Summary
Take-Two Interactive Software, Inc. (TTWO) filed its 2009 10-K report on December 18, 2009, reflecting a challenging year marked by a significant net loss and declining revenues. The company, a global publisher, developer, and distributor of interactive entertainment software and hardware, faced headwinds from the economic downturn, increased competition, and the ongoing transition to new gaming platforms. Despite a strong product pipeline including titles from its popular Rockstar Games and 2K labels, revenue for fiscal year 2009 decreased substantially compared to 2008, primarily due to the absence of a blockbuster title comparable to the prior year's 'Grand Theft Auto IV' release. The company reported a net loss of $137.9 million for fiscal year 2009. Key initiatives during the year included a focus on expanding digital distribution channels, developing titles for emerging platforms like the iPhone, and strategically managing its distribution business, which unfortunately resulted in an $14.8 million goodwill impairment charge. The company also issued convertible senior notes to strengthen its financial position. Investors should note the significant reliance on major franchises like 'Grand Theft Auto' and the inherent risks associated with the cyclical nature of the video game industry, product launch timing, and competitive market pressures.
Financial Highlights
30 data points| Revenue | $701.06M |
| Cost of Revenue | $467.58M |
| Gross Profit | $233.48M |
| R&D Expenses | $63.75M |
| Operating Expenses | $353.66M |
| Operating Income | -$120.18M |
| Net Income | -$140.45M |
| EPS (Basic) | $-1.83 |
| EPS (Diluted) | $-1.83 |
| Shares Outstanding (Basic) | 76.81M |
| Shares Outstanding (Diluted) | 76.81M |
Key Highlights
- 1Net Loss of $137.9 million for the fiscal year ended October 31, 2009, a significant turnaround from a net income of $97.1 million in the prior year.
- 2Net revenue decreased by 36.4% to $968.5 million in fiscal year 2009, primarily attributed to the lack of a major blockbuster release comparable to 'Grand Theft Auto IV' in fiscal year 2008.
- 3The 'Grand Theft Auto' franchise, while still a significant revenue driver, saw its contribution decrease, with sales of $416.8 million lower in fiscal year 2009 compared to the prior year.
- 4Recorded a goodwill and intangible asset impairment charge of $14.8 million related to the distribution segment due to the decline in the retail environment.
- 5Issued $138.0 million in 4.375% convertible senior notes in June 2009 to raise capital and strengthen its financial position.
- 6The company continues to diversify revenue streams through digital content (downloadable episodes, in-game advertising) and emerging platforms like the iPhone and iPod touch.
- 7Significant litigation and legal proceedings, including securities class actions and other claims, were ongoing, with a proposed settlement of approximately $20.1 million for the securities class action.