Summary
Take-Two Interactive Software, Inc. (TTWO) reported a net loss of $35.4 million for the three months ended June 30, 2014, a significant improvement from the $61.9 million net loss in the same period of the prior year. This reduction in net loss was driven by a substantial increase in gross profit margin, which rose to 56.8% from 34.2% year-over-year, primarily due to lower cost of goods sold as a percentage of net revenue and reduced software development impairment charges compared to the prior year. Net revenue for the quarter decreased by 12.1% to $125.4 million, largely due to a decline in sales from previously released titles, though this was partially offset by strong performance from the Grand Theft Auto franchise, particularly Grand Theft Auto V and Grand Theft Auto Online. The company continues to see a significant shift towards digital distribution, with digital online channels now representing 63.9% of net revenue, up from 51.1% in the prior year. The balance sheet shows a decrease in total assets to $1.61 billion from $1.80 billion sequentially, with a notable drop in cash and cash equivalents from $935.4 million to $822.0 million. Despite the sequential decrease in cash, the company maintains a strong liquidity position with $822 million in cash and cash equivalents and an available borrowing capacity of $57.3 million under its credit agreement, indicating sufficient resources to fund operations.
Financial Highlights
48 data points| Revenue | $125.42M |
| Cost of Revenue | $54.16M |
| Gross Profit | $71.27M |
| Operating Expenses | $104.48M |
| Operating Income | -$33.21M |
| Net Income | -$35.40M |
| EPS (Basic) | $-0.45 |
| EPS (Diluted) | $-0.45 |
| Shares Outstanding (Basic) | 79.37M |
Key Highlights
- 1Net loss improved significantly to $35.4 million from $61.9 million in the prior year's comparable quarter.
- 2Gross profit margin increased substantially to 56.8% from 34.2% year-over-year.
- 3Net revenue decreased 12.1% to $125.4 million, impacted by lower sales from older titles, but partially offset by Grand Theft Auto franchise performance.
- 4Shift to digital distribution continues, with digital online revenue now representing 63.9% of total net revenue.
- 5Cash and cash equivalents decreased sequentially to $822.0 million from $935.4 million, primarily due to operating and investing activities.
- 6Company maintained compliance with debt covenants and has $57.3 million available under its credit agreement.
- 7Significant year-over-year increase in general and administrative expenses, driven by stock-based compensation related to management agreements.