01—Abstract
Summary
Summary of the 10-Q filed October 31, 2012. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported its financial results for the fiscal quarter and six months ended September 30, 2012.
The company experienced a significant increase in net revenue for the three months ended September 30, 2012, driven by new releases such as Borderlands 2, Spec Ops: The Line, and Max Payne 3. However, the six-month period showed a more modest revenue increase, impacted by a significant decrease in sales from prior year releases. Despite revenue growth in the quarter, the company continued to incur net losses, with a net loss of $12.5 milliona for the three months and $123.3 million for the six months ended September 30, 2012.
Cash and cash equivalents decreased by approximately $91.9 millionb during the first six months of the fiscal year, primarily due to operating activities. The company maintained compliance with its credit agreement covenants and has sufficient liquidity for the next 12 months.
02—Key points
Key Highlights
- Net revenue for the three months ended September 30, 2012 increased significantly to $273.1 million, up from $107.0 million in the prior year period, largely due to new game releases like Borderlands 2.
- For the six months ended September 30, 2012, net revenue grew by 13.1% to $499.2 million, compared to $441.4 million in the same period last year, driven by new releases but partially offset by a decline in sales from previous year's titles.
- The company reported a net loss of $12.5 million ($0.15 per share) for the three months ended September 30, 2012, an improvement from a net loss of $47.4 million ($0.57 per share) in the prior year quarter.
- The net loss for the six months ended September 30, 2012 widened to $123.3 million ($1.45 per share), from a net loss of $56.1 million ($0.68 per share) in the prior year period.
- Cash and cash equivalents decreased to $328.3 million as of September 30, 2012, from $420.3 million as of March 31, 2012, reflecting net cash used in operating activities.
- Operating expenses increased significantly, particularly selling and marketing, driven by new product launch expenses.
- The company remains compliant with its Credit Agreement covenants and believes it has sufficient liquidity to meet its obligations for at least the next 12 months.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2013, Take Two Interactive Software Inc lost $0.05.
- Revenue$273.1M100.0%
- Cost of revenue−$158.5M58.0%
- Gross profit$114.6M42.0%
- Operating costs−$118.5M43.4%
- Operating income−$3.9M1.4%
- Interest, other & tax−$8.6M3.1%
- Net income−$12.5M4.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed October 31, 2012Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $273.08M$107.03M | +155.1% |
| Cost of Revenue | $158.49M$74.70M | +112.2% |
| Gross Profit | $114.60M$32.33M | +254.4% |
| Operating Expenses | $118.53M$73.84M | +60.5% |
| Operating Income | -$3.93M-$41.51M | +90.5% |
| Net Income | -$12.49M-$47.37M | +73.6% |
| EPS (Basic) | $-0.15$-0.57 | +73.7% |
| EPS (Diluted) | $-0.15$-0.57 | +73.7% |
| Shares Outstanding (Basic) | 85.40M82.94M | +3.0% |
| Shares Outstanding (Diluted) | 85.40M82.94M | +3.0% |
05—Questions
Frequently Asked Questions
What is the primary driver of the revenue increase in the recent quarter?
The significant increase in net revenue for the three months ended September 30, 2012, was primarily driven by the successful launches of new titles such as Borderlands 2, Spec Ops: The Line, and Max Payne 3.
Why did the company's net loss widen for the six-month period despite revenue growth?
While net revenue saw an increase for the six months ended September 30, 2012, the net loss widened due to significantly higher software development costs and royalties associated with the new titles released during the period, as well as increased selling and marketing expenses related to these launches. Additionally, a substantial contractual provision impacted general and administrative expenses.
How has the company's cash position changed, and what is its liquidity outlook?
Cash and cash equivalents decreased by approximately $92 million from March 31, 2012, to $328.3 million as of September 30, 2012, mainly due to cash used in operating activities, particularly investments in software development. The company states it believes its current cash position, along with availability under its Credit Agreement, provides sufficient liquidity for at least the next 12 months.
What is the status of the company's debt, and are there any concerns regarding its credit agreement?
The company has two series of convertible notes outstanding: 4.375% due 2014 and 1.75% due 2016. The company is compliant with the covenants of its Credit Agreement and has $68.1 million in available borrowings as of September 30, 2012. No outstanding borrowings were reported under the Credit Agreement at that time.
06—Continue