01—Abstract
Summary
Summary of the 10-Q filed June 5, 2009. Cited figures are marked; the original filing is the authoritative source.
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 milliona 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 millionb civil penalty and a $0.3 million payment to the DA.
02—Key points
Key Highlights
- Significant 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.
- The 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.
- Net 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.
- Publishing segment revenue dropped 64.0% for the quarter, while the distribution segment saw a more modest 1.4% decrease.
- Operating 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.
- The 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.
- Cash 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.
03—Questions
Frequently Asked Questions
What is the primary reason for the significant revenue decrease in the reported quarter?
The primary reason for the significant revenue decrease is the absence of major game releases compared to the prior year, particularly the highly successful launch of Grand Theft Auto IV in April 2008, which heavily influenced the previous year's performance. Sales from the Grand Theft Auto franchise saw a substantial decline.
What is the company's financial performance regarding profitability?
The company reported a net loss of $10.1 million for the three months ended April 30, 2009, and a net loss of $60.5 million for the six months ended April 30, 2009. This is a reversal from the net income reported in the comparable periods of the previous year.
How is the company managing its expenses in light of lower revenues?
The company has reduced operating expenses significantly, by 30.2% in the quarter, through decreased spending on selling and marketing and general and administrative activities. This also includes a reduction in stock-based compensation expenses due to the lower stock price and ongoing restructuring efforts.
Are there any significant legal or regulatory issues impacting the company?
Yes, the company announced settlements with the SEC and the New York County District Attorney regarding historical stock option practices. This resulted in a $3 million civil penalty paid to the SEC and a $0.3 million payment to the District Attorney, acknowledging certain illegal behaviors by former officers and directors.
04—Continue