01—Abstract
Summary
Summary of the 10-K filed May 25, 2011. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) filed its 10-K for the fiscal year ended March 31, 2011, showcasing a significant turnaround in financial performance.
After a substantial net loss in the prior fiscal year, the company reported a net income of $48.5 milliona, with earnings per share of $0.56. This improvement was driven by a nearly 50% increase in net revenue to $1.14 billion, largely attributed to the success of new releases like 'Red Dead Redemption' and 'Mafia II', alongside continued strength in the 'NBA 2K' franchise. The company continues to focus on its core strategy of developing and publishing high-quality, proprietary titles through its renowned labels, Rockstar Games and 2K.
The transition towards current-generation platforms (PS3, Xbox 360, Wii) is evident, with these platforms now comprising over 80%b of revenue. Digital distribution and international expansion, particularly in Asia, remain key growth areas. Despite robust revenue growth and improved profitability, investors should note the company's continued reliance on 'hit' titles, the inherent risks in product development cycles, and the competitive landscape within the interactive entertainment industry.
02—Key points
Key Highlights
- Achieved a net income of $48.5 million for the fiscal year ended March 31, 2011, a significant improvement from the prior year's net loss.
- Reported a 49.0% increase in net revenue to $1.14 billion, driven by successful new releases such as 'Red Dead Redemption' and 'Mafia II'.
- The company continues its strategic focus on developing and publishing high-quality, proprietary titles through its labels Rockstar Games and 2K.
- Revenue from current-generation platforms (PS3, Xbox 360, Wii) now accounts for approximately 83.9% of total net revenue, indicating a successful platform transition.
- Expanded international revenue to 39.2% of total net revenue, with continued focus on the Asia-Pacific markets.
- Maintained a strong liquidity position with $280.4 million in cash and cash equivalents at the end of the fiscal year.
- Despite improvements, the company's financial performance remains heavily reliant on the success of its 'hit' titles, particularly from the Grand Theft Auto franchise.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Take Two Interactive Software Inc kept $0.04.
- Revenue$1.14B100.0%
- Cost of revenue−$689.4M60.6%
- Gross profit$447.5M39.4%
- Operating costs−$370.4M32.6%
- Operating income$77.1M6.8%
- Interest, other & tax−$28.7M2.5%
- Net income$48.5M4.3%
Where FY2011 revenue went
$1.14B- Cost of revenue: $689.4M, 61% of revenue
- Other operating costs: $300.8M, 26% of revenue
- Net income: $48.5M, 4.3% of revenue
- R&D: $69.6M, 6.1% of revenue
- Interest, other & tax: $28.7M, 2.5% of revenue
Kept 4.3% as net incomeNet income $48.5M · 4.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed May 25, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.14B$762.94M | +49.0% |
| Cost of Revenue | $689.38M$494.58M | +39.4% |
| Gross Profit | $447.50M$268.36M | +66.8% |
| R&D Expenses | $69.58M$57.89M | +20.2% |
| Operating Expenses | $370.35M$344.48M | +7.5% |
| Operating Income | $77.14M-$76.12M | +201.3% |
| Net Income | $48.46M-$123.00M | +139.4% |
| EPS (Basic) | $0.56$-1.58 | +135.4% |
| EPS (Diluted) | $0.56$-1.58 | +135.4% |
| Shares Outstanding (Basic) | 80.51M77.86M | +3.4% |
| Shares Outstanding (Diluted) | 80.52M77.86M | +3.4% |
05—Questions
Frequently Asked Questions
What were the key drivers of Take-Two's improved financial performance in the fiscal year ended March 31, 2011?
The improved financial performance was primarily driven by a significant increase in net revenue, up 49.0% to $1.14 billion. This growth was fueled by the strong performance of newly released titles such as 'Red Dead Redemption' and 'Mafia II', as well as continued success from the 'NBA 2K' franchise. The company also benefited from higher gross profit margins and a reduction in operating expenses as a percentage of net revenue.
How is Take-Two addressing the shift from older gaming platforms to newer ones?
Take-Two is actively transitioning its product portfolio to current-generation platforms, including the PlayStation 3, Xbox 360, and Wii. For the fiscal year ended March 31, 2011, revenue from these current-generation consoles accounted for approximately 83.9% of total net revenue, indicating a successful shift away from older platforms.
What are the main risks highlighted by Take-Two in its 10-K filing?
Key risks highlighted include a heavy dependence on the success of 'hit' titles, particularly the Grand Theft Auto franchise, as well as the inherent risks in product development cycles, which can lead to delays and increased costs. The company also faces intense competition, risks associated with declining consumer spending, the popularity of new hardware platforms, and potential impacts from international operations and foreign currency fluctuations.
What is Take-Two's strategy for future growth?
Take-Two's strategy involves focusing on publishing a select number of high-quality titles, often building successful franchises. They aim to capitalize on emerging technologies and platforms, including digital distribution and downloadable content. International expansion, particularly in the Asia-Pacific markets, and leveraging their proprietary intellectual property are also key components of their growth strategy.
06—Continue