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Press release content from Business Wire. The AP news staff was not involved in its creation.

Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal Second Quarter 2022

November 3, 2021 GMT

NEW YORK--(BUSINESS WIRE)--Nov 3, 2021--

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong results for the second quarter of its fiscal year 2022, ending September 30, 2021. In addition, the Company raised its outlook for the fiscal year 2022, ending March 31, 2022, and provided its initial outlook for the third quarter of its fiscal year 2022, ending December 31, 2021. For further information, please see the second quarter fiscal 2022 results slide deck posted to the Company’s investor relations website at http://ir.take2games.com.

Second Quarter Fiscal 2022 Financial Highlights

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GAAP net revenue increased 2% to $858.2 million, as compared to $841.1 million in last year’s fiscal second quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 8% and accounted for 66% of total GAAP net revenue. Digitally-delivered GAAP net revenue increased 7% to $779.1 million, as compared to $725.7 million in last year’s fiscal second quarter, and accounted for 91% of total GAAP net revenue. The largest contributors to GAAP net revenue were NBA® 2K22 and NBA 2K21; Grand Theft Auto® Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands® 3; Two Dots®;Sid Meier’s Civilization® VI; and Dragon City®.

GAAP net income was $10.3 million, or $0.09 per diluted share, as compared to $99.3 million, or $0.86 per diluted share, for the comparable period last year. Cost of goods sold included a $53 million impairment charge related to the Company’s decision not to proceed with further development of an unannounced title in its pipeline.

During the six month-period ended September 30, 2021, GAAP net cash provided by operating activities was $283.7 million, as compared to $626.7 million in the same period last year. During the six month-period ended September 30, 2021, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, was $56.1 million, as compared to $536.2 million in the same period last year (please see the section below titled “Non-GAAP Financial Measure” for additional information). As of September 30, 2021, the Company had cash and short-term investments of $2.3 billion.

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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 September 30, 2021

 

 

 

 

Financial Data

 

 

Statement of
Operations

 

Change in
deferred net
revenue and
related cost of
goods sold

 

Stock-based
compensation

 

Impact of
business
reorganization

 

Amortization
and impairment
of acquired
intangibles

 

Business
acquisition

 

Gain (loss)
on long-term
investments,
net

Net revenue

 

$858,198

 

126,654

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

456,682

 

8,606

 

(10,366)

 

 

 

(13,985)

 

 

 

 

Gross profit

 

401,516

 

118,048

 

10,366

 

 

 

13,985

 

 

 

 

Operating expenses

 

381,365

 

 

 

(36,810)

 

(326)

 

(3,811)

 

(23,368)

 

 

Income from operations

 

20,151

 

118,048

 

47,176

 

326

 

17,796

 

23,368

 

 

Interest and other, net

 

(572)

 

935

 

 

 

 

 

 

 

 

 

 

Gain (loss) on long-term investments, net

 

395

 

 

 

 

 

 

 

 

 

 

 

(395)

Income before income taxes

 

19,974

 

118,983

 

47,176

 

326

 

17,796

 

23,368

 

(395)

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 116.8 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 second quarter 2022, total Net Bookings increased 3% to $984.9 million, as compared to $957.5 million during last year’s fiscal second quarter. Net Bookings from recurrent consumer spending increased 7% and accounted for 69% of total Net Bookings. Digitally-delivered Net Bookings increased 9% to $876.1 million, as compared to $806.1 million in last year’s fiscal second quarter, and accounted for 89% of total Net Bookings. The largest contributors to Net Bookings were NBA 2K22 and NBA 2K21; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; Top Eleven; Sid Meier’s Civilization VI; and Dragon City.

Catalog accounted for $629.2 million of Net Bookings led by Grand Theft Auto, NBA 2K, Red Dead Redemption, Borderlands, Top Eleven, Sid Meier’s Civilization and Dragon City.

Management Comments

“Our second quarter results were outstanding, highlighted by Net Bookings of $985 million, which greatly exceeded our expectations and increased 3% as compared to last year,” said Strauss Zelnick, Chairman and CEO of Take-Two. “We experienced consistently strong engagement trends across our key franchises, underscoring the durability of our offerings and the deep relationships that we have established with new, existing, and returning players.”

“As a result of our better-than-expected second quarter operating results, along with our updated forecast for the balance of the year, we are raising our Net Bookings guidance for the year to $3.3 to $3.4 billion.”

“We remain highly optimistic about our ability to capitalize further on the positive trends of our industry. As we continue to harness and enhance our competitive advantages – our incredible creative talent, best-in-class marketing and technology, and strong balance sheet – we will introduce new entertainment experiences that we believe have vast commercial potential and the ability to drive long-term engagement and recurrent consumer spending. We also expect to continue to attract the very best creators who share in our vision to set new benchmarks and captivate audiences throughout the world.”

COVID-19 Update

At Take-Two, our number one priority has remained the health and safety of our employees and their families. We are taking a prudent approach relating to our return to office cadence and planning. Some of our offices are open, and we plan for the majority of our offices to reopen in the coming months. Given the evolving dynamics of the COVID-19 pandemic, we are strictly following protocols from local governments and health officials to ensure that we are adhering to their safety standards.

Due to the shelter-in-place orders that began last year, we experienced heightened levels of engagement and Net Bookings growth during our fiscal 2021 period. As the return to normalcy continues to unfold, the impact to our business, operations and financial results will depend on numerous evolving factors that we are not able to predict. The key risks to our business are set forth under the heading “Cautionary Note Regarding Forward-Looking Statements” in this release and in Take-Two’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Business and Product Highlights

Since July 1, 2021:

Take-Two:

  • The Company repurchased 1.26 million shares of common stock for approximately $200 million, at an average share price of $158.67 per share.

Rockstar Games:

  • On November 11 th, Rockstar Games will digitally launch Grand Theft Auto: The Trilogy – The Definitive Edition for PlayStation 5, PlayStation 4, Xbox Series X|S, Xbox One, Nintendo Switch, and the Rockstar Games Launcher for PC. The Definitive Edition will feature across-the-board upgrades for all three games, including graphical improvements and modern controls for all three titles, while still maintaining the classic and distinct aesthetic of the original games. Grand Theft Auto: The Trilogy – The Definitive Edition will launch physically for consoles on December 7 th and will release for iOS and Android devices in the first half of calendar 2022. As part of the 20 th anniversary celebration, fans can also collect an array of special commemorative gear in Grand Theft Auto Online throughout a series of upcoming events this Fall.
  • Released new free content updates for Grand Theft Auto Online:
    • On July 20 th, delivered the Los Santos Tuners update, another major update for Grand Theft Auto Online ’s evolving world. The Los Santos Tuners update brought a renewed focus to the underground street racing scene and introduced a host of innovative and highly requested features, including the LS Car Meet – a shared social space where players can get together to modify, test and race their cars, get tattoos, and more. The update also added 17 highly customizable vehicles, a shoppable auto workshop, new robbery Contracts and street races, and the ability to add music in a new way through collectible media sticks.
    • Rockstar Games continued to provide an array of free content for their vast and growing online communities. To celebrate Halloween, Grand Theft Auto Online added a series of random events to shock and surprise players, including driverless phantom killer cars, superhuman slashers, UFOs that bend the laws of physics, and more, including bonuses on Alien Survival modes, and a new Arcade game.
  • Released new free content updates for Red Dead Online:
    • On July 13 th, released the Blood Money update for Red Dead Online. The update introduced a series of criminal-themed opportunities; complex new missions, including the game’s first train robbery; and The Quick Draw Club - a series of four distinct, rapid-fire passes featuring criminal-themed unlockable rewards, bonuses, and more.
    • Rockstar Games introduced new content to players following the Blood Money update, including new missions, contracts, special bonuses and rare items.
  • Rockstar Games looks forward to launching the expanded and enhanced version of Grand Theft Auto V and a standalone version of Grand Theft Online for new-generation consoles in March 2022. Players will enjoy a range of technical and graphical improvements across the entire experience including performance enhancements for select vehicles in Grand Theft Auto Online, and much more.

2K:

  • On September 10 th, launched NBA 2K22, the next iteration of the top-rated NBA video game simulation series of the past 20 years. Global phenomenon and two-time NBA All-Star, Luka Dončić, appears on the cover of the Standard Edition and Cross-Gen Digital Bundle, while the premium NBA 75 th Anniversary Edition showcases NBA legends Kareem Abdul-Jabbar, Dirk Nowitzki, and Kevin Durant. In North America, players are able to purchase a special version of the Standard Edition featuring six-time WNBA All-Star and WNBA Champion, Candace Parker on the cover and available exclusively through GameStop and EB Games. In Japan, players can also purchase a special version of the Standard Edition featuring Washington Wizards Rui Hachimura, a rising star who was the first Japanese player to not only be drafted in the first round in 2019, but also to reach the NBA Playoffs.
  • Launched the NBA 2K22 Arcade Edition on Apple Arcade on October 19 th. The game offers the all-new Association mode, where players can be the GM or Head Coach of their favorite NBA Franchises and build their own NBA dream teams, as well as other popular modes including MyCOURT, Online Multiplayer mode, and MyCAREER.
  • Announced Season 4 of NBA 2K Mobile, which includes a new Courtside Pass to unlock exclusive rewards, updated player likenesses and jerseys, card stats to reflect the current NBA season, and more.
  • In September, PGA TOUR 2K21 surpassed 2.5 million units sold-in around the globe, a key milestone for the series. Alongside this announcement, 2K and HB Studios revealed the theme for its all-new custom courses coming to multiplayer playlists, as well as a collaboration with lifestyle brand and gaming collective 100 Thieves.
  • On October 14 th, 2K and HB Studios launched the PGA TOUR 2K21 Baller Edition, which includes the base game, all previously released DLC courses and game modes, an assortment of exclusive adidas apparel and gear, and the Golden Touch Pack featuring a gold putter and driver.
  • 2K and Visual Concepts revealed new details behind WWE 2K22, which is planned for launch in March 2022. WWE 2K22 promises new controls, incredible graphics, and a redesigned engine for the most impressive WWE 2K experience to date. As part of the game’s development process, 85% of the in-game roster has taken part in facial scanning for ultra-realistic and updated character models, and more than 3,400 new animations have been captured.
  • WWE SuperCard released content updates, including new card tiers, rewards and the return of John Cena with a “Summer of Cena” gift redeemable for a limited time.
  • Announced that, for the first time ever, the Borderlands 3 Ultimate Edition will be available in physical disc form for PlayStation 5 and Xbox Series X. Borderlands 3 Ultimate Edition will be released on November 12 th and feature the award-winning base game plus all six content add-ons and the full collection of bonus cosmetic packs. The PlayStation 5 and Xbox Series X versions are optimized to take full advantage of the new-gen hardware’s processing power.
  • Announced that Tiny Tina’s Wonderlands, a new franchise from 2K and Gearbox, will be released in March 2022. The game is an epic adventure full of whimsy, wonder, and high-powered weaponry set in a chaotic fantasy world where magic, broadswords, and bullets collide. Tiny Tina’s Wonderlands is a full experience with a rich, story-driven co-op campaign and repeatable end-game content.
  • 2K and Marvel Entertainment announced Marvel’s Midnight Suns, a new tactical RPG set in the darker side of the Marvel Universe that brings players face-to-face against supernatural forces as they team up with and live among the Midnight Suns, Earth’s last line of defense against the underworld. Marvel’s Midnight Suns is now expected to launch in the second half of Calendar 2022 (Fiscal Year 2023), as compared to prior expectations of March 2022 (Fiscal Year 2022).
  • 2K has expanded its presence in Montréal, Québec to support several of its business units, including Global Services, an internal team responsible for artists, animators, motion capture and visual effects specialists, project managers, sound designers, user researchers, and more who work across the label’s growing portfolio of original franchises and licensed products.
  • 2K Foundations, in partnership with the Municipality of Ljubljana and Dallas Mavericks All-Star Guard Luka Dončić, unveiled its latest project in Ljubljana, Slovenia. Together, they refurbished the athlete’s childhood court and added new seating and lighting. 2K Foundations is the philanthropic arm of 2K that supports and inspires underserved communities by directly investing in local enrichment programs.

Private Division:

  • On August 13 th, Private Division and Supergiant Games partnered together to release a physical edition of Hades for PlayStation and Xbox platforms. Hades is a winner of over 50 “Game of the Year” awards and is currently Metacritic’s highest rated game for the PlayStation 5 and Xbox Series X.
  • On September 8 th, released Murder on Eridanos, the final expansion for The Outer Worlds, for the Nintendo Switch.
  • On September 24 th, released Kerbal Space Program Enhanced Edition for PlayStation 5 and Xbox Series X|S. The title contains multiple hardware advancements and developments, which allow for an upgraded resolution, improved frame-rate, advanced shaders, better textures, and additional performance improvements.
  • OlliOlli World, the skateboarding action-platformer from Roll7 remains on track to launch this winter in fiscal Q4 for PlayStation 4, PlayStation 5, Xbox One, Xbox Series X|S, PC and Nintendo Switch.

T2 Mobile Games:

  • Continued the integration of Socialpoint, Playdots, and Nordeus into “T2 Mobile Games.” This new structure is helping Take-Two’s mobile teams achieve cost synergies and share best practices.
  • Many of our mobile games launched new features, challenges, and marketing activations to drive player engagement. Our studios will continue to introduce new enhancements to their games this year to further optimize the player experience.
  • Nordeus released Top Eleven 2022, the latest installment of their mobile title that is the world’s most successful soccer management game of all time. Top Eleven 2022 delivers significant updates to the gameplay and soccer management experience.

Outlook for Fiscal 2022

Take-Two is raising its outlook for the fiscal year ending March 31, 2022 and providing its initial outlook for its fiscal third quarter ending December 31, 2021:

Fiscal Year Ending March 31, 2022

  • GAAP net revenue is expected to range from $3.35 to $3.45 billion
  • GAAP net income is expected to range from $320 to $350 million
  • GAAP diluted net income per share is expected to range from $2.75 to $3.00
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 116.6 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 $170 million
  • Net Bookings (operational metric) are expected to range from $3.3 to $3.4 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 Ended March 31, 2022

 

 

 

 

Financial Data

$ in millions

 

GAAP outlook (2)

 

Change in
deferred net
revenue and
related cost of
goods sold

 

Stock-based
compensation (3)

 

Gain on long-
term
investments,
net

 

Amortization and
impairment of
acquired
intangibles

 

Reorganization
& acquisition

Net revenue

 

$3,350 to $3,450

 

$(50)

 

 

 

 

 

 

 

 

Cost of goods sold

 

$1,506 to $1,551

 

$2

 

$(40)

 

 

 

$(50)

 

 

Operating expenses

 

$1,468 to $1,488

 

 

 

$(130)

 

 

 

$(15)

 

$(23)

Interest and other, net

 

$(3)

 

 

 

 

 

$2

 

 

 

 

Income before income taxes

 

$379 to $414

 

$(52)

 

$170

 

$(2)

 

$65

 

$23

 

ThirdQuarter Ending December 31, 2021

  • GAAP net revenue is expected to range from $840 to $890 million
  • GAAP net income is expected to range from $99 to $111 million
  • GAAP diluted net income per share is expected to range from $0.85 to $0.95
  • Share count used to calculate both GAAP and management reporting diluted net income per share is expected to be 116.3 million (4)
  • Net Bookings (operational metric) are expected to range from $800 to $850 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 Ended December 31, 2021

 

 

 

 

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

Net revenue

 

$840 to $890

 

$(40)

 

 

 

 

Cost of goods sold

 

$344 to $370

 

 

$(9)

 

$(12)

Operating expenses

 

$378 to $388

 

 

 

$(30)

 

$(3)

Interest and other, net

 

 

 

 

 

 

 

Income before income taxes

 

$118 to $132

 

$(40)

 

$39

 

$15

1)

Includes 115.5 million basic shares and 1.1 million shares representing the potential dilution from unvested employee stock grants.

2)

Adjusted for changes in restricted cash.

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 115.3 million basic shares and 1.0 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 have been released since July 1, 2021:

Label

Product

Platforms

Release Date

Rockstar Games

Red Dead Redemption Online: Blood Money Update

PS4, Xbox One, PC

July 13, 2021

Rockstar Games

Grand Theft Auto Online: Los Santos Tuners Update

PS4, Xbox One, PC

July 20, 2021

Private Division

Hades (physical release)

PS4, PS5, Xbox One, Xbox Series X

August 13, 2021

Private Division

The Outer Worlds: Murder on Eridanos (DLC)

Switch

September 8, 2021

2K

NBA 2K22

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

September 10, 2021

Private Division

Kerbal Space Program Enhanced Edition

PS5, Xbox Series X|S

September 24, 2021

2K

Mafia III: Definitive Edition

Stadia

October 1, 2021

Nordeus

Top Eleven 2022

iOs, Android

October 11, 2021

2K

PGA TOUR 2K21 Baller Edition

PS4, Xbox One, PC

October 14, 2021

2K

NBA 2K22 Arcade Edition

Apple Arcade

October 19, 2021

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

Label

Product

Platforms

Release Date

Rockstar Games

Grand Theft Auto: The Trilogy — The Definitive Edition (digital release)

PS4, PS5, Xbox One, Xbox Series X|S, Switch

November 11, 2021

2K

Borderlands 3 Ultimate Edition (physical only)

PS5, Xbox Series X

November 12, 2021

Rockstar Games

Grand Theft Auto: The Trilogy – The Definitive Edition (physical release)

PS4, PS5, Xbox One, Xbox Series X, Switch

December 7, 2021

Private Division

OlliOlli World

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

Q4 Fiscal 2022

2K

Tiny Tina's Wonderlands

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

March 25, 2022

Rockstar Games

Grand Theft Auto V: Expanded and Enhanced

PS5, Xbox Series X|S

March 2022

Rockstar Games

Grand Theft Auto Online – Standalone

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

March 2022

2K

WWE 2K22

TBA

March 2022

Rockstar Games

Grand Theft Auto: The Trilogy — The Definitive Edition (mobile release)

iOS, Android

First Half of Calendar 2022

2K

Marvel's Midnight Suns

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

Second Half of Calendar 2022 (Fiscal 2023)

Private Division

Kerbal Space Program 2

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

Fiscal 2023

Share Repurchase Authorization

In November, the Company’s Board of Directors authorized an increase of 7.4 million shares to the number of its shares of common stock that the Company is permitted to repurchase, resulting in an aggregate of 10 million shares remaining available for repurchase as of the date of the additional authorization. The authorization permits the Company to purchase shares from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any purchases at any specific time or situation. Repurchases are subject to the availability of stock, prevailing market conditions, the trading price of the stock, the Company’s financial performance and other conditions. The program may be suspended or discontinued at any time for any reason. As of October 22, 2021, the Company had approximately 115.3 million common shares outstanding.

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 September 30, 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, and T2 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

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 risks of conducting business internationally; 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 September 30,

Six months ended September 30,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 
Net revenue

$

858,198

 

$

841,142

 

$

1,671,544

 

$

1,672,452

 

 
Cost of goods sold:
Internal royalties

 

159,586

 

 

127,804

 

 

304,964

 

 

341,867

 

Software development costs and royalties

 

144,869

 

 

142,771

 

 

231,906

 

 

290,818

 

Licenses

 

86,130

 

 

92,944

 

 

136,534

 

 

148,963

 

Product costs

 

66,097

 

 

68,986

 

 

112,993

 

 

127,546

 

Total cost of goods sold

 

456,682

 

 

432,505

 

 

786,397

 

 

909,194

 

 
Gross profit

 

401,516

 

 

408,637

 

 

885,147

 

 

763,258

 

 
Selling and marketing

 

136,019

 

 

113,691

 

 

239,873

 

 

198,470

 

General and administrative

 

127,331

 

 

91,433

 

 

231,778

 

 

193,606

 

Research and development

 

101,508

 

 

74,216

 

 

193,802

 

 

147,324

 

Depreciation and amortization

 

16,181

 

 

13,691

 

 

28,646

 

 

26,109

 

Business reorganization

 

326

 

 

239

 

 

423

 

 

239

 

Total operating expenses

 

381,365

 

 

293,270

 

 

694,522

 

 

565,748

 

Income from operations

 

20,151

 

 

115,367

 

 

190,625

 

 

197,510

 

Interest and other, net

 

(572

)

 

2,706

 

 

(1,599

)

 

10,924

 

Gain (loss) on long-term investments, net

 

395

 

 

(655

)

 

2,392

 

 

(655

)

Income before income taxes

 

19,974

 

 

117,418

 

 

191,418

 

 

207,779

 

Provision for income taxes

 

9,677

 

 

18,097

 

 

28,865

 

 

19,953

 

Net income

$

10,297

 

$

99,321

 

$

162,553

 

$

187,826

 

 
Earnings per share:
Basic earnings per share

$

0.09

 

$

0.87

 

$

1.40

 

$

1.65

 

Diluted earnings per share

$

0.09

 

$

0.86

 

$

1.39

 

$

1.63

 

 
Weighted average shares outstanding:
Basic

 

115,757

 

 

114,444

 

 

115,727

 

 

114,153

 

Diluted

 

116,803

 

 

115,414

 

 

116,891

 

 

115,245

 

 
Computation of Basic EPS:
Net income

$

10,297

 

$

99,321

 

$

162,553

 

$

187,826

 

 
Weighted average shares outstanding - basic

 

115,757

 

 

114,444

 

 

115,727

 

 

114,153

 

 
Basic earnings per share

$

0.09

 

$

0.87

 

$

1.40

 

$

1.65

 

 
Computation of Diluted EPS:
Net income

$

10,297

 

$

99,321

 

$

162,553

 

$

187,826

 

 
Weighted average shares outstanding - basic

 

115,757

 

 

114,444

 

 

115,727

 

 

114,153

 

Add: dilutive effect of common stock equivalents

 

1,046

 

 

970

 

 

1,164

 

 

1,092

 

Weighted average common shares outstanding - diluted

 

116,803

 

 

115,414

 

 

116,891

 

 

115,245

 

 
Diluted earnings per share

$

0.09

 

$

0.86

 

$

1.39

 

$

1.63

 

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
 
September 30,March 31,

 

2021

 

 

2021

 

 
ASSETS
Current assets:
Cash and cash equivalents

$

856,901

 

$

1,422,884

 

Short-term investments

 

1,440,631

 

 

1,308,692

 

Restricted cash and cash equivalents

 

754,368

 

 

538,822

 

Accounts receivable, net of allowances of $350 and $350 at September 30, 2021 and March 31, 2021, respectively

 

804,468

 

 

552,762

 

Inventory

 

12,579

 

 

17,742

 

Software development costs and licenses

 

54,540

 

 

43,443

 

Deferred cost of goods sold

 

12,601

 

 

15,524

 

Prepaid expenses and other

 

307,370

 

 

320,646

 

Total current assets

 

4,243,458

 

 

4,220,515

 

 
Fixed assets, net

 

231,230

 

 

149,364

 

Right-of-use assets

 

208,751

 

 

164,763

 

Software development costs and licenses, net of current portion

 

621,470

 

 

490,892

 

Goodwill

 

662,585

 

 

535,306

 

Other intangibles, net

 

288,090

 

 

121,591

 

Deferred tax assets

 

74,994

 

 

90,206

 

Long-term restricted cash and cash equivalents

 

103,437

 

 

98,541

 

Other assets

 

185,016

 

 

157,040

 

Total assets

$

6,619,031

 

$

6,028,218

 

 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable

$

83,401

 

$

71,001

 

Accrued expenses and other current liabilities

 

1,499,898

 

 

1,204,090

 

Deferred revenue

 

951,612

 

 

928,029

 

Lease liabilities

 

31,962

 

 

31,595

 

Total current liabilities

 

2,566,873

 

 

2,234,715

 

 
Non-current deferred revenue

 

51,531

 

 

37,302

 

Non-current lease liabilities

 

207,437

 

 

159,671

 

Non-current software development royalties

 

112,459

 

 

110,127

 

Other long-term liabilities

 

211,063

 

 

154,511

 

Total liabilities

 

3,149,363

 

 

2,696,326

 

 
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000 shares authorized: no shares issued and outstanding at September 30, 2021 and March 31, 2021

 

-

 

 

-

 

Common stock, $0.01 par value, 200,000 shares authorized; 138,891 and 137,584 shares
issued and 115,210 and 115,163 outstanding at September 30, 2021 and March 31, 2021, respectively

 

1,390

 

 

1,376

 

Additional paid-in capital

 

2,475,085

 

 

2,288,781

 

Treasury stock, at cost; 23,681 and 22,421 common shares at September 30, 2021 and March 31, 2021, respectively

 

(1,020,584

)

 

(820,572

)

Retained earnings

 

2,033,524

 

 

1,870,971

 

Accumulated other comprehensive loss

 

(19,747

)

 

(8,664

)

Total stockholders' equity

 

3,469,668

 

 

3,331,892

 

Total liabilities and stockholders' equity

$

6,619,031

 

$

6,028,218

 

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

 

2021

 

 

2020

 

 
Operating activities:
Net income

$

162,553

 

$

187,826

 

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

 

95,339

 

 

92,664

 

Impairment of software development costs and licenses

 

65,049

 

 

-

 

Depreciation

 

28,436

 

 

25,826

 

Amortization of intellectual property

 

33,668

 

 

11,801

 

Stock-based compensation

 

96,196

 

 

98,719

 

Other, net

 

2,067

 

 

(2,631

)

Changes in assets and liabilities:
Accounts receivable

 

(242,844

)

 

(189,477

)

Inventory

 

5,155

 

 

(7,266

)

Software development costs and licenses

 

(263,235

)

 

(127,290

)

Prepaid expenses and other assets

 

(35,745

)

 

65,296

 

Deferred revenue

 

32,672

 

 

284,441

 

Deferred cost of goods sold

 

3,018

 

 

4,753

 

Accounts payable, accrued expenses and other liabilities

 

301,350

 

 

182,083

 

Net cash provided by operating activities

 

283,679

 

 

626,745

 

 
Investing activities:
Change in bank time deposits

 

1,021

 

 

(218,239

)

Proceeds from available-for-sale securities

 

353,399

 

 

260,729

 

Purchases of available-for-sale securities

 

(492,582

)

 

(435,511

)

Purchases of fixed assets

 

(111,192

)

 

(25,021

)

Purchases of long-term investments

 

(3,122

)

 

(9,100

)

Business acquisitions

 

(131,617

)

 

(75,482

)

Net cash used in investing activities

 

(384,093

)

 

(502,624

)

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

 

(53,370

)

 

(48,202

)

Issuance of common stock

 

9,230

 

 

6,503

 

Loan repayment

 

(234

)

 

-

 

Repurchase of common stock

 

(200,012

)

 

-

 

Net cash used in financing activities

 

(244,386

)

 

(41,699

)

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

 

(741

)

 

8,966

 

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

 

(345,541

)

 

91,388

 

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

 

2,060,247

 

 

1,993,392

 

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

$

1,714,706

 

$

2,084,780

 

 
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
September 30, 2021
Three Months Ended
September 30, 2020
Amount% of TotalAmount% of Total
 
Net revenue by geographic region
United States

$

514,920

60%

$

503,583

60%

International

 

343,278

40%

 

337,559

40%

Total net revenue

$

858,198

100%

$

841,142

100%

 
Net Bookings by geographic region
United States

$

603,744

61%

$

612,813

64%

International

 

381,108

39%

 

344,721

36%

Total Net Bookings

$

984,852

100%

$

957,534

100%

 
 
Three Months Ended
September 30, 2021
Three Months Ended
September 30, 2020
Amount% of TotalAmount% of Total
 
Net revenue by distribution channel
Digital online

$

779,097

91%

$

725,684

86%

Physical retail and other

 

79,101

9%

 

115,458

14%

Total net revenue

$

858,198

100%

$

841,142

100%

 
Net Bookings by distribution channel
Digital online

$

876,059

89%

$

806,090

84%

Physical retail and other

 

108,793

11%

 

151,445

16%

Total Net Bookings

$

984,852

100%

$

957,534

100%

 
 
Three Months Ended
September 30, 2021
Three Months Ended
September 30, 2020
Amount% of TotalAmount% of Total
Net revenue by platform mix
Console

$

596,080

70%

$

641,269

76%

PC and other

 

147,002

17%

 

138,686

17%

Mobile

 

115,116

13%

 

61,187

7%

Total net revenue

$

858,198

100%

$

841,142

100%

 
Net Bookings by platform mix
Console

$

724,337

74%

$

761,450

80%

PC and other

 

154,584

16%

 

133,205

14%

Mobile

 

105,931

10%

 

62,879

6%

Total Net Bookings

$

984,852

100%

$

957,534

100%

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
 
Six Months Ended
September 30, 2021
Six Months Ended
September 30, 2020
Amount% of TotalAmount% of Total
 
Net revenue by geographic region
United States

$

1,008,106

60%

$

974,073

58%

International

 

663,438

40%

 

698,379

42%

Total net revenue

$

1,671,544

100%

$

1,672,452

100%

 
Net Bookings by geographic region
United States

$

1,022,559

60%

$

1,199,927

61%

International

 

673,723

40%

 

753,857

39%

Total Net Bookings

$

1,696,282

100%

$

1,953,784

100%

 
Six Months Ended
September 30, 2021
Six Months Ended
September 30, 2020
Amount% of TotalAmount% of Total
 
Net revenue by distribution channel
Digital online

$

1,519,903

91%

$

1,461,260

87%

Physical retail and other

 

151,641

9%

 

211,192

13%

Total net revenue

$

1,671,544

100%

$

1,672,452

100%

 
Net Bookings by distribution channel
Digital online

$

1,556,444

92%

$

1,730,628

89%

Physical retail and other

 

139,838

8%

 

223,155

11%

Total Net Bookings

$

1,696,282

100%

$

1,953,784

100%

 
 
Six Months Ended
September 30, 2021
Six Months Ended
September 30, 2020
Amount% of TotalAmount% of Total
Net revenue by platform mix
Console

$

1,198,523

72%

$

1,252,954

75%

PC and other

 

275,647

16%

 

303,946

18%

Mobile

 

197,374

12%

 

115,552

7%

Total net revenue

$

1,671,544

100%

$

1,672,452

100%

 
Net Bookings by platform mix
Console

$

1,215,864

72%

$

1,484,249

76%

PC and other

 

284,698

16%

 

339,757

16%

Mobile

 

195,720

12%

 

129,779

8%

Total Net Bookings

$

1,696,282

100%

$

1,953,784

100%

 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Three Months Ended September 30, 2021Net revenueCost 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

$

858,198

 

$

159,586

 

$

144,869

 

$

86,130

 

$

66,097

 

$

136,019

 

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

 

126,654

 

 

6,439

 

 

530

 

 

1,637

 

Stock-based compensation

 

(10,336

)

 

(7,134

)

Amortization and impairment of acquired intangibles

 

(13,985

)

 

(1,833

)

 
Three Months Ended September 30, 2021General and
administrative
Research and
development
Depreciation and
amortization
Business
reorganization
Interest and
other, net
Gain/(loss) on
long-term
investments, net
As reported

$

127,331

 

$

101,508

 

$

16,181

 

$

326

 

$

(572

)

$

395

 

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

 

935

 

Stock-based compensation

 

(16,666

)

 

(13,010

)

Amortization and impairment of acquired intangibles

 

(1,643

)

 

(335

)

Acquisition related expenses

 

(23,368

)

Impact of business reorganization

 

(326

)

Gain on long-term investments, net

 

(395

)

 
Three Months Ended September 30, 2020Net revenueCost 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

$

841,142

 

$

127,804

 

$

142,771

 

$

92,944

 

$

68,986

 

$

113,691

 

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

 

116,392

 

 

16,209

 

 

(3,994

)

 

1,235

 

Stock-based compensation

 

(19,396

)

 

(4,439

)

Amortization and impairment of acquired intangibles

 

(4,411

)

 

(517

)

 
Three Months Ended September 30, 2020General and
administrative
Research and
development
Depreciation and
amortization
Business
reorganization
Interest and
other, net
Gain/(loss) on
long-term
investments, net
As reported

$

91,433

 

$

74,216

 

$

13,691

 

$

239

 

$

2,706

 

 

(655

)

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

 

(760

)

Stock-based compensation

 

(13,830

)

 

(7,643

)

Amortization and impairment of acquired intangibles

 

(1,684

)

 

(163

)

Acquisition related expenses

 

(2,512

)

Non-cash amounts related to convertible notes
Impact of business reorganization

 

(239

)

Loss on long-term investments

 

655

 

 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Six Months Ended September 30, 2021Net revenueCost 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

$

1,671,544

 

$

304,964

 

$

231,906

 

$

136,534

 

$

112,993

 

$

239,873

 

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

 

24,737

 

 

3,580

 

 

393

 

 

(3,500

)

Stock-based compensation

 

(22,386

)

 

(15,167

)

Amortization and impairment of acquired intangibles

 

(25,096

)

 

(3,650

)

 
Six Months Ended September 30, 2021General and
administrative
Research and
development
Depreciation and
amortization
Business
reorganization
Interest and
other, net
Gain/(loss) on
long-term
investments, net
As reported

$

231,778

 

$

193,802

 

$

28,646

 

$

423

 

$

(1,599

)

$

2,392

 

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

 

325

 

Stock-based compensation

 

(33,863

)

 

(24,780

)

Amortization and impairment of acquired intangibles

 

(3,350

)

 

(706

)

Impact of business reorganization

 

(423

)

Gain on long-term investments, net

 

(2,392

)

Acquisition related expenses

 

(25,554

)

 
 
Six Months Ended September 30, 2020Net revenueCost 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

$

1,672,452

 

$

341,867

 

$

290,818

 

$

148,963

 

$

127,546

 

$

198,470

 

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

 

281,331

 

 

20,260

 

 

(4,444

)

 

(3,589

)

Stock-based compensation

 

(48,429

)

 

(9,167

)

Amortization and impairment of acquired intangibles

 

(7,694

)

 

(517

)

 
Six Months Ended September 30, 2020General and
administrative
Research and
development
Depreciation and
amortization
Business
reorganization
Interest and
other, net
Gain (loss) on
long-term
investments, net
As reported

$

193,606

 

$

147,324

 

$

26,109

 

$

239

 

$

10,924

 

($

655

)

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

 

(2,460

)

Stock-based compensation

 

(27,030

)

 

(14,093

)

Amortization and impairment of acquired intangibles

 

(3,237

)

 

(283

)

Impact of business reorganization

 

(239

)

Loss on long-term investments

 

5,333

 

Acquisition related expenses

 

(2,512

)

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

 

2021

 

 

2020

 

Net cash from operating activities

$

283,679

 

$

626,745

 

Net change in Restricted cash related to Operations (1)

 

(227,573

)

 

(117,393

)

Adjusted Unrestricted Operating Cash Flow

$

56,106

 

$

509,352

 

 
 
 
FY 2022FY 2021
Restricted cash beginning of period (4/1)

$

637,363

 

$

635,728

 

Less Restricted cash end of period (9/30)

 

857,805

 

 

739,681

 

Restricted cash related to acquisitions

 

7,131

 

 

(13,440

)

(1) Net change in Restricted cash related to Operations

$

(227,573

)

($

117,393

)

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20211103006094/en/

CONTACT: (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

KEYWORD: NEW YORK UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: SOFTWARE ONLINE CONSUMER ELECTRONICS GENERAL ENTERTAINMENT MOBILE ENTERTAINMENT TECHNOLOGY ELECTRONIC GAMES ENTERTAINMENT

SOURCE: Take-Two Interactive

Copyright Business Wire 2021.

PUB: 11/03/2021 04:05 PM/DISC: 11/03/2021 04:06 PM

http://www.businesswire.com/news/home/20211103006094/en