GAAP net revenue increased 52.6% to $5.35
billion
GAAP net loss per share was $7.03
GAAP net cash provided by operating activities
for the twelve-months ended March 31, 2023 was $1.1 million
Adjusted Unrestricted Operating Cash Flow
(Non-GAAP) for the twelve-months ended March 31, 2023 was $55.7
million
Net Bookings were $5.28 billion
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
results for the fourth quarter and its fiscal year 2023, ended
March 31, 2023. Fourth quarter and full-year results include the
Company's combination with Zynga, which closed on May 23, 2022, and
affects the comparability of its results relative to last year. In
addition, the Company provided its initial outlook for fiscal year
2024, ending March 31, 2024, and fiscal first quarter 2024, ending
June 30, 2023. For further information, please see the fourth
quarter fiscal 2023 results slide deck posted to the Company’s
investor relations website at take2games.com/ir.
Fourth Quarter Fiscal 2023 Financial
Highlights
GAAP net revenue increased 56% to $1.45 billion, as compared to
$930.0 million in last year’s fiscal fourth 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 94% and accounted for
79% of total GAAP net revenue. Digitally-delivered GAAP net revenue
increased 67% to $1.39 billion, as compared to $833.4 million in
last year’s fiscal fourth quarter, and accounted for 96% of total
GAAP net revenue. The largest contributors to GAAP net revenue were
NBA® 2K23 and NBA 2K22; Grand Theft Auto® Online and Grand Theft
Auto V; our hyper-casual mobile portfolio; Empires & Puzzles™;
Toon Blast™; Red Dead Redemption® 2 and Red Dead Online; Merge
Dragons!™; Words With Friends™; and Zynga Poker™.
GAAP net loss was $610.3 million, or $3.62 per share, as
compared to net income of $110.9 million, or $0.95 per diluted
share, for the comparable period last year. GAAP net loss included
(i) an impairment charge of $465.3 million for acquisition-related
intangible assets and (ii) an impairment charge of $54.2 million
related to capitalized software development costs for unreleased
and cancelled titles.
The following data, together with a management reporting tax
rate of 18%, are used internally by the Company’s management and
Board of Directors to adjust the Company’s GAAP and Non-GAAP
financial results in order to facilitate comparison of its
operating performance between periods and to better understand its
core business and future outlook:
Three Months Ended March 31,
2023
Financial Data
GAAP ($ in millions)
Statement of
Operations
Change in deferred net revenue
and related cost of revenue
Stock-based
compensation
Impact of business
reorganization
Amortization and impairment of
acquired intangibles
Business acquisition
Total net revenue
$1,446.2
(52.7)
Cost of revenue
1,223.0
(0.6)
(7.5)
(669.6)
Gross profit
223.2
(52.1)
7.5
669.6
Operating expenses
925.6
(71.8)
(14.6)
(97.2)
(48.5)
(Loss) income from operations
(702.4)
(52.1)
79.3
14.6
766.8
48.5
Interest and other, net
(33.8)
(0.6)
1.9
(Loss) gain on fair value adjustments,
net
5.6
(5.6)
(Loss) income before income
taxes
(730.6)
(52.7)
79.3
14.6
766.8
44.8
Non-GAAP
EBITDA
87.0
(52.1)
79.3
14.6
41.0
In order to calculate net income per diluted share for
management reporting purposes, the Company uses its fully diluted
share count of 170.2 million. In addition, included in cost of
revenue is a $54.2 million impairment charge related to capitalized
software development costs for unreleased and cancelled titles.
Fiscal Fourth Quarter 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 fourth quarter 2023, total Net Bookings grew 65%
to $1.39 billion, as compared to $845.8 million during last year’s
fiscal fourth quarter. Net Bookings from recurrent consumer
spending grew 115% and accounted for 78% of total Net Bookings.
Digitally-delivered Net Bookings were up 76% to $1.35 billion, as
compared to $765.8 million in last year’s fiscal fourth quarter,
and accounted for 97% of total Net Bookings. The largest
contributors to Net Bookings were NBA 2K23; Grand Theft Auto Online
and Grand Theft Auto V; our hyper-casual mobile portfolio; Empires
& Puzzles; Toon Blast; Red Dead Redemption 2 and Red Dead
Online; WWE® 2K23; Merge Dragons!; and Words With Friends.
Fiscal Year 2023 Financial
Highlights
GAAP net revenue increased 53% to $5.35 billion, as compared to
$3.50 billion in fiscal year 2022. 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 84% and accounted for 78% of total GAAP net
revenue. Digitally-delivered GAAP net revenue increased 62% to
$5.09 billion, as compared to $3.15 billion in fiscal year 2022,
and accounted for 95% of total GAAP net revenue. The largest
contributors to GAAP net revenue were NBA 2K23 and NBA 2K22; Grand
Theft Auto Online and Grand Theft Auto V; Empires & Puzzles;
our hyper-casual mobile portfolio; Toon Blast; Red Dead Redemption
2 and Red Dead Online; Words With Friends; and Merge Dragons!.
GAAP net loss was $1.12 billion, or $7.03 per share, as compared
to net income of $418.0 million, or $3.58 per diluted share, for
the comparable period last year. GAAP net loss included (i) an
impairment charge of $465.3 million for acquisition-related
intangible assets and (ii) an impairment charge of $79.1 million
related to capitalized software development costs for unreleased
and cancelled titles.
During the twelve-month period ended March 31, 2023, GAAP net
cash provided by operating activities was $1.1 million, as compared
to $258.0 million in the same period last year. During the
twelve-month period ended March 31, 2023, Adjusted Unrestricted
Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash
from operating activities, adjusted for changes in restricted cash,
was $55.7 million, as compared to $424.9 million in the same period
last year (please see the section below titled “Non-GAAP Financial
Measures” for additional information). As of March 31, 2023, the
Company had cash and short-term investments of $1.0 billion and
debt of $3.1 billion.
The following data, together with a management reporting tax
rate of 18%, are used internally by the Company’s management and
Board of Directors to adjust the Company’s GAAP and Non-GAAP
financial results in order to facilitate comparison of its
operating performance between periods and to better understand its
core business and future outlook:
Twelve Months Ended March 31,
2023
Financial Data
GAAP ($ in millions)
Statement of
Operations
Change in deferred net revenue
and related cost of revenue
Stock-based
compensation
Impact of business
reorganization
Amortization and impairment of
acquired intangibles
Business acquisition
Total net revenue
$5,349.9
(66.4)
Cost of revenue
3,064.6
14.5
9.5
(1,169.7)
Gross profit
2,285.3
(80.9)
(9.5)
(1,169.7)
Operating expenses
3,450.5
(327.3)
(14.6)
(335.2)
(212.4)
(Loss) income from operations
(1,165.2)
(80.9)
317.8
14.6
1,504.9
212.4
Interest and other, net
(141.9)
0.7
26.3
(Loss) gain on fair value adjustments,
net
(31.0)
31.0
(Loss) income before income
taxes
(1,338.1)
(80.2)
317.8
14.6
1,504.9
269.7
Non-GAAP
EBITDA
351.4
(80.9)
317.8
14.6
254.9
In order to calculate net income per diluted share for
management reporting purposes, the Company uses its fully diluted
share count of 162.1 million. In addition, included in cost of
revenue is a $79.1 million impairment charge related to capitalized
software development costs for unreleased and cancelled titles.
Fiscal Year 2023 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.
Total Net Bookings grew 55% to $5.28 billion, as compared to
$3.41 billion in fiscal year 2022 . Net Bookings from recurrent
consumer spending grew 88% and accounted for 78% of total Net
Bookings. Digitally-delivered Net Bookings were up 63% to $5.03
billion, as compared to $3.08 billion in fiscal year 2022, and
accounted for 95% 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; Empires & Puzzles; our hyper-casual
mobile portfolio; Toon Blast; Red Dead Redemption 2 and Red Dead
Online; Words With Friends; and Merge Dragons!.
Management Comments
“We finished fiscal 2023 with momentum. Our fourth quarter Net
Bookings were $1.4 billion, above the high end of our guidance
range, driven by Grand Theft Auto V and Grand Theft Auto Online,
Red Dead Redemption 2, and Zynga’s mobile portfolio,” said Strauss
Zelnick, Chairman and CEO of Take-Two.
"We also issued guidance for Fiscal 2024, which includes Net
Bookings in the range of $5.45 to $5.55 billion. Our forecast
reflects the challenging consumer backdrop, as well as an extension
of the development timelines for several high-profile, long-awaited
titles in our pipeline. We believe that we will enter our next
phase of growth in Fiscal 2025, as we plan to deliver several
groundbreaking titles that we anticipate will set new standards of
quality and success and enable us to deliver over $8 billion in Net
Bookings and over $1 billion in Adjusted Unrestricted Operating
Cash Flow. We expect to sustain this momentum with additional
growth in operating performance in Fiscal 2026."
"After numerous years of investment and creative development, we
are excited about this next chapter for Take-Two. As we execute on
our strategy and release what we expect will be an array of hit
titles, we believe that we will grow our scale and margins,
generating industry-leading returns for our shareholders."
Business and Product
Highlights
Since January 1, 2023:
Take-Two:
- On April 14th, Take-Two announced that it completed an
underwritten public offering and sale of $1.0 billion aggregate
principal amount of its Senior Notes, consisting of $500 million of
its 5.000% Senior Notes due 2026 and $500 million of its 4.950%
Senior Notes due 2028. Subsequently, the Company used $350.0
million of the proceeds to prepay all of its outstanding term loan.
The remainder of the proceeds will be used for general corporate
purposes, including the repurchase or retirement of the Company’s
other outstanding indebtedness.
Rockstar Games:
- On January 19th, announced that Grand Theft Auto: The Trilogy –
The Definitive Edition is available to purchase on Steam, and on
sale through February 2nd as part of the Rockstar Games Publisher
Sale. In addition to modern controls, graphical and environmental
upgrades, and other enhancements — these versions of Grand Theft
Auto III, Grand Theft Auto: Vice City, and Grand Theft Auto: San
Andreas are Playable on Steam Deck and support additional features
including achievements and more.
- Rockstar Games continued to provide an array of free content
for their vast and growing online communities, including:
- During the period, Rockstar Games continued to support the
passionate, global Grand Theft Auto Online community with an array
of new content offerings, including The Last Dose – the epic finale
of the Los Santos Drug Wars update, as well as the roving Gun Van,
Taxi Work missions, a new 50-car garage, new vehicles, clothes,
weapons, modes, and much more.
- Through the GTA+ premium membership program, enrolled members
benefit from a rotation of numerous exclusive in-game benefits,
including vehicles, business opportunities, special upgrades, and
many other perks throughout the game.
- Drove engagement for Red Dead Online through an array of
monthly bonuses and rewards, seasonally-themed gifts, and
more.
2K:
- Continued to drive engagement for NBA 2K23 with the launch of
new seasons that feature new music, content, and rewards.
- On March 17th, 2K and Visual Concepts released WWE 2K23, the
newest installment of the flagship WWE 2K video game franchise
developed by Visual Concepts for PlayStation 5, PlayStation 4, Xbox
Series X|S, Xbox One, and PC via Steam. In celebration of his 20th
anniversary as a WWE Superstar, 16-time World Champion, Hollywood
icon, philanthropist, and WWE 2K23 Executive Soundtrack Producer,
John Cena, is featured on the cover of each edition of the game.
WWE 2K23 features several franchise advancements, including a
unique new take on the 2K Showcase, the WWE 2K introduction of the
fan-favorite WarGames, and expansions to several marquee game
modes.
- Additionally, there were updates to WWE Supercard, including a
New WrestleMania 39 card Tier, Battle Pass, Twitch drops, special
themed events and more.
- PGA TOUR 2K23 continues to impress critics and players alike,
laying the claim to the title of "Highest Rated Golf Sim" of the
last decade on Xbox and PC.
- Continued to support PGA TOUR 2K23 with additional features, as
well as the introduction of Matthew Fitzpatrick and John Cena as
playable golfers.
- On March 23rd, 2K and the LEGO Group announced LEGO® 2K Drive,
the ultimate driving adventure game, available worldwide on May
19th, 2023. Developed by Visual Concepts, LEGO 2K Drive evolves the
iconic LEGO play experience with a vast, open world where players
can build any vehicle, drive anywhere and become a LEGO racing
legend. LEGO 2K Drive will be the first release in a multi-title
partnership between 2K and the LEGO Group. LEGO 2K Drive will
combine the best elements of open-world driving and fast-paced
competitive racing, while introducing a diverse vehicle
customization system.
- On February 17th, 2K announced that industry veteran and
Firaxis Games Chief Operating Officer, Heather Hazen, has been
promoted to Studio Head, ushering in a new era of development at
the legendary interactive entertainment studio behind Sid Meier’s
Civilization, XCOM, and the recently-released and
critically-acclaimed Marvel's Midnight Suns. As Studio Head, Hazen
will manage Firaxis Games' development teams and lead its mission
to build the best strategy games on the planet. With 22 years of
experience in gaming and entertainment, Hazen joined Firaxis Games
in 2020 as the studio's Chief Operating Officer.
- On March 16th, 2K and Firaxis made Civilization VI available
for Xbox Game Pass.
- During the quarter, 2K and Marvel supported Marvel’s Midnight
Suns with three DLC packs, including The Good, the Bad, and the
Undead, which launched on January 26th, Redemption, which launched
on February 23rd, and the Hunger, which launched on March
21st.
Private Division:
- On February 24th, Private Division and Intercept Games
announced that Kerbal Space Program 2 is available in PC Early
Access on Steam, Epic Games Store, Private Division Store, and
other digital storefronts. Kerbal Space Program 2, the sequel to
the original rocket simulation game that sold over 5 million units
worldwide, ushers in the next generation of space adventure by
allowing players to build their own space program with hundreds of
new and improved parts, an upgraded onboarding experience,
modernized visuals, vibrant and realistic environments with
unprecedented detail, customizable color schemes for spacecraft,
and more. Kerbal Space Program 2 has been built from the ground up
to be expanded upon for years to come.
- On March 7th, Private Division, Obsidian Entertainment, and
Virtuos announced that The Outer Worlds: Spacer’s Choice Edition is
available on Xbox Series X|S, PlayStation 5, and PC. The Outer
Worlds: Spacer’s Choice Edition introduces overhauled lighting and
environments, dynamic 4K resolution, enhanced details resulting in
more realistic characters, an increased level cap up to level 99,
and more.
- On May 9th, announced a partnership to publish a new title from
Game Freak. Founded in 1989, the Japanese development company has
created dozens of hit games, including more than 30 entries in the
Pokémon franchise, which is widely recognized as one of the
best-selling game series of all time.
Zynga:
- On January 19th, Chartboost announced Chartboost Mediation, the
largest expansion of the company’s Helium platform to date.
Chartboost Mediation provides mobile app developers and publishers
with an all-in-one solution for increasing revenue, making
Chartboost’s tools and services one of the most advanced in the
industry today.
- On February 14th, Empires & Puzzles released its Season of
Love, a new in-game event with Rare, Epic, and Legendary Heroes for
players to use in epic battles, giving them better chances of
obtaining hard-earned Epic Hero Tokens.
- On February 23rd, Rollic celebrated the first anniversary of
Fill The Fridge!
- On March 1st, Top Eleven launched the Mastermind campaign which
supported a new feature, Season in Review, and new game mode,
Proving Grounds, in February and March.
- On March 13th, CSR Racing 2 launched the European Invitational
- a celebration of Europe's love affair with cars, featuring some
of the greatest cars from across the continent.
- On March 20th, Zynga Poker introduced ‘Cash Clash’, a new
tournament-inspired event, giving players even more ways to compete
against one another in the classic game of Texas Hold’Em
Poker.
- On March 27th, Zynga Turkey launched a new game, Backgammon
Plus, which reimagines the popular board game.
- On April 27th, announced the promotion of Akshay Bharadwaj as
the new head of its Socialpoint studio. In his previous role as
Vice President and General Manager of Zynga India, Bharadwaj
oversaw the live operations of many titles in the Zynga portfolio,
including the FarmVille franchise, while building teams to create
new mass market games.
Outlook for Fiscal 2024
Take-Two is providing its initial outlook for the fiscal year
ending March 31, 2024 and fiscal first quarter ending June 30,
2023.
Fiscal Year Ending March 31, 2024
- GAAP net revenue is expected to range from $5.37 to $5.47
billion
- GAAP net loss is expected to range from $518 to $477
million
- GAAP net loss per share is expected to range from $3.05 to
$2.80
- Share count used to calculate GAAP net loss per share is
expected to be 170.1 million
- Share count used to calculate management reporting diluted net
income per share is expected to be 171.9 million(1)
- Net cash provided by operating activities is expected to be
approximately $90 million
- Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is
expected to be approximately $100 million (2)
- Capital expenditures are expected to be approximately $180
million
- Net Bookings (operational metric) are expected to range from
$5.45 to $5.55 billion
- EBITDA (Non-GAAP) is expected to range from $427 to $479
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,
2024
Financial Data
$ in millions
Outlook (3)
Change in deferred net revenue
and related cost of revenue
Stock-based
compensation
Amortization of acquired
intangibles
Business acquisition
GAAP
Total net revenue
$5,370 to $5,470
80
Cost of revenue
$2,509 to $2,537
(13)
(743)
Operating expenses
$3,386 to $3,406
(320)
(115)
Interest and other, net
$123
(6)
(Loss) income before income
taxes
$(648) to $(596)
80
333
858
6
Non-GAAP
EBITDA
$427 to $479
80
333
First Quarter Ending June 30, 2023
- GAAP net revenue is expected to range from $1.21 to $1.26
billion
- GAAP net loss is expected to range from $178 to $161
million
- GAAP net loss per share is expected to range from $1.05 to
$0.95
- Share count used to calculate GAAP net loss per share is
expected to be 169.4 million
- Share count used to calculate management reporting diluted net
income per share is expected to be 170.8 million(4)
- Net Bookings (operational metric) are expected to range from
$1.15 to $1.2 billion
- EBITDA (Non-GAAP) is expected to range from $82 to $103
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 June 30,
2023
Financial Data
$ in millions
Outlook (3)
Change in deferred net revenue
and related cost of revenue
Stock-based
compensation
Amortization of acquired
intangibles
Business acquisition
GAAP
Total net revenue
$1,210 to $1,260
(60)
Cost of revenue
$572 to $592
(5)
1
(186)
Operating expenses
$827 to $837
(79)
(62)
Interest and other, net
$33
(2)
(Loss) income before income
taxes
$(222) to $(202)
(55)
78
248
2
Non-GAAP
EBITDA
$82 to $103
(55)
78
1)
Includes 170.1 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 169.4 million basic shares and 1.4 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: a continuation of the current economic backdrop;
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; our ongoing focus on our live services
portfolio and new game pipeline; and stable foreign exchange rates.
See also “Cautionary Note Regarding Forward Looking Statements”
below.
Product Releases
The following have been released since
January 1, 2023:
Label
Product
Platforms
Release
Date
Private Division
Kerbal Space Program 2
PC
February 24, 2023
Private Division
The Outer Worlds: Spacer’s Choice
Edition
PS5, Xbox Series X|S, PC
March 7, 2023
2K
WWE 2K23
PS4, PS5, Xbox One, Xbox Series X|S,
PC
March 17, 2023
2K
Marvel's Midnight Suns
PS4, Xbox One
May 11, 2023
Take-Two's future lineup announced to-date includes:
Label
Product
Platforms
Release
Date
2K
LEGO 2K Drive
PS4, PS5, Xbox One, Xbox Series X|S, PC,
Switch
May 19, 2023
Private Division
After Us
PS5, Xbox Series X|S, PC
May 23, 2023
Zynga
Star Wars Hunters
iOS, Android, Switch
Fiscal 2024
2K
NBA 2K24
TBA
Fiscal 2024
2K
WWE 2K24
TBA
Fiscal 2024
Ghost Story Games
Judas
PS5, Xbox Series X|S, PC
TBA
Rockstar Games
Grand Theft Auto: The Trilogy - The
Definitive Edition
iOS, Android
TBA
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
Measures
In addition to reporting financial results in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses Non-GAAP measures of financial performance: Adjusted
Unrestricted Operating Cash Flow, which is defined as GAAP net
cash from operating activities, adjusted for changes in restricted
cash, and EBITDA, which is defined as GAAP net income (loss)
excluding interest income (expense), provision for (benefit from)
income taxes, depreciation expense, and amortization and impairment
of acquired intangibles.
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.
The Company’s management believes it is important to consider
EBITDA, in addition to net income, as it removes the effect of
certain non-cash expenses, debt-related charges, and income taxes.
The Company has chosen to report EBITDA in light of the combination
with Zynga, including the related debt financing. Management
believes that, when considered together with reported amounts,
EBITDA is useful to investors and management in understanding the
Company’s ongoing operations and in analysis of ongoing operating
trends and provides useful additional information relating to the
Company’s operations and financial condition.
These Non-GAAP financial measures are not intended to be
considered in isolation from, as a substitute for, or superior to,
GAAP results. These Non-GAAP financial measures may be different
from similarly titled measures used by other companies. In the
future, Take-Two may also consider whether other items should also
be excluded in calculating these Non-GAAP financial measures used
by the Company. Management believes that the presentation of these
Non-GAAP financial measures provides investors with additional
useful information to measure Take-Two's financial and operating
performance. In particular, these measures facilitate comparison of
our operating performance between periods and may help investors to
understand better the operating results of Take-Two. Internally,
management uses these Non-GAAP financial measures in assessing the
Company's operating results and in planning and forecasting. A
reconciliation of these Non-GAAP financial measures to the most
comparable GAAP measure is contained in the financial tables to
this press release.
Final Results
The financial results discussed herein are presented on a
preliminary basis; final data will be included in Take-Two’s Annual
Report on Form 10−K for the period ended March 31, 2023.
About Take-Two Interactive
Software
Headquartered in New York City, Take-Two Interactive Software,
Inc. is a leading developer, publisher, and marketer of interactive
entertainment for consumers around the globe. We develop and
publish products principally through Rockstar Games, 2K, Private
Division, and Zynga. Our products are designed for console systems,
personal computers, and Mobile, including smartphones and tablets,
and are delivered through physical retail, digital download, online
platforms, and cloud streaming services. The Company’s common stock
is publicly traded on NASDAQ under the symbol TTWO. For more
corporate and product information please visit our website at
http://www.take2games.com.
All trademarks and copyrights contained herein are the property
of their respective holders.
Cautionary Note Regarding
Forward-Looking Statements
Statements contained herein which are not historical facts are
considered forward-looking statements under federal securities laws
and may be identified by words such as "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "potential,"
"predicts," "projects," "seeks," “should,” "will," or words of
similar meaning and include, but are not limited to, statements
regarding the outlook for the Company's future business and
financial performance. Such forward-looking statements are based on
the current beliefs of our management as well as assumptions made
by and information currently available to them, which are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. Actual outcomes and results may vary
materially from these forward-looking statements based on a variety
of risks and uncertainties including: risks relating to our
combination with Zynga; the uncertainty of the impact of the
COVID-19 pandemic and measures taken in response thereto; the
effect that measures taken to mitigate the COVID-19 pandemic have
on our operations, including our ability to timely deliver our
titles and other products, and on the operations of our
counterparties, including retailers and distributors; the effects
of the COVID-19 pandemic on both consumer demand and the
discretionary spending patterns of our customers as the situation
with the pandemic continues to evolve; the risks of conducting
business internationally; the impact of changes in interest rates
by the Federal Reserve and other central banks, including on our
short-term investment portfolio; the impact of inflation;
volatility in foreign currency exchange rates; our dependence on
key management and product development personnel; our dependence on
our NBA 2K and Grand Theft Auto products and our ability to develop
other hit titles; our ability to leverage opportunities on
PlayStation®5 and Xbox Series X|S; the timely release and
significant market acceptance of our games; the ability to maintain
acceptable pricing levels on our games; and risks associated with
international operations.
Other important factors and information are contained in the
Company's most recent Annual Report on Form 10-K, including the
risks summarized in the section entitled "Risk Factors," the
Company’s most recent Quarterly Report on Form 10-Q, and the
Company's other periodic filings with the SEC, which can be
accessed at www.take2games.com. All
forward-looking statements are qualified by these cautionary
statements and apply only as of the date they are made. The Company
undertakes no obligation to update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
TAKE-TWO INTERACTIVE SOFTWARE,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in millions, except per share
amounts)
Three Months Ended March
31,
Twelve Months Ended March
31,
2023
2022
2023
2022
Net revenue:
Game
$
1,266.3
$
910.9
$
4,735.6
$
3,423.2
Advertising
179.9
19.1
614.3
81.6
Total net revenue
1,446.2
930.0
5,349.9
3,504.8
Cost of revenue:
Software development costs and
royalties
855.7
142.4
1,604.8
417.4
Product costs
188.0
57.9
714.0
243.9
Internal royalties
104.5
142.1
438.9
619.9
Licenses
74.8
56.2
306.9
254.2
Cost of revenue
1,223.0
398.6
3,064.6
1,535.4
Gross profit
223.2
531.4
2,285.3
1,969.4
Selling and marketing
429.5
141.2
1,592.6
516.4
Research and development
237.3
96.1
892.5
406.6
General and administrative
222.5
148.7
843.1
511.7
Depreciation and amortization
36.3
16.5
122.3
61.1
Total operating expenses
925.6
402.5
3,450.5
1,495.8
(Loss) income from operations
(702.4
)
128.9
(1,165.2
)
473.6
Interest and other, net
(33.8
)
(7.0
)
(141.9
)
(14.2
)
(Loss) gain on fair value adjustments,
net
5.6
(0.1
)
(31.0
)
6.0
(Loss) income before income taxes
(730.6
)
121.8
(1,338.1
)
465.4
(Benefit from) provision for income
taxes
(120.3
)
10.9
(213.4
)
47.4
Net (loss) income
$
(610.3
)
$
110.9
$
(1,124.7
)
$
418.0
(Loss) earnings per share:
Basic (loss) earnings per share
$
(3.62
)
$
0.96
$
(7.03
)
$
3.62
Diluted (loss) earnings per share
$
(3.62
)
$
0.95
$
(7.03
)
$
3.58
Weighted average shares outstanding
Basic
168.7
115.3
159.9
115.5
Diluted
168.7
116.8
159.9
116.8
Computation of Basic EPS:
Net (loss) income
$
(610.3
)
$
110.9
$
(1,124.7
)
$
418.0
Weighted average shares outstanding -
basic
168.7
115.3
159.9
115.5
Basic (loss) earnings per share
$
(3.62
)
$
0.96
$
(7.03
)
$
3.62
Computation of Diluted EPS:
Net (loss) income
$
(610.3
)
$
110.9
$
(1,124.7
)
$
418.0
Weighted average shares outstanding -
basic
168.7
115.3
159.9
115.5
Add: dilutive effect of common stock
equivalents
—
1.5
—
1.3
Weighted average common shares outstanding
- diluted
168.7
116.8
159.9
116.8
Diluted (loss) earnings per share
$
(3.62
)
$
0.95
$
(7.03
)
$
3.58
TAKE-TWO INTERACTIVE SOFTWARE,
INC.
CONSOLIDATED BALANCE
SHEETS
(in millions, except per share
amounts)
March 31, 2023
March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
827.4
$
1,732.1
Short-term investments
187.0
820.1
Restricted cash and cash equivalents
307.6
359.8
Accounts receivable, net of allowances of
$1.3 and $0.4 at March 31, 2023 and 2022, respectively
763.2
579.4
Software development costs and
licenses
65.9
81.4
Contract assets
79.9
104.9
Prepaid expenses and other
277.1
193.4
Total current assets
2,508.1
3,871.1
Fixed assets, net
402.8
242.0
Right-of-use assets
282.7
217.2
Software development costs and licenses,
net of current portion
1,072.2
755.9
Goodwill
6,767.1
674.6
Other intangibles, net
4,453.2
266.5
Deferred tax assets
44.8
73.8
Long-term restricted cash and cash
equivalents
99.6
103.5
Other assets
231.6
341.7
Total assets
$
15,862.1
$
6,546.3
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
140.1
$
125.9
Accrued expenses and other current
liabilities
1,225.7
1,074.9
Deferred revenue
1,078.8
865.3
Lease liabilities
60.2
38.9
Short-term debt, net
1,346.8
—
Total current liabilities
3,851.6
2,105.0
Long-term debt, net
1,733.0
—
Non-current deferred revenue
35.5
70.9
Non-current lease liabilities
347.0
211.3
Non-current software development
royalties
110.2
115.5
Deferred tax liabilities, net
534.0
21.8
Other long-term liabilities
208.3
212.1
Total liabilities
$
6,819.6
$
2,736.6
Commitments and contingencies (See Note
14)
Stockholders' equity:
Preferred stock, $0.01 par value, 5.0
shares authorized: no shares issued and outstanding at March 31,
2023 and 2022
—
—
Common stock, $0.01 par value, 300.0 and
200.0 shares authorized; 192.6 and 139.0 shares issued and 168.9
and 115.4 outstanding at March 31, 2023 and 2022, respectively
1.9
1.4
Additional paid-in capital
9,010.2
2,597.2
Treasury stock, at cost; 23.7 and 23.7
common shares at March 31, 2023 and 2022, respectively
(1,020.6
)
(1,020.6
)
Retained earnings
1,164.3
2,289.0
Accumulated other comprehensive loss
(113.3
)
(57.3
)
Total stockholders' equity
$
9,042.5
$
3,809.7
Total liabilities and stockholders'
equity
$
15,862.1
$
6,546.3
TAKE-TWO INTERACTIVE SOFTWARE,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in millions)
Twelve Months Ended March
31,
2023
2022
Operating activities:
Net (loss) income
$
(1,124.7
)
$
418.0
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Amortization and impairment of software
development costs and licenses
268.3
153.3
Stock-based compensation
317.8
183.0
Noncash lease expense
81.7
34.5
Amortization and impairment of
intellectual property
1,506.7
64.8
Depreciation
90.3
61.2
Interest expense
108.6
—
Amortization of debt issuance costs
14.1
6.5
Deferred income taxes
(410.8
)
8.1
Fair value adjustments
31.5
(6.0
)
Other, net
(26.6
)
16.2
Changes in assets and liabilities, net of
effect from purchases of businesses:
Accounts receivable
106.8
(17.9
)
Software development costs and
licenses
(492.8
)
(387.0
)
Prepaid expenses, other current and other
non-current assets
77.2
(200.2
)
Deferred revenue
(141.9
)
(30.9
)
Accounts payable, accrued expenses and
other liabilities
(405.1
)
(45.6
)
Net cash provided by operating
activities
1.1
258.0
Investing activities:
Change in bank time deposits
100.0
447.0
Proceeds from available-for-sale
securities
542.0
779.9
Purchases of available-for-sale
securities
—
(756.3
)
Purchases of fixed assets
(204.2
)
(158.6
)
Proceeds from sale of long-term
investment
20.6
—
Purchase of long-term investments
(15.7
)
(12.3
)
Business acquisitions, net of cash
acquired
(3,310.9
)
(161.3
)
Other
(8.1
)
0.8
Net cash (used in) provided by investing
activities
(2,876.3
)
139.2
Financing activities:
Tax payment related to net share
settlements on restricted stock awards
(108.1
)
(64.1
)
Repurchase of common stock
—
(200.0
)
Issuance of common stock
65.4
19.7
Cost of debt
(22.4
)
(12.2
)
Repayment of debt
(200.0
)
(0.2
)
Settlement of capped calls
140.1
—
Payment of convertible notes
(1,166.8
)
—
Proceeds from issuance of debt
3,248.9
—
Payment of contingent earn-out
consideration
(26.8
)
—
Net cash provided by (used in) financing
activities
1,930.3
(256.8
)
Effects of foreign currency exchange rates
on cash, cash equivalents, and restricted cash and cash
equivalents
(15.9
)
(5.2
)
Net change in cash, cash equivalents, and
restricted cash and cash equivalents
(960.8
)
135.2
Cash, cash equivalents, and restricted
cash and cash equivalents, beginning of year (1)
2,195.4
2,060.2
Cash, cash equivalents, and restricted
cash equivalents, end of year (1)
$
1,234.6
$
2,195.4
(1)
Cash, cash equivalents and restricted cash and cash equivalents
shown on our Consolidated Statements of Cash Flow includes amounts
in the Cash and cash equivalents, Restricted cash and cash
equivalents, and Long-term restricted cash and cash equivalents on
our Consolidated Balance Sheet.
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
March 31, 2023
Three Months Ended
March 31, 2022
Amount
% of total
Amount
% of total
Net revenue by geographic
region
United States
$
947.4
66
%
$
557.2
60
%
International
498.8
34
%
372.8
40
%
Total net revenue
$
1,446.2
100
%
$
930.0
100
%
Net Bookings by geographic
region
United States
$
860.8
62
%
$
492.7
58
%
International
532.6
38
%
353.1
42
%
Total Net Bookings
$
1,393.4
100
%
$
845.8
100
%
Three Months Ended
March 31, 2023
Three Months Ended
March 31, 2022
Amount
% of total
Amount
% of total
Net revenue by distribution
channel
Digital online
$
1,392.0
96
%
$
833.4
90
%
Physical retail and other
54.2
4
%
96.6
10
%
Total net revenue
$
1,446.2
100
%
$
930.0
100
%
Net Bookings by distribution
channel
Digital online
$
1,348.3
97
%
$
765.8
91
%
Physical retail and other
45.1
3
%
80.0
9
%
Total Net Bookings
$
1,393.4
100
%
$
845.8
100
%
Three Months Ended
March 31, 2023
Three Months Ended
March 31, 2022
Amount
% of total
Amount
% of total
Net revenue by platform mix
Mobile
$
717.7
50
%
$
102.2
11
%
Console
583.3
40
%
664.9
71
%
PC and other
145.2
10
%
162.9
18
%
Total net revenue
$
1,446.2
100
%
$
930.0
100
%
Net Bookings by platform mix
Mobile
$
706.2
51
%
$
100.9
12
%
Console
535.1
38
%
601.8
71
%
PC and other
152.1
11
%
143.1
17
%
Total Net Bookings
$
1,393.4
100.0
%
$
845.8
100
%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
Net Revenue and Net Bookings by
Geographic Region, Distribution Channel, and Platform Mix
(in millions)
Twelve Months Ended
March 31, 2023
Twelve Months Ended
March 31, 2022
Amount
% of total
Amount
% of total
Net revenue by geographic
region
United States
$
3,360.0
63
%
$
2,100.2
60
%
International
1,989.9
37
%
1,404.6
40
%
Total net revenue
$
5,349.9
100
%
$
3,504.8
100
%
Net Bookings by geographic
region
United States
$
3,303.3
63
%
$
2,019.7
59
%
International
1,980.3
37
%
1,388.5
41
%
Total Net Bookings
$
5,283.6
100
%
$
3,408.2
100
%
Twelve Months Ended
March 31, 2023
Twelve Months Ended
March 31, 2022
Amount
% of total
Amount
% of total
Net revenue by distribution
channel
Digital online
$
5,085.7
95
%
$
3,149.0
90
%
Physical retail and other
264.2
5
%
355.8
10
%
Total net revenue
$
5,349.9
100
%
$
3,504.8
100
%
Net Bookings by distribution
channel
Digital online
$
5,033.4
95
%
$
3,084.6
91
%
Physical retail and other
250.2
5
%
323.6
9
%
Total Net Bookings
$
5,283.6
100
%
$
3,408.2
100
%
Twelve Months Ended
March 31, 2023
Twelve Months Ended
March 31, 2022
Amount
% of total
Amount
% of total
Net revenue by platform mix
Mobile
$
2,538.6
47
%
$
403.4
12
%
Console
2,303.8
43
%
2,528.9
72
%
PC and other
507.5
10
%
572.5
16
%
Total net revenue
$
5,349.9
100
%
$
3,504.8
100
%
Net Bookings by platform mix
Mobile
$
2,502.0
47
%
$
404.9
12
%
Console
2,257.6
43
%
2,440.0
72
%
PC and other
524.0
10
%
563.3
17
%
Total Net Bookings
$
5,283.6
100.0
%
$
3,408.2
100
%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
ADDITIONAL DATA
(in millions)
Three Months Ended March 31,
2023
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
$
1,446.2
$
855.7
$
188.0
$
104.5
$
74.8
Net effect from deferred revenue and
related cost of revenue
(52.7
)
1.7
(1.9
)
(0.4
)
Stock-based compensation
(7.5
)
Amortization and impairment of acquired
intangibles
(669.6
)
Three Months Ended March 31,
2023
Selling and marketing
General and
administrative
Research and
development
Depreciation and
amortization
Interest and other,
net
(Loss) gain on fair value
adjustments, net
As reported
$
429.5
$
222.5
$
237.3
$
36.3
$
(33.8
)
$
5.6
Net effect from deferred revenue and
related cost of revenue
(0.6
)
Stock-based compensation
(19.0
)
(24.9
)
(27.9
)
Amortization and impairment of acquired
intangibles
(80.6
)
(7.2
)
(9.4
)
Acquisition related expenses
(46.3
)
(2.2
)
1.9
(5.6
)
Impact of business reorganization
(6.1
)
(3.6
)
(4.9
)
Three Months Ended March 31,
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
$
930.0
$
142.4
$
57.9
$
142.1
$
56.2
Net effect from deferred revenue and
related cost of revenue
(84.2
)
(12.8
)
(3.2
)
(1.3
)
Stock-based compensation
(16.5
)
Amortization and impairment of acquired
intangibles
(13.2
)
Three Months Ended March 31,
2022
Selling and marketing
General and
administrative
Research and
development
Depreciation and
amortization
Interest and other,
net
(Loss) gain on fair value
adjustments, net
As reported
$
141.2
$
148.7
$
96.1
$
16.5
$
(7.0
)
$
(0.1
)
Net effect from deferred revenue and
related cost of revenue
1.6
Stock-based compensation
7.7
(16.1
)
0.1
Amortization and impairment of acquired
intangibles
(0.8
)
(0.5
)
(0.3
)
Acquisition related expenses
(33.3
)
6.5
Impact of business reorganization
(0.3
)
Gain on fair value adjustments, net
0.1
Other
(0.3
)
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
ADDITIONAL DATA
(in millions)
Twelve Months Ended March 31,
2023
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
$
5,349.9
$
1,604.8
$
714.0
$
438.9
$
306.9
Net effect from deferred revenue and
related cost of revenue
(66.4
)
14.6
(2.2
)
2.1
Stock-based compensation
9.5
Amortization and impairment of acquired
intangibles
(1,169.7
)
Twelve Months Ended March 31,
2023
Selling and marketing
General and
administrative
Research and
development
Depreciation and
amortization
Interest and other,
net
(Loss) gain on fair value
adjustments, net
As reported
$
1,592.6
$
843.1
$
892.5
$
122.3
$
(141.9
)
$
(31.0
)
Net effect from deferred revenue and
related cost of revenue
0.7
Stock-based compensation
(95.2
)
(115.5
)
(116.6
)
Amortization and impairment of acquired
intangibles
(277.1
)
(24.6
)
(33.5
)
Acquisition related expenses
(8.0
)
(187.0
)
(17.4
)
26.3
31.0
Impact of business reorganization
(6.1
)
(3.6
)
(4.9
)
Twelve Months Ended March 31,
2022
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
$
3,504.8
417.4
$
243.9
$
619.9
$
254.2
Net effect from deferred revenue and
related cost of revenue
(96.6
)
(6.6
)
(4.1
)
(1.1
)
Stock-based compensation
(48.4
)
Amortization and impairment of acquired
intangibles
(50.8
)
Twelve Months Ended March 31,
2022
Selling and marketing
General and
administrative
Research and
development
Depreciation and
amortization
Interest and other,
net
(Loss) gain on fair value
adjustments, net
As reported
$
516.4
$
511.7
$
406.6
$
61.1
$
(14.2
)
$
6.0
Net effect from deferred revenue and
related cost of revenue
3.0
Stock-based compensation
(30.0
)
(66.4
)
(38.1
)
Amortization and impairment of acquired
intangibles
(5.3
)
(5.5
)
(1.4
)
Impact of business reorganization
(0.8
)
Acquisition related expenses
(72.8
)
6.5
Gain on long-term investments, net
(6.0
)
Other
(0.3
)
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURE
(in millions)
Twelve Months Ended March
31,
2023
2022
Net cash from operating
activities
$
1.1
$
258.0
Net change in Restricted cash (1)
54.6
166.9
Adjusted Unrestricted Operating Cash
Flow
$
55.7
$
424.9
Twelve Months Ended March
31,
2023
2022
Restricted cash beginning of period
$
463.3
$
637.4
Restricted cash end of period
407.2
463.3
Restricted cash related to
acquisitions
1.5
7.1
(1) Net change in Restricted cash
$
54.6
$
166.9
TAKE-TWO INTERACTIVE SOFTWARE, INC. and
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURE
(in millions)
Three Months Ended March
31,
Twelve Months Ended March
31,
2023
2022
2023
2022
Net (loss) income
$
(610.3
)
$
110.9
$
(1,124.7
)
$
418.0
(Benefit from) provision for income
taxes
(120.3
)
10.9
(213.4
)
47.4
Interest expense (income)
23.9
4.5
95.8
1.0
Depreciation and amortization
36.3
16.0
122.3
61.1
Amortization and impairment of acquired
intangibles
757.4
14.5
1,471.4
61.5
EBITDA
$
87.0
$
156.8
$
351.4
$
589.0
Outlook
Twelve Months Ended March 31,
2024
Net loss
$(518) to $(477)
Benefit from income taxes
$(130) to $(119)
Interest expense
$114
Depreciation
$103
Amortization of acquired intangibles
$858
EBITDA
$427 to $479
Outlook
Three Months Ended June 30,
2023
Net loss
$(178) to $(161)
Benefit from income taxes
$(44) to $(40)
Interest expense
$31
Depreciation
$25
Amortization of acquired intangibles
$248
EBITDA
$82 to $103
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230517005557/en/
(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
TakeTwo Interactive Soft... (NASDAQ:TTWO)
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TakeTwo Interactive Soft... (NASDAQ:TTWO)
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