AGOURA HILLS, Calif.(BUSINESS WIRE)THQ Inc. (NASDAQ: THQI) 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.
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.”