01—Abstract
Summary
Summary of the 10-Q filed November 6, 2015. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software reported a significant turnaround in its financial performance for the three months ended September 30, 2015, compared to the same period last year.
The company achieved a net income of $54.7 milliona, a substantial improvement from a net loss of $41.4 million in the prior year. This positive swing was primarily driven by a surge in net revenue, which more than doubled to $347 million, largely attributed to the continued success and deferred revenue recognition of "Grand Theft Auto V" and "Grand Theft Auto Online," as well as strong performance from the "NBA 2K" franchise. For the six-month period, the company narrowed its net loss to $12.3 million from $76.8 million in the prior year, with net revenue more than doubling to $622.3 million.
The company's cash position saw a decrease to $711.7 millionb from $911.1 million, primarily due to investments in software development and share repurchases, though it maintained significant liquidity with available borrowing capacity under its credit agreement. The company also continued its share repurchase program, buying back shares during the quarter.
02—Key points
Key Highlights
- Net income of $54.7 million for the three months ended September 30, 2015, a significant recovery from a net loss of $41.4 million in the prior year period.
- Net revenue for the three months ended September 30, 2015, surged to $347.0 million, a 174.8% increase year-over-year, driven by "Grand Theft Auto V" and "NBA 2K" franchises.
- For the six months ended September 30, 2015, the company reported a narrowed net loss of $12.3 million, down from a $76.8 million loss in the same period last year.
- Cash and cash equivalents decreased to $711.7 million as of September 30, 2015, from $911.1 million as of March 31, 2015, mainly due to investing activities and share repurchases.
- The company repurchased approximately 953,647 shares of common stock for $26.6 million during the three months ended September 30, 2015, as part of its ongoing share repurchase program.
- Console games represented 86.8% of net revenue for the quarter and 84.1% for the six-month period, highlighting the platform's dominance for the company.
- Digital online channels accounted for 57.3% of net revenue for the six-month period, with recurrent consumer spending (add-on content, microtransactions, online play) making up a significant portion of this revenue.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2016, Take Two Interactive Software Inc kept $0.16.
- Revenue$347.0M100.0%
- Cost of revenue−$143.9M41.5%
- Gross profit$203.0M58.5%
- Operating costs−$136.6M39.4%
- Operating income$66.4M19.1%
- Interest, other & tax−$11.7M3.4%
- Net income$54.7M15.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2016filed November 6, 2015Financial Statements
Q2 FY2016 against Q2 FY2015
| Line item | Q2 FY2016Q2 FY2015 | Change |
|---|---|---|
| Revenue | $346.97M$126.28M | +174.8% |
| Cost of Revenue | $143.94M$52.02M | +176.7% |
| Gross Profit | $203.03M$74.26M | +173.4% |
| Operating Expenses | $136.60M$122.77M | +11.3% |
| Operating Income | $66.43M-$48.51M | +236.9% |
| Net Income | $54.73M-$41.37M | +232.3% |
| EPS (Basic) | $0.63$-0.51 | +223.5% |
| EPS (Diluted) | $0.55$-0.51 | +207.8% |
| Shares Outstanding (Basic) | 87.56M80.36M | +9.0% |
| Shares Outstanding (Diluted) | 114.02M80.36M | +41.9% |
05—Questions
Frequently Asked Questions
What was the primary driver for the significant revenue increase in the quarter?
The primary driver for the significant revenue increase was the continued success of the "Grand Theft Auto" franchise, particularly "Grand Theft Auto V" and "Grand Theft Auto Online." This included the recognition of previously deferred revenue from console versions and the PC release of "Grand Theft Auto V." Additionally, strong performance from the "NBA 2K" franchise contributed to the revenue growth.
How has the company's cash position changed, and what is its liquidity outlook?
Cash and cash equivalents decreased from $911.1 million at the end of the prior fiscal year to $711.7 million at September 30, 2015. This decrease was primarily due to cash used in investing activities, such as purchases of short-term investments and fixed assets, and cash used for share repurchases. However, the company maintains a strong liquidity position, with projected cash flow from operations, availability under its Credit Agreement, and Convertible Notes expected to satisfy its working capital needs for at least the next 12 months.
What is the company's strategy regarding digital distribution and online content?
The company sees digital online delivery as a growing part of its business. They offer titles through direct digital download and aim to drive ongoing engagement and incremental revenue through downloadable content, microtransactions, and online play. For the six months ended September 30, 2015, digital online channels accounted for 57.3% of net revenue, with recurrent consumer spending being a significant component of this revenue stream.
What is the status of the company's share repurchase program?
The company has an active share repurchase program. During the three months ended September 30, 2015, they repurchased approximately 953,647 shares for $26.6 million. As of September 30, 2015, there were 9,046,353 shares remaining available for repurchase under the program.
06—Continue