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Take-Two Interactive Software reported results for its fiscal first quarter 2017, ended June 30, 2016. In addition, the Company provided its initial financial outlook for its fiscal second quarter 2017, ending September 30, 2016. As previously announced, beginning this quarter, the Company will no longer adjust its Non-GAAP financial metrics for the net effect from deferral in net revenue and related cost of goods sold. The Company has recast its prior year’s first quarter Non-GAAP financial metrics to conform to its current presentation. In addition, Take-Two’s financial outlook conforms to the Company’s new Non-GAAP metrics.
Financial Results
For fiscal first quarter 2017, GAAP net revenue grew 13% to $311.6 million, as compared to $275.3 million for fiscal first quarter 2016. The largest contributors to GAAP net revenue in fiscal first quarter 2017 were Grand Theft Auto V® and Grand Theft Auto Online, NBA® 2K16 and Battleborn®.
The change in deferred net revenue, which represents revenue recognized during the current period that was deferred in prior periods, net of revenue that is being deferred into future periods, was ($39.0) million in fiscal first quarter 2017 versus $91.1 million in fiscal first quarter 2016.
GAAP digitally-delivered net revenue grew to $172.1 million, as compared to $154.0 million for fiscal first quarter 2016. Recurrent consumer spending (virtual currency, downloadable add-on content and online games) grew 18% year-over-year and accounted for 57% of GAAP digitally-delivered net revenue, or 31% of total GAAP net revenue. The largest contributors to GAAP digitally-delivered net revenue in fiscal first quarter 2017 were Grand Theft Auto V and Grand Theft Auto Online, and NBA 2K16.
The change in deferred digitally-delivered net revenue was $19.1 million in fiscal first quarter 2017 versus $100.0 million in fiscal first quarter 2016.
GAAP cost of goods sold was $191.4 million, as compared to $202.6 million for fiscal first quarter 2016.
Non-GAAP cost of goods sold was $187.0 million, as compared to $197.9 million for fiscal first quarter 2016.
The change in deferred cost of goods sold, which represents cost of goods sold recognized during the current period that were deferred in prior periods, net of cost of goods sold that are being deferred into future periods, was ($24.6) million in fiscal first quarter 2017 versus $0.1 million in fiscal first quarter 2016.
GAAP net loss narrowed to $38.6 million, or $0.46 per diluted share, as compared to GAAP net loss of $67.0 million, or $0.81 per diluted share, for the year-ago period.
Non-GAAP net loss narrowed to $17.6 million, or $0.21 per diluted share, as compared to $33.2 million, or $0.40 per diluted share, for the year-ago period.
The net effect from deferral of net revenue and related cost of goods sold, which represents the after-tax net effect on net income (loss) from the change in deferred revenue and the change in deferred cost of goods sold, was ($11.3) million (including tax benefit of $3.1 million) in fiscal first quarter 2017 versus $67.4 million (Including tax expense of $23.6 million) in fiscal first quarter 2016.
On May 18, 2016, Take-Two provided its financial outlook for the fiscal first quarter ending June 30, 2016, including Non-GAAP net revenue of $225 to $260 million and Non-GAAP net loss per diluted share of $0.30 to $0.40. This outlook was based on the Company’s prior Non-GAAP measures, which were adjusted for the net effect from deferral in net revenue and related cost of goods sold. If calculated based on these prior measures, the Company’s fiscal first quarter results would have included Non-GAAP net revenue of $272.6 million (based on GAAP net revenue of $311.6 million adjusted for the change in deferred net revenue of ($39.0) million) and Non-GAAP net loss of $28.9 million, or $0.34 per diluted share (based on the Company’s new presentation of Non-GAAP net loss of $17.6 million, adjusted for the net effect from deferral of net revenue and related cost of goods sold of ($11.3) million).
As of June 30, 2016, the Company had cash and short-term investments of $1.189 billion.
