 

70,846

 

Interest and other, net

 

10,425

 

6,601

 

Income before income taxes

 

62,155

 

77,447

 

Provision for income taxes

 

15,875

 

5,754

 

Net income

$

46,280

$

71,693

 

 
Earnings per share:
Basic earnings per share

$

0.41

$

0.63

 

Diluted earnings per share

$

0.41

$

0.62

 

 
Weighted average shares outstanding:
Basic

 

112,621

 

112,941

 

Diluted

 

113,728

 

115,985

 

 
Computation of Basic EPS:
Net income

$

46,280

$

71,693

 

 
Weighted average shares outstanding - basic

 

112,621

 

112,941

 

 
Basic earnings per share

$

0.41

$

0.63

 

 
Computation of Diluted EPS:
Net income

$

46,280

$

71,693

 

Add: interest expense, net of tax, on Convertible Notes

 

-

 

95

 

Net income for diluted EPS calculation

$

46,280

$

71,788

 

 
Weighted average shares outstanding - basic

 

112,621

 

112,941

 

Add: dilutive effect of common stock equivalents

 

1,107

 

3,044

 

Weighted average common shares outstanding - diluted

 

113,728

 

115,985

 

 
Diluted earnings per share

$

0.41

$

0.62

 

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
 
June 30, March 31,

 

2019

 

 

2019

 

 
ASSETS
Current assets:
Cash and cash equivalents

$

984,625

 

$

826,525

 

Short-term investments

 

557,653

 

 

744,485

 

Restricted cash

 

627,370

 

 

565,461

 

Accounts receivable, net of allowances of $445 and $995 at June 30, 2019 and March 31, 2019,
respectively

 

352,625

 

 

395,729

 

Inventory

 

23,847

 

 

28,200

 

Software development costs and licenses

 

18,070

 

 

28,880

 

Deferred cost of goods sold

 

36,565

 

 

51,867

 

Prepaid expenses and other

 

220,324

 

 

186,688

 

Total current assets

 

2,821,079

 

 

2,827,835

 

 
Fixed assets, net

 

126,393

 

 

127,882

 

Right-of-use assets

 

124,859

 

 

-

 

Software development costs and licenses, net of current portion

 

633,597

 

 

603,436

 

Deferred cost of goods sold, net of current portion

 

525

 

 

1,028

 

Goodwill

 

391,404

 

 

381,717

 

Other intangibles, net

 

68,008

 

 

73,115

 

Deferred tax assets

 

108,979

 

 

134,732

 

Other assets

 

91,378

 

 

93,320

 

Total assets

$

4,366,222

 

$

4,243,065

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

55,379

 

$

72,797

 

Accrued expenses and other current liabilities

 

1,038,748

 

 

1,035,695

 

Deferred revenue

 

826,085

 

 

843,302

 

Lease liabilities

 

21,794

 

Total current liabilities

 

1,942,006

 

 

1,951,794

 

 
Non-current deferred revenue

 

22,097

 

 

21,058

 

Non-current lease liabilities

 

125,128

 

 

-

 

Other long-term liabilities

 

190,664

 

 

229,633

 

Total liabilities

 

2,279,895

 

 

2,202,485

 

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

 

-

 

 

-

 

Common stock, $.01 par value, 200,000 shares authorized; 135,527 and 134,602 shares
issued and 113,106 and 112,181 outstanding at June 30, 2019 and, March 31, 2019, respectively

 

1,355

 

 

1,346

 

Additional paid-in capital

 

2,025,626

 

 

2,019,369

 

Treasury stock, at cost; 22,421 common shares at June 30, 2019 and, March 31, 2019, respectively

 

(820,572

)

 

(820,572

)

Retained earnings

 

923,906

 

 

877,626

 

Accumulated other comprehensive loss

 

(43,988

)

 

(37,189

)

Total stockholders' equity

 

2,086,327

 

 

2,040,580

 

Total liabilities and stockholders' equity

$

4,366,222

 

$

4,243,065

 

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

 

2019

 

 

2018

 

 
Operating activities:
Net income

$

46,280

 

$

71,693

 

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

 

30,498

 

 

6,858

 

Depreciation

 

11,134

 

 

9,130

 

Amortization of intellectual property

 

5,560

 

 

6,861

 

Stock-based compensation

 

57,432

 

 

24,598

 

Other, net

 

1,321

 

 

(2,980

)

Changes in assets and liabilities:
Accounts receivable

 

44,041

 

 

61,355

 

Inventory

 

4,029

 

 

3,692

 

Software development costs and licenses

 

(56,968

)

 

(54,663

)

Prepaid expenses and other current and other non-current assets

 

(131,121

)

 

(21,464

)

Deferred revenue

 

(15,871

)

 

(95,075

)

Deferred cost of goods sold

 

15,619

 

 

8,409

 

Accounts payable, accrued expenses and other liabilities

 

96,581

 

 

(29,597

)

Net cash provided by (used in) operating activities

 

108,535

 

 

(11,183

)

 
Investing activities:
Change in bank time deposits

 

133,303

 

 

(29,840

)

Proceeds from available-for-sale securities

 

82,424

 

 

51,388

 

Purchases of available-for-sale securities

 

(28,248

)

 

(44,108

)

Purchases of fixed assets

 

(9,971

)

 

(14,289

)

Purchase of long-term investment

 

(2,000

)

 

-

 

Business acquisitions

 

(8,715

)

 

(3,149

)

Net cash provided by (used in) investing activities

 

166,793

 

 

(39,998

)

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

 

(52,118

)

 

(58,403

)

Repurchase of common stock

 

-

 

 

(153,500

)

Net cash used in financing activities

 

(52,118

)

 

(211,903

)

 
Effects of foreign currency exchange rates on cash and cash equivalents

 

(3,201

)

 

(9,103

)

 
Net change in cash and cash equivalents and restricted cash

 

220,009

 

 

(272,187

)

Cash and cash equivalents and restricted cash, beginning of year

 

1,391,986

 

 

1,246,371

 

Cash and cash equivalents and restricted cash, end of period

$

1,611,995

 

$

974,184

 

 
 
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
June 30, 2019
Three Months Ended
June 30, 2018
Amount % of Total Amount % of Total
 
Net revenue by geographic region
United States

$

330,479

61

%

$

221,411

57

%

International

 

209,980

39

%

 

166,571

43

%

Total net revenue

$

540,459

100

%

$

387,982

100

%

 
Net bookings by geographic region
United States

$

259,235

61

%

$

156,648

54

%

International

 

163,005

39

%

 

131,677

46

%

Total net bookings

$

422,240

100

%

$

288,325

100

%

 
 
Three Months Ended
June 30, 2019
Three Months Ended
June 30, 2018
Amount % of Total Amount % of Total
 
Net revenue by distribution channel
Digital online

$

427,781

79

%

$

315,047

81

%

Physical retail and other

 

112,678

21

%

 

72,935

19

%

Total net revenue

$

540,459

100

%

$

387,982

100

%

 
Net bookings by distribution channel
Digital online

$

382,478

91

%

$

252,761

88

%

Physical retail and other

 

39,762

9

%

 

35,564

12

%

Total net bookings

$

422,240

100

%

$

288,325

100

%

 
 
Three Months Ended
June 30, 2019
Three Months Ended
June 30, 2018
Amount % of Total Amount % of Total
Net revenue by platform mix
Console

$

434,814

80

%

$

294,730

76

%

PC and other

 

105,645

20

%

 

93,252

24

%

Total net revenue

$

540,459

100

%

$

387,982

100

%

 
Net bookings by platform mix
Console

$

312,631

74

%

$

199,921

69

%

PC and other

 

109,609

26

%

 

88,404

31

%

Total net bookings

$

422,240

100

%

$

288,325

100

%

 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Three Months Ended June 30, 2019 Net revenue Cost of goods sold-
Software development
costs and royalties
Cost of goods sold-
Internal royalties
Cost of goods sold-
Product costs
Cost of goods sold-
Licenses
Selling and
marketing
 
As reported

$

540,459

 

$

108,441

 

$

62,889

 

$

47,635

 

$

22,504

 

$

91,821

 

Net effect from deferral and related cost of goods sold

 

(118,220

)

 

(13,159

)

 

(15,649

)

 

(789

)

Stock-based compensation

 

(30,798

)

 

(6,476

)

Amortization and impairment of acquired intangibles

 

(3,705

)

 
Three Months Ended June 30, 2019 General and
administrative
Research and
development
Depreciation and
amortization
Business reorganization Interest and other,
net
 
As reported

$

74,833

 

$

68,963

 

$

11,257

 

$

386

 

$

10,425

 

Net effect from deferral and related cost of goods sold

 

(494

)

Stock-based compensation

 

(13,567

)

 

(6,591

)

Amortization and impairment of acquired intangibles

 

(1,560

)

 

(123

)

Impact of business reorganization

 

(386

)

Acquisition related expenses

 

(326

)

 
Three Months Ended June 30, 2018 Net revenue Cost of goods sold-
Software development
costs and royalties
Cost of goods sold-
Internal royalties
Cost of goods sold-
Product costs
Cost of goods sold-
Licenses
Selling and
marketing
 
As reported

$

387,982

 

$

29,788

 

$

53,167

 

$

38,141

 

$

10,269

 

$

58,306

 

Net effect from deferral and related cost of goods sold

 

(99,657

)

 

(9

)

 

(8,405

)

Stock-based compensation

 

(3,969

)

 

(4,774

)

Amortization and impairment of acquired intangibles

 

(5,072

)

Acquisition related expenses
 
Three Months Ended June 30, 2018 General and
administrative
Research and
development
Depreciation and
amortization
Business reorganization Interest and other,
net
 
As reported

$

67,735

 

$

50,712

 

$

9,260

 

$

(242

)

$

6,601

 

Net effect from deferral and related cost of goods sold

 

(595

)

Stock-based compensation

 

(11,518

)

 

(4,337

)

Amortization and impairment of acquired intangibles

 

(1,659

)

 

(130

)

Non-cash amounts related to convertible notes

 

91

 

Impact of business reorganization

 

242

 

Acquisition related expenses

 

(194

)

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

 

2019

 

 

2018

 

Net cash from operating activities

$

108,535

 

$

(11,183

)

 
Net change in Restricted cash (1)

 

(61,909

)

 

(71,982

)

Adjusted Operating Cash Flow

$

46,626

 

$

(83,165

)

 
 
FY 2020 FY 2019
Restricted cash beginning of period (4/1)

$

565,461

 

$

437,398

 

Restricted cash end of period (6/30)

 

627,370

 

 

509,380

 

(1) Net change in Restricted cash

$

(61,909

)

($

71,982

)

 

 

Source: Take-Two Interactive

(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