01—Abstract
Summary
Summary of the 10-Q filed August 3, 2021. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported its financial results for the first quarter of fiscal year 2022 (ending June 30, 2021).
The company saw a slight decrease in net revenue to $813.3 milliona from $831.3 million in the prior year's comparable quarter. Despite the revenue dip, gross profit significantly increased by 36.4% to $483.6 million, driven by a favorable shift in revenue mix towards higher-margin recurrent consumer spending and a reduction in cost of goods sold. Net income for the quarter surged to $152.3 million, or $1.30 per diluted share, up from $88.5 million, or $0.77 per diluted share, in the same period last year.
This strong profitability was supported by increased investment in selling and marketing, and research and development, as well as a lower effective tax rate. The company also completed the acquisition of Nordeus Limited, a mobile game developer, on June 1, 2021, expanding its mobile offerings. The company's balance sheet remains robust, with total assets growing to $6.31 billionb.
Cash and cash equivalents, along with short-term investments, stood at a healthy $2.54 billionc. The company highlighted a strong performance in recurrent consumer spending, which now accounts for 70.4% of net revenue, up from 59.8% in the prior year, indicating a successful shift towards more predictable and higher-margin revenue streams. While net bookings saw a decline, the strong net income and improved gross margins suggest effective operational management and a favorable product mix.
02—Key points
Key Highlights
- Net income increased significantly by 72% year-over-year to $152.3 million, and diluted EPS rose to $1.30 from $0.77.
- Gross profit margin improved substantially to 59.5% from 42.7%, driven by a shift to higher-margin recurrent consumer spending (70.4% of net revenue) and lower cost of goods sold.
- Acquisition of Nordeus Limited completed on June 1, 2021, strengthening the company's mobile game portfolio.
- Digital online revenue accounted for 91.1% of total net revenue, demonstrating a continued shift towards digital distribution channels.
- Cash and cash equivalents, along with short-term investments, totaled $2.54 billion, providing ample liquidity.
- Net bookings decreased by 28.6% year-over-year, primarily due to lower bookings from key franchises like Grand Theft Auto and NBA 2K, partially offset by growth in mobile titles.
- Operating expenses increased, with selling and marketing up 22.5% and R&D up 26.2%, reflecting investments in growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2022, Take Two Interactive Software Inc kept $0.19.
- Revenue$813.3M100.0%
- Cost of revenue−$329.7M40.5%
- Gross profit$483.6M59.5%
- Operating costs−$313.1M38.5%
- Operating income$170.5M21.0%
- Interest, other & tax−$18.2M2.2%
- Net income$152.3M18.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed August 3, 2021Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Revenue | $813.30M$831.31M | −2.2% |
| Cost of Revenue | $329.70M$476.69M | −30.8% |
| Gross Profit | $483.60M$354.62M | +36.4% |
| Operating Expenses | $313.10M$272.48M | +14.9% |
| Operating Income | $170.50M$82.14M | +107.6% |
| Net Income | $152.30M$88.50M | +72.1% |
| EPS (Basic) | $1.32$0.78 | +69.2% |
| EPS (Diluted) | $1.30$0.77 | +68.8% |
| Shares Outstanding (Basic) | 115.70M113.86M | +1.6% |
| Shares Outstanding (Diluted) | 117.10M114.96M | +1.9% |
05—Questions
Frequently Asked Questions
What was the company's revenue performance in the quarter?
Net revenue for the three months ended June 30, 2021, was $813.3 million, a slight decrease of 2.2% compared to $831.3 million in the same period last year. This was primarily driven by a decrease in full game and other revenue, partially offset by an increase in recurrent consumer spending.
How did the Nordeus acquisition impact the company?
The acquisition of Nordeus Limited, completed on June 1, 2021, for approximately $306.3 million (including cash, stock, and contingent earn-out), was undertaken to expand the company's mobile offerings. Nordeus contributed $1.9 million in net revenue and a net loss of $4.5 million in the short period it was included in the results for the quarter.
What is the outlook for recurrent consumer spending (RCS) revenue?
Recurrent consumer spending revenue, which includes virtual currency, add-on content, and in-game purchases, increased by 15.2% to $572.3 million and now represents 70.4% of total net revenue, up from 59.8% in the prior year. This trend indicates a continued shift towards higher-margin, recurring revenue streams.
What is the company's cash position and liquidity?
As of June 30, 2021, the company had $1.40 billion in cash and cash equivalents and $1.14 billion in short-term investments, totaling approximately $2.54 billion. The company also has $247.9 million available under its revolving credit facility, indicating a strong liquidity position.
06—Continue