Legit Reviews

NEW YORK--(BUSINESS WIRE)--Oct. 31, 2012-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported financial results for its second quarter fiscal 2013, ended September 30, 2012. In addition, the Company updated its financial outlook for its fiscal year 2013, ending March 31, 2013.

For its second quarter fiscal 2013, GAAP net revenue was $273.1 million, as compared to $107.0 million for its second quarter fiscal 2012. Non-GAAP net revenue was $288.0 million, as compared to $107.0 million for the year-ago period. GAAP net loss from continuing operations was $12.4 million, or $0.15 per diluted share, as compared to $47.3 million, or $0.57 per diluted share, for the year-ago period. Non-GAAP net income was $10.2 million, or $0.11 per diluted share, as compared to Non-GAAP net loss of $39.4 million, or $0.47 per diluted share, for the year-ago period.

The strongest contributors to net revenue in the second quarter were Borderlands 2 and catalog sales led by Grand Theft Auto IV and Red Dead Redemption. Catalog sales accounted for 28% of Non-GAAP net revenue. Revenue from digitally delivered content grew 108% year-over-year and accounted for 20% of Non-GAAP net revenue, driven by offerings for the Borderlands franchise, particularly digital sales of Borderlands 2, the Grand Theft Auto franchise, the Sid Meier’s Civilization franchise, and Max Payne 3.

Management Comments

“Take-Two’s second quarter revenue and earnings exceeded our outlook, driven by the breakout success of 2K’s Borderlands 2 and robust demand for our catalog and digitally delivered offerings,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Our business continues to fire on all cylinders, led by terrific early results from 2K’s NBA 2K13, and the outlook for our upcoming releases such as BioShock Infinite is stronger than ever. As a result, we continue to expect to deliver revenue growth and Non-GAAP profits in fiscal year 2013. Moreover, with Grand Theft Auto V slated for spring 2013, we are poised to generate substantial revenue and earnings growth in fiscal year 2014.”

Business and Product Highlights

Since July 1, 2012:

Rockstar Games:

Announced that it plans to launch Grand Theft Auto V worldwide during spring 2013 for the PlayStation®3 computer entertainment system and the Xbox 360® video game and entertainment system from Microsoft.
Announced that it plans to release Grand Theft Auto: Vice City for a wide range of iOS and Android devices in the fall to celebrate the 10th anniversary of one of the top-selling games of all time for the PlayStation 2.
Announced that it plans to release Rockstar Games Collection: Edition 1 in North America on November 6, 2012. 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.

2K:

2K launched Borderlands 2, which has already become one of the most successful releases in 2K’s history. The title received rave reviews, highlighted by an average score of 90 on Metacritic, and has sold in over 5 million units to date, including strong digital sales. Like the original game, Borderlands 2 is being supported with four downloadable add-on content campaigns, available individually or combined through purchase of the Borderlands 2 Season Pass.
2K Sports released NBA 2K13, the next installment in its top-rated and top-selling basketball franchise*. The title received critical acclaim and achieved franchise record-setting first week sales, selling through 49% more units than the franchise’s previous fastest-seller, NBA 2K11**. NBA 2K13 is being supported by the new NBA 2K Everywhere strategy, 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.
2K launched XCOM: Enemy Unknown, reintroducing one of the greatest video game franchises of all time. The title is proving to be a critical and commercial success, with strong digital sales and a near 90 average review score on Metacritic. XCOM: Enemy Unknown is being supported with two downloadable add-on content packages available this year, with additional content planned for 2013.
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 Sports' award-winning basketball simulation franchise in an exciting massively multiplayer online game format.
2K Sports released Take-Two’s first free-to-play, mobile social game for Japan, NBA 2K All Stars on GREE, which attracted more than 300,000 users in less than 60 days***.
2K Play launched three mobile titles to positive reviews for iPhone, iPad, iPod touch, Android and Kindle: Comedy Central's Indecision Game, a humorous political trivia game capitalizing on election year interest; House Pest, a family game featuring the mischievous antics of Fiasco the Cat; and GridBlock, a physics-based puzzle game that has received positive accolades for its use of the accelerometer feature in mobile devices.
2K announced the development of a massively multiplayer online game based on its successful Civilization franchise. Through a partnership with renowned South Korean-based studio XLGAMES and under the leadership of its 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 for Asian markets.
2K Sports announced that Pro Baseball 2K, an online baseball simulation game for Korea being developed in partnership with Nexon Korea Corporation, is planned to enter open beta during spring 2013. Pro Baseball 2K will feature authentic and true-to-life representations of the professional players of the Korean Baseball Organization (KBO).

*According to 2008 - 2012 Gamerankings.com and The NPD Group estimates of U.S. retail video game sales through September 2012.

**Based on internal estimates for comparable platforms.

*** Based on internal estimates.

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. The Company believes that these Non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, are important in gaining an understanding of the Company’s ongoing business. These Non-GAAP financial measures also provide for comparative results from period to period. Therefore, the Company believes it is appropriate to exclude the impact of certain items as follows:

Net effect from deferral in net revenues - the Company defers revenue and related costs from the sale of certain titles that have undelivered elements upon the sale of the game and recognizes that revenue upon the delivery of the undelivered elements. As there is no impact to the Company’s operating cash flow, management excludes the impact of deferred net revenue and related costs from its Non-GAAP financial measures when evaluating the Company's operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. In addition, we believe that these Non-GAAP financial measures provide a more timely indication of trends in our business, provide comparability with the way our business is measured by analysts, and consistency with industry data sources.
Stock-based compensation – the Company does not consider stock-based compensation charges when evaluating business performance and management does not contemplate stock-based compensation expense in its short- and long-term operating plans. As a result, the Company has excluded such expenses from its Non-GAAP financial measures.
Business reorganization, restructuring and related expenses – although the Company has incurred business reorganization expenses in the past, each charge relates to a discrete event based on a unique set of business objectives. Management does not believe these charges reflect the Company's primary business, ongoing operating results or future outlook. As such, the Company believes it is appropriate to exclude these expenses and related charges from its Non-GAAP financial measures.
Income (loss) from discontinued operations – the Company does not engage in sales of subsidiaries on a regular basis and therefore believes it is appropriate to exclude such gains (losses) from its Non-GAAP financial measures. As the Company is no longer active in its discontinued operations, it believes it is appropriate to exclude income (losses) thereon from its Non-GAAP financial measures.
Professional fees and expenses associated with unusual legal and other matters – the Company has incurred expenses for legal professional fees that are outside its ordinary course of business. As a result, the Company has excluded such expenses from its Non-GAAP financial measures.
Non-cash amortization of discount on convertible notes – the Company records non-cash amortization of discount on convertible notes as interest expense in addition to the interest expense already recorded for coupon payments. The Company excludes the non-cash portion of the interest expense from its Non-GAAP financial measures because these amounts are unrelated to its ongoing business operations.
Non-cash tax expense for the impact of deferred tax liabilities associated with tax deductible amortization of goodwill – due to the nature of the adjustment as well as the expectation that it will not have any cash impact in the foreseeable future, the Company believes it is appropriate to exclude this expense from its Non-GAAP financial measures.

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.

About Take-Two Interactive Software

Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, marketer and publisher of interactive entertainment for consumers around the globe. The Company develops and publishes products through its two wholly-owned labels Rockstar Games and 2K, which publishes its titles under the 2K Games, 2K Sports and 2K Play brands. Our products are designed for console systems, handheld gaming systems and personal computers, 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.

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