01—Abstract
Summary
Summary of the 10-Q filed February 9, 2011. Cited figures are marked; the original filing is the authoritative source.
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 milliona 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 millionb as of December 31, 2010, indicating improved liquidity and financial stability.
02—Key points
Key Highlights
- For 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.
- Net 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'.
- Cash 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.
- The company completed the sale of its 'Jack of all Games' distribution business in February 2010, allowing it to concentrate resources on its publishing operations.
- Gross 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.
- Selling 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'.
- General and administrative expenses decreased by 12.2% for the nine months, primarily due to reduced legal and settlement costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2011, Take Two Interactive Software Inc kept $0.12.
- Revenue$334.3M100.0%
- Cost of revenue−$188.7M56.4%
- Gross profit$145.6M43.6%
- Operating costs−$96.9M29.0%
- Operating income$48.7M14.6%
- Interest, other & tax−$7.8M2.3%
- Net income$40.9M12.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed February 9, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $334.26M$360.36M | −7.2% |
| Cost of Revenue | $188.65M$203.74M | −7.4% |
| Gross Profit | $145.61M$156.63M | −7.0% |
| R&D Expenses | $18.07M$15.66M | +15.4% |
| Operating Expenses | $96.93M$112.16M | −13.6% |
| Operating Income | $48.68M$44.46M | +9.5% |
| Net Income | $40.86M$37.92M | +7.8% |
| EPS (Basic) | $0.47$0.45 | +4.4% |
| EPS (Diluted) | $0.45$0.43 | +4.7% |
| Shares Outstanding (Basic) | 80.74M— | — |
| Shares Outstanding (Diluted) | 93.68M— | — |
05—Questions
Frequently Asked Questions
What was the main driver of Take-Two's improved financial performance in the reported period?
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.'
How has the company's liquidity position changed?
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.
Has Take-Two undergone any significant business changes?
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.
What is the outlook for the company's profitability based on this report?
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.
06—Continue