01—Abstract
Summary
Summary of the 10-Q filed February 6, 2013. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported a significant increase in net revenue for the three months ended December 31, 2012, reaching $415.8 milliona, a 75.9% increase year-over-year, driven by strong sales from new releases like "Borderlands 2" and "XCOM: Enemy Unknown," as well as continued performance from its "NBA 2K" and "Grand Theft Auto" franchises.
Despite the revenue surge, the company reported a net loss of $52.0 millionb for the nine months ended December 31, 2012, compared to a net loss of $42.0 million in the same period last year, primarily due to increased software development costs and royalties associated with new game development and marketing expenses for upcoming titles. The company ended the nine-month period with $448.7 million in cash and cash equivalents, indicating a healthy liquidity position.
Management anticipates current cash, cash flow from operations, and credit facilities will be sufficient to meet its obligations for at least the next 12 months. Key upcoming releases include "Major League Baseball 2K13" and "BioShock Infinite," with "Grand Theft Auto V" slated for September 2013, highlighting a strong product pipeline poised to drive future growth.
02—Key points
Key Highlights
- Net revenue for the three months ended December 31, 2012, increased by 75.9% to $415.8 million, compared to $236.3 million in the prior year period.
- Gross profit margin improved to 48.0% for the three months ended December 31, 2012, from 46.5% in the prior year period.
- Despite strong revenue growth in the quarter, the company reported a net loss of $51.96 million for the nine months ended December 31, 2012.
- Selling and marketing expenses increased significantly by 43.1% to $205.6 million for the nine months ended December 31, 2012, largely due to advertising for upcoming major titles.
- The company ended December 31, 2012, with $448.7 million in cash and cash equivalents, showing a solid liquidity position.
- Key future releases include "Grand Theft Auto V" (September 2013) and "BioShock Infinite" (March 2013), indicating a strong product pipeline.
- The company authorized a share repurchase program for up to 7.5 million shares of common stock in January 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Take Two Interactive Software Inc kept $0.17.
- Revenue$415.8M100.0%
- Cost of revenue−$216.3M52.0%
- Gross profit$199.5M48.0%
- Operating costs−$118.5M28.5%
- Operating income$81.0M19.5%
- Interest, other & tax−$9.6M2.3%
- Net income$71.4M17.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed February 6, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $415.77M$236.32M | +75.9% |
| Cost of Revenue | $216.30M$126.47M | +71.0% |
| Gross Profit | $199.47M$109.86M | +81.6% |
| Operating Expenses | $118.48M$89.61M | +32.2% |
| Operating Income | $80.99M$20.25M | +300.0% |
| Net Income | $71.36M$14.10M | +406.0% |
| EPS (Basic) | $0.76$0.16 | +375.0% |
| EPS (Diluted) | $0.66$0.16 | +312.5% |
| Shares Outstanding (Basic) | 85.74M83.56M | +2.6% |
| Shares Outstanding (Diluted) | 111.76M83.56M | +33.7% |
05—Questions
Frequently Asked Questions
What drove the significant revenue increase in the most recent quarter?
The substantial increase in net revenue to $415.8 million for the three months ended December 31, 2012, was primarily driven by strong sales from new releases such as "Borderlands 2" and "XCOM: Enemy Unknown," alongside continued robust sales from established franchises like "NBA 2K" and "Grand Theft Auto."
Why did the company report a net loss for the nine-month period despite revenue growth?
While revenue increased for the nine months ended December 31, 2012, the company experienced a net loss of $51.96 million. This was largely due to increased costs associated with developing and marketing new games, including higher software development costs, royalties, and significant investments in selling and marketing for upcoming titles like "Grand Theft Auto V" and "BioShock Infinite."
What is the company's current financial position and outlook regarding liquidity?
Take-Two Interactive ended the period with $448.7 million in cash and cash equivalents. Management believes that its current cash, projected cash flow from operations, and availability under its Credit Agreement will be sufficient to meet its liquidity needs for at least the next 12 months.
Are there any significant upcoming product releases that investors should be aware of?
Yes, the company has a strong product pipeline with significant upcoming releases. "BioShock Infinite" and "Major League Baseball 2K13" are scheduled for release in early 2013, and the highly anticipated "Grand Theft Auto V" is slated for release in September 2013. "XCOM" is also planned for fiscal year 2014.
06—Continue