Take-Two Interactive Software Inc. (NASDAQ:TTWO)

The annual financial data reveals significant trends in profitability and capital efficiency over the analyzed periods. There is a notable fluctuation in the net operating profit after taxes (NOPAT), invested capital, and the return on invested capital (ROIC), indicating changing operational performance and capital utilization.

Net Operating Profit After Taxes (NOPAT)

The NOPAT initially increased substantially from 331,110 thousand US dollars in the year ending March 31, 2020, to 782,700 thousand US dollars in 2021. This was followed by a sharp decline to 410,045 thousand US dollars in 2022. Subsequently, the company experienced negative profitability starting in 2023, with losses deepening each year, reaching -4,540,136 thousand US dollars by March 31, 2025. This trend reflects a significant deterioration in operating profitability over the last three years.

Invested Capital

Invested capital increased steadily from 2,825,883 thousand US dollars in 2020 to a peak of 14,060,600 thousand US dollars in 2023, indicating substantial capital deployment. However, there was a reduction in invested capital in the following two years, decreasing to 7,701,100 thousand US dollars by 2025. This pattern suggests an aggressive expansion phase followed by a scaling back of invested resources.

Return on Invested Capital (ROIC)

The ROIC mirrored the trends in profitability with an increase from 11.72% in 2020 to 25.23% in 2021. Thereafter, it declined sharply to 9.81% in 2022 and entered negative territory from 2023 onwards. The negative ROIC values worsened significantly, falling to -58.95% in 2025. This indicates decreasing efficiency in utilizing invested capital to generate returns, correlating with the negative NOPAT and increased invested capital previously noted.

Overall, the data depicts a period of strong growth in profitability and capital investment up to 2021, followed by a sharp downturn in operating earnings and a less efficient use of capital. The negative profitability and declining ROIC in the most recent years imply challenges in operational performance and potential issues with the returns generated from invested resources. The reduction in invested capital after 2023 may reflect strategic adjustments aimed at mitigating these challenges.

Operating Profit Margin (OPM)

The operating profit margin exhibited significant volatility over the periods analyzed. Initially, it increased from 12% to a peak of 23.61% by March 31, 2021. However, this positive trend was short-lived, as the margin sharply declined thereafter, turning negative to -18.92% by March 31, 2023. The deterioration continued in subsequent years, reaching -67.74% and further declining to -77.92% by March 31, 2025, indicating substantial declines in operational profitability.

Turnover of Capital (TO)

The turnover of capital ratio showed a general declining trend from 1.07 in March 2020 to a low of 0.39 by March 2023, suggesting reduced efficiency in utilizing capital to generate revenue. There was a mild recovery observed in the last two years analyzed, improving to 0.5 and 0.73, respectively. Despite this partial rebound, the turnover remains substantially below earlier levels, reflecting persistent challenges in capital utilization.

1 – Effective Cash Tax Rate (CTR)

This metric remained consistently high throughout the periods, fluctuating around the low 90s percentile initially, with values of 91.02%, 93.87%, and 91.53% through March 2022. From March 2023 onwards, this rate stabilized at 100%, indicating that the company consistently paid close to or the full effective cash tax each year under review.

Return on Invested Capital (ROIC)

Return on invested capital mirrored the trend observed in operating profit margin, showing strong performance initially with 11.72% in 2020 and peaking at 25.23% in 2021. Following this, ROIC declined sharply, turning negative at -8.83% by 2023, then further worsening to -35.23% and -58.95% by 2024 and 2025, respectively. This pattern highlights a deteriorating ability to generate returns from invested capital, indicating operational and investment inefficiencies.

The financial data displays several significant trends over the fiscal years ending in March from 2020 to 2025. The information pertains to net operating profit before taxes, adjusted net revenue, and operating profit margin, all measured in thousands of US dollars or percentages.

Net Operating Profit Before Taxes (NOPBT)

There was a notable increase in net operating profit before taxes from 2020 to 2021, rising sharply from approximately 364 million to 834 million US dollars. However, in 2022, this figure declined substantially to around 448 million. Subsequently, the company experienced significant net operating losses beginning in 2023, with the losses deepening each year through 2025. The loss escalated to over 1 billion US dollars in 2023, and further intensified to nearly 4.4 billion US dollars by 2025, indicating a severe downturn in operating profitability.

Adjusted Net Revenue

Adjusted net revenue showed a generally upward trend across the observed periods, with some fluctuations. It increased from roughly 3.03 billion US dollars in 2020 to approximately 3.53 billion in 2021. A slight decline occurred in 2022 to about 3.48 billion, but thereafter, revenue grew markedly, peaking at 5.53 billion in 2023. There was a minor decrease in 2024 to around 5.34 billion, followed by a rise again to about 5.64 billion in 2025. Overall, the revenue trends suggest growing sales or business volume despite the subsequent profitability challenges.

Operating Profit Margin (OPM)

The operating profit margin aligns closely with the trends observed in net operating profit before taxes. Initially, the margin improved considerably from 12% in 2020 to nearly 24% in 2021, reflecting increased efficiency or profitability. This was followed by a sharp decline to about 13% in 2022. From 2023 onwards, the margin turned negative, indicating operating losses relative to revenue, with progressively worsening figures each year: -19% in 2023, dropping further to -68% in 2024, and reaching -78% by 2025. Such substantial negative margins signal deep operational difficulties despite rising revenue levels.

In summary, while adjusted net revenue demonstrates a positive trend with expanding sales or service volume over the period, the company’s operational profitability deteriorates sharply after 2021. The drastic negative swings in net operating profit before taxes and operating profit margin from 2023 forward suggest escalating losses and potential operational inefficiencies or cost management challenges that merit close attention.

Adjusted net revenue

The adjusted net revenue demonstrates an overall increasing trend from 3,030,733 thousand US dollars in 2020 to a peak of 5,528,000 thousand US dollars in 2023, representing significant growth over the four-year period. However, a slight decline is observed in 2024, with revenue decreasing to 5,337,700 thousand US dollars, followed by an increase again in 2025 to 5,640,100 thousand US dollars. This pattern indicates strong revenue growth with minor fluctuations in the later years.

Invested capital

The invested capital shows substantial variability throughout the observed periods. It starts at 2,825,883 thousand US dollars in 2020 and increases steadily to 4,181,680 thousand US dollars in 2022. A sharp rise occurs in 2023, with invested capital reaching 14,060,600 thousand US dollars, which is more than three times the previous year's amount. Subsequently, the capital investment declines to 10,727,600 thousand US dollars in 2024 and further decreases to 7,701,100 thousand US dollars in 2025. This large fluctuation suggests significant capital expenditures or acquisitions followed by a period of capital reduction or asset divestiture.

Turnover of capital (TO)

The turnover of capital ratio, representing the efficiency of invested capital in generating revenue, declines over the period with some recovery towards the end. It begins at 1.07 in 2020 and slightly improves to 1.14 in 2021. Then it markedly decreases to 0.83 in 2022 and falls sharply to a low of 0.39 in 2023, reflecting reduced efficiency in capital utilization coinciding with the peak in invested capital. In 2024 and 2025, the ratio increases to 0.50 and 0.73 respectively, indicating a partial recovery in the effective use of invested capital towards generating revenue.

Summary

The company exhibits strong growth in adjusted net revenue overall, despite some short-term fluctuations. The invested capital experienced significant volatility with a major increase in 2023 followed by a considerable reduction in subsequent years. The turnover of capital ratio indicates an initial decline in capital efficiency during the period of peak investment, followed by improvements as invested capital decreases. These trends suggest a capital-intensive expansion phase followed by efforts to optimize asset utilization and improve capital efficiency.

The financial data reveals notable fluctuations in key financial metrics over the examined period. These items include cash operating taxes, net operating profit before taxes (NOPBT), and the effective cash tax rate (CTR).

Cash Operating Taxes

Cash operating taxes showed a rising trend from 2020 to 2021, increasing from $32,663 thousand to $51,128 thousand. There was a decline in 2022 to $37,943 thousand, followed by a sharp increase in 2023 reaching $195,321 thousand. Subsequently, a gradual decrease is observed in the next two years, with values of $163,663 thousand in 2024 and $145,564 thousand in 2025.

Net Operating Profit Before Taxes (NOPBT)

NOPBT exhibited significant volatility. Initially, it rose markedly from $363,773 thousand in 2020 to $833,828 thousand in 2021. This was followed by a decrease to $447,988 thousand in 2022. A pronounced decline occurred in 2023, resulting in a negative NOPBT of -$1,045,668 thousand. The negative trend deepened further with values of -$3,615,930 thousand in 2024 and -$4,394,572 thousand in 2025, indicating substantial operating losses before taxes in the latter periods.

Effective Cash Tax Rate (CTR)

The effective cash tax rate decreased from 8.98% in 2020 to 6.13% in 2021, with a slight increase to 8.47% in 2022. Data for subsequent periods is unavailable, which could be related to the negative operating profits reported after 2022, potentially resulting in no recorded cash taxes or unreliable tax rate calculations.

Overall, while cash taxes initially increased, they eventually declined after a peak in 2023, possibly due to the growing operating losses seen in recent years. The substantial negative NOPBT values from 2023 onwards suggest challenges affecting profitability, which likely impacted the company’s tax obligations as reflected in the missing effective cash tax rate data for those periods.