01—Abstract
Summary
Summary of the 10-Q filed February 9, 2021. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. reported strong performance for the nine months ended December 31, 2020, with net revenue increasing by 8.8% to $2.53 billion and net income growing to $370.1 milliona, up from $281.7 million in the prior year.
Diluted EPS also saw a significant increase to $3.20b from $2.47. The company experienced a notable shift in revenue composition, with recurrent consumer spending (in-game purchases, virtual currency, add-on content) increasing to 59.5% of net revenue for the nine-month period, up from 41.8% in the prior year. Conversely, full game and other revenue decreased as a percentage of total revenue.
The company also demonstrated solid operational execution, with operating cash flow significantly improving to $787.7 millionc from $440.0 million. The balance sheet remains robust, with cash and cash equivalents and restricted cash and cash equivalents totaling $2.51 billion at the end of the period.
The acquisition of Playdots, Inc. in September 2020 for $195.5 milliond further strengthens Take-Two's mobile offerings. While the company faces ongoing risks related to customer concentration and the evolving hardware market, the results indicate strong underlying demand and successful strategic execution.
02—Key points
Key Highlights
- Net revenue for the nine months ended December 31, 2020, increased by 8.8% to $2.53 billion, compared to $2.33 billion in the prior year.
- Net income for the nine months ended December 31, 2020, rose to $370.1 million, a significant increase from $281.7 million in the prior year.
- Diluted earnings per share (EPS) improved to $3.20 for the nine months ended December 31, 2020, up from $2.47 in the prior year.
- Recurrent consumer spending revenue grew substantially, representing 59.5% of total net revenue for the nine-month period, up from 41.8% in the prior year, indicating a successful shift towards ongoing player engagement.
- Net cash provided by operating activities significantly increased to $787.7 million for the nine months ended December 31, 2020, up from $440.0 million in the prior year.
- The company ended the period with a strong liquidity position, holding $2.51 billion in cash, cash equivalents, and restricted cash and cash equivalents.
- Acquisition of Playdots, Inc. in September 2020 for $195.5 million enhances the company's mobile game portfolio and is expected to contribute to future growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, Take Two Interactive Software Inc kept $0.21.
- Revenue$860.9M100.0%
- Cost of revenue−$346.2M40.2%
- Gross profit$514.6M59.8%
- Operating costs−$338.6M39.3%
- Operating income$176.1M20.5%
- Interest, other & tax$6.2M0.7%
- Net income$182.2M21.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed February 9, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $860.89M$930.13M | −7.4% |
| Cost of Revenue | $346.24M$437.09M | −20.8% |
| Gross Profit | $514.64M$493.04M | +4.4% |
| Operating Expenses | $338.59M$316.20M | +7.1% |
| Operating Income | $176.06M$176.83M | −0.4% |
| Net Income | $182.25M$163.64M | +11.4% |
| EPS (Basic) | $1.58$1.44 | +9.7% |
| EPS (Diluted) | $1.57$1.43 | +9.8% |
| Shares Outstanding (Basic) | 115.00M113.25M | +1.5% |
| Shares Outstanding (Diluted) | 116.12M114.25M | +1.6% |
05—Questions
Frequently Asked Questions
How did Take-Two Interactive's revenue perform in the nine months ended December 31, 2020, compared to the same period last year?
For the nine months ended December 31, 2020, Take-Two Interactive reported an 8.8% increase in net revenue, reaching $2.53 billion, up from $2.33 billion in the prior year. This growth was primarily driven by strong performance in franchises like NBA 2K, Grand Theft Auto Online, and the Mafia series, alongside new releases such as PGA TOUR 2K21.
What is the significance of the increase in recurrent consumer spending revenue?
The significant rise in recurrent consumer spending revenue, which now accounts for 59.5% of total net revenue for the nine-month period (up from 41.8% last year), indicates a successful strategic shift towards in-game purchases, virtual currency, and add-on content. This trend suggests strong player engagement and a more stable, recurring revenue stream beyond initial game sales.
How is Take-Two Interactive's financial health, particularly regarding cash flow and liquidity?
The company's financial health appears robust. Net cash provided by operating activities saw a substantial increase to $787.7 million for the nine months ended December 31, 2020, compared to $440.0 million in the prior year. Furthermore, Take-Two Interactive ended the period with a strong liquidity position, holding $2.51 billion in cash, cash equivalents, and restricted cash and cash equivalents, providing ample resources for ongoing operations and future investments.
What was the impact of the Playdots, Inc. acquisition?
Take-Two Interactive acquired Playdots, Inc. in September 2020 for $195.5 million. This acquisition is part of the company's strategy to expand its intellectual property portfolio and strengthen its mobile offerings. The acquired company is known for its popular mobile game 'Two Dots', and this move is expected to contribute to future growth, particularly in the mobile gaming segment.
06—Continue