GAAP net revenue was $ 841.1 million

GAAP net income per diluted share increased 37% to $ 0.86

GAAP net cash provided by operating activities for the six-months ended September 30, 2020 increased 335% to $ 626.7 million

Adjusted Unrestricted Operating Cash Flow (Non-GAAP) for the six-months ended September 30, 2020 increased 1135% to $ 509.4 million

Net Bookings grew to $ 957.5 million

Company raises outlook for fiscal year 2021, including record Net Bookings

NEW YORK– (BUSINESS WIRE) –Take-Two Interactive Software, Inc. (NASDAQ: TTWO) today reported strong results for its fiscal second quarter 2021 ended September 30, 2020. In addition, the Company provided its initial outlook for its fiscal third quarter ending December 31, 2020 and increased its outlook for the fiscal year 2021, ending March 31, 2021. For additional information, please see the fiscal second quarter 2021 results slide deck posted to the Company's investor relations website at http://ir.take2games.com.

Fiscal Second Quarter 2021 Financial Highlights

GAAP net revenue was $ 841.1 million, as compared to $ 857.8 million in last year's fiscal second quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 56% and accounted for 59% of total GAAP net revenue. The largest contributors to GAAP net revenue in fiscal second quarter 2021 were NBA® 2K20 and NBA 2K21; Grand Theft Auto® Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands® 3; PGA TOUR® 2K21; Social Point's mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; Sid Meier's Civilization VI; and the WWE® series.

Digitally-delivered GAAP net revenue increased 16% to $ 711.3 million, as compared to $ 615.8 million in last year's fiscal second quarter, and accounted for 85% of total GAAP net revenue. The largest contributors to GAAP digitally-delivered net revenue in fiscal second quarter 2021 were NBA 2K20 and NBA 2K21; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; Social Point's mobile offerings; PGA TOUR 2K21; the Mafia Definitive Editions and Mafia: Trilogy; the WWE series; and Sid Meier's Civilization VI.

GAAP net income increased 38% to $ 99.3 million, or $ 0.86 per diluted share, as compared to $ 71.8 million, or $ 0.63 per diluted share, for the comparable period last year.

During the six-month period ended September 30, 2020, GAAP net cash provided by operating activities increased 335% to $ 626.7 million, as compared to $ 144.2 million in the same period last year. During the six-month period ended September 30, 2020, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, increased 1135% to $ 509.4 million, as compared to $ 41.2 million in the same period last year (please see the section below titled “Non-GAAP Financial Measure” for additional information). As of September 30, 2020, the Company had cash and short-term investments of $ 2.386 billion.

The following data can be used to monitor and control its core performance. business and future outlook:

Three Months Ended September 30, 2020

Financial Data

$ in thousands

Statement

of

operations

 

Change in

deferred

NET

revenue

and related

cost of

goods sold

 

Stock-based

compensation

 

 

Impact of

business

reorganization

 

 

 

 

Business

acquisition

 

Amortization

& impairment

of acquired

intangible

assets

 

Loss on

long term

investments

 

 

 

 

Net revenue

$ 841,142

116,392

 

 

 

 

 

Cost of goods sold

432,505

13,450

 

(19,396

)

 

 

 

(4,411

 

)

 

Gross Profit

408,637

102,942

 

19,396

 

 

 

 

4,411

 

 

 

Operating expenses

293,270

(25,912

)

 

(239

 

)

 

(2,512

 

)

 

(2,364

 

)

 

Income from operations

115,367

102,942

 

45,308

 

239

 

2,512

 

6,775

 

 

Interest and other, net

2,706

(1,669

)

 

 

 

 

Loss on long-term investments

655

 

 

 

 

 

 

(655

 

)

Income before income taxes

117,418

101,273

 

45,308

 

 

239

 

 

 

2,512

 

 

 

6,775

 

 

 

655

 

 

In order to calculate net income for diluted share for management reporting purposes, the Company uses its fully diluted share count of 115.4 million.

Operational Metric - Net Bookings

Net bookings is defined as licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.

During fiscal second quarter 2021, total Net Bookings grew to $ 957.5 million, as compared to $ 950.5 million during last year's fiscal second quarter. Net Bookings from recurrent consumer spending grew 43% and accounted for 64% of total Net Bookings. The largest contributors to Net Bookings in fiscal second quarter 2021 were NBA 2K21 and NBA 2K20; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; PGA TOUR 2K21; Borderlands 3; Social Point's mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; the WWE series; and Sid Meier's Civilization VI.

Catalog accounted for $ 587.3 million of Net Bookings led by Grand Theft Auto; NBA 2K; Red Dead Redemption; Borderlands; Social Point's mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; and the WWE series.

Digitally-delivered Net Bookings grew 14% to $ 791.7 million, as compared to $ 695.3 million in last year's second quarter, and accounted for 83% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal second quarter 2021 were NBA 2K21 and NBA 2K20; Grand Theft Auto Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; PGA TOUR 2K21; Social Point's mobile offerings; the Mafia: Definitive Editions and Mafia: Trilogy; Sid Meier's Civilization VI; and the WWE series.

Management Comments

“Our positive momentum continued in the fiscal second quarter with operating results that significantly exceeded our expectations,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Our terrific results were highlighted by the outperformance of NBA 2K, PGA TOUR 2K21, And the Mafia: Definitive Editions and Mafia: Trilogy, reflecting our ability to deliver consistently the highest quality entertainment experiences to consumers.

"As a result of our better-than-expected second quarter operating results and increased forecast for the balance of the year, we are raising our fiscal 2021 outlook, and we now expect record Net Bookings of over $ 3 billion.

"With the strongest development pipeline in the history of the Company and our ongoing investment in emerging markets, platforms and business models, Take-Two is exceedingly well positioned to capitalize on the many positive trends in our industry and to generate growth and margin expansion over the long-term. "

COVID-19 Response

At Take-Two, our number one priority is the health and safety of our employees and their families. After moving to work-from-home environments by mid-March, several of our offices have re-opened on a voluntary basis. With more people staying at home, we have experienced, and are continuing to experience, heightened levels of engagement and Net Bookings growth-to-date. The full extent of the impact of the COVID-19 pandemic to our business, operations and financial results will depend on numerous evolving factors that we are not able to predict. The key risks to our business are set forth under the heading “Cautionary Note Regarding Forward-Looking Statements” in this release and in Take-Two's Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

Business and Product Highlights

Since July 1, 2020:

Take-Two:

  • Acquired privately-held Playdots, Inc. for final consideration of $ 196 million, comprised of $ 98 million in cash and the balance in newly issued shares of Take-Two common stock. Founded in 2013 and based in New York City, Playdots builds mobile games with unique and thoughtful designs. They are best known for Two Dots, which has been downloaded over 80 million times since its launch six years ago and that continues to deeply engage audiences throughout the world. Playdots is led by Nir Efrat, who came to Playdots in March 2018 and serves as its Chief Executive Officer. Prior to Playdots, Efrat was Head of Franchises and Studios at King, the creator of the widely successful Candy Crush mobile game series. He will continue to lead Playdots and its approximately 70 employees. Playdots has a robust development pipeline with a number of innovative puzzle games planned for launch over the coming years.

Rockstar Games:

  • Acquired Ruffian Games. Based in Dundee, Scotland, the studio will operate under the new name of Rockstar Dundee. Terms of the acquisition were not disclosed. Founded in 2008 by Gary Liddon and Billy Thomson, Ruffian partnered with Microsoft to work on the Crackdown series, and with 343 Industries on Halo: Reach from the Halo Master Chief Collection, among many other projects. Ruffian's talented team of just over 40 have a depth of development experience that even includes work on some early Rockstar titles from the Grand Theft Auto and Manhunt series. Both Liddon and Thomson will remain on-board as Co-Studio Directors of Rockstar Dundee.
  • Released new free content updates for Red Dead Online Including:
    • The Naturalist, a massive new update to Red Dead Online featuring the latest specialist Role: The Naturalist, giving players the opportunity to track, study and sample animals for Naturalist Harriet Davenport, or hunt them for the trapper Gus MacMillan. The update also featured Legendary Animals, Legendary Animal Sighting Missions, Poaching Missions, new Free Roam Events, two new weapons, a new variant of the Varmint Rifle, the Advanced Camera, new clothing, and an assortment of unique items and rewards in the latest edition of Outlaw Pass: The Outlaw Pass No. 3.
  • Released new free content updates for Grand Theft Auto Online, including The Los Santos Summer Special Update, which introduced six Superyacht Life Co-Op Missions, 15 new Vehicles, nine Open Wheel Race Tracks and the new Open Wheel Race Creator, new Business Battles, the Diamond Adversary Series, two new Arcade Cabinets, new collectibles, clothing and Ambient Events, plus multiple gameplay improvements.
  • Both Grand Theft Auto Online and Red Dead Online will receive major updates later this fiscal year, featuring an extension to existing Frontier Pursuits for Red Dead Online, As well as Grand Theft Auto Online's biggest update ever, featuring a new take on Heists in a new location.

2K:

  • launched NBA 2K21, the next iteration of the top-rated and top-selling NBA video game simulation series, for current-generation platforms worldwide. With its release, NBA 2K21 offers one-of-a-kind immersion into all facets of NBA basketball and basketball culture, including exciting improvements upon its best-in-class gameplay, competitive and community online features and deep, varied game modes. Featuring Portland Trail Blazers' superstar Damian Lillard on the cover, the current-gen version of NBA 2K21 is available for $ 59.99 on Xbox One, PlayStation 4, Switch, PC and Stadia. The NBA 2K21 Mamba Forever Edition for current-gen features basketball legend Kobe Bryant on a unique custom cover with his No. 8 jersey and is available for $ 99.99. Of note, the Mamba Forever Edition includes dual-access to NBA 2K21 for current and next-gen versions of the game on either PlayStation or Xbox consoles, providing purchasers with a copy of the standard edition of the game on the other generation within the same console family. NBA 2K21 will be available for PlayStation 5 and Xbox Series X when they launch in November 2020.
  • launched Mafia: Definitive Edition for PlayStation 4, Xbox One, and PC. Developed by 2K and Hangar 13, Mafia: Definitive Edition is a comprehensive, built-from-the-ground-up remake of the original Mafia. The remake features an updated script, additional cutscenes, all-new gameplay sequences and features, a re-recorded orchestral score, and other enhancements.
  • launched WWE 2K Battlegrounds, the arcade-style brawler that will bring over-the-top WWE action to a new level of intensity, for PlayStation 4, Xbox One, PC, Switch and Stadia. Developed by Saber Interactive, WWE 2K Battlegrounds brings fast-paced action and an assortment of power-ups, special moves, unconventional melee items and interactive environments to take the brawl to the next level. Players can take on the challenges alone or compete with friends and family in person or online in cooperative and competitive multiplayer modes.
  • launched PGA TOUR 2K21 from HB Studios for PlayStation 4, Xbox One, Switch (digital), PC and Stadia. The game features PGA TOUR professional Justin Thomas as its cover athlete; officially licensed pro players, courses and gear; the most realistic course scanning to date; play-by-play commentary by Luke Elvy and Rich Beem; a new PGA TOUR Career Mode, online and local multiplayer; course and player customization; and online societies.
  • Announced that Borderlands 3 will be available for PlayStation 5 and Xbox Series X when they launch in November 2020. In addition, 2K announced a second Season Pass for Borderlands 3 will be available on November 10, 2020 for all previously released and next-gen versions of the game. 2 Season Pass will include two brand new content add-ons - Designer's Cut, which will add all new ways to play Borderlands 3 by introducing a new Skill Tree for each Vault Hunter, a new standalone mode called Arms Race, and more; and the Director's Cut, which is planned for release in spring of next year.
  • Announced that Seasonings 7 of WWE SuperCard, the newest addition to the action-packed collectible card-battling game, is scheduled to launch in November 2020 as a free, downloadable update for iOS, Android ™ and Facebook Gaming.
  • The NBA 2K League concluded its third season on August 28, 2020 with Wizards District Gaming winning the 2020 League Championship. Games were simulcast live on the NBA 2K League's Twitch and YouTube channels, as well as ESPN's platforms and Sportsnet (Canada). The NBA 2K League has begun the tryout process for its fourth season, set to take place in 2021.
  • Announced a partnership with OneTeam Partners and the National Football League Players Association that will allow the label to include the names, numbers, images and likenesses for over 2,000 current NFL players in multiple, non-simulation football games that are currently in development and set to launch starting in calendar year 2021, during fiscal 2022.

Private Division:

  • Released, along with Obsidian Entertainment, The Outer Worlds: Peril on Gorgon, the first narrative-led expansion for the critically acclaimed, darkly humorous sci-fi RPG for the PlayStation 4, Xbox One and PC. The expansion will be coming later to Nintendo Switch. The Outer Worlds: Peril on Gorgon is available individually or at a discount as part of The Outer Worlds Expansion Pass, which will also include The Outer Worlds: Murder on Eridanos, the second expansion set to launch in the first half of calendar 2021.
  • Announced three new publishing agreements with top independent developers Moon Studios, League of Geeks, and Roll7. In collaboration with these developers, Private Division will announce more details about each specific project in the future. The first of these titles is expected to launch in fiscal year 2022.

Outlook for Fiscal 2021

Take-Two is providing its initial outlook for its fiscal third quarter ending December 31, 2020 and increasing its outlook for the fiscal year ending March 31, 2021:

Third Quarter Ending December 31, 2020

  • GAAP net revenue is expected to range from $ 760 to $ 810 million
  • GAAP net income is expected to range from $ 128 to $ 140 million
  • GAAP diluted net income for share is expected to range from $ 1.10 to $ 1.21
  • Share count used to calculate both GAAP and management reporting diluted net income for share is expected to be 115.9 million (1)
  • Net Bookings (operational metric) are expected to range from $ 675 to $ 725 million

The company is also able to provide its customers with appropriate data. its core business and future outlook:

Three Months Ending December 31, 2020

Financial Data

$ in millions

GAAP outlook (2)

Change in

deferred net

revenue and

related cost of

goods sold

Stock-based

compensation

Amortization of

acquired

intangible

assets

 

Net revenue

$ 760 to $ 810

 

($ 85)

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$ 291 to $ 317

 

$ 46

 

($ 55)

 

($ 5)

 

 

 

 

 

 

 

Operating Expenses

$ 325 to $ 335

 

 

 

($ 26)

 

($ 3)

 

Interest and other, net

($ 1)

 

 

 

 

 

 

 

Income before income taxes

$ 145 to $ 159

 

($ 131)

 

$ 81

 

$8

Fiscal Year Ending March 31, 2021

  • GAAP net revenue is expected to range from $ 3.05 to $ 3.15 billion
  • GAAP net income is expected to range from $ 372 to $ 403 million
  • GAAP diluted net income for share is expected to range from $ 3.22 to $ 3.49
  • Share count used to calculate both GAAP and management reporting diluted net income for share is expected to be 115.5 million (3)
  • Net cash provided by operating activities is expected to be over $ 690 million
  • Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is expected to be over $ 650 million (4)
  • Capital expenditures are expected to be approximately $ 75 million
  • Net Bookings (operational metric) are expected to range from $ 3.15 to $ 3.25 billion

The company is also able to provide its customers with appropriate data. its core business and future outlook:

Twelve Months Ending March 31, 2021

Financial Data

$ in millions

GAAP outlook (2)

Change in

deferred net

revenue and

related cost

of goods

sold

Stock-based

compensation

 

 

 

 

Loss on

long term

investments

Amortization

of acquired

intangible

assets

reorganization

& Acquisition

 

 

Net revenue

$ 3,050 to $ 3,150

 

$ 100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

$ 1,441 to $ 1,487

 

$ 12

 

($ 83)

 

 

 

($ 17)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

$ 1,205 to $ 1,225

 

 

 

($ 97)

 

 

 

($ 11)

 

($ 3)

Interest and other, net

($ 14)

 

$3

 

 

 

 

($ 1)

 

 

 

 

 

Income before income taxes

$ 418 to $ 452

 

$ 85

 

$ 180

 

 

$1

 

$ 28

 

 

$3

1)

Includes 115.0 million basic shares and 0.9 million shares representing the potential dilution from unvested employee stock grants.

2)

The outcomes of the financial outlook may also be the company.

3)

Includes 114.6 million basic shares and 0.9 million shares representing the potential dilution from unvested employee stock grants.

4)

Includes a $ 40 million net increase in restricted cash for fiscal 2021.

Key assumptions and dependencies underlying the Company's outlook include: the timely delivery of the titles included in this financial outlook; a stable economic environment; continued consumer acceptance of 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 PlayStation 5 and Xbox Series X, PC, mobile and other platforms; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.

Product Releases

The following titles have been released since July 1, 2020:

Label

Title

Platforms

Release Date

Private Division

Kerbal Space Program: Shared Horizons (free update)

PC

July 1th, 2020

2K

Sid Meier's Civilization VI - New Frontier Pass: Ethiopia Pack (DLC)

PS4, Xbox One, Switch, PC

July 23th, 2020

Rockstar Games

Red Dead Online: The Naturalist

PS4, Xbox One, PC, Stadia

July 28th, 2020

2K

PGA TOUR 2K21

PS4, Xbox One, Switch, PC, Stadia

August 21

2K

NBA 2K21

PS4, Xbox One, Switch, PC, Stadia

September 4, 2020

Private Division

The Outer Worlds: Peril on Gorgon (DLC)

PS4, Xbox One, PC

September 9, 2020

2K

Borderlands 3: Psycho Krieg and the Fantastic Flustercluck (DLC)

PS4, Xbox One, Switch, PC, Stadia

September 10, 2020

2K

WWE 2K Battlegrounds

PS4, Xbox One, Switch, PC, Stadia

September 18, 2020

2K

Sid Meier's Civilization VI - New Frontier Pass: Byzantium & Gaul Pack (DLC)

PS4, Xbox One, Switch, PC

September 24, 2020

2K

Mafia I Definitive Edition

PS4, Xbox One, PC

September 25, 2020

2K

PGA TOUR 2K21 - 3-Hole Match Types Update (DLC)

PS4, Xbox One, Switch, PC, Stadia

October 2, 2020

Private Division

Kerbal Space Program: Shared Horizons (free update)

PS4, Xbox One

October 14, 2020

2K

PGA TOUR 2K21 - Halloween Update (DLC)

PS4, Xbox One, Switch, PC, Stadia

October 20, 2020

2K

WWE 2K Battlegrounds DLC (free update)

PS4, Xbox One, Switch, PC, Stadia

November 4

 

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

 

Label

Title

Platforms

Release Date

2K

Borderlands 3

Xbox Series X (digital only)

November 10

2K

NBA 2K21

Xbox Series X

November 10

2K

Borderlands 3 - Season Pass 2

PS4, PS5, Xbox One, Xbox Series X, PC, Stadia

November 10

2K

Borderlands 3

PS5 (digital only)

November 12

2K

NBA 2K21

PS5

November 12

2K

WWE SuperCard: Season 7

iOS, Android, Facebook Gaming

November 2020

Private Division

The Outer Worlds: Murder on Eridanos (DLC)

PS4, Xbox One, PC

1st Half Calendar 2021

Rockstar Games

Grand Theft Auto V

PS5, Xbox Series X

Fiscal 2022

Private Division

Kerbal Space Program 2

PS4, Xbox One, PC

Fiscal 2023

Conference Call

Take-Two will host a conference call today at 4: 30 pm 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 Measure

In addition to reporting financial results in accordance with US generally accepted accounting principles (GAAP), the Company uses a Non-GAAP measure of financial performance: Adjusted Unrestricted Operating Cash Flow, which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash. The Company's Management believes it is important to consider Adjusted Unrestricted Cash Flow, in addition to net cash flows from operating activities, which is primarily related to dedicated account limited to the payment of certain internal royalty obligations.

This Non-GAAP financial measure is not intended to be considered in isolation from, as a substitute for, or superior to, GAAP results. This Non-GAAP financial measure 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 this Non-GAAP financial measure used by the Company. Management believes that the presentation of this Non-GAAP financial measure provides investors with additional useful information to measure Take-Two's financial and operating performance. In particular, this measure facilitates comparison of our operating performance between periods and may help investors to understand better the operating results of Take-Two.

Contacts

(Investor Relations)
Henry A. Diamond
Senior Vice President
Investor Relations & Corporate Communications
Take-Two Interactive Software, Inc.
(646) 536-3005
Henry.Diamond@take2games.com

(Corporate Press)
Alan Lewis
Vice President
Corporate Communications & Public Affairs
Take-Two Interactive Software, Inc.
(646) 536-2983
Alan.Lewis@take2games.com

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