Take-Two News Release

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

GAAP net revenue was $930.1 million

GAAP net income per diluted share was $1.43

GAAP net cash provided by operating activities for the nine-months ended December 31, 2019 increased to $440.0 million

Adjusted Unrestricted Operating Cash Flow (Non-GAAP) for the nine-months ended December 31, 2019 was $547.9 million

Net Bookings were $888.2 million

NEW YORK--(BUSINESS WIRE)--Feb. 6, 2020-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported results for its fiscal third quarter 2020 ended December 31, 2019. In addition, the Company provided its initial outlook for its fiscal fourth quarter ending March 31, 2020 and adjusted its outlook for the fiscal year 2020, ending March 31, 2020. For additional information, please see the fiscal third quarter 2020 results slide deck posted to the Company’s investor relations website at http://ir.take2games.com.

Fiscal Third Quarter 2020 Financial Highlights

GAAP net revenue was $930.1 million, as compared to $1.249 billion in last year’s fiscal third quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 15% and accounted for 37% of total GAAP net revenue. The largest contributors to GAAP net revenue in fiscal third quarter 2020 were NBA® 2K20 and NBA 2K19; Grand Theft Auto® Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; The Outer Worlds; Borderlands® 3; WWE® 2K20 and WWE SuperCard; Sid Meier’s Civilization VI; and Social Point’s mobile offerings.

Digitally-delivered GAAP net revenue increased to $700.3 million, as compared to $594.7 million in last year’s fiscal third quarter, and accounted for 75% of total GAAP net revenue. The largest contributors to GAAP digitally-delivered net revenue in fiscal third quarter 2020 were NBA 2K20 and NBA 2K19; Grand Theft Auto Online and Grand Theft Auto V; The Outer Worlds; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; Sid Meier’s Civilization VI; Social Point’s mobile offerings; and WWE SuperCard and WWE 2K20.

GAAP net income was $163.6 million, or $1.43 per diluted share, as compared to $179.9 million, or $1.57 per diluted share, for the comparable period last year.

During the nine-month period ended December 31, 2019, GAAP net cash provided by operating activities increased to $440.0 million, as compared to $390.2 million in the same period last year. During the nine-month period ended December 31, 2019, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, was $547.9 million, as compared to $587.0 million in the same period last year (please see the section below titled “Non-GAAP Financial Measure” for additional information). As of December 31, 2019, the Company had cash and short-term investments of $1.984 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 December 31, 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

 

Amortization
& impairment
of acquired
intangible
assets

               

 

 

 

Net revenue

 

$930,129

 

(41,950

)

     

 

 

 

Cost of goods sold

 

437,093

 

(9,980

)

 

(33,048

)

 

 

 

 

(3,295

 

)

Gross Profit

 

493,036

 

(31,970

)

 

33,048

 

 

 

 

 

3,295

 

 

Operating expenses

 

316,203

     

(30,351

)

 

 

246

 

 

 

 

(1,657

 

)

Income from operations

 

176,833

 

(31,970

)

 

63,399

 

 

 

(246

 

)

 

 

4,952

 

 

 

Interest and other, net

 

11,943

 

(1,192

)

     

 

 

 

Income before income taxes

 

188,776

 

(33,162

)

 

63,399

 

 

 

(246

 

)

 

 

4,952

 

 

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 114.25 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 third quarter 2020, total Net Bookings were $888.2 million, as compared to $1.569 billion during last year’s fiscal third quarter, which had benefited from the launch of Red Dead Redemption 2. Net Bookings from recurrent consumer spending grew 6% and accounted for 41% of total Net Bookings. The largest contributors to Net Bookings in fiscal third quarter 2020 were Grand Theft Auto Online and Grand Theft Auto V; NBA 2K20; Red Dead Redemption 2 and Red Dead Online; The Outer Worlds; Borderlands 3; WWE 2K20 and WWE SuperCard; Sid Meier’s Civilization VI; and Social Point’s mobile offerings.

Catalog accounted for $359.7 million of Net Bookings led by Grand Theft Auto, Red Dead Redemption, and Social Point’s mobile offerings.

Digitally-delivered Net Bookings were $690.6 million, as compared to $703.8 million in last year’s fiscal third quarter, and accounted for 78% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal third quarter 2020 were Grand Theft Auto Online and Grand Theft Auto V; NBA 2K20; Red Dead Redemption 2 and Red Dead Online; The Outer Worlds; Borderlands 3; Sid Meier’s Civilization VI; WWE 2K20 and WWE SuperCard; and Social Point’s mobile offerings.

Management Comments

“Throughout the 2019 holiday season, we experienced robust demand for our offerings that drove third quarter operating results solidly within our increased outlook,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Highlights included the performance of Grand Theft Auto Online and Grand Theft Auto V, NBA 2K20, Red Dead Redemption 2 and Red Dead Online, The Outer Worlds and Borderlands 3, reflecting our ability to deliver some of the most captivating experiences in the entertainment industry. Fiscal 2020 is shaping up to be another terrific year for Take-Two.

“Take-Two’s development pipeline over the coming years is the largest and most diverse in our history, including releases from our largest franchises, new IP and a broad mix of gameplay experiences, all designed to captivate and engage audiences well beyond initial release. In addition, we are actively investing in emerging markets, platforms and business models that have the potential to enhance growth. Take-Two is exceedingly well positioned to capitalize on the many positive trends in our industry and to generate growth and margin expansion over the long-term.”

Business and Product Highlights

Since October 1, 2019:

Rockstar Games:

  • Launched Red Dead Redemption 2 for PC. The first game in the Red Dead Redemption series to be offered on PC, the title features a range of graphical and technical enhancements for increased immersion along with new Bounty Hunting Missions, Gang Hideouts, Weapons, a fully featured Photo Mode and more. Red Dead Redemption 2 for PC also includes free access to the shared living world of Red Dead Online, featuring all previously released improvements and the latest content updates for the complete online experience. In addition, Red Dead Redemption 2 was released as a launch title for Google Stadia™.
  • Released new free content updates for Grand Theft Auto Online, including:
    • The Diamond Casino Heist – an all-new approach to Heist architecture and execution with different scenarios unfolding in response to player’s choices as they prepare to execute a takedown of the most secure building in all of Los Santos – featuring new weapons and vehicles, plus an Arcade property featuring playable retro arcade games and more.
    • Numerous new missions, vehicles, weapons and other content.
  • Released new free content updates for Red Dead Online, including:
    • Moonshiners – the latest Frontier Pursuit that enables players to team up with an infamous distiller to start their own Moonshining business and run it out of the new Shack property –featuring new story missions; role-specific weapons, clothing and other items; the ability to run an underground bar; and more.

2K:

  • Announced the founding of Cloud Chamber™, the newest wholly-owned game development studio under the Company’s publishing label. A collective of storytellers eager to push the frontlines of interactive entertainment by making unique, entertaining and thoughtful experiences that engage the world, Cloud Chamber will build its team at two locations: 2K’s San Francisco Bay Area headquarters in Novato, California, as well as in Montréal, Québec, which marks the first-ever Canadian office for a 2K studio. In addition, 2K announced that Cloud Chamber has started to work on the next iteration of the globally acclaimed BioShock® franchise, which will be in development for the next several years.
  • Launched Sid Meier’s Civilization VI for Xbox One and PlayStation 4. Developed by Firaxis Games, and winner of The Game Awards’ Best Strategy Game and DICE Awards’ Best Strategy Game in 2016, Civilization VI is the first Civilization game since 2008 that has been available on Xbox or PlayStation consoles.
  • Launched WWE 2K20, the newest release in our WWE video game franchise that is now developed exclusively by Visual Concepts, for PlayStation 4, Xbox One and PC.
  • Released Borderlands 3 and NBA 2K20 for Google Stadia.
  • Launched Moxxi's Heist of The Handsome Jackpot, the first campaign add-on for Borderlands 3, for PC, PlayStation 4 and Xbox One. Moxxi's Heist of The Handsome Jackpot is one of four paid campaign add-ons that are included with the Borderlands 3 Super Deluxe Edition and Season Pass, or for purchase separately. Moxxi's Heist of the Handsome Jackpot will be coming to Google Stadia early in 2020.

Private Division:

  • Launched The Outer Worlds for Xbox One, PlayStation 4 and PC. 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 title will also be available for Nintendo Switch, which is now planned for fiscal year 2021.
  • Launched Ancestors: The Humankind Odyssey for digital download on PlayStation 4 and Xbox One. Ancestors: The Humankind Odyssey is the debut title from Panache Digital Games, the studio co-founded by Patrice Désilets, the original creative director of the Assassin’s Creed franchise. The title was previously released in August 2019 for digital download on PC.
  • Released the Kerbal Space Program Enhanced Edition: Breaking Ground Expansion for PlayStation 4 and Xbox One. The fan-favorite expansion Kerbal Space Program: Breaking Ground previously launched on PC in May 2019.
  • Announced that Disintegration, an upcoming sci-fi, first-person shooter, will launch digitally for PlayStation4, Xbox One and PC in calendar 2020, during our fiscal year 2021. Disintegration is the debut title from V1 Interactive, the independent development studio co-founded by Marcus Lehto, former creative director at Bungie and co-creator of Halo.
  • Announced that Kerbal Space Program 2, the sequel to the beloved original space sim, is in development and is now planned for launch during our fiscal year 2021. The original Kerbal Space Program has sold-in nearly 4 million units worldwide, and earned a Metacritic rating of 88 and a Steam user score of 91%.

Outlook for Fiscal 2020

Take-Two is providing its initial outlook for its fiscal fourth quarter ending March 31, 2020 and is adjusting its outlook for the fiscal year ending March 31, 2020:

Fourth Quarter Ending March 31, 2020

  • GAAP net revenue is expected to range from $635 to $685 million
  • GAAP net income is expected to range from $105 to $128 million
  • GAAP diluted net income per share is expected to range from $0.92 to $1.12
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 114.6 million (1)
  • Net Bookings (operational metric) are expected to range from $540 to $590 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 March 31, 2020

       

Financial Data

$ in millions

 

GAAP outlook (2)

 

Change in
deferred net
revenue and
related cost of
goods sold

 

Stock-based
compensation

 

Amortization of
acquired
intangible
assets

                 

Net revenue

 

$635 to $685

 

($95)

 

 

 

 

   

 

 

 

 

 

 

 

Cost of goods sold

 

$274 to $286

 

($24)

 

($18)

 

($2)

   

 

 

 

 

 

 

 

Operating Expenses

 

$247 to $257

 

 

 

($22)

 

($2)

                 

Interest and other, net

 

($9)

 

 

 

 

 

 

                 

Income before income taxes

 

$123 to $151

 

($71)

 

$40

 

$4

Fiscal Year Ending March 31, 2020

  • GAAP net revenue is expected to range from $2.96 to $3.01 billion
  • GAAP net income is expected to range from $387 to $409 million
  • GAAP diluted net income per share is expected to range from $3.38 to $3.58
  • 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 $575 million
  • Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is expected to be over $500 million (4)
  • Capital expenditures are expected to be approximately $60 million
  • Net Bookings (operational metric) are expected to range from $2.80 to $2.85 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

 

$2,963 to $3,013

 

($162)

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$1,420 to $1,433

 

($112)

 

($91)

 

($10)

 

 

   

 

 

 

 

 

 

 

 

 

Operating Expenses

 

$1,125 to $1,135

 

 

 

($106)

 

($7)

 

($1)

                     

Interest and other, net

 

($39)

 

 

 

 

 

 

 

 

Income before income taxes

 

$457 to $484

 

($50)

 

$197

 

$17

 

 

$1

1)

Includes 113.4 million basic shares and 1.2 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 $75.0 million net increase 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 October 1, 2019:

Label

 

Title

 

Platforms

 

Release Date

2K

 

WWE 2K20

 

PS4, Xbox One, PC

 

October 22, 2019

Private Division

 

The Outer Worlds

 

PS4, Xbox One, PC

 

October 25, 2019

2K

 

WWE 2K20 Originals: Bump in the Night (DLC)

 

PS4, Xbox One, PC

 

October 28, 2019

Rockstar Games

 

Red Dead Redemption 2

 

PC

 

November 5, 2019

2K

 

WWE SuperCard Season 6

 

iOS, Android

 

November 13,2019

Rockstar Games

 

Red Dead Redemption 2

 

Stadia

 

November 19, 2019

2K

 

NBA 2K20

 

Stadia

 

November 19, 2019

2K

 

Sid Meier’s Civilization VI

 

Xbox One, PS4

 

November 22, 2019

2K

 

Sid Meier’s Civilization VI Expansion Pack Bundle

 

Xbox One, PS4

 

November 22, 2019

Private Division

 

Kerbal Space Program Enhanced Edition: Breaking Ground Expansion

 

PS4, Xbox One

 

December 5, 2019

Private Division

 

Ancestors: The Humankind Odyssey

 

PS4, Xbox One (digital only)

 

December 6, 2019

2K

 

WWE 2K20 SmackDown 20th Anniversary Pack (DLC)

 

PS4, Xbox One, PC

 

December 6, 2019

Rockstar Games

 

Grand Theft Auto Online: The Diamond Casino Heist

 

PS4, Xbox One, PC

 

December 12, 2019

Rockstar Games

 

Red Dead Online: Moonshiners

 

PS4, Xbox One, PC. Stadia

 

December 13, 2019

2K

 

Borderlands 3

 

Stadia

 

December 17, 2019

2K

 

Borderlands 3: Moxxi's Heist of The Handsome Jackpot (DLC)

 

PS4, Xbox One, PC

 

December 19, 2019

2K

 

WWE 2K20 Originals: Wasteland Wanderers (DLC)

 

PS4, Xbox One, PC

 

December 20, 2019

 

 

 

 

 

 

 

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

             

Label

 

Title

 

Platforms

 

Release Date

2K

 

WWE 2K20 Originals: Southpaw Regional Wrestling (DLC)

 

PS4, Xbox One, PC

 

February 7, 2020

2K

 

WWE 2K20 Originals: Empire of Tomorrow (DLC)

 

PS4, Xbox One, PC

 

Fiscal 2020

Private Division

 

The Outer Worlds

 

Switch

 

Fiscal 2021

Private Division

 

Kerbal Space Program 2

 

PC

 

Fiscal 2021

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 Unrestricted Operating Cash Flow, which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash. The Company’s management believes it is important to consider Adjusted Unrestricted Operating Cash Flow, in addition to net cash from operating activities, as it provides more transparency into current business trends without regard to the timing of payments from restricted cash, which is primarily related to a dedicated account limited to the payment of certain internal royalty obligations.

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

Final Results

The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Quarterly Report on Form 10-Q for the period ended December 31, 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. We develop and publish products through our labels Rockstar Games, 2K, and Private Division, as well as 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 December 31, Nine months ended December 31,
   

 

2019

 

 

 

2018

 

 

 

2019

 

 

2018

 

                 
Net revenue  

$

930,129

 

 

$

1,248,738

 

 

$

2,328,429

 

$

2,129,387

 

                 
Cost of goods sold:                
Software development costs and royalties  

 

130,985

 

 

 

265,166

 

 

 

451,422

 

 

337,603

 

Internal royalties  

 

166,432

 

 

 

401,382

 

 

 

339,312

 

 

536,662

 

Product costs  

 

90,959

 

 

 

183,208

 

 

 

225,162

 

 

277,234

 

Licenses  

 

48,717

 

 

 

48,728

 

 

 

130,914

 

 

113,231

 

Total cost of goods sold  

 

437,093

 

 

 

898,484

 

 

 

1,146,810

 

 

1,264,730

 

                 
Gross profit  

 

493,036

 

 

 

350,254

 

 

 

1,181,619

 

 

864,657

 

                 
Selling and marketing  

 

137,068

 

 

 

161,322

 

 

 

378,455

 

 

313,793

 

General and administrative  

 

84,531

 

 

 

70,638

 

 

 

236,023

 

 

205,693

 

Research and development  

 

82,520

 

 

 

62,305

 

 

 

227,680

 

 

173,582

 

Depreciation and amortization  

 

12,330

 

 

 

10,140

 

 

 

35,611

 

 

29,151

 

Business reorganization  

 

(246

)

 

 

(5,930

)

 

 

467

 

 

(6,172

)

Total operating expenses  

 

316,203

 

 

 

298,475

 

 

 

878,236

 

 

716,047

 

Income from operations  

 

176,833

 

 

 

51,779

 

 

 

303,383

 

 

148,610

 

Interest and other, net  

 

11,943

 

 

 

8,071

 

 

 

30,422

 

 

19,647

 

Income before income taxes  

 

188,776

 

 

 

59,850

 

 

 

333,805

 

 

168,257

 

Provision for (benefit from) income taxes  

 

25,134

 

 

 

(120,098

)

 

 

52,068

 

 

(108,750

)

Net income  

$

163,642

 

 

$

179,948

 

 

$

281,737

 

$

277,007

 

                 
Earnings per share:                
Basic earnings per share  

$

1.44

 

 

$

1.59

 

 

$

2.49

 

$

2.44

 

Diluted earnings per share  

$

1.43

 

 

$

1.57

 

 

$

2.47

 

$

2.41

 

                 
Weighted average shares outstanding:                
Basic  

 

113,251

 

 

 

113,433

 

 

 

112,996

 

 

113,390

 

Diluted  

 

114,254

 

 

 

114,737

 

 

 

114,009

 

 

114,918

 

                 
Computation of Basic EPS:                
Net income  

$

163,642

 

 

$

179,948

 

 

$

281,737

 

$

277,007

 

                 
Weighted average shares outstanding - basic  

 

113,251

 

 

 

113,433

 

 

 

112,996

 

 

113,390

 

                 
Basic earnings per share  

$

1.44

 

 

$

1.59

 

 

$

2.49

 

$

2.44

 

                 
Computation of Diluted EPS:                
Net income  

$

163,642

 

 

$

179,948

 

 

$

281,737

 

$

277,007

 

                 
Weighted average shares outstanding - basic  

 

113,251

 

 

 

113,433

 

 

 

112,996

 

 

113,390

 

Add: dilutive effect of common stock equivalents  

 

1,003

 

 

 

1,304

 

 

 

1,013

 

 

1,528

 

Weighted average common shares outstanding - diluted  

 

114,254

 

 

 

114,737

 

 

 

114,009

 

 

114,918

 

                 
Diluted earnings per share  

$

1.43

 

 

$

1.57

 

 

$

2.47

 

$

2.41

 

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

 

2019

 

 

 

2019

 

         
ASSETS   (Unaudited)    
Current assets:        
Cash and cash equivalents  

$

1,284,861

 

 

$

826,525

 

Short-term investments  

 

699,269

 

 

 

744,485

 

Restricted cash  

 

457,573

 

 

 

565,461

 

Accounts receivable, net of allowances of $443 and $995 at December 31, 2019 and March 31, 2019, respectively  

 

647,460

 

 

 

395,729

 

Inventory  

 

24,426

 

 

 

28,200

 

Software development costs and licenses  

 

59,802

 

 

 

28,880

 

Deferred cost of goods sold  

 

33,079

 

 

 

51,867

 

Prepaid expenses and other  

 

228,567

 

 

 

186,688

 

Total current assets  

 

3,435,037

 

 

 

2,827,835

 

         
Fixed assets, net  

 

127,417

 

 

 

127,882

 

Right-of-use assets  

 

153,053

 

 

 

-

 

Software development costs and licenses, net of current portion  

 

440,752

 

 

 

603,436

 

Deferred cost of goods sold, net of current portion  

 

912

 

 

 

1,028

 

Goodwill  

 

391,815

 

 

 

381,717

 

Other intangibles, net  

 

56,596

 

 

 

73,115

 

Deferred tax assets  

 

110,831

 

 

 

134,732

 

Other assets  

 

163,220

 

 

 

93,320

 

Total assets  

$

4,879,633

 

 

$

4,243,065

 

         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable  

$

82,491

 

 

$

72,797

 

Accrued expenses and other current liabilities  

 

1,147,918

 

 

 

1,035,695

 

Deferred revenue  

 

841,814

 

 

 

843,302

 

Lease liabilities  

 

24,108

 

 

 

-

 

Total current liabilities  

 

2,096,331

 

 

 

1,951,794

 

         
Non-current deferred revenue  

 

32,962

 

 

 

21,058

 

Non-current lease liabilities  

 

151,400

 

 

 

-

 

Other long-term liabilities  

 

196,905

 

 

 

229,633

 

Total liabilities  

 

2,477,598

 

 

 

2,202,485

 

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

 

-

 

 

 

-

 

Common stock, $.01 par value, 200,000 shares authorized; 135,771 and 134,602 shares        
issued and 113,350 and 112,181 outstanding at December 31, 2019 and, March 31, 2019, respectively  

 

1,358

 

 

 

1,346

 

Additional paid-in capital  

 

2,100,373

 

 

 

2,019,369

 

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

 

(820,572

)

 

 

(820,572

)

Retained earnings  

 

1,159,363

 

 

 

877,626

 

Accumulated other comprehensive loss  

 

(38,487

)

 

 

(37,189

)

Total stockholders' equity  

 

2,402,035

 

 

 

2,040,580

 

Total liabilities and stockholders' equity  

$

4,879,633

 

 

$

4,243,065

 

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

 

2019

 

 

 

2018

 

           
Operating activities:        
  Net income  

$

281,737

 

 

$

277,007

 

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

 

115,823

 

 

 

160,167

 

  Depreciation  

 

35,246

 

 

 

28,769

 

  Amortization of intellectual property  

 

15,981

 

 

 

17,785

 

  Stock-based compensation  

 

176,598

 

 

 

178,609

 

  Other, net  

 

1,809

 

 

 

(3,912

)

  Changes in assets and liabilities:        
  Accounts receivable  

 

(249,709

)

 

 

(525,981

)

  Inventory  

 

3,688

 

 

 

(26,352

)

  Software development costs and licenses  

 

(18,552

)

 

 

(157,710

)

  Prepaid expenses and other current and other non-current assets  

 

(215,060

)

 

 

(142,918

)

  Deferred revenue  

 

11,751

 

 

 

328,325

 

  Deferred cost of goods sold  

 

18,602

 

 

 

(37,281

)

  Accounts payable, accrued expenses and other liabilities  

 

262,061

 

 

 

293,691

 

  Net cash provided by operating activities  

 

439,975

 

 

 

390,199

 

           
Investing activities:        
  Change in bank time deposits  

 

114,720

 

 

 

64,101

 

  Proceeds from available-for-sale securities  

 

243,170

 

 

 

184,542

 

  Purchases of available-for-sale securities  

 

(311,995

)

 

 

(179,570

)

  Purchases of fixed assets  

 

(34,790

)

 

 

(43,646

)

  Purchases of long-term investments  

 

(26,142

)

 

 

-

 

  Business acquisitions  

 

(12,040

)

 

 

(3,149

)

  Net cash (used in) provided by investing activities  

 

(27,077

)

 

 

22,278

 

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

 

(71,260

)

 

 

(85,837

)

  Issuance of common stock  

 

10,515

 

 

 

-

 

  Repurchase of common stock  

 

-

 

 

 

(262,392

)

  Net cash used in financing activities  

 

(60,745

)

 

 

(348,230

)

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

 

(1,705

)

 

 

(15,124

)

           
  Net change in cash, cash equivalents, and restricted cash  

 

350,448

 

 

 

49,124

 

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

 

1,391,986

 

 

 

1,246,371

 

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

$

1,742,434

 

 

$

1,295,495

 

           
             
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
December 31, 2019
    Three Months Ended
December 31, 2018
    Amount     % of Total     Amount     % of Total
                       
Net revenue by geographic region                      
United States  

$

536,841

   

58%

   

$

651,568

   

52%

International  

 

393,288

   

42%

   

 

597,170

   

48%

Total net revenue  

$

930,129

   

100%

   

$

1,248,738

   

100%

                       
Net bookings by geographic region                      
United States  

$

499,983

   

56%

   

$

803,341

   

51%

International  

 

388,196

   

44%

   

 

765,227

   

49%

Total net bookings  

$

888,178

   

100%

   

$

1,568,568

   

100%

                       
    Three Months Ended
December 31, 2019
    Three Months Ended
December 31, 2018
    Amount     % of Total     Amount     % of Total
                       
Net revenue by distribution channel                      
Digital online  

$

700,321

   

75%

   

$

594,722

   

48%

Physical retail and other  

 

229,808

   

25%

   

 

654,016

   

52%

Total net revenue  

$

930,129

   

100%

   

$

1,248,738

   

100%

                       
Net bookings by distribution channel                      
Digital online  

$

690,558

   

78%

   

$

703,777

   

45%

Physical retail and other  

 

197,621

   

22%

   

 

864,791

   

55%

Total net bookings  

$

888,179

   

100%

   

$

1,568,568

   

100%

                       
    Three Months Ended
December 31, 2019
    Three Months Ended
December 31, 2018
    Amount     % of Total     Amount     % of Total
Net revenue by platform mix                      
Console  

$

679,799

   

73%

   

$

1,144,459

   

92%

PC and other  

 

250,330

   

27%

   

 

104,279

   

8%

Total net revenue  

$

930,129

   

100%

   

$

1,248,738

   

100%

                       
Net bookings by platform mix                      
Console  

$

638,516

   

72%

   

$

1,454,394

   

93%

PC and other  

 

249,663

   

28%

   

 

114,172

   

7%

Total net bookings  

$

888,179

   

100%

   

$

1,568,568

   

100%

                       
             
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)                      
                       
    Nine Months Ended
December 31, 2019
    Nine Months Ended
December 31, 2018
    Amount     % of Total     Amount     % of Total
                       
Net revenue by geographic region                      
United States  

$

1,361,981

   

58%

   

$

1,152,285

   

54%

International  

 

966,448

   

42%

   

 

977,102

   

46%

Total net revenue  

$

2,328,429

   

100%

   

$

2,129,387

   

100%

                       
Net bookings by geographic region                      
United States  

$

1,326,721

   

59%

   

$

1,322,466

   

54%

International  

 

934,214

   

41%

   

 

1,117,848

   

46%

Total net bookings  

$

2,260,935

   

100%

   

$

2,440,314

   

100%

                       
    Nine Months Ended
December 31, 2019
    Nine Months Ended
December 31, 2018
    Amount     % of Total     Amount     % of Total
                       
Net revenue by distribution channel                      
Digital online  

$

1,743,876

   

75%

   

$

1,268,140

   

60%

Physical retail and other  

 

584,553

   

25%

   

 

861,247

   

40%

Total net revenue  

$

2,328,429

   

100%

   

$

2,129,387

   

100%

                       
Net bookings by distribution channel                      
Digital online  

$

1,768,383

   

78%

   

$

1,382,717

   

57%

Physical retail and other  

 

492,552

   

22%

   

 

1,057,597

   

43%

Total net bookings  

$

2,260,935

   

100%

   

$

2,440,314

   

100%

                       
    Nine Months Ended
December 31, 2019
    Nine Months Ended
December 31, 2018
    Amount     % of Total     Amount     % of Total
Net revenue by Platform Mix                      
Console  

$

1,766,431

   

76%

   

$

1,811,429

   

85%

PC and other  

 

561,998

   

24%

   

 

317,958

   

15%

Total net revenue  

$

2,328,429

   

100%

   

$

2,129,387

   

100%

                       
Net bookings by platform mix                      
Console  

$

1,688,231

   

75%

   

$

2,132,285

   

87%

PC and other  

 

572,704

   

25%

   

 

308,029

   

13%

Total net bookings  

$

2,260,935

   

100%

   

$

2,440,314

   

100%

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

$

930,129

 

 

$

130,985

 

 

$

166,432

 

 

$

90,959

 

 

$

48,717

 

 

$

137,068

 

 
    Net effect from deferral and related cost of goods sold  

 

(41,950

)

 

 

(6,990

)

     

 

(3,031

)

 

 

41

 

     
    Stock-based compensation      

 

(33,048

)

             

 

(4,113

)

 
    Amortization and impairment of acquired intangibles      

 

(3,295

)

                 
                               
  Three Months Ended December 31, 2019   General and
administrative
  Research and
development
  Depreciation and
amortization
  Business reorganization   Interest and other,
net
     
                               
As reported  

$

84,531

 

 

$

82,520

 

 

$

12,330

 

 

$

(246

)

 

$

11,943

 

     
    Net effect from deferral and related cost of goods sold                  

 

(1,192

)

     
    Stock-based compensation  

 

(14,911

)

 

 

(11,327

)

                 
    Amortization and impairment of acquired intangibles      

 

(1,536

)

 

 

(121

)

             
    Impact of business reorganization              

 

246

 

         
                               
  Three Months Ended December 31, 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  

$

1,248,738

 

 

$

265,166

 

 

$

401,382

 

 

$

183,208

 

 

$

48,728

 

 

$

161,322

 

 
    Net effect from deferral and related cost of goods sold  

 

319,829

 

 

 

42,914

 

     

 

43,948

 

 

 

139

 

     
    Stock-based compensation      

 

(96,082

)

             

 

(6,673

)

 
    Amortization and impairment of acquired intangibles      

 

(3,630

)

                 
                               
  Three Months Ended December 31, 2018   General and
administrative
  Research and
development
  Depreciation and
amortization
  Business reorganization   Interest and other,
net
     
                               
As reported  

$

70,638

 

 

$

62,305

 

 

$

10,140

 

 

$

(5,930

)

 

$

8,071

 

     
    Net effect from deferral and related cost of goods sold                  

 

(313

)

     
    Stock-based compensation  

 

(13,790

)

 

 

(7,123

)

                 
    Amortization and impairment of acquired intangibles      

 

(1,585

)

 

 

(125

)

             
    Impact of business reorganization              

 

5,930

 

         
                               
                               
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES  
ADDITIONAL DATA                          
(in thousands)                          
                               
  Nine Months Ended December 31, 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  

$

2,328,429

 

 

$

451,422

 

 

$

339,312

 

 

$

225,162

 

 

$

130,914

 

 

$

378,455

 

 
    Net effect from deferral and related cost of goods sold  

 

(67,494

)

 

 

(46,310

)

     

 

(20,584

)

 

 

385

 

     
    Stock-based compensation      

 

(91,678

)

             

 

(14,333

)

 
    Amortization and impairment of acquired intangibles      

 

(10,310

)

                 
                               
  Nine Months Ended December 31, 2019   General and
administrative
  Research and
development
  Depreciation and
amortization
  Business reorganization   Interest and other,
net
     
                               
As reported  

$

236,023

 

 

$

227,680

 

 

$

35,611

 

 

$

467

 

 

$

30,422

 

     
    Net effect from deferral and related cost of goods sold                  

 

(381

)

     
    Stock-based compensation  

 

(42,054

)

 

 

(28,533

)

                 
    Acquisition related expenses  

 

(367

)

                     
    Amortization and impairment of acquired intangibles      

 

(4,642

)

 

 

(365

)

             
    Impact of business reorganization              

 

(467

)

         
                               
  Nine Months Ended December 31, 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  

$

2,129,387

 

 

$

337,603

 

 

$

536,662

 

 

$

277,234

 

 

$

113,231

 

 

$

313,793

 

 
    Net effect from deferral and related cost of goods sold  

 

310,927

 

 

 

46,396

 

     

 

37,087

 

 

 

735

 

     
    Stock-based compensation      

 

(107,740

)

             

 

(16,321

)

 
    Amortization and impairment of acquired intangibles      

 

(12,371

)

                 
                               
  Nine Months Ended December 31, 2018   General and
administrative
  Research and
development
  Depreciation and
amortization
  Business reorganization   Interest and other,
net
     
                               
As reported  

$

205,693

 

 

$

173,582

 

 

$

29,151

 

 

($

6,172

)

 

$

19,647

 

     
    Net effect from deferral and related cost of goods sold                  

 

(911

)

     
    Stock-based compensation  

 

(38,234

)

 

 

(16,314

)

                 
    Non-cash amounts related to convertible notes                  

 

91

 

     
    Amortization and impairment of acquired intangibles      

 

(4,859

)

 

 

(382

)

             
    Impact of business reorganization              

 

6,172

 

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

2019

 

2018

Net cash from operating activities  

$

439,975

 

$

390,199

Net change in Restricted cash (1)  

 

107,888

 

 

196,814

Adjusted Unrestricted Operating Cash Flow  

$

547,863

 

$

587,013

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

$

565,461

 

$

437,398

Restricted cash end of period (12/31)  

 

457,573

 

 

240,584

(1) Net change in Restricted cash  

$

107,888

 

$

196,814

 

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