10-QPeriod: Q3 FY2011

TAKE TWO INTERACTIVE SOFTWARE INC Quarterly Report for Q3 Ended Dec 31, 2010

Filed February 9, 2011For Securities:TTWO

Summary

Take-Two Interactive Software, Inc. (TTWO) reported a significant turnaround in its financial performance for the nine months ended December 31, 2010, compared to the same period in the prior year. The company transitioned from a substantial net loss of $113.2 million in the nine months ended December 31, 2009, to a net income of $70.5 million for the corresponding period in 2010. This improvement was driven by a strong increase in net revenue, up 80.2% to $954.6 million, largely attributed to successful game releases such as 'Red Dead Redemption,' 'Mafia II,' and 'NBA 2K11.' Operationally, the company has divested its distribution business, allowing for a more focused strategy on its core publishing operations. Despite a decrease in revenue for the three months ended December 31, 2010, compared to the prior year, the overall nine-month performance reflects substantial recovery and growth. The company's balance sheet shows a healthy increase in cash and cash equivalents, rising to $297.1 million as of December 31, 2010, indicating improved liquidity and financial stability.

Financial Highlights

50 data points
Beta

Revenue

$334.26M

43.6% Gross Margin

Net Income

$40.86M

12.2% Net Margin

EPS (Diluted)

$0.45

Total Assets

$976.60M

Cash & Equivalents

$297.12M

Free Cash Flow

$87.35M

Financial Statements
Beta
Revenue$334.26M
Cost of Revenue$188.65M
Gross Profit$145.61M
R&D Expenses$18.07M
Operating Expenses$96.93M
Operating Income$48.68M
Net Income$40.86M
EPS (Basic)$0.47
EPS (Diluted)$0.45
Shares Outstanding (Basic)80.74M
Shares Outstanding (Diluted)93.68M

Key Highlights

  • 1For the nine months ended December 31, 2010, Take-Two reported a net income of $70.5 million, a significant improvement from a net loss of $113.2 million in the prior year's comparable period.
  • 2Net revenue for the nine months ended December 31, 2010, surged by 80.2% to $954.6 million, primarily driven by successful game releases like 'Red Dead Redemption,' 'Mafia II,' and 'NBA 2K11'.
  • 3Cash and cash equivalents increased substantially, reaching $297.1 million as of December 31, 2010, compared to $145.8 million at March 31, 2010, indicating enhanced liquidity.
  • 4The company completed the sale of its 'Jack of all Games' distribution business in February 2010, allowing it to concentrate resources on its publishing operations.
  • 5Gross profit margin improved to 40.4% for the nine months ended December 31, 2010, up from 35.0% in the prior year, reflecting better pricing mix and operational efficiencies.
  • 6Selling and marketing expenses increased by 26.1% for the nine months, reflecting investments in key product launches such as 'Red Dead Redemption' and 'Mafia II'.
  • 7General and administrative expenses decreased by 12.2% for the nine months, primarily due to reduced legal and settlement costs.

Frequently Asked Questions

The primary driver was the significant increase in net revenue, which rose by 80.2% to $954.6 million for the nine months ended December 31, 2010. This growth was largely fueled by the successful launch and sales of key titles such as 'Red Dead Redemption,' 'Mafia II,' and 'NBA 2K11.'

Take-Two's liquidity has significantly improved. Cash and cash equivalents grew to $297.1 million as of December 31, 2010, a substantial increase from $145.8 million at March 31, 2010. This indicates a stronger financial position to fund operations and future growth.

Yes, the company completed the sale of its 'Jack of all Games' distribution business in February 2010. This strategic divestiture allows Take-Two to focus its resources and efforts on its core interactive entertainment publishing operations.

The report shows a strong turnaround from a net loss to a net income for the nine-month period. The improved gross profit margins and successful product releases suggest a positive trajectory, though performance can be influenced by new product release schedules and market reception.