THQ has reported a "successful turnaround" for its fiscal year, thanks to strong sales from UFC 2009: Undisputed and WWE SmackDown Vs. Raw 2010, both shipping 4 million units each.
For its fiscal year 2010, which ended on March 31, THQ reported $899.1 million in revenues which is up 8 percent YoY with net losses at $9 million compared to $431.1 million last year.
"We are very excited about our development pipeline and how we've positioned THQ to capitalize on both traditional and digital gaming opportunities going forward," said THQ CEO Brian Farrell.
THQ had a 16 percent rise in revenues to $197.7 million, with net loss for Q4 2010 at $10.4 million.
The conference call is ongoing, we'll keep you posted with the happenings.
The full financial PR is below.
AGOURA HILLS, Calif.--(BUSINESS WIRE)--THQ Inc. (NASDAQ: THQI - News) today reported financial results for the fourth quarter and fiscal year ended March 31, 2010, demonstrating the company’s significant financial turnaround in just one year.
Three Months Ended
Twelve Months Ended
March 31, March 31,
($ thousands except EPS)
2010 2009 2010 2009
Net sales $ 197,668 $ 170,259 $ 899,137 $ 829,963
Operating income (loss) (9,380 ) (87,149 ) (9,649 ) (387,713 )
Earnings (loss) per share (0.15 ) (1.44 ) (0.13 ) (6.45 )
Net sales 197,415 154,320 888,652 812,615
Operating income (loss) 4,920 (41,834 ) 15,603 (164,606 )
Earnings (loss) per share 0.06 (0.54 ) 0.19 (1.52 )
Full Year Results
For the twelve months ended March 31, 2010, THQ’s net sales rose 8% to $899.1 million, compared with net sales of $830.0 million a year ago. On a non-GAAP basis, the company reported fiscal 2010 net sales of $888.7 million, up 9% from $812.6 million in the prior year.
For the fiscal year ended March 31, 2010, the company reported a net loss of $9.0 million, or $0.13 per share, compared with a net loss of $431.1 million, or $6.45 per share, in the prior year. On a non-GAAP basis, the company reported fiscal 2010 net income of $12.7 million, or $0.19 per diluted share, compared with a net loss of $101.8 million, or $1.52 per share, for the prior year. A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.
“In fiscal 2010, we achieved a successful turnaround, grew market share and exceeded our financial and operating targets. We have streamlined our cost structure, which will provide us with increased operating leverage in our model as our business continues to grow,” said Brian Farrell, THQ President and CEO. “Importantly, during the fiscal year we established three major core game franchises, UFC, Darksiders and Red Faction. We are very excited about our development pipeline and how we’ve positioned THQ to capitalize on both traditional and digital gaming opportunities going forward.”
Fourth Quarter Results
For the fourth quarter of fiscal 2010, THQ reported net sales of $197.7 million, up 16% from $170.3 million for the same period a year ago. On a non-GAAP basis, the company reported net sales of $197.4 million, up 28% from $154.3 million for the same period a year ago. Sales were driven primarily by new releases Darksiders™ and Metro 2033™.
For the fourth quarter of fiscal 2010, the company reported a net loss of $10.4 million, or $0.15 per share, compared with a net loss of $96.9 million, or $1.44 per share, for the same period a year ago. On a non-GAAP basis, the company reported fiscal 2010 fourth quarter net income of $4.4 million, or $0.06 per diluted share, compared with a net loss of $36.4 million, or $0.54 per share, for the same period a year ago. A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.
The company reported cash, cash equivalents and short-term investments of $271.3 million at March 31, 2010, up from $140.7 million at March 31, 2009.
Fiscal 2010 Highlights and Recent Developments
Market Share/Product Sales
* For the twelve months ended March 31, 2010, THQ’s U.S. sell-through dollars grew 21% versus the prior-year period and the company gained market share, ranking as the #4 independent publisher with a 4.9% share1. For the same period, THQ’s global sell-through dollars grew 6% versus the prior-year period and the company gained market share, ranking as the #4 independent publisher with a 4.4% share2.
* UFC® 2009 Undisputed™ ranked among the top ten new video game releases in the U.S.1 for calendar 2009.
* UFC 2009 Undisputed and WWE® SmackDown® vs. Raw® 2010 each shipped nearly 4 million units in fiscal 2010.
1Source: The NPD Group
2Source: Seven territories for which syndicated data is available (sources: NPD, Chart Track, GfK): US, Canada, UK, Germany, France, Spain and New Zealand. Value in USD millions; each territory converted from local currency to USD at current exchange rates.
Product Quality, New Franchises and Innovations
* THQ’s fiscal 2010 Core Games achieved average Metacritic scores of 82, up from 80 in fiscal 2009 and 72 in fiscal 2008.
* In fiscal 2010, THQ added Darksiders™ to its growing portfolio of owned brands, including de Blob®, Drawn to Life®, MX vs. ATV™, Red Faction® and Saints Row®.
* THQ published Metro 2033, the first PC game to utilize all three of the current cutting-edge technologies (NVIDIA PhysX, NVIDIA 3D Vision and DirectX 11 Tessellation) to deliver an immersive 3D gaming experience.
Strategic License Agreements
* THQ and World Wrestling Entertainment, Inc. (WWE) entered into a new direct eight-year agreement granting THQ exclusive worldwide rights to develop and publish video games based on WWE content effective January 1, 2010.
* THQ announced multi-year, multi-property video game license agreements with DreamWorks Animation to develop and publish video games based on Kung Fu Panda: The Kaboom of Doom, Puss in Boots, and The Penguins of Madagascar, adding to the company’s previously announced rights to publish games based on MegaMind.
* THQ announced two multi-year license agreements granting the company the exclusive worldwide rights to develop and publish video games based on Sony Pictures Consumer Products’ popular game show properties, “JEOPARDY!” and “Wheel of Fortune”.
Core and Online Game Development
* Consistent with our strategy to migrate our key brands online, THQ announced the realignment of two of our development studios that will now focus on the creation of digital games.
* Consistent with our strategy to reduce development costs while delivering high product quality, in December 2009, THQ announced plans to establish a new video game development studio in Montreal, Quebec.
* During fiscal 2010, THQ, WWE and JAKKS Pacific, Inc. reached settlement agreements with respect to the previous WWE video game license and the termination of the THQ/JAKKS Pacific LLC joint venture, resulting in a new direct relationship with WWE and a lower overall royalty rate on WWE videogames.
“We plan to build on our fiscal 2010 momentum by demonstrating continued progress in fiscal 2011 and delivering accelerated growth in fiscal 2012 when we expect to launch three core games, including the third installment of our successful Saints Row franchise,” said Farrell. “I want to thank all of our dedicated employees for making our turnaround a reality and positioning THQ for continued growth in the future.”
Fiscal Year Ending March 31, 2011
The company expects to report non-GAAP fiscal 2011 net sales in the range of $905 million to $920 million, which represents a 2% to 4% increase from those reported in fiscal 2010, and to report non-GAAP EPS in the range of $0.25 to $0.30 per share, which is approximately 30% to 60% higher than fiscal 2010, reflecting expected operating leverage on the company’s lower cost structure.
Fiscal First Quarter 2011
THQ expects to report fiscal first quarter non-GAAP net sales in the range of $190 million to $200 million and non-GAAP EPS of approximately breakeven.
THQ has announced the following key releases scheduled for the first quarter of fiscal 2011:
Fiscal First Quarter
UFC Undisputed 2010
Xbox 360®, PlayStation®3
Kids, Family and Casual Games
All Star Karate™
Big Beach Sports™ 2
The Last Airbender
Nintendo Wii, DS, DSi™
Non-GAAP Financial Measures
In addition to results determined in accordance with GAAP, the company discloses certain non-GAAP financial measures that exclude the following:
* stock-based compensation expense,
* the impact of certain deferred revenue and related costs,
* business realignment expense,
* other-than-temporary impairment on investments and any subsequent realized gains on those investments, and mark-to-market adjustments on trading Auction Rate Securities,
* material litigation settlements, charges and benefits, and
* related income tax effects for each of these items.
Beginning in fiscal 2010, for non-GAAP purposes, the company adopted a fixed, long-term projected tax rate of 15% to evaluate its operating performance, as well as to forecast, plan and analyze future periods.
THQ may consider whether other significant items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.
The company excludes these expenses from its non-GAAP financial measures primarily because its management does not believe they reflect the company’s primary business, ongoing operating results or future outlook. THQ’s management believes that the use of non-GAAP financial measures provides meaningful supplemental information regarding its financial condition and results of operations, and helps investors compare actual results to its long-term operating goals as well as to its performance in prior periods. The non-GAAP financial measures included in this earnings release have been reconciled to the comparable GAAP results in the accompanying tables, and should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.
In addition to the reasons stated above, which are generally applicable to each of the items THQ excludes from its non-GAAP financial measures, the company’s management uses certain of the non-GAAP financial measures for the following reasons:
Stock-Based Compensation. THQ does not consider stock-based compensation charges when evaluating the performance of its business or formulating its operating plans. Stock-based compensation charges are subject to significant fluctuation outside of the control of management due to the variables used to estimate the fair value of a share-based payment, such as THQ’s stock price, interest rates and the volatility of the company’s stock price. Further, when considering the impact of equity award grants, THQ places a greater emphasis on the use of such grants as retention tools for long-term stockholder value creation, as well as overall stockholder dilution, rather than the accounting charges associated with such grants.
Deferred Revenue/Costs. Beginning in fiscal 2008, the company began recognizing the revenue and related costs from the sale of certain titles for which the online service is determined to be a deliverable over the estimated online service period. Although the company defers the recognition of its net revenue and costs with respect to these titles, there is no adverse impact to its operating cash flow. Internally, THQ’s management excludes the impact of deferred net revenue and costs related to packaged games when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.
Business Realignment Expense. Although THQ has incurred business realignment expenses in the past, each charge has been 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 from its non-GAAP financial measures.
Our fiscal year ends on the Saturday nearest March 31st. For simplicity, we present all fiscal periods as ending on a calendar month end. In fiscal 2010, our fourth quarter and fiscal year ended on April 3, 2010. In fiscal 2009, our fourth quarter and fiscal year ended on March 28, 2009. The fiscal three month periods ended March 31, 2010 and 2009 consisted of 13 weeks. The fiscal twelve month periods ended March 31, 2010 and 2009 consisted of 53 and 52 weeks, respectively.
Investor Conference Call
THQ will host a conference call to discuss fiscal 2010 fourth quarter results today at 2:00 p.m. Pacific/5:00 p.m. Eastern. Please dial 877.356.8075 domestic or 706.902.0203 international, conference ID 70320819 to listen to the call or visit the THQ Inc. Investor Relations Home page at http://investor.thq.com. The online archive of the broadcast will be available approximately two hours after the live call ends. In addition, a telephonic replay of the conference call will be provided approximately two hours after the live call ends through May 7, 2010, by dialing 800.642.1687, domestic, or 706.645.9291, international, conference ID 70320819.
THQ Inc. (NASDAQ: THQI - News) is a leading worldwide developer and publisher of interactive entertainment software. Headquartered in Los Angeles County, California, THQ sells product through its global network of offices located throughout North America, Europe and Asia Pacific. More information about THQ and its products may be found at www.thq.com and www.thqwireless.com. THQ, All Star Karate, Beat City, Big Beach Sports, Darksiders, de Blob, Drawn to Life, MX vs. ATV, Red Faction, Saints Row and their respective logos are trademarks and/or registered trademarks of THQ Inc.
Microsoft, Xbox, Xbox 360, Xbox Live, the Xbox logos, and the Xbox Live logo are either registered trademarks or trademarks of Microsoft Corporation in the U.S. and/or other countries.
“PlayStation”, is a registered trademark of Sony Computer Entertainment Inc.
Wii, Nintendo DS and Nintendo DSi are trademarks of Nintendo.