Summary
Take-Two Interactive Software, Inc. (TTWO) reported its second-quarter 2010 results, showcasing a significant turnaround in performance compared to the prior year. The company experienced a substantial increase in net revenue, driven primarily by the successful launch of "Red Dead Redemption" and other key titles like "BioShock 2" and "Borderlands." This revenue growth led to a positive net income for the quarter, a marked improvement from the net loss reported in the same period of 2009. The company also demonstrated strong cash flow generation, significantly increasing its cash and cash equivalents balance, largely due to robust operating and investing activities, including the divestiture of its distribution business. The strategic focus on its core publishing operations, coupled with a pipeline of anticipated strong titles, positions Take-Two for continued growth. While challenges remain, including managing operating expenses and navigating potential legal proceedings, the company appears to be on a stronger financial footing. Investors should monitor the impact of new product releases and the company's ability to maintain its revenue momentum and control costs.
Financial Highlights
50 data points| Revenue | $244.97M |
| Cost of Revenue | $136.64M |
| Gross Profit | $108.33M |
| R&D Expenses | $11.29M |
| Operating Expenses | $95.30M |
| Operating Income | $13.03M |
| Net Income | $3.34M |
| EPS (Basic) | $0.04 |
| EPS (Diluted) | $0.04 |
| Shares Outstanding (Basic) | 79.79M |
| Shares Outstanding (Diluted) | 79.79M |
Key Highlights
- 1Net revenue surged by 273.0% to $354.1 million for the three months ended July 31, 2010, compared to $94.9 million in the prior year, largely driven by the release of 'Red Dead Redemption'.
- 2The company swung to a net income of $5.9 million ($0.07 per share) for the quarter, a significant improvement from a net loss of $56.5 million ($0.73 per share) in the same period last year.
- 3Cash and cash equivalents increased significantly to $232.1 million as of July 31, 2010, up from $102.1 million at October 31, 2009, indicating improved liquidity.
- 4Operating expenses saw a notable increase in selling and marketing costs, up 97.2% to $46.7 million, primarily due to increased advertising for 'Red Dead Redemption'.
- 5The company completed the sale of its Jack of all Games distribution business in February 2010, classifying its results as discontinued operations and allowing for a sharper focus on publishing.
- 6Total operating expenses as a percentage of net revenue decreased substantially from 74.4% in Q2 2009 to 26.3% in Q2 2010, reflecting improved operational leverage.
- 7Gross profit margin improved significantly to 32.1% from 19.0% year-over-year, benefiting from a more favorable pricing mix, including the strong performance of 'Red Dead Redemption'.