01—Abstract
Summary
Summary of the 10-Q filed November 8, 2011. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported a net loss of $47.4 milliona for the third quarter of fiscal year 2011, a significant downturn compared to a net income of $3.3 million in the same period last year.
This loss translates to a diluted loss per share of $0.57b. The decline in revenue was primarily attributed to the absence of major releases like 'Red Dead Redemption' and 'Mafia II' in the current quarter, which were strong contributors in the prior year. While 'L.A.
Noire' showed some positive contribution, it was not enough to offset the revenue gap. The company's financial position shows a decrease in cash and cash equivalents to $269.7 millionc from $280.4 million at the end of the previous fiscal year, largely due to operating and investing activities.
The balance sheet indicates a significant increase in inventory and software development costs, suggesting investment in future product pipelines, alongside a decrease in accounts receivable. Despite the net loss, the company remains compliant with its credit agreement covenants.
02—Key points
Key Highlights
- Net loss of $47.4 million for the three months ended September 30, 2011, compared to a net income of $3.3 million in the prior year.
- Diluted loss per share of $0.57 for the quarter, versus diluted earnings per share of $0.04 in the prior year.
- Net revenue decreased significantly by 56.3% to $107.0 million from $244.9 million year-over-year, primarily due to the lack of major title releases compared to the prior year.
- Cash and cash equivalents decreased to $269.7 million from $280.4 million at the end of the fiscal year.
- Inventory increased to $45.1 million from $24.6 million, and software development costs and licenses increased significantly.
- The company has a new Credit Agreement in place as of October 2011, providing up to $100 million in borrowings.
- The legal proceeding 'Wilamowsky v. Take-Two et al.' was dismissed with prejudice on September 30, 2011.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2012, Take Two Interactive Software Inc lost $0.44.
- Revenue$107.0M100.0%
- Cost of revenue−$74.7M69.8%
- Gross profit$32.3M30.2%
- Operating costs−$73.8M69.0%
- Operating income−$41.5M38.8%
- Interest, other & tax−$5.9M5.5%
- Net income−$47.4M44.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2012filed November 8, 2011Financial Statements
Q2 FY2012 against Q2 FY2011
| Line item | Q2 FY2012Q2 FY2011 | Change |
|---|---|---|
| Revenue | $107.03M$244.97M | −56.3% |
| Cost of Revenue | $74.70M$136.64M | −45.3% |
| Gross Profit | $32.33M$108.33M | −70.2% |
| Operating Expenses | $73.84M$95.30M | −22.5% |
| Operating Income | -$41.51M$13.03M | −418.6% |
| Net Income | -$47.37M$3.34M | −1518.7% |
| EPS (Basic) | $-0.57$0.04 | −1525.0% |
| EPS (Diluted) | $-0.57$0.04 | −1525.0% |
| Shares Outstanding (Basic) | 82.94M79.79M | +3.9% |
| Shares Outstanding (Diluted) | 82.94M79.79M | +3.9% |
05—Questions
Frequently Asked Questions
What is the primary reason for the significant revenue decline in the third quarter?
The primary reason for the substantial decrease in net revenue (down 56.3% year-over-year) is the absence of major title releases that drove significant sales in the same period last year, such as 'Red Dead Redemption', 'Mafia II', and 'Sid Meier's Civilization V'. While 'L.A. Noire' contributed positively, its impact was not sufficient to offset the revenue shortfall.
How has the company's cash position changed?
The company's cash and cash equivalents decreased to $269.7 million as of September 30, 2011, from $280.4 million at the end of the previous fiscal year (March 31, 2011). This decrease was mainly due to cash used in operating and investing activities, partially offset by positive foreign currency exchange rate effects.
What is the company's outlook regarding future product development and releases?
The company's balance sheet shows an increase in inventory and capitalized software development costs, indicating continued investment in its product pipeline. Announced titles include 'NBA 2K12', 'The Darkness II', 'Max Payne 3', 'Major League Baseball 2K12', 'BioShock Infinite', 'Spec Ops: The Line', 'Borderlands 2', 'XCOM', and 'Grand Theft Auto V', with release dates ranging from late 2011 through fiscal year 2013.
Are there any significant legal matters that investors should be aware of?
The company announced that the legal proceeding 'Wilamowsky v. Take-Two et al.', related to alleged stock option backdating, was dismissed with prejudice by the court on September 30, 2011. This resolves a potentially material legal risk for the company.
06—Continue