01—Abstract
Summary
Summary of the 10-K filed May 22, 2015. 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, 2015, reporting significant revenue decline primarily due to the absence of a major title release like Grand Theft Auto V in the prior year, which heavily influenced fiscal year 2014 results.
The company experienced a net loss for fiscal year 2015 compared to a substantial net income in fiscal year 2014. Despite the revenue drop, digital distribution channels showed strong growth, now representing 42%a of net revenue. The company continues to invest in its core franchises like Grand Theft Auto and NBA 2K, and is expanding its presence in emerging markets and digital content, including add-on content and microtransactions, which are showing positive trends.
Key risks highlighted include dependence on "hit" titles, particularly Grand Theft Auto, product development risks, competition, and reliance on a limited number of major customers. The company's financial position remains solid with over $911 millionb in cash and cash equivalents at year-end. Despite the reported net loss for the fiscal year, the company is focused on strategic product development and leveraging digital channels for future growth.
02—Key points
Key Highlights
- Net revenue decreased by 53.9% to $1.08 billion in fiscal year 2015, largely due to the absence of a major release like Grand Theft Auto V in the preceding year which boosted FY2014 results.
- The company reported a net loss of $279.5 million for fiscal year 2015, a significant shift from a net income of $361.6 million in fiscal year 2014.
- Digital online channels saw substantial growth, accounting for 42.0% of net revenue in fiscal year 2015, up from 15.8% in fiscal year 2014, indicating a strategic shift towards digital distribution.
- The Grand Theft Auto franchise, while seeing a decline from the prior year's massive contribution, still represented 28.0% of net revenue in fiscal year 2015, highlighting its continued importance.
- The company maintained a strong liquidity position with $911.1 million in cash and cash equivalents as of March 31, 2015.
- Key franchises such as NBA 2K and WWE 2K continue to be significant revenue contributors, alongside growing contributions from titles like Borderlands and Evolve.
- The company faces significant risks, including over-reliance on a few "hit" titles, intense competition, product development risks, and dependence on a limited number of major retail customers.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2015, Take Two Interactive Software Inc lost $0.26.
- Revenue$1.08B100.0%
- Cost of revenue−$794.9M73.4%
- Gross profit$288.1M26.6%
- Operating costs−$546.5M50.5%
- Operating income−$258.5M23.9%
- Interest, other & tax−$21.0M1.9%
- Net income−$279.5M25.8%
04—Financials
Financial Highlights
Figures from 10-KFY2015filed May 22, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $1.08B$2.35B | −53.9% |
| Cost of Revenue | $794.87M$1.41B | −43.8% |
| Gross Profit | $288.07M$936.24M | −69.2% |
| Operating Expenses | $546.53M$520.99M | +4.9% |
| Operating Income | -$258.46M$415.26M | −162.2% |
| Net Income | -$279.47M$361.61M | −177.3% |
| EPS (Basic) | $-3.48$3.79 | −191.8% |
| EPS (Diluted) | $-3.48$3.20 | −208.7% |
| Shares Outstanding (Basic) | 80.37M95.35M | −15.7% |
| Shares Outstanding (Diluted) | 80.37M— | — |
05—Questions
Frequently Asked Questions
What was the primary reason for the significant revenue decline in fiscal year 2015 compared to fiscal year 2014?
The primary reason for the significant revenue decline was the absence of a major title release comparable to Grand Theft Auto V in fiscal year 2014. Grand Theft Auto V's release in the prior year generated substantial revenue, making year-over-year comparisons challenging.
How is the company addressing the increasing importance of digital distribution?
Take-Two Interactive is actively investing in and expanding its digital distribution channels. Digital online channels accounted for 42.0% of net revenue in fiscal year 2015, a significant increase, reflecting the company's strategy to deliver content through digital downloads, including add-on content and microtransactions.
What are the company's main sources of revenue and what are the key franchises?
The company's revenue is primarily derived from the sale of interactive entertainment software, both internally developed and licensed. Key franchises include Grand Theft Auto (under Rockstar Games) and NBA 2K, WWE 2K, Borderlands, and BioShock (under 2K). The Grand Theft Auto franchise remains a critical revenue driver.
What are the key risks and challenges facing the company?
The company faces several risks, including a heavy reliance on a few "hit" titles like Grand Theft Auto, which can lead to volatile revenue streams. Other challenges include intense competition, the inherent risks of product development (delays, cost overruns, market acceptance), dependence on a limited number of major retail customers, and the evolving landscape of digital distribution and emerging platforms.
06—Continue