Summary
Take-Two Interactive Software, Inc.'s (TTWO) Q2 fiscal year 2018 results show a mixed financial performance. While net revenue saw an increase of 5.6% to $443.6 million for the quarter and 17.8% to $861.8 million for the six months compared to the prior year, driven by strong performance from franchises like NBA 2K and Grand Theft Auto Online, the company reported a net loss of $2.7 million for the quarter, a reversal from a net profit of $36.4 million in the prior year period. This shift was significantly impacted by a substantial increase in operating expenses, particularly in research and development and general and administrative costs, as well as a notable increase in cost of goods sold due to higher internal royalties and stock-based compensation expenses related to award modifications. The company also recorded a $11.3 million impairment charge related to R&D from the Social Point acquisition and initiated a strategic reorganization at one of its labels. Despite the quarterly loss, the six-month period still shows a net income of $57.5 million. The company's balance sheet remains robust with total assets of $3.7 billion and a healthy cash position, although cash and cash equivalents decreased from the prior quarter. The company reiterated its positive outlook for future releases, including Red Dead Redemption 2, expected in Spring 2018.
Financial Highlights
52 data points| Revenue | $443.56M |
| Cost of Revenue | $246.55M |
| Gross Profit | $197.01M |
| Operating Expenses | $208.33M |
| Operating Income | -$11.32M |
| Interest Expense | $0 |
| Net Income | $25.37M |
| EPS (Basic) | $-0.03 |
| EPS (Diluted) | $-0.03 |
| Shares Outstanding (Basic) | 109.43M |
| Shares Outstanding (Diluted) | 109.43M |
Key Highlights
- 1Net revenue increased 5.6% to $443.6 million for the quarter and 17.8% to $861.8 million for the six months, primarily driven by NBA 2K and Grand Theft Auto Online.
- 2Reported a net loss of $2.7 million for the quarter, a significant decrease from a net income of $36.4 million in the prior year's comparable period.
- 3Gross profit margin declined to 44.4% for the quarter from 51.1% in the prior year, impacted by higher royalties and stock-based compensation.
- 4Operating expenses increased significantly, with R&D up 66.6% and G&A up 22.4% for the quarter.
- 5Recorded an $11.3 million impairment charge for in-process R&D from the Social Point acquisition.
- 6Initiated a strategic reorganization impacting one of its labels, resulting in $1.7 million in reorganization expenses for the quarter.
- 7Strong digital revenue contribution: 68.3% of QTD revenue and 66.3% of YTD revenue came from digital channels.