10-KPeriod: FY2016

TAKE TWO INTERACTIVE SOFTWARE INC Annual Report, Year Ended Mar 31, 2016

Filed May 19, 2016For Securities:TTWO

Summary

Take-Two Interactive Software, Inc. (TTWO) reported its annual results for the fiscal year ended March 31, 2016, showcasing a significant revenue increase of 30.5% to $1.41 billion, largely driven by the enduring success of its Grand Theft Auto franchise, particularly Grand Theft Auto V and its online component. Despite the revenue growth, the company reported a net loss of $8.3 million, an improvement from the prior year's net loss of $279.5 million. This indicates a shift towards profitability, although the company is still navigating development costs and market dynamics. The company's strategy remains focused on developing and publishing high-quality, internally-owned franchises through its Rockstar Games and 2K labels. A key trend highlighted is the increasing importance of digital distribution and recurrent consumer spending, which now accounts for a substantial portion of revenue. International markets also continue to be a significant contributor, representing 47.4% of net revenue. Management acknowledges the inherent seasonality and reliance on 'hit' titles, with Grand Theft Auto alone contributing over 54% of revenue, underscoring both its strength and a potential area of risk.

Financial Statements
Beta
Revenue$1.41B
Cost of Revenue$813.87M
Gross Profit$599.83M
Operating Expenses$610.65M
Operating Income-$10.83M
Net Income-$8.30M
EPS (Basic)$-0.10
EPS (Diluted)$-0.10
Shares Outstanding (Basic)83.42M
Shares Outstanding (Diluted)83.42M

Key Highlights

  • 1Revenue increased by 30.5% to $1.41 billion for the fiscal year ended March 31, 2016, driven by strong performance from the Grand Theft Auto franchise.
  • 2Reported a net loss of $8.3 million, a significant improvement from a net loss of $279.5 million in the prior fiscal year.
  • 3Digital online channels accounted for 49.3% of net revenue, indicating a growing shift towards digital distribution and recurrent consumer spending.
  • 4The Grand Theft Auto franchise remains a critical revenue driver, contributing 54.5% of total net revenue for the fiscal year.
  • 5International sales represented 47.4% of total net revenue, highlighting the company's global market presence.
  • 6The company continues to invest in its core franchises like Grand Theft Auto and NBA 2K, and has a pipeline of upcoming titles including Mafia III and Civilization VI.
  • 7Significant investments in software development and licenses are ongoing, reflecting a commitment to future product pipelines.

Frequently Asked Questions

For the fiscal year ended March 31, 2016, Take-Two Interactive reported a net revenue of $1.41 billion, a 30.5% increase year-over-year, primarily driven by the Grand Theft Auto franchise. The company also reported a net loss of $8.3 million, a substantial improvement compared to the $279.5 million net loss in the previous year.

The Grand Theft Auto franchise is a critical revenue source for Take-Two. For the fiscal year ended March 31, 2016, it accounted for 54.5% of the company's total net revenue. This highlights the franchise's immense popularity and its central role in the company's financial performance.

Take-Two is increasingly focused on digital distribution and recurring consumer spending. For the fiscal year ended March 31, 2016, digital online channels represented 49.3% of net revenue. The company aims to generate incremental revenue through downloadable content, microtransactions, and online play, particularly for its established franchises.

Key risks identified include a heavy reliance on the success of 'hit' titles like Grand Theft Auto, potential delays in product development and releases, intense competition, dependence on a few large customers for sales, and risks associated with evolving technologies and digital distribution channels. The company also acknowledges the impact of economic conditions on consumer spending and the potential for market risk from currency fluctuations.