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Take-Two Interactive Software, Inc. Reports Results for Fiscal Second Quarter 2023 image

Take-Two Interactive Software, Inc. Reports Results for Fiscal Second Quarter 2023

GAAP net revenue increased 62% to $1.4 billion

GAAP net loss per share was $1.54

GAAP net cash provided by operating activities for the six-months ended September 30, 2022 was $155.4 million

Adjusted Unrestricted Operating Cash Flow (Non-GAAP) for the six-months ended September 30, 2022 was $(17.1) million

Net Bookings grew 53% to $1.5 billion

Company updates outlook for fiscal year 2023, including Net Bookings of $5.4 billion to $5.5 billion

New York, NY — Take-Two Interactive Software, Inc  reported strong results for the second quarter of its fiscal year 2023, ended September 30, 2022, reflecting its first full quarter of operations since the combination with Zynga earlier this year. In addition, the Company revised its outlook for fiscal year 2023, ending March 31, 2023, and provided its initial outlook for the third quarter of fiscal year 2023, ending December 31, 2022. For further information, please see the second quarter fiscal 2023 results slide deck posted to the Company’s investor relations website at take2games.com/ir.

Second Quarter Fiscal 2023 Financial Highlights

GAAP net revenue increased 62% to $1.4 billion, as compared to $858.2 million in last year’s fiscal second quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content, in game purchases and in-game advertising) increased 95% and accounted for 79% of total GAAP net revenue. Digitally-delivered GAAP net revenue increased 69% to $1.3 billion, as compared to $779.1 million in last year’s fiscal second quarter, and accounted for 95% of total GAAP net revenue. The largest contributors to GAAP net revenue were NBA® 2K22 and NBA 2K23; Grand Theft Auto® Online and Grand Theft Auto V; Empires & Puzzles™; Rollic’s hyper-casual portfolio; Toon Blast™; Red Dead Redemption® 2 and Red Dead Online; Words With Friends™; Merge Dragons!™; and Toy Blast™.

GAAP net loss was $257.0 million, or $1.54 per share, as compared to net income of $10.2 million, or $0.09 per diluted share, for the comparable period last year.

During the six-month period ended September 30, 2022, GAAP net cash provided by operating activities was $155.4 million, as compared to $283.7 million in the same period last year. During the six-month period ended September 30, 2022, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, was $(17.1) million, as compared to $56.1 million in the same period last year (please see the section below titled “Non-GAAP Financial Measures” for additional information). As of September 30, 2022, the Company had cash and short-term investments of $1.3 billion and debt of $3.3 billion.

The following data, together with a management reporting tax rate of 18%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP and Non-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 September 30, 2022
        Financial Data
GAAP   Statement of Operations   Change in deferred

net revenue and

related cost of revenue

  Stock-based

compensation

    Amortization of

acquired intangibles

  Business

acquisition

  Gain on fair

value adjustments,

net

Total net revenue   $1,393.5   111.3                  
Cost of revenue   713.9   10.6   (8.0)     (201.4)        
Gross profit   679.6   100.7   8.0     201.4        
Operating expenses   932.1       (99.9)     (119.0)   (25.8)    
(Loss) income from operations   (252.5)   100.7   107.9     320.4   25.8    
Interest and other, net   (50.5)   3.5             12.6    
(Loss) gain on fair value adjustments, net   1.9                 (1.4)   (0.5)
(Loss) income before income taxes   (301.1)   104.2   107.9     320.4   37.0   (0.5)
                           
Non-GAAP                          
EBITDA   65.3   100.7   107.9         37.0    

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 168.6 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 second quarter 2023, total Net Bookings grew 53% to $1.5 billion, as compared to $984.9 million during last year’s fiscal second quarter. Net Bookings from recurrent consumer spending grew 76% and accounted for 80% of total Net Bookings. Digitally-delivered Net Bookings were up 62% to $1.4 billion, as compared to $876.1 million in last year’s fiscal second quarter, and accounted for 94% of total Net Bookings. The largest contributors to Net Bookings were NBA 2K23 and NBA 2K22; Grand Theft Auto Online and Grand Theft Auto V; Rollic’s hyper-casual portfolio; Empires & Puzzles; Toon Blast; Words With Friends; Merge Dragons!; Red Dead Redemption 2 and Red Dead Online; and Toy Blast.

Management Comments

“We posted another consecutive quarter of solid results, with Net Bookings of $1.5 billion, underscoring our ability to launch exciting new games and content updates across our portfolio,” said Strauss Zelnick, Chairman and CEO of Take-Two. “We continue to make excellent progress with our integration of Zynga, and we remain highly optimistic about the vast, long-term growth potential for the mobile industry, which is expected to reach over $160 billion in gross bookings within the next four years.”

“We now expect to deliver Net Bookings of $5.4 to $5.5 billion in Fiscal 2023. Our reduced forecast reflects shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile.”

“Despite these headwinds and their effect on our guidance for the year, we remain highly confident in our diverse and extensive development pipeline that we expect will deliver us sequential years of growth and record performance. Take-Two has a proven strategy and consistent track record of success, driven by our core tenets: we aspire to be the most creative, the most innovative, and the most efficient entertainment company in the world. As we strive to capitalize on the numerous opportunities ahead of us, we are committed to creating significant long-term value for our shareholders.”

COVID-19 Update

At Take-Two, our number one priority has remained the health and safety of our employees and their families. The majority of our global offices have reopened. We continue to follow protocols from local governments and health officials to ensure that we are adhering to their safety standards.

Business and Product Highlights

Since July 1, 2022:

Rockstar Games:

Rockstar Games continued to provide an array of free content for their vast and growing online communities, including:

  • Throughout the period, Rockstar Games continued to support Grand Theft Auto Online with new gameplay additions and vehicles, as well as weekly rewards, bonuses, and special seasonal events.
  • Starting July 26, Grand Theft Auto Online launched its latest major update, The Criminal Enterprises, introducing expanded gameplay across the Criminal Careers of Executives, Bikers, Nightclub Owners, and Gunrunners, as well as the opportunity to work with federal agents to uncover a criminal conspiracy in the new Operation Paper Trail series of Contact Missions. The update also featured a range of new vehicles, and more, including the new Community Series, showcasing some of the most fun and unique experiences created by players across the globe. This major update also delivered a host of overall improvements to the gameplay experience, including increased payouts across a wide array of activities and several other player-requested features.
  • To celebrate Halloween, Grand Theft Auto Online delivered a month-long schedule of events and gameplay, including the Beast vs. Slasher Adversary Mode, enhanced rewards and payouts, spooky items, and more.
  • Through the GTA+ membership program, enrolled members benefit from a rotation of numerous exclusive in-game benefits, including vehicles, upgrades, and gear every month.
  • Rockstar Games continued to support Red Dead Online with new telegram missions, showdown maps, and seasonal content, including a new Halloween Hardcore Telegram Mission, new All Hallows’ Call to Arms locations, The Halloween Pass 2, and more.

2K:

  • On September 9th, released NBA 2K23, the latest iteration of the top-rated NBA video game simulation series of the past 21 years. NBA 2K23 offers an authentic and hyper-real basketball experience showcasing all-new gameplay innovations and animations, the coveted return of the Jordan Challenge mode, an immersive online community experience, and so much more. Phoenix Suns’ shooting guard, three-time NBA All-Star, and 2021-22 Kia All-NBA First Team selection, Devin Booker, is featured on this year’s Standard Edition and cross-gen Digital Deluxe Edition. The iconic Michael Jordan – a six-time NBA Champion and five-time Kia NBA Most Valuable Player, regarded as one of the greatest basketball players of all time – appears on the NBA 2K23 Michael Jordan Edition and the brand-new NBA 2K23 Championship Edition retailing for $149.99, which for the first time ever, includes a 12-month subscription to NBA League Pass, among other perks. In the U.S. and Canada, players can purchase the NBA 2K23 WNBA Edition, which features Phoenix Mercury’s two-time Kia WNBA Finals MVP, three-time WNBA Champion, WNBA all-time leading scorer, and five-time Olympic gold medalist Diana Taurasi, along with Seattle Storm’s four-time WNBA Champion, 13-time WNBA All-Star, WNBA all-time assists leader, and five-time Olympic gold medalist, Sue Bird. This marks the second cover in which NBA 2K celebrates WNBA athletes.
  • Continued to drive engagement for NBA 2K23 with the launch of seasons that feature new songs by top artists, apparel, themed events, and more.
  • On October 18th, 2K released NBA 2K23 Arcade Edition, the authentic mobile experience for the NBA 2K basketball game on Apple Arcade. The experience includes the all-new “The Greatest” mode, which features 20 of the “Greatest of All-Time” NBA players from the current NBA season at launch, along with official NBA commentary for a more immersive and realistic NBA gameplay experience. This is in addition to a variety of features and modes that offer more ways to play, including Association Mode, where aspiring coaches can play out becoming the GM or Head Coach of their favorite NBA Franchise or build out their dream team.
  • On October 14th, 2K released PGA TOUR® 2K23, the latest entry in the golf simulation video game franchise. Featuring PGA TOUR icon and all-time sports great Tiger Woods as cover athlete, PGA TOUR 2K23 celebrates Woods’ legacy by introducing him as both a playable in-game pro and an Executive Director advising the game’s development team. PGA TOUR 2K23 included 20 licensed courses at launch, including the industry-leading Course Designer, offering players the opportunity to build their dream courses and share them with a global online community. PGA TOUR 2K23 also offers new casual modes to help new players get into the game, while giving seasoned players new challenges and opportunities to work on their skills. The introduction of Topgolf offers a unique experience emulating the popular golf entertainment phenomenon, where players can aim for targets and try to earn the highest score. Training mode offers multiple ways to develop skills, including swing calibration, lessons, chipping practice, a driving range and a putting green.
  • On July 19th, 2K introduced its fifth DLC pack for WWE 2K22, entitled the Whole Dam Pack.
  • On October 5th, WWE Supercard released a Halloween-themed content drop featuring the infamous Chucky character from the Child’s Play horror film franchise, which coincided with the Season 2 premiere of the Chucky TV series on USA/Syfy.
  • On August 11th, 2K and Gearbox Software continued to support their successful new franchise, Tiny Tina’s Wonderlands, with the fourth DLC pack for the title, Shattering Spectreglass.
  • On September 9th, 2K and Marvel Entertainment (MVL) announced that Marvel’s Midnight Suns will launch on December 2nd for Windows PC, Xbox Series X|S and PlayStation 5 and will be preceded by five Prequel Shorts that detail the backstory of the young core of the Midnight Suns and the otherworldly evil they’re up against in Lilith. The announcement was made as part of the Disney and Marvel GAMES SHOWCASE and featured a new gameplay trailer that highlights the full breadth of what players can do in Marvel’s Midnight Suns.
  • On October 21st, 2K and Gearbox Software launched New Tales from the Borderlands, a standalone, choice-based interactive narrative adventure set in the Borderlands universe. The title contains a number of compelling narrative dynamics and features that bring the cinematic experience to new heights.
  • On October 24th, 2K and Supermassive Games launched a new Halloween-themed DLC for The Quarry featuring a classic makeover with new character outfits inspired by ‘50s horror. Entitled the 50s Throwback Character Outfit DLC, the update was free for new and returning players for a limited time, after which it was available for individual purchase.

Private Division:

  • On August 15th, Private Division announced that they signed a new publishing agreement with Wētā Workshop, best known for their work on Middle-earth for The Lord of the Rings film trilogy. In 2014 Wētā Workshop founded an interactive game division and are now developing a new game set in the Middle-earth universe of J.R.R. Tolkien. Middle-earth Enterprises have licensed the literary works of the series, providing Wētā Workshop with the broadest creative license to interpret the underlying lore of the books. The title is in early development and is expected to launch during Take-Two’s Fiscal Year 2024.
  • On August 16th, Private Division and Roll7 launched Rollerdrome, an all-new, wildly imaginative third-person shooter-skater. Rollerdrome brings together arena combat, fluid movement and technical tricks to create “flow-state mayhem.” This new IP comes from Roll7, the BAFTA and multi-award-winning London based studio famous for making beloved and remarkable games like OlliOlli, OlliOlli 2: Welcome to Olliwood, OlliOlli World, Laser League, and NOT A HERO.
  • On October 21st, Private Division and Intercept games announced that they will launch Kerbal Space Program 2, the sequel to the beloved rocket building sim, in Early Access for PC on Steam, Epic Games Store, and other digital storefronts. Those that purchase KSP2 in Early Access will help inform the future development of the game by providing feedback directly to Intercept Games leading up to the full launch of the title.

Zynga:

  • On July 19th, Words With Friends celebrated its 13th anniversary.
  • On August 31st, Merge Dragons! introduced Treasure Tower, a new feature where players can climb a magical tower floor-by-floor, revealing mystery rewards and magical creatures.
  • Zynga Poker celebrated its 15th anniversary with an action-packed 21-day event in September, capped off with a giveaway of 15 billion chips to a few lucky players.
  • On September 1st, Socialpoint partnered with AMC Networks to bring new The Walking Dead experiences to its Dragon City and Monster Legends games. As part of the collaboration, a new VIP Family has appeared in-game, comprising six playable dragons and monsters, respectively, with unique attributes based on iconic characters from The Walking Dead.
  • On September 6th, FarmVille 2 (web only) celebrated its 10th anniversary with a 26-day celebration of pre-anniversary teaser videos, in-game events, and real-world giveaways.
  • On September 12th, Zynga completed the acquisition of Storemaven, a world leader in mobile growth and App Store Optimization technologies. The Storemaven team will combine its innovative mobile technologies with Zynga’s expansive global portfolio and Chartboost’s advertising platform. With this acquisition, Zynga aims to enhance its usage and investment in state-of-the-art growth technologies, augment its leadership position in reaching mass audiences, and further its mission to connect the world through games.
  • On September 16th, CSR2 exclusively unveiled Pagani’s new multi-million-dollar hypercar – only their third model – named ‘Utopia’.
  • On September 20th, Harry Potter: Puzzles & Spells celebrated its second anniversary with a slate of in-game events while revealing magical milestones such as players forming over 649,000 in-game clubs and completing more than 5.2 billion puzzles since launch.
  • Rollic surpassed 2 billion lifetime downloads worldwide and has now launched 19 titles that have reached the #1 or #2 most downloaded game position in the U.S. App Store.

Outlook for Fiscal 2023

Take-Two is revising its outlook for the fiscal year ending March 31, 2023, and is providing its initial outlook for its fiscal third quarter ending December 31, 2022:

Fiscal Year Ending March 31, 2023

  • GAAP net revenue is expected to range from $5.41 to $5.51 billion
  • GAAP net loss is expected to range from $674 to $631 million
  • GAAP net loss per share is expected to range from $4.22 to $3.95
  • Share count used to calculate GAAP net loss per share is expected to be 159.8 million
  • Share count used to calculate management reporting diluted net income per share is expected to be 161.6 million(1)
  • Net cash provided by operating activities is expected to be over $630 million
  • Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is expected to be over $650 million (2)
  • Capital expenditures are expected to be approximately $150 million
  • Net Bookings (operational metric) are expected to range from $5.4 to $5.5 billion
  • EBITDA (Non-GAAP) is expected to range from $465 to $514 million

The Company is also providing selected data and its management reporting tax rate of 18%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP and Non-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, 2023
        Financial Data
$ in millions   Outlook (3)   Change in

deferred net

revenue and

related cost of

revenue

  Stock-based

compensation

  Loss on long-term

investments,

net

  Amortization of acquired

intangibles

  Business

acquisition

GAAP                        
Total net revenue   $5,410 to $5,510   $(10)                
Cost of revenue   $2,611 to $2,642   $10   $14       $(694)    
Operating expenses   $3,398 to $3,418       $(323)       $(332)   $(153)
Interest and other, net   $176   $(5)       $(48)       $(13)
(Loss) income before income taxes   $(775) to $(726)   $(15)   $309   $48   $1,026   $166
                         
Non-GAAP                        
EBITDA   $465 to $514   $(20)   $309   $48       $153

Third Quarter Ending December 31, 2022

  • GAAP net revenue is expected to range from $1.43 to $1.48 billion
  • GAAP net loss is expected to range from $160 to $142 million
  • GAAP net loss per share is expected to range from $0.95 to $0.85
  • Share count used to calculate GAAP net loss per share is expected to be 167.7 million
  • Share count used to calculate management reporting diluted net income per share is expected to be 169.2 million(4)
  • Net Bookings (operational metric) are expected to range from $1.41 to $1.46 billion
  • EBITDA (Non-GAAP) is expected to range from $164 to $185 million

The Company is also providing selected data and its management reporting tax rate of 18%, which are used internally by its management and Board of Directors to adjust the Company’s GAAP and Non-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 December 31, 2022
        Financial Data
$ in millions   Outlook (3)   Change in deferred net revenue and

related cost of

revenue

  Stock-based

compensation

  Amortization of

intangible assets

  Business

acquisition

GAAP                    
Total net revenue   $1,430 to $1,480   $(20)            
Cost of revenue   $690 to $710   $10   $(2)   $(198)    
Operating expenses   $897 to $907       $(80)   $(97)   $(5)
Interest and other, net   $31               $(1)
(Loss) income before income taxes   $(188) to $(168)   $(30)   $82   $294   $6
                     
Non-GAAP                    
EBITDA   $164 to $185   $(30)   $82       $5
1) Includes 159.8 million basic shares and 1.8 million shares representing the potential dilution from unvested employee stock grants and the potential dilution from convertible notes.
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 167.7 million basic shares and 1.5 million shares representing the potential dilution from unvested employee stock grants and the potential dilution from convertible notes.

Key assumptions and dependencies underlying the Company’s outlook include: the timely delivery of the titles included in this financial outlook; 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; factors affecting our performance on mobile, such as player acquisition costs; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.

Product Releases

The following have been released since July 1, 2022:

Label Product Platforms Release Date
Rockstar Games The Criminal Enterprises Summer Update PS4, PS5, Xbox One, Xbox Series X/S, PC July 26, 2022
2K Tiny Tina’s Wonderlands: Shattering Spectreglass (DLC) PS4, PS5, Xbox One, Xbox Series X/S, PC (Steam & Epic Games Store) August 11, 2022
Private Division Rollerdrome PS4, PS5, PC (Steam) (digital only) August 16, 2022
2K NBA 2K23 PS4, PS5, Xbox One, Xbox Series X|S, PC, Switch September 9, 2022
2K PGA TOUR 2K23 PS4, PS5, Xbox One, Xbox Series X|S, PC (Steam) October 14, 2022
2K NBA 2K23 Arcade Edition Apple Arcade October 18, 2021
2K New Tales From The Borderlands PS4, PS5, Xbox One, Xbox Series X/S, PC (Steam & Epic Games Store), Switch October 21, 2022
Private Division OlliOlli World: Finding the Flowzone (DLC) PS4, PS5, Xbox One, Xbox Series X/S, PC, Switch (Digital Only) November 2, 2022

Take-Two’s future lineup announced to-date includes:

Label Product Platforms Release Date
2K Marvel’s Midnight Suns PS5, Xbox Series X|S, PC (Steam and Epic Games Store) December 2, 2022
Private Division Kerbal Space Program 2 (Early Access) PC (Steam, Epic Games Store, other digital storefronts) February 24, 2023
2K WWE 2K23 TBA Fiscal 2023
Rockstar Games Grand Theft Auto: The Trilogy – The Definitive Edition iOS, Android TBA
2K Marvel’s Midnight Suns PS4, Xbox One, Switch TBA
Zynga Star Wars Hunters iOS, Android, Switch TBA

 

TAKE-TWO INTERACTIVE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
                 
    Three Months Ended September 30,   Six Months Ended September 30,
      2022       2021       2022       2021  
Net revenue:                
Game   $ 1,218.8     $ 832.7     $ 2,238.0     $ 1,629.0  
Advertising     174.7       25.5       257.9       42.5  
Total net revenue     1,393.5       858.2       2,495.9     $ 1,671.5  
Cost of revenue:                
Software development costs and royalties     289.9       144.9       455.0       231.9  
Product costs     204.5       66.1       321.4       113.0  
Internal royalties     124.3       159.6       217.7       305.0  
Licenses     95.2       86.1       155.6       136.5  
Total cost of revenue     713.9       456.7       1,149.7       786.4  
Gross profit     679.6       401.5       1,346.2       885.1  
Selling and marketing     444.4       136.0       716.4       239.9  
General and administrative     214.6       127.8       451.7       232.2  
Research and development     243.2       101.5       417.0       193.8  
Depreciation and amortization     29.9       16.1       51.0       28.6  
Total operating expenses     932.1       381.4       1,636.1       694.5  
(Loss) income from operations     (252.5 )     20.1       (289.9 )     190.6  
Interest and other, net     (50.5 )     (0.6 )     (79.8 )     (1.6 )
Gain (loss) on fair value adjustments, net     1.9       0.4       (37.7 )     2.4  
(Loss) income before income taxes     (301.1 )     19.9       (407.4 )     191.4  
(Benefit from) provision for income taxes     (44.1 )     9.7       (46.4 )     28.9  
Net (loss) income   $ (257.0 )   $ 10.2     $ (361.0 )   $ 162.5  
                 
Earnings (loss) per share:                
Basic (loss) earnings per share   $ (1.54 )   $ 0.09     $ (2.38 )   $ 1.40  
Diluted (loss) earnings per share   $ (1.54 )   $ 0.09     $ (2.38 )   $ 1.39  
Weighted average shares outstanding                
Basic     166.9       115.8       151.8       115.7  
Diluted     166.9       116.8       151.8       116.9  
Computation of Basic EPS:                
Net (loss) income   $ (257.0 )   $ 10.2     $ (361.0 )   $ 162.5  
Weighted average shares outstanding – basic     166.9       115.8       151.8       115.7  
Basic (loss) earnings per share   $ (1.54 )   $ 0.09     $ (2.38 )   $ 1.40  
Computation of Diluted EPS:                
Net (loss) income   $ (257.0 )   $ 10.2     $ (361.0 )   $ 162.5  
Weighed average shares outstanding – basic     166.9       115.8       151.8       115.7  
Add: dilutive effect of common stock equivalents           1.0             1.2  
Weighted average common shares outstanding – diluted     166.9       116.8       151.8       116.9  
Diluted (loss) earnings per share   $ (1.54 )   $ 0.09     $ (2.38 )   $ 1.39  
TAKE-TWO INTERACTIVE SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
  September 30, 2022   March 31, 2022
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 956.4     $ 1,732.1  
Short-term investments   348.0       820.1  
Restricted cash and cash equivalents   591.7       359.8  
Accounts receivable, net of allowances of $1.3 and $0.4 at September 30, 2022 and March 31, 2022, respectively   831.4       579.4  
Software development costs and licenses   89.0       81.4  
Contract assets   87.6       104.9  
Prepaid expenses and other   347.0       193.4  
Total current assets   3,251.1       3,871.1  
Fixed assets, net   333.8       242.0  
Right-of-use assets   298.3       217.2  
Software development costs and licenses, net of current portion   907.8       755.9  
Goodwill   6,871.5       674.6  
Other intangibles, net   5,362.9       266.5  
Deferred tax assets   115.9       73.8  
Long-term restricted cash and cash equivalents   109.3       103.5  
Other assets   242.3       341.7  
Total assets $ 17,492.9     $ 6,546.3  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 162.8     $ 125.9  
Accrued expenses and other current liabilities   1,733.9       1,074.9  
Deferred revenue   1,164.7       865.3  
Lease liabilities   55.6       38.9  
Short-term debt   350.0        
Total current liabilities   3,467.0       2,105.0  
Long-term debt, net   2,935.5        
Non-current deferred revenue   29.1       70.9  
Non-current lease liabilities   329.9       211.3  
Non-current software development royalties   119.3       115.5  
Deferred tax liabilities, net   871.5       21.8  
Other long-term liabilities   307.1       212.1  
Total liabilities $ 8,059.4     $ 2,736.6  
Commitments and contingencies (See Note 12)      
Stockholders’ equity:      
Preferred stock, $0.01 par value, 5.0 shares authorized; no shares issued and outstanding at September 30, 2022 and March 31, 2022          
Common stock, $0.01 par value, 300.0 and 200.0 shares authorized; 191.2 and 139.0 shares issued and 167.5 and 115.4 outstanding at September 30, 2022 and March 31, 2022, respectively   1.9       1.4  
Additional paid-in capital   8,760.5       2,597.2  
Treasury (TSRMF) stock, at cost; 23.7 and 23.7 common shares at September 30, 2022 and March 31, 2022, respectively   (1,020.6 )     (1,020.6 )
Retained earnings   1,928.0       2,289.0  
Accumulated other comprehensive loss   (236.3 )     (57.3 )
Total stockholders’ equity $ 9,433.5 $ 3,809.7
Total liabilities and stockholders’ equity $ 17,492.9     $ 6,546.3  
TAKE-TWO INTERACTIVE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
         
    Six Months Ended

September 30,

      2022       2021  
Operating activities:        
Net (loss) income   $ (361.0 )   $ 162.5  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:        
Amortization and impairment of software development costs and licenses     81.7       95.3  
Stock-based compensation     151.8       96.2  
Noncash lease expense     23.3       19.6  
Amortization of intellectual property     438.2       33.7  
Depreciation     38.9       28.4  
Impairment of software development costs and licenses     23.3       65.0  
Amortization of debt issuance costs     10.5        
Interest expense     49.5        
Fair value adjustments     38.2        
Other, net     (37.4 )     2.1  
Changes in assets and liabilities, net of effect from purchases of businesses:        
Accounts receivable     15.2       (242.8 )
Software development costs and licenses     (252.2 )     (263.2 )
Prepaid expenses and other current and other non-current assets     (44.7 )     (47.2 )
Deferred revenue     (57.4 )     32.7  
Accounts payable, accrued expenses and other liabilities     37.5       301.4  
Net cash provided by operating activities     155.4       283.7  
Investing activities:        
Change in bank time deposits     124.4       1.0  
Sale and maturities of available-for-sale securities     354.3       353.4  
Purchases of available-for-sale securities           (492.6 )
Purchases of fixed assets     (99.4 )     (111.2 )
Proceeds from sale of long-term investment     20.6        
Purchases of long-term investments     (7.6 )     (3.1 )
Business acquisitions     (3,156.9 )     (131.6 )
Acquisition related earn-outs     (26.0 )      
Net cash used in investing activities     (2,790.6 )     (384.1 )
Financing activities:        
Tax payment related to net share settlements on restricted stock awards     (77.7 )     (53.4 )
Issuance of common stock     11.4       9.2  
Payment for settlement of convertible notes     (1,166.8 )      
Proceeds from issuance of debt     3,248.9        
Cost of debt     (22.4 )      
Settlement of capped calls     140.1        
Loan repayment           (0.2 )
Repurchase of common stock           (200.0 )
Net cash provided by (used in) financing activities     2,133.5       (244.4 )
Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents     (36.2 )     (0.7 )
Net change in cash, cash equivalents, and restricted cash and cash equivalents     (537.9 )     (345.5 )
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year     2,195.3       2,060.2  
Cash, cash equivalents, and restricted cash and cash equivalents, end of period   $ 1,657.4     $ 1,714.7  
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES    
Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix    
(in millions)                
                 
    Three Months Ended

September 30, 2022

  Three Months Ended

September 30, 2021

    Amount   % of total   Amount   % of total
Net revenue by geographic region                
United States   $ 842.9   60 %   $ 514.9   60 %
International     550.6   40 %     343.3   40 %
Total net revenue   $ 1,393.5   100 %   $ 858.2   100 %
                 
Net Bookings by geographic region                
United States   $ 947.3   63 %   $ 603.8   61 %
International     557.6   37 %     381.1   39 %
Total Net Bookings   $ 1,504.9   100 %   $ 984.9   100 %
             
    Three Months Ended

September 30, 2022

  Three Months Ended

September 30, 2021

    Amount   % of total   Amount   % of total
Net revenue by distribution channel                
Digital online   $ 1,319.2   95 %   $ 779.1   91 %
Physical retail and other     74.3   5 %     79.1   9 %
Total net revenue   $ 1,393.5   100 %   $ 858.2   100 %
                 
Net Bookings by distribution channel                
Digital online   $ 1,420.9   94 %   $ 876.1   89 %
Physical retail and other     84.0   6 %     108.8   11 %
Total Net Bookings   $ 1,504.9   100 %   $ 984.9   100 %
             
    Three Months Ended

September 30, 2022

  Three Months Ended

September 30, 2021

    Amount   % of total   Amount   % of total
Net revenue by platform mix                
Console   $ 551.9   40 %   $ 596.1   69 %
Mobile     730.1   52 %     115.1   13 %
PC and other     111.5   8 %     147.0   17 %
Total net revenue   $ 1,393.5   100 %   $ 858.2   100 %
                 
Net Bookings by platform mix                
Console   $ 677.1   45 %   $ 724.3   74 %
Mobile     712.9   47 %     105.9   11 %
PC and other     114.9   8 %     154.6   16 %
Total Net Bookings   $ 1,504.9   100.0 %   $ 984.8   100 %
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES    
Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix
(in millions)                
                 
    Six Months Ended

September 30, 2022

  Six Months Ended

September 30, 2021

    Amount   % of total   Amount   % of total
Net revenue by geographic region                
United States   $ 1,525.8   61 %   $ 1,008.1   60 %
International     970.1   39 %     663.4   40 %
Total net revenue   $ 2,495.9   100 %   $ 1,671.5   100 %
                 
Net Bookings by geographic region                
United States   $ 1,570.1   63 %   $ 1,022.6   60 %
International     937.3   37 %     673.7   40 %
Total Net Bookings   $ 2,507.4   100 %   $ 1,696.3   100 %
             
    Six Months Ended

September 30, 2022

  Six Months Ended

September 30, 2021

    Amount   % of total   Amount   % of total
Net revenue by distribution channel                
Digital online   $ 2,357.0   94 %   $ 1,519.9   91 %
Physical retail and other     138.9   6 %     151.6   9 %
Total net revenue   $ 2,495.9   100 %   $ 1,671.5   100 %
                 
Net Bookings by distribution channel                
Digital online   $ 2,376.9   95 %   $ 1,556.5   92 %
Physical retail and other     130.5   5 %     139.8   8 %
Total Net Bookings   $ 2,507.4   100 %   $ 1,696.3   100 %
             
    Six Months Ended

September 30, 2022

  Six Months Ended

September 30, 2021

    Amount   % of total   Amount   % of total
Net revenue by platform mix                
Console   $ 1,159.1   46 %   $ 1,198.5   72 %
Mobile     1,099.7   44 %     197.4   12 %
PC and other     237.1   10 %     275.6   16 %
Total net revenue   $ 2,495.9   100 %   $ 1,671.5   100 %
                 
Net Bookings by platform mix                
Console   $ 1,180.8   47 %   $ 1,215.9   72 %
Mobile     1,082.6   43 %     195.7   13 %
PC and other     244.0   10 %     284.7   17 %
Total Net Bookings   $ 2,507.4   100.0 %   $ 1,696.3   100 %
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES                
ADDITIONAL DATA                      
(in millions)                      
                       
Three Months Ended September 30, 2022 Net revenue   Cost of revenue-

Software

development costs

and royalties

  Cost of revenue-

Product costs

  Cost of revenue-

Internal royalties

  Cost of revenue-

Licenses

   
As reported $ 1,393.5     $ 289.9     $ 204.5     $ 124.3     $ 95.2      
Net effect from deferred revenue and related cost of revenue   111.3       8.7       0.4           1.5      
Stock-based compensation       (8.0 )                
Amortization and impairment of acquired intangibles       (201.4 )                
                       
Three Months Ended September 30, 2022 Selling and

marketing

  General and

administrative

  Research and

development

  Depreciation and

amortization

  Interest and

other, net

  Gain (loss) on

fair value

adjustments, net

As reported $ 444.4     $ 214.6     $ 243.2     $ 29.9     $ (50.5 )   $ 1.9  
Net effect from deferred revenue and related cost of revenue                   3.5      
Stock-based compensation   (17.5 )     (44.2 )     (38.2 )            
Amortization and impairment of acquired intangibles   (101.0 )         (9.2 )     (8.8 )        
Acquisition related expenses   (1.2 )     (22.8 )     (1.8 )         12.6       (1.4 )
Gain on fair value adjustments, net                       (0.5 )
                       
Three Months Ended September 30, 2021 Net revenue   Cost of revenue-

Software

development costs

and royalties

  Cost of revenue-

Product costs

  Cost of revenue-

Internal royalties

  Cost of revenue-

Licenses

   
As reported $ 858.2     $ 144.9     $ 66.1     $ 159.6     $ 86.1      
Net effect from deferred revenue and related cost of revenue   126.7       6.4       1.6           0.5      
Stock-based compensation       (10.4 )                
Amortization and impairment of acquired intangibles       (14.0 )                
                       
Three Months Ended September 30, 2021 Selling and

marketing

  General and

administrative

  Research and

development

  Depreciation and

amortization

  Interest and

other, net

  Gain (loss) on

fair value

adjustments, net

As reported $ 136.0     $ 127.8     $ 101.5     $ 16.1     $ (0.6 )   $ 0.4  
Net effect from deferred revenue and related cost of revenue                   0.9      
Stock-based compensation   (7.1 )     (16.7 )     (13.0 )            
Amortization and impairment of acquired intangibles   (1.8 )         (1.6 )     (0.3 )        
Impact of business reorganization       (0.3 )                
Acquisition related expenses       (23.4 )                
Gain on fair value adjustments, net                       (0.4 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES                
ADDITIONAL DATA                      
(in millions)                      
Six Months Ended September 30, 2022 Net revenue   Cost of revenue-

Software

development costs

and royalties

  Cost of revenue-

Product costs

  Cost of revenue-

Internal royalties

  Cost of revenue-

Licenses

   
As reported $ 2,495.9     $ 455.0     $ 321.4     $ 217.7     $ 155.6      
Net effect from deferred revenue and related cost of revenue   11.4       10.2       (3.0 )         1.5      
Stock-based compensation       25.4                  
Amortization and impairment of acquired intangibles       (297.7 )                
                       
Six Months Ended September 30, 2022 Selling and

marketing

  General and

administrative

  Research and

development

  Depreciation and

amortization

  Interest and

other, net

  Gain (loss) on

long-term

investments, net

As reported $ 716.4     $ 451.7     $ 417.0     $ 51.0     $ (79.8 )   $ (37.7 )
Net effect from deferred revenue and related cost of revenue 5.1
Stock-based compensation   (53.2 )     (64.7 )     (59.3 )            
Amortization and impairment of acquired intangibles   (116.0 )         (10.3 )     (12.8 )        
Acquisition related expenses   (6.4 )     (124.4 )     (11.2 )       21.0     37.9  
Gain on long-term investments, net                       (0.2 )
                       
Six Months Ended September 30, 2021 Net revenue   Cost of goods revenue-

Software

development costs

and royalties

  Cost of revenue-

Product costs

  Cost of revenue-

Internal royalties

  Cost of revenue-

Licenses

   
As reported $ 1,671.5     $ 231.9     $ 113.0     $ 305.0     $ 136.5      
Net effect from deferred revenue and related cost of revenue   24.7       3.6       (3.5 )         0.4      
Stock-based compensation       (22.4 )                
Amortization and impairment of acquired intangibles       (25.1 )                
                       
Six Months Ended September 30, 2021 Selling and

marketing

  General and

administrative

  Research and

development

  Depreciation and

amortization

  Interest and

other, net

  Gain (loss) on

long-term

investments, net

As reported $ 239.9     $ 232.2     $ 193.8     $ 28.6     $ (1.6 )   $ 2.4  
Net effect from deferred revenue and related cost of revenue                   0.3      
Stock-based compensation   (15.2 )     (33.9 )     (24.8 )            
Amortization and impairment of acquired intangibles   (3.7 )         (3.4 )     (0.7 )        
Impact of business reorganization       (0.4 )                
Acquisition related expenses       (25.6 )                
Gain on long-term investments, net                       (2.4 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES        
RECONCILIATION OF GAAP TO NON-GAAP MEASURE        
(in millions)        
         
    Six Months Ended September 30,
      2022       2021  
Net cash from operating activities   $ 155.4     $ 283.7  
Net change in Restricted cash (1)     (172.5 )     (227.6 )
Adjusted Unrestricted Operating Cash Flow   $ (17.1 )   $ 56.1  
         
    Six Months Ended September 30,
      2022       2021  
Restricted cash beginning of period   $ 463.3     $ 637.4  
Restricted cash end of period     701.0       857.8  
Restricted cash related to acquisitions     (65.2 )     7.1  
(1) Net change in Restricted cash   $ (172.5 )   $ (227.6 )
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES      
RECONCILIATION OF GAAP TO NON-GAAP MEASURE      
(in millions)              
    Three Months Ended September 30, Six Months Ended September 30,
      2022       2021     2022       2021  
Net (loss) income   $ (257.0 )   $ 10.2   $ (361.0 )   $ 162.5  
(Benefit from) provision for income taxes     (44.1 )   $ 9.7   $ (46.4 )   $ 28.9  
Interest expense (income)     24.9     $ (1.5 ) $ 49.9     $ (2.2 )
Depreciation and amortization     29.9       16.1     51.0       28.6  
Amortization of acquired intangibles     311.6       14.6     424.0       32.4  
EBITDA   $ 65.3     $ 49.2   $ 117.5     $ 250.2  
Outlook    
    Twelve Months Ending March 31, 2023
Net loss   $(674) to $(631)
Benefit from income taxes   $(101) to $(95)
Interest expense   $105
Depreciation   $109
Amortization of acquired intangibles   $1,026
EBITDA   $465 to $514
Outlook    
    Three Months Ending December 31, 2022
Net loss   $(160) to $(142)
Benefit from income taxes   $(28) to $(25)
Interest expense   $28
Depreciation   $30
Amortization of acquired intangibles   $294
EBITDA   $164 to $185

 

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