GAAP net revenue was $ 930.1 million

GAAP net income for diluted share was $ 1.43

GAAP net cash provided by operating activities for the nine-months ended December 31, 2019 increased to $ 440.0 million

Adjusted Unrestricted Operating Cash Flow (Non-GAAP) for the nine-months ended December 31, 2019 was $ 547.9 million

Net Bookings were $ 888.2 million

NEW YORK– (BUSINESS WIRE) –Take-Two Interactive Software, Inc. (NASDAQ: TTWO) today reported results for its fiscal third quarter 2020 ended December 31, 2019. In addition, the Company provided its initial outlook for its fiscal fourth quarter ending March 31, 2020 and adjusted its outlook for the fiscal year 2020, ending March 31, 2020. For additional information, please see the fiscal third quarter 2020 results slide deck posted to the Company's investor relations website at http://ir.take2games.com.

Fiscal Third Quarter 2020 Financial Highlights

GAAP net revenue was $ 930.1 million, as compared to $ 1.249 billion in last year's fiscal third quarter. Recurrent consumer spending (which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases) increased 15% and accounted for 37% of total GAAP net revenue. The largest contributors to GAAP net revenue in fiscal third quarter 2020 were NBA® 2K20 and NBA 2K19; Grand Theft Auto® Online and Grand Theft Auto V; Red Dead Redemption 2 and Red Dead Online; The Outer Worlds; Borderlands® 3; WWE® 2K20 and WWE SuperCard; Sid Meier's Civilization VI; and Social Point's mobile offerings.

Digitally-delivered GAAP net revenue increased to $ 700.3 million, as compared to $ 594.7 million in last year's fiscal third quarter, and accounted for 75% of total GAAP net revenue. The largest contributors to GAAP digitally-delivered net revenue in fiscal third quarter 2020 were NBA 2K20 and NBA 2K19; Grand Theft Auto Online and Grand Theft Auto V; The Outer Worlds; Red Dead Redemption 2 and Red Dead Online; Borderlands 3; Sid Meier's Civilization VI; Social Point's mobile offerings; and WWE SuperCard and WWE 2K20.

GAAP net income was $ 163.6 million, or $ 1.43 for diluted share, as compared to $ 179.9 million, or $ 1.57 for diluted share, for the comparable period last year.

During the nine-month period ended December 31, 2019, GAAP net cash provided by operating activities increased to $ 440.0 million, as compared to $ 390.2 million in the same period last year. During the nine-month period ended December 31, 2019, Adjusted Unrestricted Operating Cash Flow (Non-GAAP), which is defined as GAAP net cash from operating activities, adjusted for changes in restricted cash, was $ 547.9 million, as compared to $ 587.0 million in the same period last year (please see the section below titled "Non-GAAP Financial Measure" for additional information). As of December 31, 2019, the Company had cash and short-term investments of $ 1.984 billion.

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

Three Months Ended December 31, 2019

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

Amortization
& impairment
of acquired
intangible
assets

Net revenue

$ 930,129

(41,950

)

Cost of goods sold

437,093

(9,980

)

(33,048

)

(3,295

)

Gross Profit

493,036

(31,970

)

33,048

3,295

Operating expenses

316,203

(30,351

)

246

(1,657

)

Income from operations

176,833

(31,970

)

63,399

(246

)

4,952

Interest and other, net

11,943

(1,192

)

Income before income taxes

188,776

(33,162

)

63,399

(246

)

4,952

In order to calculate net income for diluted share for management reporting purposes, the Company uses its fully diluted share count of 114.25 million.

Operational Metric - Net Bookings

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

During fiscal third quarter 2020, total Net Bookings were $ 888.2 million, as compared to $ 1.569 billion during last year's fiscal third quarter, which had benefited from the launch of Red Dead Redemption 2. Net Bookings from recurrent consumer spending grew 6% and accounted for 41% of total Net Bookings. The largest contributors to Net Bookings in fiscal third quarter 2020 were Grand Theft Auto Online and Grand Theft Auto V; NBA 2K20; Red Dead Redemption 2 and Red Dead Online; The Outer Worlds; Borderlands 3; WWE 2K20 and WWE SuperCard; Sid Meier's Civilization VI; and Social Point's mobile offerings.

Catalog accounted for $ 359.7 million of Net Bookings led by Grand Theft Auto, Red Dead Redemption, and Social Point's mobile offerings.

Digitally-delivered Net Bookings were $ 690.6 million, as compared to $ 703.8 million in last year's fiscal third quarter, and accounted for 78% of total Net Bookings. The largest contributors to digitally-delivered Net Bookings in fiscal third quarter 2020 were Grand Theft Auto Online and Grand Theft Auto V; NBA 2K20; Red Dead Redemption 2 and Red Dead Online; The Outer Worlds; Borderlands 3; Sid Meier's Civilization VI; WWE 2K20 and WWE SuperCard; and Social Point's mobile offerings.

Management Comments

"Throughout the 2019 holiday season, we experienced robust demand for our offerings that drove third quarter operating results solidly within our increased outlook,"Said Strauss Zelnick, Chairman and CEO of Take-Two. "Highlights included the performance of Grand Theft Auto Online and Grand Theft Auto V, NBA 2K20, Red Dead Redemption 2 and Red Dead Online, The Outer Worlds and Borderlands 3, reflecting our ability to deliver some of the most captivating experiences in the entertainment industry. Fiscal 2020 is shaping up to be another terrific year for Take-Two.

"Take-Two's development pipeline over the coming years is the largest and most diverse in our history, including releases from our largest franchises, new IP and a broad mix of gameplay experiences, all designed to captivate and engage audiences well beyond initial release. In addition, we are actively investing in emerging markets, platforms and business models that have the potential to enhance growth. 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. "

Business and Product Highlights

Since October 1, 2019:

Rockstar Games:

  • launched Red Dead Redemption 2 for PC. The first game in the Red Dead Redemption series to be offered on PC, the title features a range of graphical and technical enhancements for increased immersion along with new Bounty Hunting Missions, Gang Hideouts, Weapons, a fully featured Photo Mode and more. Red Dead Redemption 2 for PC also includes free access to the shared living world of Red Dead Online, featuring all previously released improvements and the latest content updates for the complete online experience. In addition, Red Dead Redemption 2 was released as a launch title for Google Stadia ™.
  • Released new free content updates for Grand Theft Auto Online, including:
    • The Diamond Casino Heist - an all-new approach to Heist architecture and execution with different scenarios unfolding in response to player's choices as they prepare to execute a takedown of the most secure building in all of Los Santos - featuring new weapons and vehicles, plus an Arcade property featuring playable retro arcade games and more.
    • Numerous new missions, vehicles, weapons and other content.
  • Released new free content updates for Red Dead Online, including:
    • Moonshiners - the latest Frontier Pursuit that enables players to team up with an infamous distiller to start their own Moonshining business and run it out of the new Shack property –featuring new story missions; role-specific weapons, clothing and other items; the ability to run an underground bar; and more.

2K:

  • Announced the founding of Cloud Chamber ™, the newest wholly-owned game development studio under the Company's publishing label. A collective of storytellers eager to push the frontlines of interactive entertainment by making unique, entertaining and thoughtful experiences that engage the world, Cloud Chamber will build its team at two locations: 2K's San Francisco Bay Area headquarters in Novato, California, as well as in Montréal, Québec, which marks the first-ever Canadian office for a 2K studio. In addition, 2K announced that Cloud Chamber has started to work on the next iteration of the globally acclaimed BioShock® franchise, which will be in development for the next several years.
  • launched Sid Meier's Civilization VI for Xbox One and PlayStation 4. Developed by Firaxis Games, and winner of The Game Awards 'Best Strategy Game and DICE Awards' Best Strategy Game in 2016, Civilization VI is the first Civilization game since 2008 that has been available on Xbox or PlayStation consoles.
  • launched WWE 2K20, the newest release in our WWE video game franchise that is now developed exclusively by Visual Concepts, for PlayStation 4, Xbox One and PC.
  • Released Borderlands 3 and NBA 2K20 for Google Stadia.
  • launched Moxxi's Heist of The Handsome Jackpot, the first campaign add-on for Borderlands 3, for PC, PlayStation 4 and Xbox One. Moxxi's Heist of The Handsome Jackpot is one of four paid campaign add-ons that are included with the Borderlands 3 Super Deluxe Edition and Season Pass, or for purchase separately. Moxxi's Heist of the Handsome Jackpot will be coming to Google Stadia early in 2020.

Private Division:

  • launched The Outer Worlds for Xbox One, PlayStation 4 and PC. Created by the renowned RPG developer, Obsidian Entertainment, The Outer Worlds is a dark and witty player-driven story set in a colony at the farthest reaches of the galaxy. The title will also be available for Nintendo Switch, which is now planned for fiscal year 2021.
  • launched Ancestors: The Humankind Odyssey for digital download on PlayStation 4 and Xbox One. Ancestors: The Humankind Odyssey is the debut title from Panache Digital Games, the studio co-founded by Patrice Désilets, the original creative director of the Assassin's Creed franchise. The title was previously released in August 2019 for digital download on PC.
  • Released the Kerbal Space Program Enhanced Edition: Breaking Ground Expansion for PlayStation 4 and Xbox One. The fan-favorite expansion Kerbal Space Program: Breaking Ground previously launched on PC in May 2019.
  • Announced that Disintegration, an upcoming sci-fi, first-person shooter, will launch digitally for PlayStation 4, Xbox One and PC in calendar 2020, during our fiscal year 2021. Disintegration is the debut title from V1 Interactive, the independent development studio co-founded by Marcus Lehto, former creative director at Bungie and co-creator of Halo.
  • Announced that Kerbal Space Program 2, the sequel to the beloved original space sim, is in development and is now planned for launch during our fiscal year 2021. The original Kerbal Space Program has sold-in nearly 4 million units worldwide, and earned a Metacritic rating of 88 and a Steam user score of 91%.

Outlook for Fiscal 2020

Take-Two is providing its initial outlook for its fiscal fourth quarter ending March 31, 2020 and is adjusting its outlook for the fiscal year ending March 31, 2020:

Fourth Quarter Ending March 31, 2020

  • GAAP net revenue is expected to range from $ 635 to $ 685 million
  • GAAP net income is expected to range from $ 105 to $ 128 million
  • GAAP diluted net income for share is expected to range from $ 0.92 to $ 1.12
  • Share count used to calculate both GAAP and management reporting diluted net income for share is expected to be 114.6 million (1)
  • Net Bookings (operational metric) are expected to range from $ 540 to $ 590 million

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

Three Months Ending March 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

$ 635 to $ 685

($ 95)

Cost of goods sold

$ 274 to $ 286

($ 24)

($ 18)

($ 2)

Operating Expenses

$ 247 to $ 257

($ 22)

($ 2)

Interest and other, net

($ 9)

Income before income taxes

$ 123 to $ 151

($ 71)

$ 40

$4

Fiscal Year Ending March 31, 2020

  • GAAP net revenue is expected to range from $ 2.96 to $ 3.01 billion
  • GAAP net income is expected to range from $ 387 to $ 409 million
  • GAAP diluted net income for share is expected to range from $ 3.38 to $ 3.58
  • Share count used to calculate both GAAP and management reporting diluted net income for share is expected to be 114.6 million (3)
  • Net cash provided by operating activities is expected to be over $ 575 million
  • Adjusted Unrestricted Operating Cash Flow (Non-GAAP) is expected to be over $ 500 million (4)
  • Capital expenditures are expected to be approximately $ 60 million
  • Net Bookings (operational metric) are expected to range from $ 2.80 to $ 2.85 billion

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

Twelve Months Ending March 31, 2020

Financial Data

$ in millions

GAAP outlook (3)

Change in
deferred net
revenue and
related cost of
goods sold

Stock-based
compensation

Amortization
of acquired
intangible
assets

reorganization
& acquisition

Net revenue

$ 2,963 to $ 3,013

($ 162)

Cost of goods sold

$ 1,420 to $ 1,433

($ 112)

($ 91)

($ 10)

Operating Expenses

$ 1,125 to $ 1,135

($ 106)

($ 7)

($ 1)

Interest and other, net

($ 39)

Income before income taxes

$ 457 to $ 484

($ 50)

$ 197

$ 17

$1

1)

Includes 113.4 million basic shares and 1.2 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 113.1 million basic shares and 1.5 million shares representing the potential dilution from unvested employee stock grants.

4)

Includes a $ 75.0 million net increase in restricted cash for fiscal 2020.

Key assumptions and dependencies underlying the Company's outlook include: timely delivery of titles included in this financial outlook; continued consumer acceptance of Xbox One and PlayStation 4; the ability to develop and develop products that capture market share; and stable foreign exchange rates. See also "Cautionary Note Regarding Forward Looking Statements" below.

Product Releases

The following titles were released since October 1, 2019:

Label

Title

Platforms

Release Date

2K

WWE 2K20

PS4, Xbox One, PC

October 22, 2019

Private Division

The Outer Worlds

PS4, Xbox One, PC

October 25, 2019

2K

WWE 2K20 Originals: Bump in the Night (DLC)

PS4, Xbox One, PC

October 28, 2019

Rockstar Games

Red Dead Redemption 2

PC

November 5

2K

WWE SuperCard Season 6

iOS, Android

November 13,2019

Rockstar Games

Red Dead Redemption 2

Stadia

November 19

2K

NBA 2K20

Stadia

November 19

2K

Sid Meier's Civilization VI

Xbox One, PS4

November 22

2K

Sid Meier's Civilization VI Expansion Pack Bundle

Xbox One, PS4

November 22

Private Division

Kerbal Space Program Enhanced Edition: Breaking Ground Expansion

PS4, Xbox One

December 5, 2019

Private Division

Ancestors: The Humankind Odyssey

PS4, Xbox One (digital only)

December 6, 2019

2K

WWE 2K20 SmackDown 20th Anniversary Pack (DLC)

PS4, Xbox One, PC

December 6, 2019

Rockstar Games

Grand Theft Auto Online: The Diamond Casino Heist

PS4, Xbox One, PC

December 12, 2019

Rockstar Games

Red Dead Online: Moonshiners

PS4, Xbox One, PC. Stadia

December 13, 2019

2K

Borderlands 3

Stadia

December 17, 2019

2K

Borderlands 3: Moxxi's Heist of The Handsome Jackpot (DLC)

PS4, Xbox One, PC

December 19, 2019

2K

WWE 2K20 Originals: Wasteland Wanderers (DLC)

PS4, Xbox One, PC

December 20, 2019

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

Label

Title

Platforms

Release Date

2K

WWE 2K20 Originals: Southpaw Regional Wrestling (DLC)

PS4, Xbox One, PC

February 7

2K

WWE 2K20 Originals: Empire of Tomorrow (DLC)

PS4, Xbox One, PC

Fiscal 2020

Private Division

The Outer Worlds

switch

Fiscal 2021

Private Division

Kerbal Space Program 2

PC

Fiscal 2021

Private Division

Disintegration

TBA

2020 (fiscal 2021)

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 is a non-GAAP financial measure. 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. Non-GAAP financial measure provides investors with additional useful information to measure. In particular, this measure facilitates comparison of operating performance with periods of time. Internally, management uses this Non-GAAP financial measure in assessing the Company's operating results and in planning and forecasting. Reconciliation of this Non-GAAP financial measure to the most comparable

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, 2019.

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 through our labels Rockstar Games, 2K, and Private Division, as well as Social Point, a leading developer of mobile games. Our products are designed for console systems and personal computers, including smartphones and tablets, and are delivered through physical retail, digital downloads, online platforms and cloud streaming services. The Company's 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 in their respective holders.

Cautionary Note Regarding Forward-Looking Statements

The statements contained herein which are not considered facts forward-looking statements 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 not limited to, statements regarding the outlook for the Company's future business and financial performance. Such forward-looking statements are based on the current beliefs of management as well as assumptions made by information, with 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 risks and uncertainties, including dependencies on key management and product development personnel, our dependence on our Grand Theft Auto products and our ability to develop other hit titles, the timely release and significant market acceptance of our games, the ability to maintain acceptable pricing levels on our games, and risks associated with international operations. 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. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share amounts)
Three months ended December 31, Nine months ended December 31,

2019

2018

2019

2018

Net revenue

$

930,129

$

1,248,738

$

2,328,429

$

2,129,387

Cost of goods sold:
Software development costs and royalties

130,985

265,166

451,422

337,603

Internal royalties

166,432

401,382

339,312

536,662

Product costs

90,959

183,208

225,162

277,234

Licenses

48,717

48,728

130,914

113,231

Total cost of goods sold

437,093

898,484

1,146,810

1,264,730

Gross profit

493,036

350,254

1,181,619

864,657

Selling and marketing

137,068

161,322

378,455

313,793

General and administrative

84,531

70,638

236,023

205,693

Research and development

82,520

62,305

227,680

173,582

Depreciation and amortization

12,330

10,140

35,611

29,151

Business reorganization

(246

)

(5,930

)

467

(6,172

)

Total operating expenses

316,203

298,475

878,236

716,047

Income from operations

176,833

51,779

303,383

148,610

Interest and other, net

11,943

8,071

30,422

19,647

Income before income taxes

188,776

59,850

333,805

168,257

Provision for (benefit from) income taxes

25,134

(120,098

)

52,068

(108,750

)

Net income

$

163,642

$

179,948

$

281,737

$

277,007

Earnings per share:
Basic earnings per share

$

1.44

$

1.59

$

2.49

$

2.44

Diluted earnings per share

$

1.43

$

1.57

$

2.47

$

2.41

Weighted average shares outstanding:
Basic

113,251

113,433

112,996

113,390

diluted

114,254

114,737

114,009

114,918

Computation of Basic EPS:
Net income

$

163,642

$

179,948

$

281,737

$

277,007

Weighted average shares outstanding - basic

113,251

113,433

112,996

113,390

Basic earnings per share

$

1.44

$

1.59

$

2.49

$

2.44

Computation of Diluted EPS:
Net income

$

163,642

$

179,948

$

281,737

$

277,007

Weighted average shares outstanding - basic

113,251

113,433

112,996

113,390

Add: dilutive effect of common stock equivalents

1,003

1,304

1,013

1,528

Weighted average common shares outstanding - diluted

114,254

114,737

114,009

114,918

Diluted earnings per share

$

1.43

$

1.57

$

2.47

$

2.41

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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