Summary
Take-Two Interactive Software, Inc. (TTWO) reported significant revenue declines in the fiscal second quarter and first half of 2009 compared to the prior year, primarily driven by the absence of major title releases like Grand Theft Auto IV, which heavily influenced the prior year's performance. Net revenue for the three months ended April 30, 2009, fell to $229.7 million from $539.8 million in the same period last year, resulting in a net loss of $10.1 million ($0.13 per share) compared to a net income of $98.2 million ($1.31 per share). The company's publishing segment experienced a substantial revenue drop, reflecting a challenging comparison to the prior year's GTA IV launch. The distribution segment saw a more modest revenue decline. Operating expenses were also reduced, largely due to decreased selling and marketing and general and administrative costs, partly driven by lower stock-based compensation as a result of a declining stock price and legal settlements. Despite these cost controls, the company posted a net loss for the period. The company noted a significant increase in software development costs and licenses, particularly for unreleased titles. The company also announced a settlement with the SEC and the New York County District Attorney regarding stock option backdating practices, involving a $3 million civil penalty and a $0.3 million payment to the DA.
Key Highlights
- 1Significant revenue decline of 64.0% ($309.3 million) in the three months ended April 30, 2009, compared to the prior year, primarily due to the absence of major game releases like Grand Theft Auto IV.
- 2The company reported a net loss of $10.1 million ($0.13 per share) for the quarter, a sharp contrast to the $98.2 million net income ($1.31 per share) reported in the same period last year.
- 3Net revenue for the six months ended April 30, 2009, decreased by 46.6% ($282.6 million) year-over-year, leading to a net loss of $60.5 million ($0.79 per share) for the period.
- 4Publishing segment revenue dropped 64.0% for the quarter, while the distribution segment saw a more modest 1.4% decrease.
- 5Operating expenses decreased significantly by 30.2% in the quarter, with reductions in selling and marketing, and general and administrative expenses, partly due to lower stock-based compensation and restructuring efforts.
- 6The company settled with the SEC and New York County District Attorney regarding stock option practices, resulting in a $3 million civil penalty to the SEC and a $0.3 million payment to the DA, and acknowledgment of illegal behavior by former officers/directors.
- 7Cash and cash equivalents decreased by $100.7 million during the six months ended April 30, 2009, primarily due to cash used in operating activities, ending the period with $179.6 million.