UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  February 7, 2018

TAKE-TWO INTERACTIVE SOFTWARE, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code  (646) 536-2842

622 Broadway, New York, New York, 10012

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02                                           Results of Operations and Financial Condition

On February 7, 2018, Take-Two Interactive Software, Inc. (the “Company”) issued a press release announcing the financial results of the Company for its third fiscal quarter ended December 31, 2017.  A copy of the press release is attached to this Current Report as Exhibit 99.1 and is incorporated by reference herein.

The information included in this Current Report on Form 8-K, including Exhibit 99.1 hereto, that is furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.  In addition, the information included in this Current Report on Form 8-K, including Exhibit 99.1 hereto, that is furnished pursuant to this Item 2.02 shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.

Item 9.01                                           Financial Statements and Exhibits

(d)                                 Exhibits:

99.1                        Press Release dated February 7, 2018 relating to Take-Two Interactive Software, Inc.’s financial results for its third fiscal quarter ended December 31, 2017.

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EXHIBIT INDEX

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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Exhibit 99.1

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

GAAP net revenue was $480.8 million

GAAP net income was $0.21 per diluted share

Net cash provided by operating activities was $203.0 million

Net Bookings were $653.9 million

Company deployed $110.1 million to repurchase 1.06 million shares of common stock

New York, NY — February 7, 2018 — Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported results for its fiscal third quarter 2018, ended December 31, 2017.  In addition, the Company provided its initial financial outlook for its fiscal fourth quarter ending March 31, 2018, and updated its financial outlook for its fiscal year ending March 31, 2018.

Fiscal Third Quarter 2018 GAAP Financial Highlights

Net revenue grew to $480.8 million, as compared to $476.5 million in last year’s fiscal third quarter.  Recurrent consumer spending (virtual currency, add-on content and microtransactions) grew 64% year-over-year and accounted for 32% of total net revenue.  The largest contributors to net revenue in fiscal third quarter 2018 were Grand Theft Auto® V and Grand Theft Auto Online, NBA® 2K18, WWE® 2K18 and WWE SuperCard, and L.A. Noire.

Digitally-delivered net revenue grew 8% to $258.4 million, as compared to $240.2 million in last year’s fiscal third quarter, and accounted for 54% of total net revenue.  The largest contributors to digitally-delivered net revenue in fiscal third quarter 2018 were Grand Theft Auto Online and Grand Theft Auto V, NBA 2K18, WWE 2K18 and WWE SuperCard, and Sid Meier’s Civilization VI.

Net income increased to $25.1 million, or $0.21 per diluted share, as compared to net loss of $29.8 million, or $0.33 per diluted share, for the comparable period last year.  Net income reflects $11.9 million of incremental income tax expense, or approximately $0.10 per diluted share, due to the application of the Tax Cuts and Jobs Act, enacted on December 22, 2017.  This amount is a reasonable estimate provided in accordance with Securities and Exchange Commission guidance.  We will provide additional information about such estimate in our forthcoming Form 10-Q for the fiscal quarter ended December 31, 2017.

Net cash provided by operating activities was $203.0 million.  As of December 31, 2017, the Company had cash and short-term investments of $1.322 billion.

The following data, together with a management reporting tax rate of 22%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 119.5 million and adds back to net income the interest expense, net of tax, on its convertible notes of $0.01 million.

Operational Metric — Net Bookings

During fiscal third quarter 2018, total Net Bookings were $653.9 million, as compared to $744.8 million during last year’s fiscal third quarter, which had benefitted from the launches of Mafia III and Sid Meier’s Civilization VI.  Net Bookings from recurrent consumer spending grew 44% year-over-year and accounted for 40% of total Net Bookings.  The largest contributors to Net Bookings were Grand Theft Auto Online and Grand Theft Auto V, NBA 2K18, WWE 2K18, L.A. Noire, and Dragon City and Monster Legends.

Catalog accounted for $343.5 million of Net Bookings led by Grand Theft Auto, and Dragon City and Monster Legends.

Digitally-delivered Net Bookings grew 6% to $379.7 million, as compared to $357.4 million in last year’s fiscal third quarter, and accounted for 58% of total Net Bookings.  The largest contributors to digitally-delivered Net Bookings in fiscal third quarter 2018 were Grand Theft Auto Online and Grand Theft Auto V, NBA 2K18, WWE 2K18 and WWE SuperCard, and Monster Legends and Dragon City.

Management Comments

“During the holiday season, we benefited from high consumer demand for our offerings, enabling our Company to deliver another quarter of both strong Net Bookings and net cash provided by operating activities,” said Strauss Zelnick, Chairman and CEO of Take-Two.  “Our stellar results were highlighted by record recurrent consumer spending on both Grand Theft Auto Online and NBA 2K18, robust ongoing sales of Grand Theft Auto V, and the successful launch of WWE 2K18.  We took advantage of favorable market conditions to deploy $110 million of cash to repurchase more than 1 million shares of our stock.  As a result of our outstanding third quarter performance and increased fourth quarter forecast, we are raising our fiscal 2018 outlook for Net Bookings.

“In addition to achieving superb results, we announced the formation of Private Division, our new label that is dedicated to bringing titles from top independent developers to market.  Private Division already has deals to publish several upcoming titles based on new IP from renowned talent, and represents an exciting new growth opportunity that complements Take-Two’s core business.

“Rockstar Games has announced that Red Dead Redemption 2 will launch on October 26, 2018.  We continue to expect to deliver both record Net Bookings and record net cash provided by operating activities in fiscal 2019, in excess of $2.5 billion and $700 million, respectively, led by the launches of Red Dead Redemption 2 and a highly anticipated new title from one of 2K’s biggest franchises.  We have a robust development pipeline and are better positioned than ever for long-term growth and margin expansion.”

Business and Product Highlights

Since October 1, 2017:

·                  Take-Two announced the formation of Private Division, a new publishing label that focuses on bringing titles from top independent developers to market.  Private Division will publish several upcoming titles based on new IP from renowned industry creative talent, including the previously announced Ancestors: The Humankind Odyssey from Panache Digital Games; an unannounced RPG currently codenamed Project Wight from The Outsiders; an unannounced RPG from Obsidian Entertainment; and an unannounced sci-fi first-person shooter from V1 Interactive.  Private Division is also the publisher for Kerbal Space Program, which Take-Two acquired in May 2017.

·                  Take-Two deployed $110.1 million to repurchase 1.06 million shares of its common stock.

·                  Effective December 18, 2017, Take-Two was added to the NASDAQ-100 Index® (Nasdaq: NDX).  The NASDAQ-100 Index is composed of the 100 largest non-financial companies listed on The NASDAQ Stock Market®.

Rockstar Games:

·                  Released new versions of the blockbuster detective thriller, L.A. Noire, for Nintendo Switch™, PlayStation®4 and Xbox One.  These new versions include the original L.A. Noire game plus all of its additional downloadable content, with specific enhancements tailored to the unique capabilities of each platform.  Following these came the release of LA Noire: The VR Case Files, featuring seven select cases from the original game rebuilt specifically for a virtual reality experience on the HTC VIVE™ system.

·                  Released new free content updates for Grand Theft Auto Online, including:

·                  More themed content drops for Smuggler’s Run featuring:

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

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

·                  Special Halloween content including the Vigilante weaponized vehicle, the Seabreeze aircraft and Condemned Adversary Mode.

·                  The Doomsday Heist, a story-driven online adventure involving the planning, preparation and execution of a series of epic co-operative heist missions and featuring a ton of new vehicles and gear, inside the biggest Grand Theft Auto Online update yet.

·                  Festive Surprise 2017, which featured holiday-themed items in stores across Los Santos, the Firework Launcher, as well as the return of favorite items from past holiday seasons and more.

·                  Released the Criminal Enterprise Starter Pack that gives players access to a huge range of the most exciting and popular additions to Grand Theft Auto Online, including properties, vehicles, weapons and more valued at over GTA$10,000,000 plus GTA$1,000,000 Bonus Cash.

·                  Announced that Red Dead Redemption 2, which had been planned for release during Spring 2018, will now launch on October 26, 2018 to allow additional time to polish further the final product.

2K:

·                  Released the Sid Meier’s Civilization VI: Khemer and Indonesia Civilization and Scenario Pack bringing new challenges and scenarios to Firaxis Games’ popular strategy series, and announced that its Rise and Fall expansion pack for the title will launch on February 8, 2018.

·                  Launched WWE 2K18 for PlayStation 4, Xbox One, Nintendo Switch and PC.  Developed collaboratively by Yuke’s and Visual Concepts, WWE 2K18 features Seth Rollins as its cover Superstar, along with the largest playable roster in franchise history, new online-centric Road to Glory mode, notable gameplay improvements, and a powerful new graphics engine.  WWE 2K18 has been supported with a series of downloadable content, including a Season Pass.

·                  Released WWE SuperCard — Season 4, the latest addition to the Company’s action-packed collectible card-battling game, as a free downloadable update for iOS and Android™ devices. Featuring 250 new cards, three new card tiers, and much more, the WWE SuperCard series — which has now been downloaded more than 16.5 million times to date — delivers the best in competitive and engaging WWE action for mobile devices.

·                  Launched NHL® SuperCard 2K18, the foremost NHL collectible card-battling game.  Featuring cover athlete Kyle Turris, center for the Nashville Predators, NHL SuperCard is available for download free of charge for iOS and Android devices and offers more than 450 cards, thrilling game modes, weekly events and more to bring players on the ice and into the action.

Private Division:

·                  Released Kerbal Space Program Enhanced Edition, the new console version of the beloved space simulation game, for digital download on PlayStation 4 and Xbox One.  Kerbal Space Program Enhanced Edition is built from the ground up to include re-worked and console-optimized UI, a new control scheme exclusively for consoles, and more ways to enjoy launching spaceships into orbit.  As a thank you to the existing console community, all owners of the prior console version of Kerbal Space Program can redeem the Enhanced Edition for free.

Financial Outlook for Fiscal 2018

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

Fourth Quarter Ending March 31, 2018

·                  GAAP net revenue is expected to range from $460 to $510 million

·                  GAAP net income is expected to range from $87 to $99 million

·                  GAAP diluted net income per share is expected to range from $0.73 to $0.83

·                  Share count used to calculate GAAP diluted net income per share is expected to be 118.8 million (1)

·                  Net Bookings (operational metric) are expected to range from $410 to $460 million

The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

Fiscal Year Ending March 31, 2018

As a result of its strong fiscal third quarter 2018 results and increased outlook for the fiscal fourth quarter, Take-Two is raising its fiscal year 2018 outlook for Net Bookings.  In addition, the Company is increasing its outlook for GAAP net revenue and GAAP net income.

·                  GAAP net revenue is expected to range from $1.80 to $1.85 billion

·                  GAAP net income is expected to range from $170 to $181 million

·                  GAAP diluted net income per share is expected to range from $1.50 to $1.60

·                  Share count used to calculate GAAP diluted net income per share is expected to be 113.2 million (4)

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

·                  Capital expenditures are expected to be approximately $60 million

·                  Net Bookings (operational metric) are expected to range from $1.99 to $2.04 billion

The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

(1)         For the fiscal fourth quarter ending March 31, 2018, the Company’s fully diluted share count used for both GAAP and management reporting purposes is expected to be 118.8 million, which includes 114.0 million basic shares, 4.1 million shares representing the potential dilution from unvested employee stock grants, and 0.7 million shares representing the potential dilution from convertible notes.  For management reporting purposes, the interest expense, net of tax, on the convertible notes, which is added back to net income to calculate diluted net income per share is $0.03 million.

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

(3)         The Company’s stock-based compensation expense for the periods above includes the cost of approximately 0.6 million restricted stock units previously granted to ZelnickMedia that are subject to variable accounting.  Actual expense to be recorded in connection with these shares is dependent upon several factors, including future changes in Take-Two’s stock price.

(4)         For the fiscal year ending March 31, 2018, the Company’s fully diluted share count used for management reporting purposes is expected to be 118.0 million, which includes 110.1 million basic shares, 3.1 million shares representing the potential dilution from unvested employee stock grants, and 4.8 million shares representing the potential dilution from convertible notes.  The interest expense, net of tax, on the convertible notes, which is added back to net income to calculate diluted net income per share for management reporting purposes is $0.83 million.  Take-Two’s GAAP net income per diluted share outlook is calculated using a diluted share count of 113.2 million (basic shares plus unvested employee stock grants ), because using the “if-converted” method and the Company’s fully diluted share count of 118.0 million would have been anti-dilutive.

(5)         Includes $2.4 million of stock-based compensation related to business reorganization.

Key assumptions and dependencies underlying the Company’s financial outlook include: the timely delivery of the titles included in this financial outlook; continued consumer acceptance of Xbox One and PlayStation 4; the ability to develop and publish products that capture market share for these new-generation systems while also leveraging opportunities on Nintendo Switch, Xbox 360, PlayStation 3, PC and mobile platforms; and stable foreign exchange rates.  See also “Cautionary Note Regarding Forward Looking Statements” below.

Product Releases

The following titles were released since October 1, 2017:

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

Conference Call

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

Final Results

The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Quarterly Report on Form 10-Q for the period ended December 31, 2017.

About Take-Two Interactive Software

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

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

Cautionary Note Regarding Forward-Looking Statements

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

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TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix

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