01—Abstract
Summary
Summary of the 10-Q filed August 10, 2015. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. reported a significant increase in net revenue to $275.3 milliona for the three months ended June 30, 2015, up from $125.4 million in the prior year period.
This growth was primarily driven by strong sales of the 'Grand Theft Auto' franchise, particularly 'Grand Theft Auto V' which saw its PC release in April 2015 and continued revenue from its online component. Despite the revenue surge, the company experienced a widening net loss of $67.0 million compared to $35.4 millionb in the prior year.
This increase in loss is attributed to a substantial rise in the cost of goods sold, largely due to higher internal royalties, alongside increased operating expenses in selling, marketing, general administrative, and research and development functions. The company maintains a strong liquidity position with $815.8 millionc in cash and cash equivalents and short-term investments as of June 30, 2015.
02—Key points
Key Highlights
- Net revenue increased significantly to $275.3 million, driven by 'Grand Theft Auto V' PC release and ongoing 'Grand Theft Auto Online' revenue.
- Cost of goods sold rose substantially, impacting gross profit margins, primarily due to increased internal royalties.
- Operating expenses saw a notable increase across selling & marketing, general & administrative, and R&D, impacting profitability.
- Net loss widened to $67.0 million from $35.4 million in the prior year's comparable quarter.
- The company holds a substantial cash and short-term investment balance of $1.19 billion ($815.8 million cash + $375.0 million short-term investments) as of June 30, 2015.
- Console platform revenue dominated, representing 80.8% of total net revenue, a significant increase from the prior year.
- Digital online distribution channels accounted for 55.9% of net revenue, though this proportion decreased year-over-year.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2016, Take Two Interactive Software Inc lost $0.24.
- Revenue$275.3M100.0%
- Cost of revenue−$202.6M73.6%
- Gross profit$72.7M26.4%
- Operating costs−$135.3M49.2%
- Operating income−$62.6M22.8%
- Interest, other & tax−$4.4M1.6%
- Net income−$67.0M24.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2016filed August 10, 2015Financial Statements
Q1 FY2016 against Q1 FY2015
| Line item | Q1 FY2016Q1 FY2015 | Change |
|---|---|---|
| Revenue | $275.30M$125.42M | +119.5% |
| Cost of Revenue | $202.62M$54.16M | +274.1% |
| Gross Profit | $72.68M$71.27M | +2.0% |
| Operating Expenses | $135.32M$104.48M | +29.5% |
| Operating Income | -$62.64M-$33.21M | −88.6% |
| Net Income | -$67.02M-$35.40M | −89.3% |
| EPS (Basic) | $-0.81$-0.45 | −80.0% |
| EPS (Diluted) | $-0.81$-0.45 | −80.0% |
| Shares Outstanding (Basic) | 82.83M79.37M | +4.4% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the significant revenue increase?
The primary driver was the strong performance of the 'Grand Theft Auto' franchise, specifically the PC release of 'Grand Theft Auto V' in April 2015 and continued revenue from 'Grand Theft Auto Online'. Other contributing factors included revenue from 'Evolve' and higher sales of the 'WWE 2K' franchise.
Why did the net loss increase despite the higher revenue?
The increase in net loss was primarily due to a substantial rise in the cost of goods sold, largely driven by higher internal royalties as a percentage of net revenue. Additionally, operating expenses, including selling and marketing, general and administrative, and research and development, also increased compared to the prior year period.
What is the company's liquidity position?
Take-Two Interactive maintains a strong liquidity position. As of June 30, 2015, the company reported $815.8 million in cash and cash equivalents and $375.0 million in short-term investments, totaling $1.19 billion.
How is revenue distributed across platforms and distribution channels?
Console platforms represented a significant 80.8% of net revenue, up from 66.8% in the prior year. Digital online channels accounted for 55.9% of net revenue, a decrease from 63.9% in the prior year, while physical retail and other channels increased their share.
06—Continue