Take-Two Interactive Software, Inc. Reports Results for First Quarter Fiscal 2013

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Net Revenue was $226.1 Million

Non-GAAP Net Loss Per Diluted Share was $1.16

Company Now Expects Non-GAAP Net Income Per Diluted Share of $1.75 to $2.00 For Fiscal Year 2013

NEW YORK--(BUSINESS WIRE)--Jul. 31, 2012-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported financial results for the first quarter of its fiscal year 2013, ended June 30, 2012. In addition, the Company updated its financial outlook for the fiscal year 2013, ending March 31, 2013, and provided its initial financial outlook for the fiscal second quarter ending September 30, 2012.

For the first quarter of fiscal 2013, net revenue was $226.1 million, as compared to $334.4 million for the first quarter of fiscal 2012. GAAP loss from continuing operations was $110.8 million, or $1.30 per diluted share, as compared to $8.6 million, or $0.11 per diluted share, for the year-ago period. Non-GAAP net loss was $98.8 million, or $1.16 per diluted share, as compared to Non-GAAP net income of $2.0 million, or $0.02 per diluted share, for the year-ago period. Both GAAP loss from continuing operations and Non-GAAP net loss for the first quarter of fiscal 2013 include the negative impact from a one-time contractual obligation of $15 million, or $0.18 per diluted share.

The strongest contributors to net revenue in the first quarter were the release of Max Payne 3, catalog sales led by the Grand Theft Auto franchise and Red Dead Redemption, the release of Spec Ops: The Line, and continuing sales of NBA 2K12. Catalog sales grew 50% year-over-year and accounted for 26% of net revenue. Revenue from digitally delivered content grew 33% year-over-year and accounted for 14% of net revenue, driven by offerings for the Sid Meier's Civilization franchise, the Grand Theft Auto franchise, the Max Payne franchise, NBA 2K12, and Red Dead Redemption.

Management Comments

"Although our first quarter results were below expectations due to lower-than-anticipated sales of Spec Ops: The Line and Max Payne 3, the outlook for our slate of upcoming releases is stronger than ever," said Strauss Zelnick, Chairman and CEO of Take-Two. "Early consumer enthusiasm suggests robust demand for our extraordinary lineup of upcoming releases, particularly Borderlands 2, NBA 2K13 and BioShock Infinite. We continue to expect fiscal 2013 to be one of the best years in Take-Two's history.

"Our long-term strategy is to continue to grow our revenues and reduce the volatility of our results by complementing our core console business with digitally delivered content for mobile and online platforms. During the current fiscal year we have made substantial progress, including launching an open beta for NBA 2K Online in China; expanding our lineup of core titles for tablets and smartphones with Max Payne Mobile; releasing our first domestic mobile social game - COMEDY CENTRAL'S Indecision Game; and delivering our first mobile social game for Japan - NBA 2K All Stars. While our core console business has faced short-term cyclical headwinds, we remain exceedingly optimistic about our Company's long-term prospects for growth and profitability."

Business and Product Highlights

Since April 1, 2012:

Rockstar Games:

  • Launched Max Payne 3 on Xbox 360, PS3 and PC. The title received excellent reviews and has sold-in over 3 million units to date. Max Payne 3 is being supported by a comprehensive downloadable content plan, with new releases starting in July and extending through the fall.
  • Released Max Payne Mobile, enabling fans to experience the classic 2001 release, Max Payne, optimized for the iPad, iPhone, iPod touch and select Android enabled devices.
  • Announced that it is expanding its Toronto development studio with the support of the Ontario government. In conjunction with the expansion, Rockstar Games is moving its Vancouver development team to the new Toronto facility and expects to grow staff over time.


  • 2K Games launched Spec Ops: The Line, a heart-pounding military shooter that explores the dark realities of war, on Xbox 360, PS3 and PC.
  • 2K Games released Sid Meier's Civilization V: Gods & Kings, the expansion pack for the award-winning PC strategy title, Civilization V.
  • 2K Sports announced the "no data wipe" open beta launch of its free-to-play NBA 2K Online MMO game on the Tencent Games portal in China.
  • 2K Play launched our first mobile social game, COMEDY CENTRAL's Indecision Game for iPhone, iPad, iPod touch and Android, including Amazon's Kindle Fire.
  • 2K Games released our first mobile social game for Japan, NBA 2K All Stars on GREE, and also announced a partnership with GREE to bring additional games to select global mobile social gaming markets, including Pirates! Legends and Civilization (working title).
  • 2K Sports announced that the Oklahoma City Thunder's Kevin Durant, Los Angeles Clippers' Blake Griffin and the Chicago Bulls' Derrick Rose will be the cover athletes for NBA 2K13, the next installment of the top-selling and top-rated NBA video game simulation franchise*, which is planned for release on October 2, 2012 in North America and October 5, 2012 internationally. In addition, the title will be our first offering for WiiU, available during the holiday season.
  • 2K Play announced that it plans to release Nickelodeon Dance 2 for console systems and Bubble Guppies and Dora & Team Umizoomi's Fantastic Flight for the Nintendo DS in November.
  • 2K Play unveiled their slate of new, casual mobile games at E3 2012, including House Pest™ Starring Fiasco the Cat™, GridBlock™, Herd, Herd, Herd™, and Carnival Games® MiniGolf, which will be available beginning this summer.
  • 2K Games announced that XCOM: Enemy Unknown is planned for release on October 9, 2012 in North America and October 12, 2012 internationally.
  • 2K Games announced that BioShock Infinite is now planned for launch on February 26, 2013.

*According to 2008 - 2012 Gamerankings.com and The NPD Group estimates of U.S. retail video game sales through June 2012.

Financial Outlook for Fiscal 2013

Take-Two is providing its financial outlook for the second quarter ending September 30, 2012 and updating its financial outlook for the fiscal year ending March 31, 2013 as follows:


Fiscal Year


Ending 3/31/2013


$200 to $250 Million


Non-GAAP net income (loss) per diluted share (1)


$1.75 to $2.00




Non-cash amortization of discount on convertible notes per share






Non-cash tax expense per share







The following titles were released since April 1, 2012:




Release Date

Max Payne Mobile


April 12, 2012

Sid Meier's Pirates!


April 19, 2012

Max Payne 3


May 15, 2012*

Max Payne 3


June 1, 2012

Max Payne Mobile


June 14, 2012

Sid Meier's Civilization V: Gods and Kings (Expansion Pack)


June 19, 2012*

Spec Ops: The Line


June 26, 2012*

Max Payne 3: Local Justice Map Pack (DLC)


July 3, 2012

COMEDY CENTRAL'S Indecision Game


July 10, 2012

NBA 2K All Stars


July 19, 2012


Take-Two's lineup of future titles announced to date includes:




Planned Release

Max Payne 3: Local Justice Map Pack (DLC)


August 9, 2012

Max Payne 3: Disorganized Crime Pack (DLC)


August 2012

House Pest Starring Fiasco the Cat


Summer 2012



Summer 2012

Herd, Herd, Herd


Summer 2012

Carnival Games MiniGolf


Summer 2012

Borderlands 2


September 18, 2012*

Max Payne 3: Hostage Negotiation Map Pack (DLC)


September 2012

NBA 2K13


October 2, 2012*

XCOM: Enemy Unknown


October 9, 2012*

Max Payne 3: Painful Memories Map Pack (DLC)


October 2012

Max Payne 3: Deathmatch Made In Heaven Mode Pack (DLC)


October 2012

Nickelodeon Dance 2


November 2012

Bubble Guppies


November 2012

Dora & Team Umizoomi's Fantastic Flight


November 2012

NBA 2K13


Holiday 2012

BioShock Infinite


February 26, 2013

Grand Theft Auto V





Fiscal Year 2014

(in thousands, except per share amounts)
      2012     Net revenue     226,139       334,380  
Product costs       98,451  
105,004         Internal royalties       16,512  
8,520         Total cost of goods sold       211,219  
39,408         Selling and marketing       74,683  
43,202         Research and development       16,519  
2,769         Total operating expenses       125,024  
(100,882 (1,863 Interest and other, net       )       )
(108,931 (5,543 Provision for income taxes       3,076  
(110,772 (8,619 Loss from discontinued operations, net of taxes       )       )
$ )     (8,713 Earnings (loss) per share:            
$ )     (0.11 Discontinued operations       -  
$ )     (0.11 Continuing operations     (1.30 $ )
-         Diluted earnings (loss) per share     (1.30 $ )
Basic       82,505  
85,010         Three months ended June 30,
2012     Geographic revenue mix            
47 45 International       %       %
Microsoft Xbox 360       %       %
40 41 PC and other       %       %
1 1 Nintendo Wii       %       %
1 1 Sony PlayStation 2       %       %
June 30,     2012     ASSETS     Current assets:            
$   420,279  
and March 31, 2012, respectively       45,035  
27,987     22,477  
209,662     211,224  
42,695     44,602  
719,107     743,617  
19,354     18,949  
60,685     104,755  
225,118     228,169  
11,931     16,266  
36,942     37,671  
$   1,149,427  
Current liabilities:            
$   46,681  
162,983     156,768  
14,348     13,864  
1,438         Total current liabilities       218,725  
320,883         Income taxes payable       15,621  
679         Liabilities of discontinued operations, net of current portion           Total liabilities       553,700  
Stockholders' equity:            
-         Common stock, $.01 par value, 150,000 shares authorized; 91,071 and 90,215            
911     902  
803,007     799,431  
(322,177     )
(4,706     Total stockholders' equity       595,727  
$   1,149,427  
Three months ended June 30,
Net loss     (110,838 $ )
  Amortization and impairment of software development costs and licenses       72,466  
  2,769         Loss from discontinued operations       94  
  4,209         Stock-based compensation       8,048  
  4,543         Amortization of debt issuance costs       313  
  581         )
  Accounts receivable       )       )
  (5,510 (1,363 Software development costs and licenses       )       )
  2,105         )
  484         Accounts payable, accrued expenses, income taxes payable and other liabilities       28,162  
  (410 (420 Net cash used in operating activities       )       )
Purchase of fixed assets       )       )
  -         )
  (3,290 (3,875 Financing activities:            
  -         Net cash provided by financing activities       162  
  2,583         Net decrease in cash and cash equivalents       )       )
  420,279         Cash and cash equivalents, end of period     367,056       248,759  
Three months ended June 30,
GAAP Gross Profit     39,408       123,161  
4,948         Non-GAAP Gross Profit     44,356       126,365  
GAAP Loss from Operations     (100,882 $ )
7,006         Professional fees and legal matters       176  
$ )     6,361  
GAAP Net Loss     (110,838 $ )
66         Stock-based compensation       8,048  
-         Non-cash amortization of discount on Convertible Notes       1,997  
473         Non-GAAP Net Income (Loss)     (98,750 $ Diluted Earnings (Loss) Per Share            
$ )     (0.11 Non-GAAP earnings (loss) per share     (1.16 $ Number of diluted shares used in computation            
85,010         Non-GAAP (1)       88,778  

For the three months ended June 30, 2011, the diluted shares used in the computation of Non-GAAP diluted EPS include participating shares of 5,326.

Source: Take-Two Interactive


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