01—Abstract
Summary
Summary of the 10-Q filed November 6, 2020. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported its fiscal second-quarter and year-to-date results for the period ending September 30, 2020.
The company demonstrated strong top-line growth for the first six months of the fiscal year, with net revenue increasing by 19.6% year-over-year to $1.67 billiona, driven primarily by strong performance in recurrent consumer spending and digital distribution channels. The company also saw significant improvements in profitability, with net income rising to $187.8 million for the six-month period, up from $118.1 million in the prior year.
Diluted earnings per share also saw a substantial increase. The acquisition of Playdots, Inc., a mobile game developer, on September 4, 2020, is expected to bolster the company's mobile offerings and expand its portfolio of intellectual property.
02—Key points
Key Highlights
- Net revenue for the six months ended September 30, 2020, increased by 19.6% to $1.67 billion, compared to $1.40 billion in the prior year.
- Recurrent consumer spending revenue, which includes virtual currency and in-game purchases, was a significant growth driver, increasing by 341.8 million for the six-month period.
- Digital online distribution channels accounted for 86.0% of net revenue for the six months ended September 30, 2020, highlighting the shift towards digital sales.
- Net income for the six months increased by 58.9% to $187.8 million, compared to $118.1 million in the prior year.
- Diluted earnings per share rose to $1.63 for the six months, a substantial increase from $1.04 in the prior year.
- The company completed the acquisition of Playdots, Inc. on September 4, 2020, for approximately $195.5 million, aiming to strengthen its mobile game portfolio.
- As of September 30, 2020, the company had $1.04 billion in short-term investments, providing significant financial flexibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2021, Take Two Interactive Software Inc kept $0.12.
- Revenue$841.1M100.0%
- Cost of revenue−$432.5M51.4%
- Gross profit$408.6M48.6%
- Operating costs−$293.3M34.9%
- Operating income$115.4M13.7%
- Interest, other & tax−$16.0M1.9%
- Net income$99.3M11.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2021filed November 6, 2020Financial Statements
Q2 FY2021 against Q2 FY2020
| Line item | Q2 FY2021Q2 FY2020 | Change |
|---|---|---|
| Revenue | $841.14M$857.84M | −1.9% |
| Cost of Revenue | $432.50M$468.25M | −7.6% |
| Gross Profit | $408.64M$389.59M | +4.9% |
| Operating Expenses | $293.27M$314.77M | −6.8% |
| Operating Income | $115.37M$74.82M | +54.2% |
| Net Income | $99.32M$71.81M | +38.3% |
| EPS (Basic) | $0.87$0.63 | +38.1% |
| EPS (Diluted) | $0.86$0.63 | +36.5% |
| Shares Outstanding (Basic) | 114.44M113.12M | +1.2% |
| Shares Outstanding (Diluted) | 115.41M114.08M | +1.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth for Take-Two Interactive in the reported period?
The primary drivers of revenue growth were the strong performance in recurrent consumer spending (in-game purchases, virtual currency, etc.) and the continued shift towards digital distribution channels, which accounted for 86.0% of net revenue for the six months ended September 30, 2020.
How did the acquisition of Playdots, Inc. impact the company's financial position?
The acquisition of Playdots, Inc. on September 4, 2020, for approximately $195.5 million (cash and stock) is expected to enhance Take-Two's mobile game offerings and expand its intellectual property. While the direct financial impact in this reporting period is minimal, it represents a strategic investment for future growth in the mobile segment.
What is the company's outlook on liquidity and cash position?
Take-Two Interactive maintains a strong liquidity position with $1.04 billion in short-term investments and $1.35 billion in cash and cash equivalents as of September 30, 2020. The company anticipates sufficient liquidity to meet its obligations, supported by operating cash flows and an available revolving credit facility.
How is the company addressing the impact of the COVID-19 pandemic on its business?
The company noted a positive impact on its results in the initial phases of the pandemic due to increased consumer engagement. However, it acknowledges the uncertainty of continued effects and potential offsetting impacts from deteriorating economic conditions. Take-Two has implemented work-from-home policies with minimal disruption to operations and continues to monitor the situation closely.
06—Continue