Take-Two News Release

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

GAAP Net revenue grew 9% to $3.373 billion

GAAP Net income increased 46% to $588.9 million or $5.09 per diluted share

GAAP Net cash provided by operating activities was $912.3 million

Adjusted Unrestricted Operating Cash Flow (Non-GAAP) was $920.3 million

Net Bookings grew 19% to $3.553 billion

NEW YORK--(BUSINESS WIRE)--May 18, 2021-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong results for its fourth quarter and fiscal year 2021, ended March 31, 2021, and provided its initial outlook for its fiscal year 2022, ending March 31, 2022 and fiscal first quarter 2022, ending June 30, 2021.

Fiscal Fourth Quarter 2021 Financial Highlights

GAAP net revenue grew 10% to $839.4 million, as compared to $760.5 million in last year’s fiscal fourth quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 38% and accounted for 67% of total GAAP net revenue. The largest contributors to GAAP net revenue in fiscal fourth 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, Social Point’s mobile games, Sid Meier’s Civilization® VI, Borderlands 3, and NBA Online.

Digitally-delivered GAAP net revenue grew 19% to $753.3 million, as compared to $634.7 million in last year’s fiscal fourth quarter, and accounted for 90% of total GAAP net revenue. The largest contributors to digitally-delivered GAAP net revenue in fiscal fourth 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, Social Point’s mobile games, Sid Meier’s Civilization VI, Borderlands 3, and NBA Online.

GAAP net income grew 78% to $218.8 million, or $1.88 per diluted share, as compared to $122.7 million, or $1.07 per diluted share, for the year-ago period. GAAP net income included the reversal of expense of approximately $69.5 million related to forfeitures of previously granted stock awards.

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 March 31, 2021

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

Gain on

long-term

investments,

net

 

 

 

 

 

 

 

Net revenue

$839,431

(54,899)

 

 

 

 

 

 

Cost of goods sold

279,647

(10,792)

52,821

 

 

(6,465)

 

 

Gross profit

559,784

(44,107)

(52,821)

 

 

6,465

 

 

Total operating expenses

303,967

 

(23,459)

134

(1,378)

(3,506)

 

Income from operations

255,817

(44,107)

(29,362)

(134)

1,378

9,971

 

Interest and other, net

(3,226)

2,425

 

 

499

 

 

Gain on long-term investments, net

1,000

 

 

 

 

 

 

(1,000)

 

Income before income taxes

253,591

(41,682)

(29,362)

 

(134)

 

1,877

 

9,971

 

(1,000)

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 116.3 million.

Fiscal Fourth Quarter 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.

Total Net Bookings grew 8% to $784.5 million, as compared to $729.4 million during last year’s fiscal fourth quarter. Net Bookings from recurrent consumer spending grew 17% year-over-year and accounted for 67% of total Net Bookings. The largest contributors to Net Bookings were NBA 2K21, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Social Point’s mobile games, Sid Meier’s Civilization VI, Borderlands 3, Two Dots, NBA Online, and WWE SuperCard.

Catalog accounted for $514.7 million of Net Bookings led by Grand Theft Auto, Red Dead Redemption, and Sid Meier’s Civilization.

Digitally-delivered Net Bookings grew 8% to $723.7 million, as compared to $672.1 million in last year’s fiscal fourth quarter, and accounted for 92% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal fourth quarter 2021 were NBA 2K21, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Sid Meier’s Civilization VI, Social Point’s mobile games, Borderlands 3, and NBA Online.

Fiscal Year 2021 Financial Highlights

GAAP net revenue grew 9% to $3.373 billion, as compared to $3.089 billion in fiscal year 2020. Recurrent consumer spending increased 50% and accounted for 62% of total GAAP net revenue. The largest contributors to GAAP net revenue in fiscal year 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, Social Point’s mobile games, Sid Meier’s Civilization VI, and PGA TOUR 2K21.

Digitally-delivered GAAP net revenue grew 23% to $2.919 billion, as compared to $2.379 billion in fiscal year 2020, and accounted for 87% of total GAAP net revenue. The largest contributors to digitally-delivered GAAP net revenue in fiscal year 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, Social Point’s mobile games, and Sid Meier’s Civilization VI.

GAAP net income increased 46% to $588.9 million, or $5.09 per diluted share, as compared to $404.5 million, or $3.54 per diluted share, in fiscal year 2020. GAAP net income included the reversal of expense of approximately $69.8 million related to forfeitures of previously granted stock awards and a gain of approximately $40.6 million due to the sale of one of our long-term investments.

GAAP net cash provided by operating activities was $912.3 million, as compared to $685.7 million in fiscal year 2020. Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, was $920.3 million, as compared to $615.4 million last year (please see the section below titled “Non-GAAP Financial Measure” for additional information). As of March 31, 2021, the Company had cash and short-term investments of $2.732 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:

 

 

Twelve Months Ended March 31, 2021

Financial Data

 

$ in thousands

Statement

of

operations

Change in

deferred net

revenue

and related

cost of

goods sold

Stock-based

compensation

Business

acquisition

Impact of

business

reorganization

Amortization

& impairment

of acquired

intangible

assets

Gain on

long-term

investments,

net

 

 

 

 

 

 

 

Net revenue

$3,372,772

179,825

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

1,535,085

11,283

(8,707)

 

 

(20,587)

 

 

 

 

 

 

 

 

Gross profit

1,837,687

168,542

8,707

 

 

20,587

 

 

 

 

 

 

 

 

Total operating expenses

1,208,303

 

(101,765)

(7,317)

272

(11,037)

 

Income from operations

629,384

168,542

110,472

7,317

(272)

31,624

 

Interest and other, net

8,796

(2,874)

 

 

499

 

 

 

 

 

Gain on long-term investments, net

39,636

 

 

 

 

 

 

(39,636)

Income before income taxes

677,816

165,668

110,472

 

7,816

 

(272)

 

31,624

 

(39,636)

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 115.7 million.

Fiscal Year 2021 Operational Metric – Net Bookings

Total Net Bookings grew 19% to $3.553 billion, as compared to $2.990 billion in fiscal year 2020. Net Bookings from recurrent consumer spending grew 48% and accounted for 63% of total Net Bookings. The largest contributors to Net Bookings 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, Social Point’s mobile games, Sid Meier’s Civilization VI, PGA TOUR 2K21, and The Outer Worlds.

Digitally-delivered Net Bookings grew 27% to $3.095 billion, as compared to $2.440 billion in fiscal year 2020, and accounted for 87% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal year 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, Social Point’s mobile games, Sid Meier’s Civilization VI, and WWE SuperCard.

Management Comments

“Our strong fourth quarter results concluded an exceptional year for our organization,” said Strauss Zelnick, Chairman and CEO of Take-Two. “We delivered record operating results, including Net Bookings of approximately $3.6 billion and Adjusted Unrestricted Operating Cash Flow of $920 million. Throughout the year, we enhanced our organization for the long term by broadening our portfolio of offerings, capitalizing on diverse business models, enhancing our infrastructure, and most importantly, investing in our creative talent.”

“In Fiscal 2022, we plan to deliver an exciting array of offerings, including four immersive core releases, of which two will be from new franchises. In addition, we expect Fiscal 2022 to be our second consecutive year of Net Bookings in excess of $3 billion. With the strongest pipeline in our Company’s history, including many new releases planned for Fiscal 2023 and Fiscal 2024, we will be making significant investments this year to enhance our enterprise in key areas such as creative talent, IT, and other infrastructure. As we continue to grow our business, we believe that we will achieve sequential growth in Fiscal 2023 and establish new record levels of operating results over the next few years.”

Business and Product Highlights

Since January 1, 2021:

Take-Two:

  • Take-Two maintained its commitment to giving back to its communities. During fiscal year 2021, across our Company and labels, we donated nearly $20 million to provide support to approximately 200 organizations throughout the world, and we will continue these efforts. Our donations have supported charities dedicated to COVID-19 relief efforts, as well as initiatives to enhance diversity and inclusion within our industry and to help eradicate racial injustice within our communities.

Rockstar Games:

  • Released new free content updates for Grand Theft Auto Online, including casino story missions, new stunt races, and more. Additionally, many new exotic vehicles were introduced, including the BF Weevil car, the Maibatsu Manchez Scout motorcycle, the Vapid Slamtruck, the Vetir military truck, the Mammoth Squaddie truck, the Dinka Verus Off-Road vehicle, and the Nagasaki Weaponized Dinghy.
  • Released new free content updates for Red Dead Online including:
  • Debuted the first “A New Source of Employment” missions, available for solo players and delivered via telegram.
    • Introduced the Outlaw Pass No. 5 and its new rewards, which include clothing, emotes, camp items such as flags and a canine companion, Moonshine Shack décor, horse manes and mustaches, and photo studio backdrops. Additionally, new Wheeler, Rawson & Co. Club Rank Rewards were introduced for all players to unlock, including clothing, weapon modifications, filters for the advanced camera, and a new emote.
  • Throughout the fiscal year, Rockstar Games will continue to support both Grand Theft Auto Online and Red Dead Online with more content updates to keep new and returning players excited and engaged.

2K:

  • Continued to expand the breadth of NBA 2K offerings with the launch of the NBA 2K21 Arcade Edition on Apple Arcade, delivering an all-new basketball simulation game experience to Apple’s video game subscription service, available on iPhone, iPad, Apple TV, and Mac devices.
  • Acquired HookBang, LLC’s Austin-based video game division, which will become part of Visual Concepts, the distinguished, wholly-owned studio and developer of the iconic NBA 2K video game franchise. The acquired team, under the new name of Visual Concepts Austin, will expand its efforts on the NBA 2K franchise, including platform development and live services support.
  • PGA TOUR 2K21 released the Clubhouse Pass Season 2 and launched its newest game mode, Divot Derby, which features a “battle golf” style competition where players can compete with up to 20 other players.
  • To drive continued momentum in golf, 2K entered into an exclusive, long term partnership with Tiger Woods, one of the most iconic and celebrated figures in golf history. Woods’ partnership with 2K includes rights for his name and likeness to appear exclusively in the PGA TOUR 2K franchise, as well as any other golf games published by 2K during the partnership term. Woods will play an active role in the video game landscape as an Executive Director and consultant with PGA TOUR 2K, while 2K will also partner with Woods’ TGR Foundation, which provides award-winning STEM curricula and college-access programs to offer underserved students the tools needed to thrive in school and beyond.
  • Acquired privately-held HB Studios Multimedia Ltd., developers of the critically acclaimed and commercially successful PGA TOUR 2K21, as well as The Golf Club franchise.
  • During the WrestleMania 37 broadcast on April 10, 2021, 2K and Visual Concepts revealed the first teaser video for WWE 2K22, which will launch later this calendar year. The teaser video stars Rey Mysterio, a high-flying lucha libre legend and one of the most exciting and decorated Superstars in WWE history.
  • WWE 2K Battlegrounds released its fifth and final roster update, which added legendary WWE names including Mr. McMahon, Paige, Ricky Steamboat, British Bulldog, Mr. Perfect, Doink the Clown, Jim “The Anvil” Neidhart and Vader.
  • Introduced exciting new content for Season 7 of WWE SuperCard, including the debut of the WrestleMania 37 card tier and new features to the game. WWE SuperCard also celebrated the 25th anniversary of “Stone Cold” Steve Austin’s WWE debut with new items and events, such as a brand- new “Stone Cold” Steve Austin cardback, Austin’s iconic jean shorts and more.
  • Released the Borderlands 3: Director’s Cut add-on, which is available for purchase separately and available to download for owners of Borderlands 3 Ultimate Edition or Season Pass 2. The Director’s Cut add-on delivered a brand-new raid boss, story-driven murder mystery missions, daily and weekly challenges with unique themed rewards, and never-before-seen behind-the-scenes content. In addition, Tales from the Borderlands – a critically acclaimed, narrative-driven adventure game set within the Borderlands universe – was officially re-released on consoles and PC, and was also released on Switch for the first time, bringing an essential chapter of the Borderlands narrative to new audiences.
  • Launched the Vietnam & Kublai Khan Pack and the Portugal Pack for Sid Meier's Civilization VI, completing the full season of content from Firaxis Games’ New Frontier Pass. The packs bring new leaders, civilizations, optional game modes and more to Civilization VI.

Private Division:

  • On February 10, 2021, Private Division and Obsidian Entertainment released The Outer Worlds: Peril on Gorgon, the first narrative-led expansion for the critically acclaimed, darkly humorous sci-fi RPG for Switch. The expansion was released previously for PlayStation4, Xbox One, and PC. The second and final expansion, The Outer Worlds: Murder on Eridanos, launched on March 17, 2021 on PlayStation 4, Xbox One, and PC, and will launch on Switch later in calendar 2021. Both expansions are available individually or at a discount as part of The Outer Worlds Expansion Pass.
  • Private Division announced that it will launch OlliOlli World this winter for Switch, Xbox Series X|S, Xbox One, PlayStation 4, PlayStation 5, and PC. Developed by Roll7, this skateboarding action-platformer marks a bold new direction for the critically acclaimed franchise. Roll7 is a BAFTA and multi-award-winning London based independent studio famous for re-defining genres and creating remarkable games including OlliOlli, OlliOlli 2: Welcome to Olliwood, Laser League, and NOT A HERO.

Social Point/Playdots:

  • Across many of their mobile games, Social Points and Playdots launched new features, scavenger hunts, and marketing activations to drive player engagement. Both studios will continue to introduce new enhancements to their games in the coming year to further optimize the player experience.

Outlook for Fiscal 2022

Take-Two is providing its initial outlook for its fiscal year ending March 31, 2022 and its fiscal first quarter ending June 30, 2021:

Fiscal Year Ending March 31, 2022

  • GAAP net revenue is expected to range from $3.14 to $3.24 billion
  • GAAP net income is expected to range from $228 to $257 million
  • GAAP diluted net income per share is expected to range from $1.95 to $2.20
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 116.8 million (1)
  • Net cash provided by operating activities is expected to be over $380 million
  • Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is expected to be over $400 million (2)
  • Capital expenditures are expected to be approximately $100 million
  • Net Bookings (operational metric) are expected to range from $3.2 to $3.3 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, 2022

Financial Data

 

$ in millions

GAAP outlook (3)

Change in deferred

net revenue and

related cost of

goods sold

Stock-based

compensation

Amortization

of Intangible

Assets

Reorganization

& Acquisition

 

Net revenue

$3,140 to $3,240

$60

 

 

 

 

 

 

 

 

Cost of goods sold

$1,411 to $1,456

$15

($43)

($22)

 

 

 

 

 

 

Operating expenses

$1,461 to $1,481

 

($129)

($9)

($3)

 

 

 

 

 

Interest and other, net

($2)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

$270 to $305

$45

$172 

$31

$3

First Quarter Ending June 30, 2021

  • GAAP net revenue is expected to range from $730 to $780 million
  • GAAP net income is expected to range from $116 to $129 million
  • GAAP diluted net income per share is expected to range from $1.00 to $1.10
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 116.5 million (4)
  • Net Bookings (operational metric) are expected to range from $625 to $675 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 June 30, 2021

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

 

Net revenue

$730 to $780

($105)

 

 

 

 

 

 

Cost of goods sold

$277 to $303

($10)

($14)

($6)

 

 

 

 

Operating Expenses

$316 to $326

 

($38)

($3)

 

 

 

 

Interest and other, net

($1)

 

 

 

 

 

 

 

Income before income taxes

$138 to $152

($95)

$52 

$9 

1)

Includes 115.9 million basic shares and 0.9 million shares representing the potential dilution from unvested employee stock grants.

2)

Includes a $20 million net decrease in restricted cash for fiscal 2022.

3)

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.

4)

Includes 115.5 million basic shares and 1 million shares representing the potential dilution from unvested employee stock grants.

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, as well as continued growth in the installed base of PlayStation 5 and Xbox Series X|S; 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 January 1, 2021:

Label

Title

Platforms

Release Date

2K

WWE 2K Battlegrounds Roster Update #4 (DLC)

PS4, Xbox One, Switch, PC, Stadia

January 27, 2021

2K

Sid Meier's Civilization VI – New Frontier Pass: Vietnam & Kublai Khan Pack (DLC)

PS4, Xbox One, Switch, PC

January 28, 2021

Private Division

Kerbal Space Program

WeGame (China)

February 2, 2021

2K

WWE 2K Battlegrounds Roster Update #5 (DLC)

PS4, Xbox One, Switch, PC, Stadia

February 10, 2021

Private Division

The Outer Worlds: Peril on Gorgon (DLC)

Switch

February 10, 2021

2K

Tales from the Borderlands

PS4, PC

February 17, 2021

Private Division

The Outer Worlds: Murder on Eridanos (DLC)

PS4, Xbox One, PC

March 17, 2021

2K

Tales from the Borderlands

Switch

March 24, 2021

2K

Sid Meier's Civilization VI - New Frontier Pass: Portugal Pack (DLC)

PS4, Xbox One, Switch, PC

March 25, 2021

2K

NBA 2K21

iOS

April 2, 2021

2K

Borderlands 3 - Director's Cut (part of Season Pass 2 DLC)

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

April 8, 2021

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

Label

Title

Platforms

Release Date

Rockstar Games

Grand Theft Auto V

PS5, Xbox Series X|S

November 11, 2021

Rockstar Games

Grand Theft Auto Online – Standalone

PS5, Xbox Series X|S

November 11, 2021

Private Division

OlliOlli World

PS4, PS5, Xbox One, Xbox Series X|S, Switch (digital only)

Winter 2021

Private Division

The Outer Worlds: Murder on Eridanos (DLC)

Switch

Calendar 2021

2K

NBA 2K22

TBA

Fiscal 2022

2K

WWE 2K22

TBA

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 Annual Report on Form 10−K for the period ended March 31, 2021.

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, Social Point, and Playdots. 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 both consumer demand and the discretionary spending patterns of our customers as the situation with the pandemic continues to evolve; 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 NBA 2K and Grand Theft Auto products and our ability to develop other hit titles; our ability to leverage opportunities on PlayStation 5 and Xbox Series X|S; 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 March 31,

Twelve months ended March 31,

 

2021

 

 

 

2020

 

 

2021

 

 

 

2020

 

 
 
Net revenue

$

839,431

 

$

760,541

 

$

3,372,772

 

$

3,088,970

 

 
Cost of goods sold:
Internal royalties

 

158,128

 

 

144,385

 

 

637,652

 

 

483,697

 

Software development costs and royalties

 

22,465

 

 

159,776

 

 

396,797

 

 

611,198

 

Licenses

 

53,841

 

 

39,494

 

 

260,721

 

 

170,408

 

Product costs

 

45,213

 

 

51,985

 

 

239,915

 

 

277,147

 

Total cost of goods sold

 

279,647

 

 

395,640

 

 

1,535,085

 

 

1,542,450

 

 
Gross profit

 

559,784

 

 

364,901

 

 

1,837,687

 

 

1,546,520

 

 
Selling and marketing

 

106,609

 

 

79,969

 

 

444,985

 

 

458,424

 

General and administrative

 

98,453

 

 

82,212

 

 

390,683

 

 

318,235

 

Research and development

 

83,559

 

 

68,718

 

 

317,311

 

 

296,398

 

Depreciation and amortization

 

15,480

 

 

12,502

 

 

55,596

 

 

48,113

 

Business reorganization

 

(134

)

 

(384

)

 

(272

)

 

83

 

Total operating expenses

 

303,967

 

 

243,017

 

 

1,208,303

 

 

1,121,253

 

Income from operations

 

255,817

 

 

121,884

 

 

629,384

 

 

425,267

 

Interest and other, net

 

(3,226

)

 

8,083

 

 

8,796

 

 

38,505

 

Gain (loss) on long-term investments, net

 

1,000

 

 

(5,333

)

 

39,636

 

 

(5,333

)

Income before income taxes

 

253,591

 

 

124,634

 

 

677,816

 

 

458,439

 

Provision for income taxes

 

34,779

 

 

1,912

 

 

88,930

 

 

53,980

 

Net income

$

218,812

 

$

122,722

 

$

588,886

 

$

404,459

 

 
Earnings per share:
Basic earnings per share

$

1.90

 

$

1.08

 

$

5.14

 

$

3.58

 

Diluted earnings per share

$

1.88

 

$

1.07

 

$

5.09

 

$

3.54

 

 
Weighted average shares outstanding: 
Basic

 

115,110

 

 

113,394

 

 

114,602

 

 

113,096

 

Diluted

 

116,300

 

 

114,400

 

 

115,744

 

 

114,136

 

 
Computation of Basic EPS:
Net income

$

218,812

 

$

122,722

 

$

588,886

 

$

404,459

 

 
Weighted average shares outstanding - basic

 

115,110

 

 

113,394

 

 

114,602

 

 

113,096

 

 
Basic earnings per share

$

1.90

 

$

1.08

 

$

5.14

 

$

3.58

 

 
Computation of Diluted EPS:
Net income for diluted EPS calculation

$

218,812

 

$

122,722

 

$

588,886

 

$

404,459

 

 
Weighted average shares outstanding - basic

 

115,110

 

 

113,394

 

 

114,602

 

 

113,096

 

Add: dilutive effect of common stock equivalents

 

1,190

 

 

1,006

 

 

1,142

 

 

1,040

 

Weighted average common shares outstanding - diluted

 

116,300

 

 

114,400

 

 

115,744

 

 

114,136

 

 
Diluted earnings per share

$

1.88

 

$

1.07

 

$

5.09

 

$

3.54

 

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

March 31,

March 31,

 

2021

 

 

2020

 

 
ASSETS
Current assets:
Cash and cash equivalents

$

1,422,884

 

$

1,357,664

 

Short-term investments

 

1,308,692

 

 

644,003

 

Restricted cash and cash equivalents

 

538,822

 

 

546,604

 

Accounts receivable, net of allowances of $350 and $443 at March 31, 2021 and 2020,
respectively

 

552,762

 

 

592,555

 

Inventory

 

17,742

 

 

19,108

 

Software development costs and licenses

 

43,443

 

 

40,316

 

Deferred cost of goods sold

 

15,524

 

 

19,598

 

Prepaid expenses and other

 

320,646

 

 

273,503

 

Total current assets

 

4,220,515

 

 

3,493,351

 

 
Fixed assets, net

 

149,364

 

 

131,888

 

Right-of-use assets

 

164,763

 

 

154,284

 

Software development costs and licenses, net of current portion

 

490,892

 

 

401,778

 

Goodwill

 

535,306

 

 

386,494

 

Other intangibles, net

 

121,591

 

 

51,260

 

Deferred tax assets

 

90,206

 

 

116,676

 

Long-term restricted cash and cash equivalents

 

98,541

 

 

89,124

 

Other assets

 

157,040

 

 

123,977

 

Total assets

$

6,028,218

 

$

4,948,832

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

71,001

 

$

65,684

 

Accrued expenses and other current liabilities

 

1,204,090

 

 

1,169,884

 

Deferred revenue

 

928,029

 

 

777,784

 

Lease liabilities

 

31,595

 

 

25,187

 

Total current liabilities

 

2,234,715

 

 

2,038,539

 

 
Non-current deferred revenue

 

37,302

 

 

28,339

 

Non-current lease liabilities

 

159,671

 

 

152,059

 

Non-current software development royalties

 

110,127

 

 

104,417

 

Other long-term liabilities

 

154,511

 

 

86,234

 

Total liabilities

 

2,696,326

 

 

2,409,588

 

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

 

-

 

 

-

 

Common stock, $.01 par value, 200,000 shares authorized; 137,584 and 135,927 shares
issued and 115,163 and 113,506 outstanding at March 31, 2021 and 2020, respectively

 

1,376

 

 

1,359

 

Additional paid-in capital

 

2,288,781

 

 

2,134,748

 

Treasury stock, at cost; 22,421 common shares at March 31, 2021 and, 2020, respectively

 

(820,572

)

 

(820,572

)

Retained earnings

 

1,870,971

 

 

1,282,085

 

Accumulated other comprehensive loss

 

(8,664

)

 

(58,376

)

Total stockholders' equity

 

3,331,892

 

 

2,539,244

 

Total liabilities and stockholders' equity

$

6,028,218

 

$

4,948,832

 

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Twelve months ended March 31,

 

2021

 

 

2020

 

 
Operating activities:
Net income

$

588,886

 

$

404,459

 

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

 

144,263

 

 

167,925

 

Depreciation

 

56,309

 

 

47,628

 

Amortization of intellectual property

 

32,241

 

 

20,990

 

Stock-based compensation

 

110,472

 

 

257,881

 

Deferred income taxes

 

10,631

 

 

(3,486

)

Gain on long-term investments

 

(41,588

)

 

-

 

Other, net

 

5,515

 

 

9,074

 

Changes in assets and liabilities:
Accounts receivable

 

47,195

 

 

(195,484

)

Inventory

 

2,503

 

 

8,489

 

Software development costs and licenses

 

(221,279

)

 

(48,434

)

Prepaid expenses and other current and other non-current assets

 

(58,737

)

 

(259,817

)

Deferred revenue

 

152,466

 

 

(55,460

)

Deferred cost of goods sold

 

4,768

 

 

32,180

 

Accounts payable, accrued expenses and other liabilities

 

78,673

 

 

299,733

 

Net cash provided by operating activities

 

912,318

 

 

685,678

 

 
Investing activities:
Change in bank time deposits

 

(387,762

)

 

196,720

 

Proceeds from available-for-sale securities

 

546,287

 

 

400,635

 

Purchases of available-for-sale securities

 

(824,477

)

 

(499,991

)

Purchases of fixed assets

 

(68,923

)

 

(53,384

)

Proceeds from sale of long-term investments

 

47,472

 

 

-

 

Purchases of long-term investments

 

(16,852

)

 

(27,891

)

Business acquisitions

 

(102,469

)

 

(12,040

)

Net cash (used in) provided by investing activities

 

(806,724

)

 

4,049

 

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

 

(71,552

)

 

(87,968

)

Issuance of common stock

 

14,214

 

 

10,515

 

Net cash used in financing activities

 

(57,338

)

 

(77,453

)

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

 

18,599

 

 

(10,868

)

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

 

66,855

 

 

601,406

 

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

$

2,060,247

 

$

1,993,392

 

 
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
March 31, 2021
Three Months Ended
March 31, 2020
Amount % of Total Amount % of Total
 
Net revenue by geographic region
United States

$

513,488

61%

$

413,701

54%

International

 

325,943

39%

 

346,840

46%

Total net revenue

$

839,431

100%

$

760,541

100%

 
Net bookings by geographic region
United States

$

479,784

61%

$

406,592

56%

International

 

304,749

39%

 

322,831

44%

Total net bookings

$

784,532

100%

$

729,423

100%

 
 
Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
Amount % of Total Amount % of Total
 
Net revenue by distribution channel
Digital online

$

753,257

90%

$

634,687

83%

Physical retail and other

 

86,174

10%

 

125,854

17%

Total net revenue

$

839,431

100%

$

760,541

100%

 
Net bookings by distribution channel
Digital online

$

723,656

92%

$

672,053

92%

Physical retail and other

 

60,876

8%

 

57,370

8%

Total net bookings

$

784,532

100%

$

729,423

100%

 
 
Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
Amount % of Total Amount % of Total
Net revenue by platform mix
Console

$

607,960

72%

$

542,171

71%

PC and other

 

231,471

28%

 

218,370

29%

Total net revenue

$

839,431

100%

$

760,541

100%

 
Net bookings by platform mix
Console

$

550,231

70%

$

507,612

70%

PC and other

 

234,301

30%

 

221,811

30%

Total net bookings

$

784,532

100%

$

729,423

100%

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
 
Twelve Months Ended
March 31, 2021
Twelve Months Ended
March 31, 2020
Amount % of Total Amount % of Total
 
Net revenue by geographic region
United States

$

2,015,885

60%

$

1,775,682

57%

International

 

1,356,887

40%

 

1,313,288

43%

Total net revenue

$

3,372,772

100%

$

3,088,970

100%

 
Net bookings by geographic region
United States

$

2,171,240

61%

$

1,733,313

58%

International

 

1,381,358

39%

 

1,257,045

42%

Total net bookings

$

3,552,598

100%

$

2,990,358

100%

 
 
Twelve Months Ended
March 31, 2021
Twelve Months Ended
March 31, 2020
Amount % of Total Amount % of Total
 
Net revenue by distribution channel
Digital online

$

2,919,292

87%

$

2,378,563

77%

Physical retail and other

 

453,480

13%

 

710,407

23%

Total net revenue

$

3,372,772

100%

$

3,088,970

100%

 
Net bookings by distribution channel
Digital online

$

3,094,962

87%

$

2,440,435

82%

Physical retail and other

 

457,636

13%

 

549,923

18%

Total net bookings

$

3,552,598

100%

$

2,990,358

100%

 
 
Twelve Months Ended
March 31, 2021
Twelve Months Ended
March 31, 2020
Amount % of Total Amount % of Total
Net revenue by Platform Mix
Console

$

2,516,993

75%

$

2,308,602

75%

PC and other

 

855,779

25%

 

780,368

25%

Total net revenue

$

3,372,772

100%

$

3,088,970

100%

 
Net bookings by platform mix
Console

$

2,637,340

74%

$

2,195,843

73%

PC and other

 

915,258

26%

 

794,515

27%

Total net bookings

$

3,552,598

100%

$

2,990,358

100%

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Three Months Ended March 31, 2021

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

$

839,431

 

$

158,128

 

$

22,465

 

$

53,841

 

$

45,213

 

$

106,609

 

Net effect from deferred net revenue and related cost of goods sold

 

(54,899

)

 

(5,836

)

 

(455

)

 

(4,501

)

Stock-based compensation

 

52,821

 

 

(5,050

)

Amortization and impairment of acquired intangibles

 

(6,465

)

 

(1,550

)

 
Three Months Ended March 31, 2021

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 

Gain (loss) on

long-term

investments, net

 
As reported

$

98,453

 

$

83,559

 

$

15,480

 

$

(134

)

$

(3,226

)

$

1,000

 

Net effect from deferred net revenue and related cost of goods sold

 

2,425

 

Stock-based compensation

 

(14,262

)

 

(4,147

)

Amortization and impairment of acquired intangibles

 

(1,718

)

 

(238

)

Impact of business reorganization

 

134

 

Gain on long-term investments, net

 

(1,000

)

Acquisition related expenses

 

(1,378

)

 

499

 

 
Three Months Ended March 31, 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

$

760,541

 

$

144,385

 

$

159,776

 

$

39,494

 

$

51,985

 

$

79,969

 

Net effect from deferred net revenue and related cost of goods sold

 

(31,119

)

 

(8,204

)

 

216

 

 

(12,755

)

Stock-based compensation

 

(62,353

)

 

(4,347

)

Amortization and impairment of acquired intangibles

 

(3,288

)

 
Three Months Ended March 31, 2020

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 

Gain (loss) on

long-term

investments, net

 
As reported

$

82,212

 

$

68,718

 

$

12,502

 

$

(384

)

$

8,083

 

 

(5,333

)

Net effect from deferred net revenue and related cost of goods sold

 

857

 

Stock-based compensation

 

(11,553

)

 

(3,030

)

Amortization and impairment of acquired intangibles

 

(1,538

)

 

(120

)

Impact of business reorganization

 

384

 

Loss on long-term investments

 

5,333

 

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
 
Twelve Months Ended March 31, 2021

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

$

3,372,772

 

$

637,652

 

$

396,797

 

$

260,721

 

$

239,915

 

$

444,985

 

Net effect from deferred net revenue and related cost of goods sold

 

179,825

 

 

15,663

 

 

(282

)

 

(4,098

)

Stock-based compensation

 

(8,707

)

 

(18,348

)

Amortization and impairment of acquired intangibles

 

(20,587

)

 

(3,617

)

 
Twelve Months Ended March 31, 2021

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 

Gain (loss) on

long-term

investments, net

 
As reported

$

390,683

 

$

317,311

 

$

55,596

 

($

272

)

$

8,796

 

$

39,636

 

Net effect from deferred net revenue and related cost of goods sold

 

(2,874

)

Stock-based compensation

 

(56,830

)

 

(26,587

)

Amortization and impairment of acquired intangibles

 

(6,663

)

 

(757

)

Impact of business reorganization

 

272

 

Gain on long-term investments, net

 

(39,636

)

Acquisition related expenses

 

(7,317

)

 

499

 

 
 
Twelve Months Ended March 31, 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

$

3,088,970

 

$

483,697

 

$

611,198

 

$

170,408

 

$

277,147

 

$

458,424

 

Net effect from deferred net revenue and related cost of goods sold

 

(98,612

)

 

(54,515

)

 

601

 

 

(33,339

)

Stock-based compensation

 

(154,031

)

 

(18,680

)

Amortization and impairment of acquired intangibles

 

(13,598

)

 
Twelve Months Ended March 31, 2020

General and

administrative

 

Research and

development

 

Depreciation and

amortization

 

Business

reorganization

 

Interest and

other, net

 

Gain (loss) on

long-term

investments, net

 
As reported

$

318,235

 

$

296,398

 

$

48,113

 

$

83

 

$

38,505

 

($

5,333

)

Net effect from deferred net revenue and related cost of goods sold

 

476

 

Stock-based compensation

 

(53,607

)

 

(31,563

)

Amortization and impairment of acquired intangibles

 

(6,180

)

 

(485

)

Impact of business reorganization

 

(83

)

Loss on long-term investments

 

5,333

 

Acquisition related expenses

 

(367

)

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURE
(in thousands)
 
Twelve months ended March 31,

2021

 

2020

 

Net cash from operating activities

$

912,318

$

685,678

 

Net change in Restricted cash related to Operations (1)

 

7,965

 

(70,267

)

Adjusted Unrestricted Operating Cash Flow

$

920,283

$

615,411

 

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

$

635,728

$

565,461

 

Less Restricted cash end of period (3/31)

 

637,363

 

635,728

 

Plus Restricted cash related to acquisitions

 

9,600

 

-

 

(1) Net change in Restricted cash related to Operations

$

7,965

($

70,267

)

 

(Investor Relations)
Nicole Shevins
Senior Vice President
Investor Relations & Corporate Communications
Take-Two Interactive Software, Inc.
(646) 536-3005
Nicole.Shevins@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