Take Two Interactive Software Inc 10-Q for FY2024 Q1

Take Two Interactive Software Inc (TTWO)

10-Q 2023-08-09 For: 2023-06-30

Added on April 09, 2026

About this 10-Q

Take Two Interactive Software Inc filed this 10-Q on August 9, 2023, covering the quarter ended June 30, 2023 (FY2024 Q1).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.28B; up 16.5% from $1.1B a year earlier
Net loss: $206M; compared with a net loss of $104M a year earlier
Diluted EPS: -$1.22; compared with -$0.76 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .


Delaware		51-0350842
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
110 West 44th Street		10036
New York	New York	(Zip Code)
(Address of principal executive offices)


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	TTWO	NASDAQ Global Select Market


PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Equity	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
	Signatures	38


	June 30, 2023		March 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	775.8	$	827.4
Short-term investments	109.2		187.0
Restricted cash and cash equivalents	381.3		307.6
Accounts receivable, net of allowances of $1.2 and $1.3 at June 30, 2023 and March 31, 2023, respectively	622.2		763.2
Software development costs and licenses	34.4		65.9
Contract assets	79.9		79.9
Prepaid expenses and other	252.2		277.1
Total current assets	2,255.0		2,508.1
Fixed assets, net	405.9		402.8
Right-of-use assets	291.7		282.7
Software development costs and licenses, net of current portion	1,189.0		1,072.2
Goodwill	6,769.3		6,767.1
Other intangibles, net	4,206.7		4,453.2
Deferred tax assets	38.1		44.8
Long-term restricted cash and cash equivalents	103.6		99.6
Other assets	266.0		231.6
Total assets	$	15,525.3	$	15,862.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	127.5	$	140.1
Accrued expenses and other current liabilities	1,186.3		1,225.7
Deferred revenue	991.5		1,078.8
Lease liabilities	60.6		60.2
Short-term debt, net	372.1		1,346.8
Total current liabilities	2,738.0		3,851.6
Long-term debt, net	2,704.7		1,733.0
Non-current deferred revenue	35.5		35.5
Non-current lease liabilities	354.7		347.0
Non-current software development royalties	98.8		110.2
Deferred tax liabilities, net	422.0		534.0
Other long-term liabilities	231.4		208.3
Total liabilities	$	6,585.1	$	6,819.6
Commitments and contingencies (See Note 1 1)
Stockholders' equity:
Preferred stock, $0.01 par value, 5.0 shares authorized; no shares issued and outstanding at June 30, 2023 and March 31, 2023	—		—
Common stock, $0.01 par value, 300.0 and 300.0 shares authorized; 193.5 and 192.6 shares issued and 169.8 and 168.9 outstanding at June 30, 2023 and March 31, 2023, respectively	1.9		1.9
Additional paid-in capital	9,087.0		9,010.2
Treasury stock, at cost; 23.7 and 23.7 common shares at June 30, 2023 and March 31, 2023, respectively	(1,020.6)		(1,020.6)
Retained earnings	958.3		1,164.3
Accumulated other comprehensive loss	(86.4)		(113.3)
Total stockholders' equity	$	8,940.2	$	9,042.5
Total liabilities and stockholders' equity	$	15,525.3	$	15,862.1


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended June 30,
	2023		2022
Net revenue:
Game	$	1,096.1	$	1,019.2
Advertising	188.6		83.2
Total net revenue	1,284.7		1,102.4
Cost of revenue	605.5		435.7
Gross profit	679.2		666.7
Selling and marketing	400.9		272.1
Research and development	244.0		172.6
General and administrative	198.2		237.1
Depreciation and amortization	40.4		22.3
Total operating expenses	883.5		704.1
Loss from operations	(204.3)		(37.4)
Interest and other, net	(25.4)		(29.3)
Gain (loss) on fair value adjustments, net	0.8		(39.6)
Loss before income taxes	(228.9)		(106.3)
Benefit from income taxes	22.9		2.3
Net loss	$	(206.0)	$	(104.0)
Loss per share:
Basic and diluted loss per share	$	(1.22)	$	(0.76)


	Three Months Ended June 30,
	2023		2022
Net loss	$	(206.0)	$	(104.0)
Other comprehensive income (loss):
Foreign currency translation adjustment	26.0		(62.8)








Change in fair value of available for sale securities	0.9		(0.4)
Other comprehensive income (loss)	26.9		(63.2)
Comprehensive loss	$	(179.1)	$	(167.2)


	Three Months Ended June 30, 2023

	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholder's Equity
	Shares	Amount				Shares	Amount

Balance, March 31, 2023	192.6	$	1.9	$	9,010.2	(23.7)	$	(1,020.6)	$	1,164.3	$	(113.3)	$	9,042.5
Net loss	—	—		—		—	—		(206.0)		—		(206.0)
Change in cumulative foreign currency translation adjustment	—	—		—		—	—		—		26.0		26.0
Net unrealized gain on available-for-sale securities, net of taxes	—	—		—		—	—		—		0.9		0.9
Stock-based compensation	—	—		99.4		—	—		—		—		99.4

Issuance of restricted stock, net of forfeitures and cancellations	1.0	—		—		—	—		—		—		—
Net share settlement of restricted stock awards	(0.3)	—		(41.3)		—	—		—		—		(41.3)
Employee share purchase plan settlement	0.2	—		18.5		—	—		—		—		18.5
Exercise of stock options	—	—		0.2		—	—		—		—		0.2

Balance, June 30, 2023	193.5	$	1.9	$	9,087.0	(23.7)	$	(1,020.6)	$	958.3	$	(86.4)	$	8,940.2


	Three Months Ended June 30, 2022

	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholder's Equity
	Shares	Amount				Shares	Amount

Balance, March 31, 2022	139.0	$	1.4	$	2,597.2	(23.7)	$	(1,020.6)	$	2,289.0	$	(57.3)	$	3,809.7
Net loss	—	—		—		—	—		(104.0)		—		(104.0)
Change in cumulative foreign currency translation adjustment	—	—		—		—	—		—		(62.8)		(62.8)
Net unrealized loss on available-for-sale securities, net of taxes	—	—		—		—	—		—		(0.4)		(0.4)
Stock-based compensation	—	—		61.3		—	—		—		—		61.3
Issuance of restricted stock, net of forfeitures and cancellations	1.2	—		—		—	—		—		—		—
Net share settlement of restricted stock awards	(0.4)	—		(53.9)		—	—		—		—		(53.9)
Employee share purchase plan settlement	0.1	—		11.4		—	—		—		—		11.4
Issuance of shares related to Zynga Acquisition	46.3	0.5		5,377.2		—	—		—		—		5,377.7
Stock-based compensation assumed in Zynga Acquisition	—	—		143.6		—	—		—		—		143.6
Issuance of shares for conversion of Convertible Notes	3.7	—		479.7		—	—		—		—		479.7
Balance, June 30, 2022	189.9	$	1.9	$	8,616.5	(23.7)	$	(1,020.6)	$	2,185.0	$	(120.5)	$	9,662.3


	June 30, 2023
	Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Assets:
Cash and cash equivalents:
Money market funds	$	278.1	$	—	$	—	$	278.1
Bank-time deposits	27.8		—		—		27.8



Short-term investments:
Corporate bonds	—		68.3		—		68.3
Bank-time deposits	40.9		—		—		40.9



Restricted cash and cash equivalents:
Money market funds	380.8		—		—		380.8
Bank-time deposits	0.5		—		—		0.5
Restricted cash and cash equivalents, long term:
Money market funds	103.6		—		—		103.6
Other assets:
Private equity	—		—		28.6		28.6
Total financial assets	$	831.7	$	68.3	$	28.6	$	928.6

Liabilities:
Accrued expenses and other current liabilities:
Foreign currency forward contracts	$	—	$	0.1	$	—	$	0.1
Contingent earn-out consideration	—		—		86.6		86.6
Other-long term liabilities:
Contingent earn-out consideration	—		—		21.5		21.5
Short-term debt, net:
Convertible notes	—		22.1		—		22.1
Long-term debt, net:
Convertible notes	—		23.5		—		23.5
Total financial liabilities	$	—	$	45.7	$	108.1	$	153.8


	March 31, 2023
	Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Assets:
Cash and cash equivalents:
Money market funds	$	368.0	$	—	$	—	$	368.0
Bank-time deposits	145.8		—		—		145.8
Short-term investments:
Corporate bonds	—		145.2		—		145.2
Bank-time deposits	41.8		—		—		41.8
Restricted cash and cash equivalents:
Money market funds	306.1		—		—		306.1
Bank-time deposits	0.5		—		—		0.5
Restricted cash and cash equivalents, long term:
Money market funds	99.6		—		—		99.6
Other assets:
Private equity	—		—		26.5		26.5
Total financial assets	$	961.8	$	145.2	$	26.5	$	1,133.5

Liabilities:
Accrued expenses and other current liabilities:
Foreign currency forward contracts	$	—	$	2.5	$	—	$	2.5
Contingent earn-out consideration	—		—		66.6		66.6
Other long-term liabilities:
Contingent earn-out consideration	—		—		27.3		27.3
Long-term debt, net:
Convertible notes	—		44.1		—		44.1
Total financial liabilities	$	—	$	46.6	$	93.9	$	140.5


	June 30, 2023
			Gross Unrealized
	Cost or Amortized Cost		Gains		Losses		Fair Value
Short-term investments
Bank time deposits	$	40.9	$	—	$	—	$	40.9
Available-for-sale securities:
Corporate bonds	69.0		—		(0.7)		68.3



Total Short-term investments	$	109.9	$	—	$	(0.7)	$	109.2


	June 30, 2023
	Amortized Cost		Fair Value
Short-term investments
Due in 1 year or less	$	109.9	$	109.2


Total Short-term investments	$	109.9	$	109.2


	June 30, 2023		March 31, 2023
Forward contracts to sell foreign currencies	$	257.3	$	224.3
Forward contracts to purchase foreign currencies	107.0		51.2


	Three Months Ended June 30,
	2023	2022
Time-based	97	192
Market-based(1)	295	510
Performance-based(1)
IP	—	18
RCS	98	153
Total Performance-based	98	171
Total Restricted Stock Units	490	873


	June 30, 2023		March 31, 2023
Software development royalties	$	539.6	$	510.7
Compensation and benefits	151.6		177.5
Marketing and promotions	123.8		132.7
Deferred acquisition payments	97.3		82.7
Licenses	63.4		63.0
Tax payable	46.4		33.0
Refund liability	41.2		52.4


Other	123.0		173.7
Accrued expenses and other current liabilities	$	1,186.3	$	1,225.7


	Annual Interest Rate	Maturity Date	June 30, 2023		Fair Value (Level 2)
2025 Notes	3.55%	April 14, 2025	$	600.0	$	578.5
2026 Notes	5.00%	March 28, 2026	500.0		495.1
2027 Notes	3.70%	April 14, 2027	600.0		567.0
2028 Notes	4.95%	March 28, 2028	500.0		493.5
2032 Notes	4.00%	April 14, 2032	500.0		457.5
2026 Convertible Notes	0.00%	December 15, 2026	23.5		23.5
Total			$	2,723.5	$	2,615.1
Unamortized discount and issuance costs			(18.8)
Long-term debt, net			$	2,704.7


	Annual Interest Rate	Maturity Date	March 31, 2023		Fair Value (Level 2)
2025 Notes	3.55%	April 14, 2025	$	600.0	$	583.8
2027 Notes	3.70%	April 14, 2027	600.0		580.9
2032 Notes	4.00%	April 14, 2032	500.0		460.6
2024 Convertible Notes	0.25%	June 1, 2024	20.8		20.8
2026 Convertible Notes	0.00%	December 15, 2026	23.3		23.3
Total			$	1,744.1	$	1,669.4
Unamortized discount and issuance costs			(11.1)
Long-term debt, net			$	1,733.0


	June 30, 2023				March 31, 2023
	Current		Non-current		Current		Non-current
Software development costs, internally developed	$	25.9	$	988.0	$	47.4	$	882.0
Software development costs, externally developed	—		190.0		2.2		169.7
Licenses	8.5		11.0		16.3		20.5
Software development costs and licenses	$	34.4	$	1,189.0	$	65.9	$	1,072.2


Three Months Ended June 30, 2023	Maturities
2024 (remaining)	$	350.0
2025	21.4
2026	1,100.0
2027	29.4
2028	1,100.0
Thereafter	500.0
Total	3,100.8
Fair value adjustments	(5.2)
Total face value	$	3,095.6


	June 30, 2023		March 31, 2023
Available borrowings	$	499.5	$	499.5
Outstanding letters of credit	2.8		2.8


	Fair value of purchase consideration
Cash	$	3,992.4
Common stock (46.3 shares)	5,377.7
Replacement equity awards	151.7
Total	$	9,521.8


	Fair Value		Weighted average useful life
Cash acquired	$	864.9	N/A
Accounts receivable	271.2		N/A
Prepaid expenses and other	194.4		N/A
Fixed assets	54.3		N/A
Right-of-use assets	92.7		N/A
Other tangible assets	67.1		N/A
Accounts payable	(78.5)		N/A
Accrued expenses and other current liabilities	(352.8)		N/A
Deferred revenue	(333.1)		N/A
Lease liabilities	(15.7)		N/A
Long-term debt	(1,653.1)		N/A
Non-current lease liabilities	(131.6)		N/A
Deferred tax liabilities, net	(922.9)		N/A
Other liabilities assumed	(61.5)		N/A
Intangible Assets
Developed game technology	4,440.0		7
Branding and trade names	384.0		12
Game engine technology	261.0		4
User base	316.0		1
Developer relationships	57.0		4
Advertising technology	43.0		3
Customer relationships	31.0		5
Goodwill	5,994.4		N/A
Total	$	9,521.8


	Fair value of purchase consideration
Cash	$	116.9
Common stock (0.6 shares)	57.8
Contingent earn-out	23.3
Total	$	198.0


	Three Months Ended June 30,
(millions of dollars)	2023				2022
Net revenue	$	1,284.7	100.0	%	$	1,102.4	100.0	%
Cost of revenue	605.5		47.1	%	435.7		39.5	%
Gross profit	679.2		52.9	%	666.7		60.5	%
Selling and marketing	400.9		31.2	%	272.1		24.7	%
Research and development	244.0		19.0	%	172.6		15.7	%
General and administrative	198.2		15.4	%	237.1		21.5	%
Depreciation and amortization	40.4		3.1	%	22.3		2.0	%
Total operating expenses	883.5		68.8	%	704.1		63.9	%
Loss from operations	(204.3)		(15.9)	%	(37.4)		(3.4)	%
Interest and other, net	(25.4)		(2.0)	%	(29.3)		(2.7)	%
Gain (loss) on fair value adjustments, net	0.8		0.1	%	(39.6)		(3.6)	%
Loss before income taxes	(228.9)		(17.8)	%	(106.3)		(9.6)	%
Benefit from income taxes	22.9		1.8	%	2.3		0.2	%
Net loss	$	(206.0)	(16.0)	%	$	(104.0)	(9.4)	%


(millions of dollars)	2023		% of net revenue		2022		% of net revenue		Increase/ (decrease)		% Increase/ (decrease)
Selling and marketing	$	400.9	31.2	%	$	272.1	24.7	%	$	128.8	47.3	%
Research and development	244.0		19.0	%	172.6		15.7	%	71.4		41.4	%
General and administrative	198.2		15.4	%	237.1		21.5	%	(38.9)		(16.4)	%
Depreciation and amortization	40.4		3.1	%	22.3		2.0	%	18.1		81.2	%
Total operating expenses(1)	$	883.5	68.8	%	$	704.1	63.9	%	$	179.4	25.5	%


Period	Shares purchased	Average price per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the repurchase program
April 1-30, 2023	—	$	—	—	10.0
May 1-31, 2023	—	$	—	—	10.0
June 1-30, 2023	—	$	—	—	10.0


Exhibits:
4.1			Fifth Supplemental Indenture, dated as of April 14, 2023, between the Company and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2023)
4.2			Sixth Supplemental Indenture, dated as of April 14, 2023, between the Company and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2023)
4.3			Form of Global Note representing 5.000% Senior Notes due 2026 (included as part of Exhibit 4.1) (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2023)
4.4			Form of Global Note representing 4.950% Senior Notes due 2028 (included as part of Exhibit 4.2) (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2023)
10.1			Restricted Unit Agreement, dated as of June 1, 2023, by and between Take-Two Interactive Software, Inc. and ZMC Advisors, L.P. (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-3 ASR filed with the Securities and Exchange Commission on June 1, 2023)
31.1			Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Calculation Linkbase Document
101.LAB			Inline XBRL Taxonomy Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Presentation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Document


		TAKE-TWO INTERACTIVE SOFTWARE, INC. (Registrant)
Date:	August 8, 2023	By:	/s/ STRAUSS ZELNICK
			Strauss Zelnick Chairman and Chief Executive Officer (Principal Executive Officer)

Date:	August 8, 2023	By:	/s/ LAINIE GOLDSTEIN
			Lainie Goldstein Chief Financial Officer (Principal Financial Officer)