Summary
Take-Two Interactive Software, Inc. (TTWO) reported its financial results for the first quarter of fiscal year 2017, ending June 30, 2016. The company demonstrated a significant improvement in gross profit margin, which rose to 38.6% from 26.4% in the prior year, driven by stronger net revenue and a favorable shift in revenue mix, particularly from the NBA 2K franchise. Despite an increase in selling and marketing expenses related to new product launches like 'Battleborn' and upcoming titles, the company managed to reduce its net loss to $38.6 million ($0.46 per share) from $67.0 million ($0.81 per share) in the same period last year. This performance reflects a strategic focus on higher-margin revenue streams and disciplined operational expense management. Financially, Take-Two maintained a strong liquidity position with $796.3 million in cash and cash equivalents and $392.5 million in short-term investments as of June 30, 2016. The company's balance sheet shows total assets of $2.54 billion and total liabilities of $2.01 billion. While the company utilized $47.2 million in cash from operations, largely due to investments in upcoming product development, its overall cash position remained robust, supported by investing activities. The upcoming maturity of its 1.75% Convertible Notes in December 2016 warrants investor attention.
Financial Highlights
50 data points| Revenue | $311.55M |
| Cost of Revenue | $191.38M |
| Gross Profit | $120.17M |
| Operating Expenses | $159.16M |
| Operating Income | -$38.98M |
| Net Income | -$38.57M |
| EPS (Basic) | $-0.46 |
| EPS (Diluted) | $-0.46 |
| Shares Outstanding (Basic) | 84.59M |
| Shares Outstanding (Diluted) | 84.59M |
Key Highlights
- 1Net revenue increased by 13.2% year-over-year to $311.6 million, driven primarily by the NBA 2K franchise and PC title XCOM 2, partially offset by declines in Grand Theft Auto V and Evolve.
- 2Gross profit margin significantly improved to 38.6% from 26.4% in the prior year, indicating better cost management and a favorable revenue mix.
- 3Selling and marketing expenses increased by 56.1% to $71.1 million, reflecting investments in new product launches like 'Battleborn' and upcoming titles such as 'Mafia III'.
- 4Net loss narrowed to $38.6 million ($0.46 per diluted share) from $67.0 million ($0.81 per diluted share) in the prior year's comparable period.
- 5Cash and cash equivalents remained strong at $796.3 million, although operating activities used $47.2 million in cash, primarily for product development.
- 6The company's 1.75% Convertible Notes are set to mature in December 2016, representing a significant upcoming financial event.
- 7Recurrent consumer spending (add-on content, microtransactions, online play) increased its contribution to digital online revenue to 57.0% from 53.7% in the prior year.