February 26, 2024

Take-Two Interactive Software, Inc. Reports Results for Fiscal Third Quarter 2024

$1.34 billion Net Bookings, with outperformance in Grand Theft Auto V and Grand Theft Auto Online, Red Dead Redemption series, and Toon Blast

Company updates outlook for fiscal 2024, including Net Bookings of $5.25 to $5.3 billion

Contacts

(Investor Relations)

Nicole Shevins

Senior Vice President

Investor Relations & Corporate Communications

Take-Two Interactive Software, Inc.

(646) 536-3005

[email protected]

(Corporate Press)

Alan Lewis

Vice President

Corporate Communications & Public Affairs

Take-Two Interactive Software, Inc.

(646) 536-2983

[email protected]

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported results for the third quarter of its fiscal year 2024, ended December 31, 2023. For further information, please see the third quarter fiscal 2024 results slide deck posted to the Company’s investor relations website at take2games.com/ir.

Management Comments

"We achieved solid third quarter results, including Net Bookings of $1.3 billion. Grand Theft Auto V and Grand Theft Auto Online, the Red Dead Redemption series, and Zynga’s in-app purchases, led by Toon Blast, exceeded our expectations, as we launched engaging new content, partnerships, and activations. This was partially offset by some softness in mobile advertising and sales for NBA 2K24," said Strauss Zelnick, Chairman and CEO of Take-Two.

"We are reducing our outlook for the year to reflect these factors, as well as a planned release moving out of the fourth quarter, and increased marketing for Zynga’s new hit mobile game, Match Factory!, which we believe will enable us to scale the title meaningfully. Our revised Net Bookings forecast is $5.25 to $5.3 billion."

"Our strategy is anchored in creativity, innovation, and efficiency. We are currently working on a significant cost reduction program across our entire business to maximize our margins, while still investing for growth. These measures are incremental to, and more robust than, our prior cost reduction program, and we aim to achieve greater operating leverage as we roll out our outstanding release schedule.”

"We have always managed Take-Two for the long-term. Our Company's potential is vast and unique, driven by our creative talent, our owned and controlled IP, and our groundbreaking pipeline for fiscal 2025 and beyond. As we focus on our strategic priorities, we are confident that we will grow our Net Bookings, enhance our profitability, and continue to deliver value for our shareholders.”

Third Quarter Fiscal 2024 Financial and Operational Highlights

  • Total Net Bookings* decreased 3% to $1.34 billion, as compared to $1.38 billion during last year’s fiscal third quarter.
    • Net Bookings from recurrent consumer spending** decreased 7% and accounted for 75% of total Net Bookings.
    • The largest contributors to Net Bookings were NBA® 2K24, Grand Theft Auto® Online and Grand Theft Auto V, Toon Blast™, Empires & Puzzles™, our hyper-casual mobile portfolio, Red Dead Redemption® 2 and Red Dead Online, Words With Friends™, Grand Theft Auto: The Trilogy - The Definitive Edition, and Merge Dragons!™.
  • GAAP net revenue decreased 3% to $1.37 billion, as compared to $1.41 billion in last year’s fiscal third quarter.
    • Recurrent consumer spending** decreased 7% and accounted for 76% of total GAAP net revenue.
    • The largest contributors to GAAP net revenue were NBA 2K24 and NBA 2K23, Grand Theft Auto Online and Grand Theft Auto V, Toon Blast, Empires & Puzzles, our hyper-casual mobile portfolio, Red Dead Redemption 2 and Red Dead Online, Words With Friends, Merge Dragons!, and Grand Theft Auto: The Trilogy - The Definitive Edition.
  • GAAP net loss was $91.6 million, or $0.54 per share, as compared to $153.4 million, or $0.91 per share, for the comparable period last year.
  • Our GAAP results include an impairment charge of $53.4 million related to intangible assets.

* Net Bookings is our operational metric and 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.

** Recurrent consumer spending is generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and in-game advertising.

Third Quarter Fiscal 2024 Financial Results

The following data is 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 December 31, 2023

 

 

 

 

Financial Data

in millions

 

Statement of Operations

 

Change in deferred net revenue and related cost of revenue

 

Stock-based compensation

 

Amortization and impairment of acquired intangibles

 

Business acquisition

 

Other (a)

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Total net revenue

 

$1,366.3

 

(28.5)

 

 

 

 

 

 

 

 

Cost of revenue

 

688.2

 

 

(6.4)

 

(230.1)

 

 

 

 

Gross profit

 

678.1

 

(28.5)

 

6.4

 

230.1

 

 

 

 

Operating expenses

 

807.6

 

 

 

(79.5)

 

(19.0)

 

10.9

 

(1.3)

(Loss) income from operations

 

(129.5)

 

(28.5)

 

85.9

 

249.1

 

(10.9)

 

1.3

Interest and other, net

 

(22.5)

 

(1.8)

 

 

 

 

 

1.8

 

3.8

(Loss) gain on fair value adjustments, net

 

(0.3)

 

 

 

 

 

 

 

 

 

0.3

(Loss) income before income taxes

 

(152.3)

 

(30.3)

 

85.9

 

249.1

 

(9.1)

 

5.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

146.5

 

(28.5)

 

85.9

 

 

 

(12.6)

 

5.1

Note: For management reporting purposes, the table above assumes a management tax rate of 18% and a fully diluted share count of 172.7 million in order to calculate diluted net income per share.

(a) Other includes adjustments for (i) the revaluation of the Turkish Lira against the U.S. Dollar, (ii) business reorganization expenses, and (iii) fair value adjustments related to certain equity investments.

Outlook for Fiscal 2024

Take-Two is revising its outlook for the fiscal year ending March 31, 2024 and providing its initial outlook for its fiscal fourth quarter ending March 31, 2024:

Fiscal Year Ending March 31, 2024

The Company is also providing selected data, which is 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:

 

 

Fiscal Year Ending March 31, 2024

 

 

 

 

Financial Data

$ in millions except for per share amounts

 

Outlook (1)

 

Change in deferred net revenue and related cost of revenue

 

Stock-based compensation

 

Amortization and impairment of acquired intangibles

 

Business acquisition and other (a)

GAAP

 

 

 

 

 

 

 

 

 

 

Total net revenue

 

$5,270 to $5,320

 

$(20)

 

 

 

 

 

 

Cost of revenue

 

$2,787 to $2,806

 

 

$(27)

 

$(991)

 

$10

Operating expenses

 

$3,545 to $3,555

 

 

 

$(309)

 

$(115)

 

$(200)

Interest and other, net

 

$110

 

$1

 

 

 

 

 

$(22)

(Loss) income before income taxes

 

$(1,172) to $(1,151)

 

$(21)

 

$336

 

$1,106

 

$212

Net loss

 

$(1,013) to $(995)

 

 

 

 

 

 

 

 

Net loss per share

 

$(5.95) to $(5.85)

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

approximately $90

 

 

 

 

 

 

 

 

Capital expenditures

 

approximately $150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$313 to $334

 

$(20)

 

$336

 

 

 

$25

Adjusted Unrestricted Operating Cash Flow

 

approximately $100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational metric

 

 

 

 

 

 

 

 

 

 

Net Bookings

 

$5,250 to $5,300

 

 

 

 

 

 

 

 

  • Management reporting tax rate anticipated to be 18%
  • 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 172.4 million

(a) Other includes adjustments for (i) the revaluation of the Turkish Lira against the U.S. Dollar, (ii) business reorganization expenses, and (iii) fair value adjustments related to certain equity investments.

Fourth Quarter Ending March 31, 2024

The Company is also providing selected data, which is 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 March 31, 2024

 

 

 

 

Financial Data

$ in millions except for per share amounts

 

Outlook (1)

 

Change in deferred net revenue and related cost of revenue

 

Stock-based compensation

 

Amortization of intangible assets

 

Business acquisition and other

GAAP

 

 

 

 

 

 

 

 

 

 

Total net revenue

 

$1,323 to $1,373

 

$(57)

 

 

 

 

 

 

Cost of revenue

 

$609 to $628

 

$(3)

 

$(6)

 

$(164)

 

 

Operating expenses

 

$896 to $906

 

 

 

$(82)

 

$(20)

 

$6

Interest and other, net

 

$30

 

 

 

 

 

 

 

$(2)

(Loss) income before income taxes

 

$(213) to $(192)

 

$(54)

 

$88

 

$184

 

$(4)

Net loss

 

$(170) to $(153)

 

 

 

 

 

 

 

 

Net loss per share

 

$(1.00) to $(0.90)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$33 to $55

 

$(54)

 

$88

 

 

 

$(6)

 

 

 

 

 

 

 

 

 

 

 

Operational metric

 

 

 

 

 

 

 

 

 

 

Net Bookings

 

$1,270 to $1,320

 

 

 

 

 

 

 

 

  • Management reporting tax rate anticipated to be 18%
  • Share count used to calculate GAAP net loss per share is expected to be 170.6 million
  • Share count used to calculate management reporting diluted net income per share is expected to be 173.0 million
 1)

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.

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 growth in the installed base of PlayStation 5 and Xbox Series X|S, as well as engagement on Xbox One and PlayStation 4; 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 October 1, 2023:

Label

Product

Platforms

Release Date

Zynga

Top Troops

iOS, Android

October 3, 2023

2K

Borderlands 3 Ultimate Edition

Switch

October 6, 2023

2K

NBA 2K24 Arcade Edition

Apple Arcade

October 24, 2023

Zynga

Match Factory!

iOS

November 7, 2023

Private Division

Rollerdrome

Xbox Series X|S

November 28, 2023

Rockstar Games

Grand Theft Auto Online: The Chop Shop

PS4, PS5, XBox One, Xbox Series X|S, PC

December 12, 2023

Zynga

Match Factory!

Android

December 21, 2023

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

Label

Product

Platforms

Release Date

2K

WWE 2K24

PS4, PS5, Xbox One, Xbox Series X|S, PC

March 8, 2024

Private Division

Penny's Big Breakaway

PS5, Xbox Series X|S, PC, Switch

Q1 Calendar 2024

Private Division

No Rest for the Wicked

Early Access on PC

Q2 Calendar 2024

Zynga

Game of Thrones: Legends

iOS, Android

Calendar 2024

Zynga

Star Wars Hunters

iOS, Android, Switch

Calendar 2024

Private Division

Tales of the Shire

TBA

Fiscal 2025

Rockstar Games

Grand Theft Auto VI

PS5, Xbox Series X|S

Calendar 2025

2K

Top Spin 2K25

TBA

TBA

Ghost Story Games

Judas

PS5, Xbox Series X|S, PC

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. 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 Quarterly Report on Form 10-Q for the period ended December 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 gaming systems, PC, and mobile, including smartphones and tablets. We deliver our products 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

The statements contained herein, which are not historical facts, including statements relating to Take-Two Interactive Software, Inc.'s ("Take-Two," the "Company," "we," "us," or similar pronouns) outlook, 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 our 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 Inc.; the risks of conducting business internationally, including as a result of unforeseen geopolitical events; 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; factors affecting our mobile business, such as player acquisition costs; the timely release and significant market acceptance of our games; the ability to maintain acceptable pricing levels on our games.

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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net revenue:

 

 

 

 

 

 

 

 

Game

 

$

1,208.2

 

 

$

1,231.3

 

 

$

3,432.9

 

 

$

3,469.3

 

Advertising

 

 

158.1

 

 

 

176.5

 

 

 

517.3

 

 

 

434.4

 

Total net revenue

 

 

1,366.3

 

 

 

1,407.8

 

 

 

3,950.2

 

 

 

3,903.7

 

Cost of revenue:

 

 

 

 

 

 

 

 

Game intangibles

 

 

230.1

 

 

 

202.5

 

 

 

826.4

 

 

 

500.1

 

Product costs

 

 

191.3

 

 

 

204.6

 

 

 

545.9

 

 

 

526.0

 

Software development costs and royalties

 

 

59.7

 

 

 

91.6

 

 

 

258.5

 

 

 

249.0

 

Internal royalties

 

 

134.1

 

 

 

116.7

 

 

 

319.5

 

 

 

334.4

 

Licenses

 

 

73.0

 

 

 

76.5

 

 

 

227.2

 

 

 

232.1

 

Total cost of revenue

 

 

688.2

 

 

 

691.9

 

 

 

2,177.5

 

 

 

1,841.6

 

Gross profit

 

 

678.1

 

 

 

715.9

 

 

 

1,772.7

 

 

 

2,062.1

 

Selling and marketing

 

 

367.6

 

 

 

446.7

 

 

 

1,103.1

 

 

 

1,163.1

 

Research and development

 

 

232.4

 

 

 

238.2

 

 

 

710.7

 

 

 

655.2

 

General and administrative

 

 

165.0

 

 

 

168.9

 

 

 

542.7

 

 

 

620.6

 

Depreciation and amortization

 

 

42.6

 

 

 

35.0

 

 

 

128.3

 

 

 

86.0

 

Goodwill impairment

 

 

 

 

 

 

 

 

165.4

 

 

 

 

Total operating expenses

 

 

807.6

 

 

 

888.8

 

 

 

2,650.2

 

 

 

2,524.9

 

Loss from operations

 

 

(129.5

)

 

 

(172.9

)

 

 

(877.5

)

 

 

(462.8

)

Interest and other, net

 

 

(22.5

)

 

 

(28.3

)

 

 

(79.0

)

 

 

(108.1

)

(Loss) gain on fair value adjustments, net

 

 

(0.3

)

 

 

1.1

 

 

 

(1.7

)

 

 

(36.6

)

Loss before income taxes

 

 

(152.3

)

 

 

(200.1

)

 

 

(958.2

)

 

 

(607.5

)

Benefit from income taxes

 

 

60.7

 

 

 

46.7

 

 

 

117.0

 

 

 

93.1

 

Net loss

 

$

(91.6

)

 

$

(153.4

)

 

$

(841.2

)

 

$

(514.4

)

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

Basic and diluted loss per share

 

$

(0.54

)

 

$

(0.91

)

 

$

(4.95

)

 

$

(3.27

)

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

170.3

 

 

 

168.0

 

 

 

169.9

 

 

 

157.2

 

 

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)

 

 

December 31, 2023

 

March 31, 2023

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

898.7

 

 

$

827.4

 

Short-term investments

 

 

23.5

 

 

 

187.0

 

Restricted cash and cash equivalents

 

 

184.6

 

 

 

307.6

 

Accounts receivable, net of allowances of $1.2 and $1.3 at December 31, 2023 and March 31, 2023, respectively

 

 

666.3

 

 

 

763.2

 

Software development costs and licenses

 

 

69.9

 

 

 

65.9

 

Contract assets

 

 

88.7

 

 

 

79.9

 

Prepaid expenses and other

 

 

286.8

 

 

 

277.1

 

Total current assets

 

 

2,218.5

 

 

 

2,508.1

 

Fixed assets, net

 

 

400.4

 

 

 

402.8

 

Right-of-use assets

 

 

316.6

 

 

 

282.7

 

Software development costs and licenses, net of current portion

 

 

1,444.3

 

 

 

1,072.2

 

Goodwill

 

 

6,614.2

 

 

 

6,767.1

 

Other intangibles, net

 

 

3,546.9

 

 

 

4,453.2

 

Deferred tax assets

 

 

7.1

 

 

 

44.8

 

Long-term restricted cash and cash equivalents

 

 

106.5

 

 

 

99.6

 

Other assets

 

 

241.2

 

 

 

231.6

 

Total assets

 

$

14,895.7

 

 

$

15,862.1

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

151.8

 

 

$

140.1

 

Accrued expenses and other current liabilities

 

 

1,022.2

 

 

 

1,225.7

 

Deferred revenue

 

 

1,081.2

 

 

 

1,078.8

 

Lease liabilities

 

 

64.0

 

 

 

60.2

 

Short-term debt, net

 

 

373.2

 

 

 

1,346.8

 

Total current liabilities

 

 

2,692.4

 

 

 

3,851.6

 

Long-term debt, net

 

 

2,708.2

 

 

 

1,733.0

 

Non-current deferred revenue

 

 

61.3

 

 

 

35.5

 

Non-current lease liabilities

 

 

380.7

 

 

 

347.0

 

Non-current software development royalties

 

 

100.8

 

 

 

110.2

 

Deferred tax liabilities, net

 

 

223.0

 

 

 

534.0

 

Other long-term liabilities

 

 

220.7

 

 

 

208.3

 

Total liabilities

 

$

6,387.1

 

 

$

6,819.6

 

Stockholders' equity:

 

 

 

 

Preferred stock, $0.01 par value, 5.0 shares authorized; no shares issued and outstanding at December 31, 2023 and March 31, 2023

 

 

 

 

 

 

Common stock, $0.01 par value, 300.0 and 300.0 shares authorized; 194.2 and 192.6 shares issued and 170.5 and 168.9 outstanding at December 31, 2023 and March 31, 2023, respectively

 

 

1.9

 

 

 

1.9

 

Additional paid-in capital

 

 

9,286.9

 

 

 

9,010.2

 

Treasury stock, at cost; 23.7 and 23.7 common shares at December 31, 2023 and March 31, 2023, respectively

 

 

(1,020.6

)

 

 

(1,020.6

)

Retained earnings

 

 

323.1

 

 

 

1,164.3

 

Accumulated other comprehensive loss

 

 

(82.7

)

 

 

(113.3

)

Total stockholders' equity

 

$

8,508.6

 

 

$

9,042.5

 

Total liabilities and stockholders' equity

 

$

14,895.7

 

 

$

15,862.1

 

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)

 

 

 

 

 

 

 

Nine Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

Operating activities:

 

 

 

 

Net loss

 

$

(841.2

)

 

$

(514.4

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Amortization and impairment of software development costs and licenses

 

 

152.1

 

 

 

147.6

 

Stock-based compensation

 

 

255.0

 

 

 

238.5

 

Noncash lease expense

 

 

46.4

 

 

 

35.2

 

Amortization and impairment of intangibles

 

 

924.9

 

 

 

740.1

 

Depreciation

 

 

101.6

 

 

 

62.9

 

Goodwill impairment

 

 

165.4

 

 

 

 

Interest expense

 

 

103.2

 

 

 

79.0

 

Gain on debt extinguishment

 

 

(7.7

)

 

 

 

Fair value adjustments

 

 

1.7

 

 

 

37.1

 

Other, net

 

 

30.6

 

 

 

(23.7

)

Changes in assets and liabilities, net of effect from purchases of businesses:

 

 

 

 

Accounts receivable

 

 

98.0

 

 

 

158.0

 

Software development costs and licenses

 

 

(457.3

)

 

 

(362.9

)

Prepaid expenses and other current and other non-current assets

 

 

(47.8

)

 

 

(23.5

)

Deferred revenue

 

 

27.2

 

 

 

(88.1

)

Accounts payable, accrued expenses and other liabilities

 

 

(559.3

)

 

 

(450.0

)

Net cash (used in) provided by operating activities

 

 

(7.2

)

 

 

35.8

 

Investing activities:

 

 

 

 

Change in bank time deposits

 

 

21.2

 

 

 

123.0

 

Sale and maturities of available-for-sale securities

 

 

144.0

 

 

 

436.1

 

Purchases of fixed assets

 

 

(95.5

)

 

 

(137.7

)

Proceeds from sale of long-term investment

 

 

 

 

 

20.6

 

Purchases of long-term investments

 

 

(17.5

)

 

 

(10.2

)

Business acquisitions

 

 

(17.5

)

 

 

(3,241.8

)

Other

 

 

(8.2

)

 

 

(4.8

)

Net cash provided by (used in) investing activities

 

 

26.5

 

 

 

(2,814.8

)

Financing activities:

 

 

 

 

Tax payment related to net share settlements on restricted stock awards

 

 

(76.6

)

 

 

(90.6

)

Issuance of common stock

 

 

38.1

 

 

 

22.3

 

Payment for settlement of convertible notes

 

 

 

 

 

(1,166.8

)

Proceeds from issuance of debt

 

 

999.3

 

 

 

3,248.9

 

Cost of debt

 

 

(7.5

)

 

 

(22.4

)

Settlement of capped calls

 

 

 

 

 

140.1

 

Repayment of debt

 

 

(989.6

)

 

 

(200.0

)

Payment of contingent earn-out consideration

 

 

(35.7

)

 

 

(26.9

)

Net cash (used in) provided by financing activities

 

 

(72.0

)

 

 

1,904.6

 

Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents

 

 

7.9

 

 

 

(18.6

)

Net change in cash, cash equivalents, and restricted cash and cash equivalents

 

 

(44.8

)

 

 

(893.0

)

Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year (1)

 

 

1,234.6

 

 

 

2,195.3

 

Cash, cash equivalents, and restricted cash and cash equivalents, end of period (1)

 

$

1,189.8

 

 

$

1,302.3

 

(1) Cash, cash equivalents and restricted cash and cash equivalents shown on our Condensed 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 Condensed Consolidated Balance Sheet.

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2023

 

Three Months Ended

December 31, 2022

 

 

Amount

 

% of total

 

Amount

 

% of total

Net revenue by geographic region

 

 

 

 

 

 

 

 

United States

 

$

818.3

 

60

%

 

$

886.8

 

63

%

International

 

 

548.0

 

40

%

 

 

521.0

 

37

%

Total Net revenue

 

$

1,366.3

 

100

%

 

$

1,407.8

 

100

%

 

 

 

 

 

 

 

 

 

Net Bookings by geographic region

 

 

 

 

 

 

 

 

United States

 

$

786.6

 

59

%

 

$

872.2

 

63

%

International

 

 

551.2

 

41

%

 

 

510.4

 

37

%

Total Net Bookings

 

$

1,337.8

 

100

%

 

$

1,382.6

 

100

%

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2023

 

Three Months Ended

December 31, 2022

 

 

Amount

 

% of total

 

Amount

 

% of total

Net revenue by distribution channel

 

 

 

 

 

 

 

 

Digital online

 

$

1,297.3

 

95

%

 

$

1,336.7

 

95

%

Physical retail and other

 

 

69.0

 

5

%

 

 

71.1

 

5

%

Total Net revenue

 

$

1,366.3

 

100

%

 

$

1,407.8

 

100

%

 

 

 

 

 

 

 

 

 

Net Bookings by distribution channel

 

 

 

 

 

 

 

 

Digital online

 

$

1,268.4

 

95

%

 

$

1,308.2

 

95

%

Physical retail and other

 

 

69.4

 

5

%

 

 

74.4

 

5

%

Total Net Bookings

 

$

1,337.8

 

100

%

 

$

1,382.6

 

100

%

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2023

 

Three Months Ended

December 31, 2022

 

 

Amount

 

% of total

 

Amount

 

% of total

Net revenue by platform

 

 

 

 

 

 

 

 

Mobile

 

$

706.7

 

52

%

 

$

721.2

 

51

%

Console

 

 

547.6

 

40

%

 

 

561.4

 

40

%

PC and other

 

 

112.0

 

8

%

 

 

125.2

 

9

%

Total Net revenue

 

$

1,366.3

 

100

%

 

$

1,407.8

 

100

%

 

 

 

 

 

 

 

 

 

Net Bookings by platform

 

 

 

 

 

 

 

 

Mobile

 

$

697.9

 

52

%

 

$

713.2

 

52

%

Console

 

 

524.3

 

39

%

 

 

541.6

 

39

%

PC and other

 

 

115.6

 

9

%

 

 

127.8

 

9

%

Total Net Bookings

 

$

1,337.8

 

100.0

%

 

$

1,382.6

 

100

%

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

Net Revenue and Net Bookings by Geographic Region, Distribution Channel, and Platform Mix

(in millions)

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

December 31, 2023

 

Nine Months Ended

December 31, 2022

 

 

Amount

 

% of total

 

Amount

 

% of total

Net revenue by geographic region

 

 

 

 

 

 

 

 

United States

 

$

2,417.8

 

61

%

 

$

2,412.6

 

62

%

International

 

 

1,532.4

 

39

%

 

 

1,491.1

 

38

%

Total Net revenue

 

$

3,950.2

 

100

%

 

$

3,903.7

 

100

%

 

 

 

 

 

 

 

 

 

Net Bookings by geographic region

 

 

 

 

 

 

 

 

United States

 

$

2,428.6

 

61

%

 

$

2,442.3

 

63

%

International

 

 

1,555.6

 

39

%

 

 

1,447.7

 

37

%

Total Net Bookings

 

$

3,984.2

 

100

%

 

$

3,890.0

 

100

%

 

 

 

 

 

 

 

 

 

Nine Months Ended

December 31, 2023

 

Nine Months Ended

December 31, 2022

 

 

Amount

 

% of total

 

Amount

 

% of total

Net revenue by distribution channel

 

 

 

 

 

 

 

 

Digital online

 

$

3,777.0

 

96

%

 

$

3,693.7

 

95

%

Physical retail and other

 

 

173.2

 

4

%

 

 

210.0

 

5

%

Total Net revenue

 

$

3,950.2

 

100

%

 

$

3,903.7

 

100

%

 

 

 

 

 

 

 

 

 

Net Bookings by distribution channel

 

 

 

 

 

 

 

 

Digital online

 

$

3,805.7

 

96

%

 

$

3,685.1

 

95

%

Physical retail and other

 

 

178.5

 

4

%

 

 

204.9

 

5

%

Total Net Bookings

 

$

3,984.2

 

100

%

 

$

3,890.0

 

100

%

 

 

 

 

 

 

 

 

 

Nine Months Ended

December 31, 2023

 

Nine Months Ended

December 31, 2022

 

 

Amount

 

% of total

 

Amount

 

% of total

Net revenue by platform

 

 

 

 

 

 

 

 

Mobile

 

$

2,032.9

 

52

%

 

$

1,820.9

 

47

%

Console

 

 

1,598.6

 

40

%

 

 

1,720.5

 

44

%

PC and other

 

 

318.7

 

8

%

 

 

362.3

 

9

%

Total Net revenue

 

$

3,950.2

 

100

%

 

$

3,903.7

 

100

%

 

 

 

 

 

 

 

 

 

Net Bookings by platform

 

 

 

 

 

 

 

 

Mobile

 

$

2,049.4

 

51

%

 

$

1,795.8

 

46

%

Console

 

 

1,622.4

 

41

%

 

 

1,722.4

 

44

%

PC and other

 

 

312.4

 

8

%

 

 

371.8

 

10

%

Total Net Bookings

 

$

3,984.2

 

100.0

%

 

$

3,890.0

 

100

%

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

ADDITIONAL DATA

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2023

Net revenue

 

Cost of revenue- Game intangibles

 

Cost of revenue- Product costs

 

Cost of revenue- Software development costs and royalties

 

Cost of revenue- Internal royalties

 

Cost of revenue- Licenses

As reported

$

1,366.3

 

 

$

230.1

 

 

$

191.3

 

 

$

59.7

 

 

$

134.1

 

 

$

73.0

 

Net effect from deferred revenue and related cost of revenue

 

(28.5

)

 

 

 

 

1.1

 

 

 

(1.5

)

 

 

 

 

0.3

 

Stock-based compensation

 

 

 

 

 

 

 

(6.4

)

 

 

 

 

Amortization and impairment of acquired intangibles

 

 

 

(230.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2023

Selling and marketing

 

Research and development

 

General and administrative

 

Depreciation and amortization

 

Interest and other, net

 

(Loss) gain on fair value adjustments, net

As reported

$

367.6

 

 

$

232.4

 

 

$

165.0

 

 

$

42.6

 

 

$

(22.5

)

 

$

(0.3

)

Net effect from deferred revenue and related cost of revenue

 

 

 

 

 

 

 

 

 

(1.8

)

 

 

Stock-based compensation

 

(23.9

)

 

 

(26.9

)

 

 

(28.7

)

 

 

 

 

 

 

Amortization and impairment of acquired intangibles

 

(1.6

)

 

 

(7.2

)

 

 

 

 

(10.3

)

 

 

 

 

Acquisition related expenses

 

 

 

 

 

10.9

 

 

 

 

 

1.8

 

 

 

Other

 

(0.3

)

 

 

(1.2

)

 

 

(0.1

)

 

 

 

 

3.8

 

 

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2022

Net revenue

 

Cost of revenue -Game intangibles

 

Cost of revenue - Product costs

 

Cost of revenue- Software development costs and royalties

 

Cost of revenue- Internal royalties

 

Cost of revenue- Licenses

As reported

$

1,407.8

 

 

$

202.5

 

 

$

204.6

 

 

$

91.6

 

 

$

116.7

 

 

$

76.5

 

Net effect from deferred revenue and related cost of revenue

 

(25.0

)

 

 

 

 

2.7

 

 

 

2.7

 

 

 

 

 

1.0

 

Stock-based compensation

 

 

 

 

 

 

 

(8.4

)

 

 

 

 

Amortization and impairment of acquired intangibles

 

 

 

(202.5

)

 

 

 

 

(0.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2022

Selling and marketing

 

Research and development

 

General and administrative

 

Depreciation and amortization

 

Interest and other, net

 

(Loss) gain on fair value adjustments, net

As reported

$

446.7

 

 

$

238.2

 

 

$

168.9

 

 

$

35.0

 

 

$

(28.3

)

 

$

1.1

 

Net effect from deferred revenue and related cost of revenue

 

 

 

 

 

 

 

 

 

(3.8

)

 

 

Stock-based compensation

 

(23.0

)

 

 

(29.2

)

 

 

(25.8

)

 

 

 

 

 

 

Amortization and impairment of acquired intangibles

 

(80.5

)

 

 

(7.2

)

 

 

 

 

(11.4

)

 

 

 

 

Acquisition related expenses

 

(1.1

)

 

 

(1.8

)

 

 

(16.3

)

 

 

 

 

3.4

 

 

 

Fair value adjustments, net

 

 

 

 

 

 

 

 

 

 

 

(1.1

)

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

ADDITIONAL DATA

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended December 31, 2023

Net revenue

 

Cost of revenue - Game intangibles

 

Cost of revenue - Product costs

 

Cost of revenue- Software development costs and royalties

 

Cost of revenue- Internal royalties

 

Cost of revenue- Licenses

 

 

As reported

$

3,950.2

 

 

$

826.4

 

 

$

545.9

 

 

$

258.5

 

 

$

319.5

 

 

$

227.2

 

 

 

Net effect from deferred revenue and related cost of revenue

 

34.0

 

 

 

 

 

0.1

 

 

 

3.0

 

 

 

 

 

(0.4

)

 

 

Stock-based compensation

 

 

 

 

 

 

 

(20.5

)

 

 

 

 

 

 

Amortization and impairment of acquired intangibles

 

 

 

(826.4

)

 

 

 

 

 

 

 

 

 

 

Acquisition related expenses

 

 

 

 

 

 

 

 

 

 

 

10.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended December 31, 2023

Selling and marketing

 

Research and development

 

General and administrative

 

Depreciation and amortization

 

Goodwill impairment

 

Interest and other, net

 

(Loss) gain on fair value adjustments, net

As reported

$

1,103.1

 

 

$

710.7

 

 

$

542.7

 

 

$

128.3

 

 

$

165.4

 

 

$

(79.0

)

 

$

(1.7

)

Net effect from deferred revenue and related cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

(72.8

)

 

 

(79.4

)

 

 

(82.3

)

 

 

 

 

 

 

 

 

Amortization and impairment of acquired intangibles

 

(49.4

)

 

 

(21.5

)

 

 

 

 

(28.2

)

 

 

 

 

 

 

Acquisition related expenses

 

(0.2

)

 

 

(2.2

)

 

 

(17.1

)

 

 

 

 

(165.4

)

 

 

(1.0

)

 

 

3.2

 

Other

 

(1.7

)

 

 

(8.8

)

 

 

(1.6

)

 

 

 

 

 

 

19.6

 

 

 

(1.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended December 31, 2022

Net revenue

 

Cost of revenue - Game intangibles

 

Cost of revenue - Product costs

 

Cost of goods revenue- Software development costs and royalties

 

Cost of revenue - Internal royalties

 

Cost of revenue - Licenses

 

 

As reported

$

3,903.7

 

 

$

500.1

 

 

$

526.0

 

 

$

249.0

 

 

$

334.4

 

 

$

232.1

 

 

 

Net effect from deferred revenue and related cost of revenue

 

(13.6

)

 

 

 

 

0.3

 

 

 

12.9

 

 

 

 

 

2.6

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

17.0

 

 

 

 

 

 

 

Amortization and impairment of acquired intangibles

 

 

 

(500.1

)

 

 

 

 

(0.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended December 31, 2022

Selling and marketing

 

Research and development

 

General and administrative

 

Depreciation and amortization

 

Interest and other, net

 

(Loss) gain on fair value adjustments, net

 

 

As reported

$

1,163.1

 

 

$

655.2

 

 

$

620.6

 

 

$

86.0

 

 

$

(108.1

)

 

$

(36.6

)

 

 

Net effect from deferred revenue and related cost of revenue

 

 

 

 

 

 

 

 

 

1.3

 

 

 

 

 

Stock-based compensation

 

(76.2

)

 

 

(88.7

)

 

 

(90.6

)

 

 

 

 

 

 

 

 

Amortization and impairment of acquired intangibles

 

(196.5

)

 

 

(17.4

)

 

 

 

 

(24.1

)

 

 

 

 

 

 

Acquisition related expenses

 

(8.0

)

 

 

(15.3

)

 

 

(140.1

)

 

 

 

 

24.4

 

 

 

37.9

 

 

 

Fair value adjustments, net

 

 

 

 

 

 

 

 

 

 

 

(0.5

)

 

 

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURE

(in millions)

 

 

 

 

 

 

 

Nine Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

Net cash from operating activities

 

$

(7.2

)

 

$

35.8

 

Net change in Restricted cash (1)

 

 

115.0

 

 

 

87.1

 

Adjusted Unrestricted Operating Cash Flow

 

$

107.8

 

 

$

122.9

 

 

 

 

 

 

 

 

Nine Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

Restricted cash beginning of period

 

$

407.2

 

 

$

463.3

 

Restricted cash end of period

 

 

291.1

 

 

 

441.4

 

Restricted cash related to acquisitions

 

 

1.1

 

 

 

(65.2

)

(1) Net change in Restricted cash

 

$

115.0

 

 

$

87.1

 

 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURE

(in millions)

 

 

Three Months Ended December 31,

Nine Months Ended December 31,

 

 

 

2023

 

 

 

2022

 

 

2023

 

 

 

2022

 

Net loss

 

$

(91.6

)

 

$

(153.4

)

$

(841.2

)

 

$

(514.4

)

Benefit from income taxes

 

 

(60.7

)

 

 

(46.7

)

 

(117.0

)

 

 

(93.1

)

Interest expense (income)

 

 

17.4

 

 

 

22.5

 

 

50.3

 

 

 

72.1

 

Depreciation and amortization

 

 

42.6

 

 

 

35.0

 

 

128.3

 

 

 

86.0

 

Amortization and impairment of acquired intangibles

 

 

238.8

 

 

 

290.4

 

 

897.3

 

 

 

714.1

 

Goodwill impairment

 

 

 

 

 

 

 

165.4

 

 

 

 

EBITDA

 

$

146.5

 

 

$

147.8

 

$

283.2

 

 

$

264.6

 

Outlook

 

 

 

 

Fiscal Year Ending March 31, 2024

Net loss

 

$(1,013) to $(995)

Benefit from income taxes

 

$(159) to $(156)

Interest expense

 

$79

Depreciation

 

$135

Amortization of acquired intangibles

 

$1,106

Goodwill impairment

 

$165

EBITDA

 

$313 to $334

Outlook

 

 

 

 

Three Months Ended March 31, 2024

Net loss

 

$(170) to $(153)

Benefit from income taxes

 

$(43) to $(38)

Interest expense

 

$29

Depreciation

 

$33

Amortization of acquired intangibles

 

$184

EBITDA

 

$33 to $55

 

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