Summary
Take-Two Interactive Software, Inc. reported strong financial results for the nine months and three months ended December 31, 2018, driven significantly by the successful launch of "Red Dead Redemption 2" and the adoption of new revenue recognition standards (Topic 606). Net revenue for the nine months more than doubled year-over-year to $2.13 billion, with a substantial portion attributed to the new accounting standard which accelerated revenue recognition. The company demonstrated robust profitability, with net income reaching $277 million for the nine-month period, a significant increase from $82.7 million in the prior year. Key financial metrics show substantial growth, with Net Bookings surging 140% in the quarter and 54.5% for the nine-month period. The company also saw a significant improvement in its balance sheet, with cash and cash equivalents increasing to $1.3 billion. The company's strategic product releases and continued investment in game development, coupled with the favorable impact of Topic 606, position it well for continued growth, though investors should remain mindful of the industry's inherent cyclicality and dependence on major title releases.
Financial Highlights
53 data points| Revenue | $1.25B |
| Cost of Revenue | $898.48M |
| Gross Profit | $350.25M |
| Operating Expenses | $298.48M |
| Operating Income | $51.78M |
| Net Income | $179.95M |
| EPS (Basic) | $1.59 |
| EPS (Diluted) | $1.57 |
| Shares Outstanding (Basic) | 113.43M |
| Shares Outstanding (Diluted) | 114.74M |
Key Highlights
- 1Net revenue for the nine months ended December 31, 2018, reached $2.13 billion, a significant increase from $1.34 billion in the prior year, largely due to the launch of "Red Dead Redemption 2" and the adoption of new revenue recognition standards (Topic 606).
- 2Net income for the nine months surged to $277 million, up from $82.7 million in the prior year, indicating strong profitability.
- 3Net Bookings showed substantial growth, increasing by 139.9% for the three months and 54.5% for the nine months ended December 31, 2018, driven by major title releases.
- 4The company's cash and cash equivalents, including restricted cash, increased to $1.3 billion as of December 31, 2018, up from approximately $1.25 billion at the end of the prior fiscal year.
- 5Operating expenses increased, but as a percentage of net revenue, they generally decreased, demonstrating operating leverage, particularly with the revenue boost from Topic 606.
- 6The company continued its share repurchase program, buying back $262.4 million worth of stock in the nine months ended December 31, 2018.
- 7Gross profit margin decreased to 40.6% for the nine months (from 47.2% prior year), but this was primarily due to the revenue acceleration from Topic 606, which impacted margins; the underlying operational performance remains strong.