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Take-Two Interactive Software, Inc. Reports Strong Results for Third Quarter Fiscal 2013
Non-GAAP Net Revenue Grew 71% to $405.0 Million
Non-GAAP Net Income Increased 148% to $0.67 Per Diluted Share
Increases Low-End of Financial Outlook Range for Fiscal Year 2013
Announces Share Repurchase Authorization
NEW YORK--(BUSINESS WIRE)--Feb. 5, 2013-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported financial results for its third quarter fiscal 2013, ended December 31, 2012, and increased the low-end of its financial outlook range for its fiscal year 2013, ending March 31, 2013. In addition, the Company announced that its Board of Directors has authorized the repurchase of up to 7.5 million shares of the Company’s common stock.
For its third quarter fiscal 2013, GAAP net revenue was $415.8 million, as compared to $236.3 million for its third quarter fiscal 2012. Non-GAAP net revenue was $405.0 million, as compared to $236.3 million for the year-ago period. GAAP net income from continuing operations was $70.9 million, or $0.66 per diluted share, as compared to $14.2 million, or $0.16 per diluted share, for the year-ago period. Non-GAAP net income was $78.8 million, or $0.67 per diluted share, as compared to $29.0 million, or $0.27 per diluted share, for the year-ago period. As of December 31, 2012, the Company had cash and cash equivalents of $448.7 million.
The strongest contributors to net revenue in the third quarter were the release of NBA 2K13, continuing sales of Borderlands 2, the release of XCOM: Enemy Unknown, and catalog sales led by Grand Theft Auto IV and Red Dead Redemption. Catalog sales accounted for 22% of Non-GAAP net revenue. Revenue from digitally delivered content grew 244% year-over-year and accounted for 23% of Non-GAAP net revenue, driven by offerings for the Borderlands franchise – particularly digital sales of Borderlands 2 and its add-on content, XCOM: Enemy Unknown, the Grand Theft Auto franchise, and NBA 2K13.
Management Comments
“Take-Two’s positive business momentum continued in the third quarter, enabling us to deliver growth and profits that exceeded our outlook,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Our results benefited from the record-breaking launch of NBA 2K13, along with continued strong demand for Borderlands 2, the successful launch of XCOM: Enemy Unknown, and robust holiday sales of our catalog and growing portfolio of digitally delivered offerings. With consumer anticipation building for the launches of BioShock Infinite and Grand Theft Auto V, we are well positioned for a solid finish to fiscal year 2013 and substantial revenue and earnings growth in fiscal year 2014.
“I am also pleased to report that our Board of Directors has authorized the Company to return capital to shareholders through the repurchase of its common stock. Given our strong balance sheet and favorable business outlook in both the short and long-term, we have ample capital to pursue a variety of investment opportunities.”
Business and Product Highlights
Since October 1, 2012:
Rockstar Games:
Released Rockstar Games Collection: Edition 1. This box set features four of the most critically acclaimed titles of the current console generation, including Red Dead Redemption, L.A. Noire, Grand Theft Auto: Episodes from Liberty City and Midnight Club: Los Angeles Complete Edition.
Released Grand Theft Auto: Vice City for a wide range of iOS and Android devices to celebrate the 10th anniversary of one of the highest-rated and top-selling games of all time for the PlayStation 2.*
Announced that it plans to launch Grand Theft Auto V worldwide on September 17, 2013.
2K:
Released NBA 2K13, the next installment in its top-rated and top-selling basketball franchise,* which has sold-in more than 15 million units since the release of NBA 2K11 in October 2010. NBA 2K13 received critical acclaim, achieved franchise record-setting first week sales, and has sold-in nearly 4.5 million units to date. The title is being supported by the new NBA 2K Everywhere offerings, which gives fans the opportunity to experience NBA 2K virtually anywhere via an all-new mobile companion app, a social game on Facebook, and a full-featured mobile version of NBA 2K13.
Launched XCOM: Enemy Unknown, reintroducing one of the greatest video game franchises of all time. The title is a critical and commercial success, with strong digital sales and a near 90 average review score on Metacritic. 2K has released two downloadable add-on content packs for XCOM: Enemy Unknown and has additional content planned for later this year.
Launched its holiday lineup of family-oriented titles, including Nickelodeon Dance 2 for consoles and Bubble Guppies and Team Umizoomi & Dora’s Fantastic Flight for the Nintendo DS.
Launched Borderlands Legends, an all-new action packed Borderlands experience designed specifically for mobile devices.
NBA 2K Online launched commercially on the Tencent Games portal in China. Co-developed by Visual Concepts and Tencent, this free-to-play game builds on 2K’s award-winning basketball simulation franchise in an exciting massively multiplayer online game (MMOG) format.
Pro Baseball 2K, an online baseball simulation game created by 2K in partnership with Nexon, entered closed beta in Korea in November. Pro Baseball 2K features authentic and true-to-life representations of the professional players of the Korean Baseball Organization (KBO), and is planned for open beta release in spring 2013.
Announced that Major League Baseball 2K13 is planned for release on March 5, 2013. The title will feature Tampa Bay Rays’ Cy Young Award winning pitcher David Price as cover athlete and will once again be supported with the Perfect Game Challenge, 2K Sports’ groundbreaking $1 million competition.
Announced that the MMOG which 2K has been developing in partnership with South Korean-based studio XLGAMES is based on 2K’s successful Civilization franchise. Under the leadership of XLGAMES’ CEO and MMOG design luminary, Jake Song, Civilization Online (working title) is being designed from the ground up as an entirely new online entertainment experience, which will initially launch in Asian markets.
* According to 2008-2012 Metacritic.com and The NPD Group estimates of U.S. retail video game sales through December 2012.
http://ir.take2games.com/phoenix.zhtml?c=86428&p=irol-newsArticle&ID=1781747&highlight=
Conf call start at 4:30 p.m. ET.
In thousands $.
Non-GAAP Net Revenue Grew 71% to $405.0 Million
Non-GAAP Net Income Increased 148% to $0.67 Per Diluted Share
Increases Low-End of Financial Outlook Range for Fiscal Year 2013
Announces Share Repurchase Authorization
NEW YORK--(BUSINESS WIRE)--Feb. 5, 2013-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported financial results for its third quarter fiscal 2013, ended December 31, 2012, and increased the low-end of its financial outlook range for its fiscal year 2013, ending March 31, 2013. In addition, the Company announced that its Board of Directors has authorized the repurchase of up to 7.5 million shares of the Company’s common stock.
For its third quarter fiscal 2013, GAAP net revenue was $415.8 million, as compared to $236.3 million for its third quarter fiscal 2012. Non-GAAP net revenue was $405.0 million, as compared to $236.3 million for the year-ago period. GAAP net income from continuing operations was $70.9 million, or $0.66 per diluted share, as compared to $14.2 million, or $0.16 per diluted share, for the year-ago period. Non-GAAP net income was $78.8 million, or $0.67 per diluted share, as compared to $29.0 million, or $0.27 per diluted share, for the year-ago period. As of December 31, 2012, the Company had cash and cash equivalents of $448.7 million.
The strongest contributors to net revenue in the third quarter were the release of NBA 2K13, continuing sales of Borderlands 2, the release of XCOM: Enemy Unknown, and catalog sales led by Grand Theft Auto IV and Red Dead Redemption. Catalog sales accounted for 22% of Non-GAAP net revenue. Revenue from digitally delivered content grew 244% year-over-year and accounted for 23% of Non-GAAP net revenue, driven by offerings for the Borderlands franchise – particularly digital sales of Borderlands 2 and its add-on content, XCOM: Enemy Unknown, the Grand Theft Auto franchise, and NBA 2K13.
Management Comments
“Take-Two’s positive business momentum continued in the third quarter, enabling us to deliver growth and profits that exceeded our outlook,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Our results benefited from the record-breaking launch of NBA 2K13, along with continued strong demand for Borderlands 2, the successful launch of XCOM: Enemy Unknown, and robust holiday sales of our catalog and growing portfolio of digitally delivered offerings. With consumer anticipation building for the launches of BioShock Infinite and Grand Theft Auto V, we are well positioned for a solid finish to fiscal year 2013 and substantial revenue and earnings growth in fiscal year 2014.
“I am also pleased to report that our Board of Directors has authorized the Company to return capital to shareholders through the repurchase of its common stock. Given our strong balance sheet and favorable business outlook in both the short and long-term, we have ample capital to pursue a variety of investment opportunities.”
Business and Product Highlights
Since October 1, 2012:
Rockstar Games:
Released Rockstar Games Collection: Edition 1. This box set features four of the most critically acclaimed titles of the current console generation, including Red Dead Redemption, L.A. Noire, Grand Theft Auto: Episodes from Liberty City and Midnight Club: Los Angeles Complete Edition.
Released Grand Theft Auto: Vice City for a wide range of iOS and Android devices to celebrate the 10th anniversary of one of the highest-rated and top-selling games of all time for the PlayStation 2.*
Announced that it plans to launch Grand Theft Auto V worldwide on September 17, 2013.
2K:
Released NBA 2K13, the next installment in its top-rated and top-selling basketball franchise,* which has sold-in more than 15 million units since the release of NBA 2K11 in October 2010. NBA 2K13 received critical acclaim, achieved franchise record-setting first week sales, and has sold-in nearly 4.5 million units to date. The title is being supported by the new NBA 2K Everywhere offerings, which gives fans the opportunity to experience NBA 2K virtually anywhere via an all-new mobile companion app, a social game on Facebook, and a full-featured mobile version of NBA 2K13.
Launched XCOM: Enemy Unknown, reintroducing one of the greatest video game franchises of all time. The title is a critical and commercial success, with strong digital sales and a near 90 average review score on Metacritic. 2K has released two downloadable add-on content packs for XCOM: Enemy Unknown and has additional content planned for later this year.
Launched its holiday lineup of family-oriented titles, including Nickelodeon Dance 2 for consoles and Bubble Guppies and Team Umizoomi & Dora’s Fantastic Flight for the Nintendo DS.
Launched Borderlands Legends, an all-new action packed Borderlands experience designed specifically for mobile devices.
NBA 2K Online launched commercially on the Tencent Games portal in China. Co-developed by Visual Concepts and Tencent, this free-to-play game builds on 2K’s award-winning basketball simulation franchise in an exciting massively multiplayer online game (MMOG) format.
Pro Baseball 2K, an online baseball simulation game created by 2K in partnership with Nexon, entered closed beta in Korea in November. Pro Baseball 2K features authentic and true-to-life representations of the professional players of the Korean Baseball Organization (KBO), and is planned for open beta release in spring 2013.
Announced that Major League Baseball 2K13 is planned for release on March 5, 2013. The title will feature Tampa Bay Rays’ Cy Young Award winning pitcher David Price as cover athlete and will once again be supported with the Perfect Game Challenge, 2K Sports’ groundbreaking $1 million competition.
Announced that the MMOG which 2K has been developing in partnership with South Korean-based studio XLGAMES is based on 2K’s successful Civilization franchise. Under the leadership of XLGAMES’ CEO and MMOG design luminary, Jake Song, Civilization Online (working title) is being designed from the ground up as an entirely new online entertainment experience, which will initially launch in Asian markets.
* According to 2008-2012 Metacritic.com and The NPD Group estimates of U.S. retail video game sales through December 2012.
http://ir.take2games.com/phoenix.zhtml?c=86428&p=irol-newsArticle&ID=1781747&highlight=
Conf call start at 4:30 p.m. ET.
Q: Talk about GTA's move from Spring to September and how is relates to coming next-gen consoles.
A: GTA stands alone. It's a unique IP. We're all excited about it. We think it's gonna blow people away at a level people don't anticipate. The delay is required to deliver what people expect. September's an open field and a great window. For next gen, nothing's been announced yet, but assuming new consoles are coming, it'll be a light install base initially. I'm sure we'll have an extraordinary array of next-gen offerings.
Q: MLB 2K. Profitable release?
A: Range of losses were announced based on a inherited legacy deal ($30mil). Expectations of a new release reflect a new deal. We're optimistic and enthusiastic both creatively and financially.
Q: GTA V. How should we think about post-sale revenue compared to previous GTA? Full game downloads: primarily from Steam? How does this differ from retail?
A: Couldn't be more enthusiastic about GTA. Full game downloads come from many places: Steam, etc...
Q: Next-gen. Allegedly ore focused on media than games. How does this impact you?
A: If that happens, I'd be happy to debate if they will become set top boxes or not. Our job is to make high quality entertainment and meet consumers on their devices, whilst being flexible with business models. Broad based models on next-gen is probably a good thing. Also, they'll be more likely to penetrate than they are now.
Q: Basketball franchises/Borderlands 2. Help us understand the attach rate you're getting.
A: We don't talk about attach rates. Every year, Visual Concepts try to make NBA 2K even better, this year 90+ Metacritic, multi-plat experience, in game purchases. This all means happy consumers, spending more money, making more money. Same with Borderlands. We want to give consumers more value than what they paid for.
Q: Great property coming up in March (BioShock). How do you view retail in 3-6 months and how is pre-order activity?
A: Retail landscape interesting, go back 9 months, things were looking bleak, people were saying it's in decline. We denied this. Like all entertainment business, our industry relies on hits, and it's affected by changing console cycles (we're heading into the end of one). We have the highest expectations for BioShock.
Q: Digital: Your success in digital, how is the margin profile looking against retail? What opportunities are there in creating ongoing relationships with customers, e.g. Season Pass?
A: The margins are pretty much in line with retail, but time to time this changes based on the title, usually a better digital margin. Our properties have been standard bearers for this, e.g. Borderlands, GTA. We see the lifecycle extending greatly and we'll continue to experiment. With tablets becoming bigger, episodic approaches may increase too. We're flexible. We'll try anything that delights consumers so long as it aligns with our high quality.
Q: What are you thinking about next-gen development budgets with key titles, e.g. sports.
A: We don't believe budgets will change significantly, if anything, group wide, our spending will become tighter. Can't go into specifics though.
Q: Install base today is large, 360/PS3 will continue to be major influencers, similar to prior transition, I'm sure there will be cross-generational software post-launch. How do you go about developing for both current and next-gen when clearly development teams want to be innovating but clearly there's a tradeoff to accommodate for current install base?
A: We can't talk about next-gen. We're not the ones to talk about if first. We're all excited about the possibilities and working diligently on them. 4 elements of transition success: 1) strong IP, 2) strong teams, 3) strong tech, 4) strong balance sheet. We have all four.
Q: Facebook is developing for core gamers, does this reset your opinion?
A: Facebook is incredible serving hundreds of millions of people, could be a great platform.
Q: I'm hearing current-gen portability is easier. Philosophically, you see Bungie doing a dual-gen approach, not going specific, if you had the opportunity to do a dual-gen launch?
A: There is not one gamer who will sit out GTA V hoping that there will be something better down the line. GTA V will blow everyone away. We have to wait for announcements. We're always looking over a shoulder. We're planning as well as we can and we think we are well positioned.
Q: Ouya, Valve - lots of people trying to create new solutions. Where do you see the best opportunity?
A: All of the above. We go with the audience. We don't spend resources unless there's a demonstrated audience. We've always been willing to support meaningful initiatives without a large install base. We will be wherever the consumers are.
Q: Timing on NBA expansion into Taiwan/Philippines, different demographics across tablets.
A: We haven't seen meaningful differences across tablet purchases, not sure we can read into it that well. Still in early experimentation mode. We haven't spoken about expanding into other territories, always balancing opportunity with risk. Encouraged by what we're seeing in Asia.
Q: How is NBA 2K online doing in Asia?
A: We're pleased with the tracking in China. We don't have anything at this point to say on further rollout.
Q: On digital delivery, you mention it represents 23% of net revenue. Where is most of this coming from?
A: Borderlands 2/NBA 2K13 for this quarter, and the rest of the catalogue.
Event over! Most of the above is paraphrased/written very briefly, so don't read much into the phrasing!
In thousands $.
