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GAAP net revenue was $813 million
GAAP net income per diluted share increased to $1.30
GAAP net cash provided by operating activities for the three-months ended June 30, 2021 was $148 million
Adjusted Unrestricted Operating Cash Flow (Non-GAAP) for the three-months ended June 30, 2021 was $29 million
Net Bookings were $711 million, above guidance
Company reiterates outlook for fiscal year 2022
NEW YORK–(BUSINESS WIRE)–$TTWO–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 |
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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 |
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|
|
|
|
|
|||||||||||||||||
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:
*Source: AppAnnie based upon downloads and revenue through April 2021.
Rockstar Games:
2K:
Private Division:
T2 Mobile Games:
Outlook for Fiscal 2022
Take-Two is reiterating its outlook for the fiscal year ending March 31, 2022 and providing its initial outlook for its fiscal second quarter ending September 30, 2021:
Fiscal Year Ending March 31, 2022
The Company is also providing selected data and its management reporting tax rate of 16%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:
Twelve Months Ending March 31, 2022 |
|||||||||||||||
Financial Data |
|||||||||||||||
$ in millions |
GAAP outlook (3) |
Change in deferred net revenue and related cost of goods sold |
Stock-based compensation |
Gain on long term investments, net |
Amortization of Intangible Assets |
Reorganization & Acquisition |
|||||||||
|
|
||||||||||||||
Net revenue |
$3,140 to $3,240 |
|
$60 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of goods sold |
$1,399 to $1,444 |
|
$27 |
|
($42) |
|
|
|
($48) |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses |
$1,481 to $1,501 |
|
|
|
($127) |
|
|
|
($12) |
|
($2) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other, net |
($3) |
$1 |
$2 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes |
$263 to $298 |
$32 |
$169 |
($2) |
$60 |
$2 |
Second Quarter Ending September 30, 2021
The Company is also providing selected data and its management reporting tax rate of 16%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:
Three Months Ending September 30, 2021 |
|||||||||
Financial Data |
|||||||||
$ in millions |
GAAP outlook (3) |
Change in deferred net revenue and related cost of goods sold |
Stock-based compensation |
Amortization of acquired intangible assets |
|||||
Net revenue |
$740 to $790 |
|
$75 |
|
|
|
|
||
|
|
|
|
|
|
|
|||
Cost of goods sold |
$323 to $349 |
|
$10 |
|
($8) |
|
($12) |
||
|
|
|
|
|
|
|
|||
Operating Expenses |
$368 to $378 |
|
|
|
($29) |
|
($4) |
||
Interest and other, net |
$0 |
|
|
|
|
|
|
||
Income before income taxes |
$49 to $63 |
|
$65 |
|
$37 |
|
$16 |
1) |
Includes 116.3 million basic shares and 1.1 million shares representing the potential dilution from employee stock grants. |
|
2) |
Adjusted for changes in restricted cash. |
|
3) |
The individual components of the financial outlook may not foot to the totals, as the Company does not expect actual results for every component to be at the low end or high end of the outlook range simultaneously. |
|
4) |
Includes 116.4 million basic shares and 0.9 million shares representing the potential dilution from unvested employee stock grants. |
Key assumptions and dependencies underlying the Company’s outlook include: the timely delivery of the titles included in this financial outlook; a stable economic environment; continued consumer acceptance of Xbox One and PlayStation 4, as well as continued growth in the installed base of PlayStation 5 and Xbox Series X|S; the ability to develop and publish products that capture market share for these current generation systems while also leveraging opportunities on PC, mobile and other platforms; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.
Product Releases
The following titles have been released since April 1, 2021:
Label |
Title |
Platforms |
Release Date |
2K |
NBA 2K21 Arcade Edition |
iOS |
April 2, 2021 |
2K |
Borderlands 3 – Director’s Cut (part of Season Pass 2 DLC) |
PS4, PS5, Xbox One, Xbox Series X|S, PC, Stadia |
April 8, 2021 |
2K |
Civilization VI Anthology |
Windows PC |
June 10, 2021 |
Rockstar Games |
Red Dead Redemption Online: Blood Money Update |
PS4, Xbox One, PC |
July 13, 2021 |
Rockstar Games |
Grand Theft Auto Online: Los Santos Tuners Update |
PS4, Xbox One, PC |
July 20, 2021 |
Take-Two’s lineup of future titles announced to-date includes:
Label |
Title |
Platforms |
Release Date |
Private Division |
Hades (physical release) |
PS4, PS5, Xbox One, Xbox Series X |
August 13, 2021 |
2K |
NBA 2K22 |
PS4, PS5, Xbox One, Xbox Series X|S, PC, Switch |
September 10, 2021 |
Private Division |
The Outer Worlds: Murder on Eridanos (DLC) |
Switch |
Q2 Fiscal 2022 |
Private Division |
Kerbal Space Program Enhanced Edition |
PS5, Xbox Series X|S |
Fall 2021 |
Rockstar Games |
Grand Theft Auto V: Expanded and Enhanced |
PS5, Xbox Series X|S |
November 11, 2021 |
Rockstar Games |
Grand Theft Auto Online – Standalone |
PS5, Xbox Series X|S |
November 11, 2021 |
2K |
Tiny Tina’s Wonderlands |
PS4, PS5, Xbox One, Xbox Series X|S, PC |
Q4 Fiscal 2022 |
Private Division |
OlliOlli World |
PS4, PS5, Xbox One, Xbox Series X|S, Switch, PC (digital only) |
Fiscal 2022 |
2K |
WWE 2K22 |
TBA |
Fiscal 2022 |
Private Division |
Kerbal Space Program 2 |
PS4, PS5, Xbox One, Xbox Series X|S, PC |
Fiscal 2023 |
Conference Call
Take-Two will host a conference call today at 4:30 p.m. Eastern Time to review these results and discuss other topics. The call can be accessed by dialing (877) 407-0984 or (201) 689-8577. A live listen-only webcast of the call will be available by visiting http://ir.take2games.com and a replay will be available following the call at the same location.
Non-GAAP Financial Measure
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses a Non-GAAP measure of financial performance: Adjusted Unrestricted Operating Cash Flow, which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash. The Company’s management believes it is important to consider Adjusted Unrestricted Operating Cash Flow, in addition to net cash from operating activities, as it provides more transparency into current business trends without regard to the timing of payments from restricted cash, which is primarily related to a dedicated account limited to the payment of certain internal royalty obligations.
Contacts
(Investor Relations)
Nicole Shevins
Senior Vice President
Investor Relations & Corporate Communications
Take-Two Interactive Software, Inc.
(646) 536-3005
Nicole.Shevins@take2games.com
(Corporate Press)
Alan Lewis
Vice President
Corporate Communications & Public Affairs
Take-Two Interactive Software, Inc.
(646) 536-2983
Alan.Lewis@take2games.com
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