01—Abstract
Summary
Summary of the 10-KT filed December 20, 2010. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) filed a Transition Report on Form 10-KT for the five-month period ending March 31, 2010, covering a transition in their fiscal year end.
The company operates as a global publisher and developer of interactive entertainment software, with key labels Rockstar Games and 2K. During this period, TTWO faced a challenging economic environment impacting consumer spending, although net revenue saw an increase compared to the prior year's comparable period, driven by strong performances from titles like BioShock 2 and Borderlands, partially offset by decreased sales of the Grand Theft Auto franchise. The company is strategically focused on developing premium quality games and successful franchises, emphasizing internally owned intellectual property.
They are also leveraging emerging technologies like downloadable content and expanding into international markets, particularly Asia. Despite revenue growth in this transition period, TTWO reported a net loss, reflecting ongoing investments in development and marketing, as well as the impact of a discontinued distribution business. Investors should note the company's reliance on 'hit' titles, the competitive nature of the industry, and risks associated with product development cycles and platform dependence.
02—Key points
Key Highlights
- The company has shifted its fiscal year end to March 31, making this filing a Transition Report for the period November 1, 2009, to March 31, 2010.
- Net revenue for the transition period increased by 20.8% compared to the prior year's comparable period, reaching $359.2 million, driven by new releases and franchise performance.
- Despite revenue growth, the company reported a net loss of $28.8 million for the transition period, an improvement from the $46.3 million loss in the prior year's comparable period.
- Key franchises like Grand Theft Auto continued to be significant revenue drivers, though sales decreased year-over-year, while new titles like BioShock 2 and Borderlands showed strong performance.
- TTWO continues to focus on developing internally owned intellectual property and leveraging emerging technologies such as downloadable content and expanding its presence in international markets, especially in Asia.
- The company sold its Jack of all Games third-party distribution business in February 2010, with results classified as discontinued operations.
- The company faces significant risks including dependence on 'hit' titles, industry competition, product development cycles, and reliance on major hardware platforms and a limited number of key customers.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2010, Take Two Interactive Software Inc lost $0.16.
- Revenue$762.9M100.0%
- Cost of revenue−$494.6M64.8%
- Gross profit$268.4M35.2%
- Operating costs−$344.5M45.2%
- Operating income−$76.1M10.0%
- Interest, other & tax−$46.9M6.1%
- Net income−$123.0M16.1%
04—Financials
Financial Highlights
Figures from 10-KFY2010filed December 20, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $762.94M$701.06M | +8.8% |
| Cost of Revenue | $494.58M$467.58M | +5.8% |
| Gross Profit | $268.36M$233.48M | +14.9% |
| R&D Expenses | $57.89M$63.75M | −9.2% |
| Operating Expenses | $344.48M$353.66M | −2.6% |
| Operating Income | -$76.12M-$120.18M | +36.7% |
| Net Income | -$123.00M-$140.45M | +12.4% |
| EPS (Basic) | $-1.58$-1.83 | +13.7% |
| EPS (Diluted) | $-1.58$-1.83 | +13.7% |
| Shares Outstanding (Basic) | 77.86M76.81M | +1.4% |
| Shares Outstanding (Diluted) | 77.86M76.81M | +1.4% |
05—Questions
Frequently Asked Questions
What is the primary business of Take-Two Interactive Software, Inc.?
Take-Two Interactive Software, Inc. is a global publisher and developer of interactive entertainment software. They operate through their wholly-owned labels Rockstar Games and 2K (which includes 2K Games, 2K Sports, and 2K Play), developing, publishing, marketing, and selling software titles for various gaming hardware platforms.
What was the company's financial performance during the transition period (November 1, 2009 - March 31, 2010)?
During this five-month transition period, Take-Two reported an increase in net revenue to $359.2 million, a 20.8% rise compared to the same period in the previous year. However, the company also incurred a net loss of $28.8 million. This loss was an improvement from the $46.3 million net loss reported in the prior year's comparable period. The company benefited from strong sales of titles like BioShock 2 and Borderlands, but saw a decrease in Grand Theft Auto franchise sales.
What are the company's key growth strategies?
Take-Two's strategies include focusing on creating premium quality games and successful franchises with internally owned intellectual property. They are also actively pursuing revenue streams from emerging technologies like downloadable content and in-game advertising. Furthermore, the company aims to expand its international business, particularly in the Asia-Pacific markets, and to diversify its product offerings across different genres and target demographics.
What are some of the significant risks faced by Take-Two Interactive Software?
Key risks include a heavy reliance on the success of 'hit' titles, particularly the Grand Theft Auto franchise, which can lead to significant revenue fluctuations. The company also faces intense competition in the interactive entertainment industry, risks associated with product development cycles and costs, dependence on third-party hardware platform manufacturers (Sony, Microsoft, Nintendo), and a significant portion of sales coming from a limited number of major customers.
06—Continue