Take-Two Interactive Software, Inc. Reports Better Than Expected Results for Fiscal First

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NEW YORK–(BUSINESS WIRE)–Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported better than expected results for the first quarter of its fiscal year 2022, ending June 30, 2021. In addition, the Company reiterated its outlook for the fiscal year 2022, ending March 31, 2022, and provided its initial outlook for the second quarter of its fiscal year 2022, ending September 30, 2021. For further information, please see the fiscal first quarter 2022 results slide deck posted to the Company’s investor relations website at http://ir.take2games.com.

First Quarter Fiscal 2022 Financial Highlights

GAAP net revenue decreased 2% to $813.3 million, as compared to $831.3 million in last year’s fiscal first quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 15% and accounted for 70% of total GAAP net revenue. The largest contributors to GAAP net revenue were NBA® 2K21 and NBA 2K20; Grand Theft Auto® Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands® 3; the WWE® series; Dragon City®; Sid Meier’s Civilization® VI; and Two Dots®.

Digitally-delivered GAAP net revenue increased 1% to $740.8 million, as compared to $735.6 million in last year’s fiscal first quarter, and accounted for 91% of total GAAP net revenue. The largest contributors to GAAP digitally-delivered net revenue were NBA 2K21 and NBA 2K20; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; the WWE series; Dragon City; Two Dots; Sid Meier’s Civilization VI; and Monster Legends®.

GAAP net income increased 72% to $152.3 million, or $1.30 per diluted share, as compared to $88.5 million, or $0.77 per diluted share, for the comparable period last year.

During the three-month period ended June 30, 2021, GAAP net cash provided by operating activities was $148.2 million, as compared to $445.4 million in the same period last year. During the three-month period ended June 30, 2021, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, was $29.1 million, as compared to $324.0 million in the same period last year (please see the section below titled “Non-GAAP Financial Measure” for additional information). As of June 30, 2021, the Company had cash and short-term investments of $2.536 billion.

The following data, together with a management reporting tax rate of 16%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

Three Months Ended June 30, 2021

Financial Data

 

$ in thousands

Statement of

operations

Change in

deferred net

revenue

and related

cost of

goods sold

Stock-based

compensation

 

 

 

Impact of

business

reorganization

 

 

Business

acquisition

 

Amortization

& impairment

of acquired

intangible

assets

Gain on

long-term

investments, net

 

 

 

 

 

Net revenue

$813,346

 

(101,916

)

 

 

 

 

 

Cost of goods sold

329,715

 

(8,135

)

(12,050

)

 

 

 

 

(11,112

 

)

 

 

Gross profit

 

483,631

 

 

 

(93,781

 

)

 

12,050

 

 

 

 

 

 

11,112

 

 

 

Total operating expenses

313,157

 

(37,000

)

 

(97

 

)

 

(2,186

 

)

 

 

(3,894

 

)

 

Income from operations

170,474

 

(93,781

)

49,050

 

97

 

2,186

 

 

15,006

 

 

Interest and other, net

(1,027

)

(610

)

 

 

 

 

 

 

 

 

 

Gain on long-term investments, net

1,997

 

 

 

 

 

 

 

 

 

(1,997

)

Income before income taxes

171,444

 

(94,391

)

49,050

 

97

 

2,186

 

 

 

15,006

 

 

 

 

(1,997

)

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 117.1 million.

Operational Metric – Net Bookings

Net Bookings is defined as the net amount of products and services sold digitally or sold-in physically during the period, and includes licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.

During fiscal first quarter 2022, total Net Bookings declined 29% to $711.4 million, as compared to $996.2 million during last year’s fiscal first quarter. Net Bookings from recurrent consumer spending declined 25% and accounted for 69% of total Net Bookings. The largest contributors to Net Bookings were Grand Theft Auto Online and Grand Theft Auto V; NBA 2K21 and 2K20; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; the WWE series; Dragon City; Two Dots; Sid Meier’s Civilization VI; and Monster Legends.

Catalog accounted for $652.6 million of Net Bookings led by Grand Theft Auto, NBA 2K, Red Dead Redemption, Borderlands, the WWE series, Dragon City, Sid Meier’s Civilization and Two Dots.

Digitally-delivered Net Bookings declined 26% to $680.4 million, as compared to $924.5 million in last year’s fiscal first quarter, and accounted for 96% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings were Grand Theft Auto Online and Grand Theft Auto V; NBA 2K21 and NBA 2K20; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; the WWE series; Dragon City; Two Dots; Sid Meier’s Civilization VI; and Monster Legends.

Management Comments

“We began fiscal 2022 with positive momentum, which was reflected in our ability to deliver first quarter operating results which were above our expectations,” said Strauss Zelnick, Chairman and CEO of Take-Two. “During the period, we continued to invest in our future, including growing our creative teams and expanding our mobile business and expertise further.

“For the year, we are reiterating our outlook, as there has been some movement in our release schedule, including two of our immersive core titles shifting to later in fiscal 2022 than contemplated by our prior guidance. As we deliver on our expansive multi-year pipeline, we believe that we will achieve sequential growth in fiscal 2023 and establish new record levels of operating results over the next few years.

“We remain highly optimistic about the growth potential for the interactive entertainment industry and our competitive positioning within the sector. We believe that our unique strategic advantages, together with our focus on enhancing our enterprise and capitalizing on our growth opportunities, will enable us to deliver long-term shareholder value.”

COVID-19 Response

At Take-Two, our number one priority has remained the health and safety of our employees and their families. All of our offices moved largely to work-from-home environments by mid-March 2020. As we begin to re-open many of our offices, we are strictly following protocols from local governments and health officials to ensure that we are adhering to their safety standards.

Due to the shelter-in-place orders that began last year, we experienced heightened levels of engagement and Net Bookings growth during our fiscal 2021 period. As the return to normalcy continues to unfold, the impact to our business, operations and financial results will depend on numerous evolving factors that we are not able to predict. The key risks to our business are set forth under the heading “Cautionary Note Regarding Forward-Looking Statements” in this release and in Take-Two’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Business and Product Highlights

Since April 1, 2021:

Take-Two:

  • Acquired privately-held Nordeus for an upfront purchase price of $225 million. There is the potential for the payment of an additional earn-out consideration based upon Nordeus achieving EBITDA results above certain thresholds during each of the…

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