Summary
Take-Two Interactive Software, Inc. (TTWO) reported its fiscal second quarter 2013 financial results for the period ending September 30, 2013. The company experienced a significant decline in net revenue, down 45.5% year-over-year for the quarter, primarily driven by lower sales of titles released in the previous year, such as Borderlands 2. This revenue drop led to a substantial increase in net loss to $124.1 million, or $1.40 per share, compared to a net loss of $12.5 million, or $0.15 per share, in the prior year period. Despite the revenue challenges, the company successfully launched Grand Theft Auto V in September 2013, a major revenue driver that has had revenue deferred due to accounting policies for undelivered elements. The company also saw a significant increase in cash and cash equivalents, reaching $661.9 million, largely due to proceeds from the issuance of new convertible notes and the termination of related hedge transactions, as well as positive cash flow from operations driven by collections related to recent releases. The company's strategic shift towards digital distribution channels continues, with digital online revenue comprising a larger portion of total revenue.
Financial Highlights
47 data points| Revenue | $148.82M |
| Cost of Revenue | $92.46M |
| Gross Profit | $56.36M |
| Operating Expenses | $174.25M |
| Operating Income | -$117.89M |
| Net Income | -$124.12M |
| EPS (Basic) | $-1.40 |
| EPS (Diluted) | $-1.40 |
| Shares Outstanding (Basic) | 88.82M |
Key Highlights
- 1Net revenue for the quarter decreased by 45.5% to $148.8 million, compared to $273.1 million in the prior year quarter, largely due to the cyclical nature of game releases and lower sales from prior period titles.
- 2Net loss widened significantly to $124.1 million ($1.40 per share) from a net loss of $12.5 million ($0.15 per share) in the same period last year.
- 3The company launched Grand Theft Auto V in September 2013, a key title for future revenue, with revenue and associated costs deferred due to accounting treatment for undelivered content.
- 4Cash and cash equivalents increased substantially to $661.9 million from $402.5 million at the prior fiscal year-end, bolstered by new convertible note issuance and operational cash flow.
- 5Gross profit margin decreased to 37.9% from 42.0% year-over-year, impacted by a shift in product mix and higher software development costs.
- 6Digital online revenue now represents a larger portion of total revenue, accounting for 60.1% of net revenue in the current quarter, up from 20.3% in the prior year quarter.
- 7Operating expenses increased significantly, driven by higher selling and marketing expenses for new game launches (Grand Theft Auto V, The Bureau: XCOM Declassified) and increased general and administrative costs, including stock-based compensation.