Summary
Take-Two Interactive Software, Inc. (TTWO) reported its third-quarter fiscal year 2017 results for the period ending December 31, 2016. The company demonstrated revenue growth, driven by strong performance in titles such as Civilization VI and NBA 2K17, as well as continued engagement with Grand Theft Auto Online. Digital distribution channels continue to gain prominence, now accounting for over half of net revenue, highlighting a significant shift in consumer purchasing behavior. Despite overall revenue growth, the company reported a net loss for the quarter and the year-to-date period. This loss is attributed to increased selling and marketing expenses, higher research and development costs for new titles, and some non-recurring items like business reorganization expenses in the prior year. However, the company's cash position remains strong, with a substantial increase in cash and cash equivalents driven by operating and investing activities, indicating a healthy liquidity. Looking ahead, the company is well-positioned with a strong product pipeline, including the highly anticipated Red Dead Redemption 2. Recent acquisitions, such as Social Point, signal a strategic focus on expanding its mobile gaming presence. Investors should monitor the company's ability to translate revenue growth into profitability and manage its significant R&D investments.
Financial Highlights
52 data points| Revenue | $476.47M |
| Cost of Revenue | $311.07M |
| Gross Profit | $165.40M |
| Operating Expenses | $193.81M |
| Operating Income | -$28.41M |
| Net Income | -$29.84M |
| EPS (Basic) | $-0.33 |
| EPS (Diluted) | $-0.33 |
| Shares Outstanding (Basic) | 90.43M |
| Shares Outstanding (Diluted) | 90.43M |
Key Highlights
- 1Net revenue increased by 15.0% to $476.5 million for the three months ended December 31, 2016, compared to $414.2 million in the prior year period.
- 2Digital online channels represented 50.4% of total net revenue for the quarter, an increase from 35.4% in the prior year, indicating a strong shift towards digital sales.
- 3The company reported a net loss of $29.8 million for the quarter, compared to a net loss of $42.4 million in the prior year.
- 4Cash and cash equivalents significantly increased to $1,039.4 million as of December 31, 2016, from $798.7 million as of March 31, 2016, reflecting strong operational cash flow.
- 5Selling and marketing expenses increased significantly by 60.1% year-over-year for the quarter, driven by advertising for new releases and announcements like Red Dead Redemption 2.
- 6The company is investing heavily in Research & Development, with R&D expenses increasing by 34.5% year-over-year for the quarter to support new titles.
- 7Subsequent to the quarter, on January 31, 2017, Take-Two acquired Social Point, a mobile game developer, for $175 million in cash and stock.