Greetings, welcome to the Take-Two Interactive Software fourth quarter fiscal year 2014 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hank Diamond, Senior Vice President of Investor Relations. Thank you.
Good afternoon. Welcome, thank you for joining Take-Two's conference call to discuss its results for the fourth quarter and fiscal year 2014, ended March 31st, 2014. Today's call will be led by Strauss Zelnick, Take-Two's Chairman and Chief Executive Officer, Karl Slatoff, our President, and Lainie Goldstein, our Chief Financial Officer, who will be available to answer your questions during the Q&A session following our prepared remarks. Before we begin, I'd like to remind everyone that the statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us. We have no obligation to update these forward-looking statements. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors.
These important factors are described in our filings with the SEC, including the company's annual report on Form 10-K for the fiscal year ended March 31st, 2013, and Form 10-Q for the fiscal quarter ended December 31st, 2013. I'd also like to note that unless otherwise stated, all numbers we will be discussing today are non-GAAP. Please refer to our earnings release for a GAAP to non-GAAP reconciliation and further explanation. Our earnings release and filings with the SEC may be obtained from our website at www.take2games.com. Now I'll turn the call over to Strauss.
Thanks, Hank. Good afternoon, thanks for joining us today. Fiscal 2014 was a record-breaking year for Take-Two. Rockstar Games' Grand Theft Auto V reached $1 billion in sales faster than any entertainment release in history. NBA 2K14 enjoyed the franchise's strongest launch. Borderlands 2 became 2K's top-selling title, and our digitally delivered revenue grew to its highest level ever. As a result of these achievements, we generated record revenue, earnings, and cash flow for our shareholders. We ended the year with nearly $1 billion in cash after spending $277 million to repurchase our stock at a meaningful discount to today's share price. The highlight of our fiscal year was the worldwide launch of Grand Theft Auto V. This extraordinary title, which received more than 300 perfect scores, illustrates Rockstar Games' unmatched ability to deliver creative excellence.
Grand Theft Auto V has been a commercial blockbuster that shattered numerous entertainment industry records. To date, the title has sold in more than 33 million units worldwide and continues to attract new fans. Rockstar Games is hard at work on their upcoming lineup, and we're excited about what they have in store for the new generation of systems this fiscal year. In sports, it's a monumental achievement to win a championship two years in a row. 2K and Visual Concepts have done just that for 13 consecutive years by consistently delivering the highest-rated and top-selling basketball video game. NBA 2K14 was our first next-generation title and already has surpassed NBA 2K13 as the top-performing release in the franchise's history, with sell-in of more than six and a half million units to date.
The title has dominated next-generation sports sales, surpassing both FIFA and Madden as the third highest selling title of any genre on PS4 and Xbox One in the U.S., according to the NPD Group. Borderlands 2, which launched in September 2012, continued to be a significant contributor to our results. The title was the top-selling release in the history of 2K, with over nine million units sold to date. An important driver of Borderlands 2's success has been its superb array of add-on offerings. During fiscal 2014, 2K released eight new downloadable content packs for the title as well as a Game of the Year edition. The Borderlands franchise was launched less than five years ago and has quickly become one of the most beloved brands in interactive entertainment. We look forward to expanding it with new offerings in the current year.
Our fiscal 2014 results also benefited from the successful launch of WWE 2K14 and continuing demand for Grand Theft Auto IV or BioShock Infinite, which has now sold in more than six million units, and offerings for Sid Meier's Civilization V. The February release of Civilization V, the Complete Edition, marked the final offering for this title, which has sold in over five million units and was supported by two critically acclaimed expansion packs, along with a selection of downloadable content. The Civilization franchise will move forward this fall with the launch of Civilization: Beyond Earth. Creating opportunities to drive ongoing engagement with our titles is a key strategic focus for our company, and we've started to generate significant revenue and profits from recurrent consumer spending, including virtual currency, downloadable add-on content, and online gaming.
During fiscal 2014, recurrent consumer spending accounted for nearly 50% of our record $435 million in digitally delivered revenue and approximately 75% of its growth. Revenue from Grand Theft Auto Online outperformed our expectations in the fourth quarter and was the single largest contributor to our digitally delivered revenue in the fiscal year. More than 70% of those who have played "Grand Theft Auto V" while connected to the internet have played "Grand Theft Auto Online." Rockstar Games has supported this vibrant universe with additional content, including the Valentine's Day Massacre Special, the Business Update, and today's release of the High Life Update, and has much more to come. Rockstar Games has also given players tools to create and publish their own in-game content. As a result, players have created over seven million pieces of content for "Grand Theft Auto Online" to date.
We look forward to the future of the ever-evolving world of "Grand Theft Auto Online." Online play by fans of our basketball franchise, including multiplayer gaming, grew significantly with the release of "NBA 2K14" and was a key contributor to growth in recurrent consumer spending during the past fiscal year. Sales of the game's virtual currency increased more than 150% over "NBA 2K13" as players continue to customize their experience and deepen their engagement with the NBA 2K brand. Add-on content was also an important driver of growth in recurrent consumer spending. In addition to "Borderlands 2," we released successful downloadable offerings for "BioShock Infinite," "Sid Meier's Civilization V," and "WWE 2K14." We'll continue to support many of our new releases with immersive add-on content. Our online projects major contributed to growth in recurrent consumer spending.
In particular, usage and player engagement with "NBA 2K Online" continue to gain momentum, and it's now the number 1 PC online sports game in China with 19 million registered users. Full game downloads across console, PC, and mobile platforms also help to drive growth in digitally delivered revenue. We're committed to providing our products on all relevant platforms, regardless of the screen size. During the past year, we released multiple titles for tablets and smartphones, including core titles such as "Grand Theft Auto: San Andreas," "XCOM: Enemy Unknown," and "NBA 2K14," along with a slate of offerings designed exclusively for these devices. Over the past several years, Take-Two has been transformed from a company that was dependent on one series into a financially strong, global interactive entertainment enterprise with numerous successful franchises encompassing a variety of genres.
Today, our company is defined by its top creative talent, unwavering commitment to quality, and world-class marketing that turns product launches into pop culture events. Our diverse portfolio of intellectual property includes 10 franchises with at least 1 to 5 million-unit selling release and more than 40 individual multimillion-unit selling titles. In addition, we've complemented our core release schedule with numerous successful offerings to drive recurrent consumer spending. Looking ahead, we have more than 10 unique next-generation titles in development, including unannounced releases planned for fiscal 2015. The successful evolution of Take-Two and its vast potential is reflected in our significant profit outlook for the current fiscal year, as well as our expectation for continued non-GAAP profitability every year for the foreseeable future. I'll now turn the call over to Karl.
Thanks, Strauss. Today, I'll provide an update on our robust development pipeline for fiscal 2015. On October 7th, Visual Concepts will enhance their unparalleled basketball legacy with the launch of "NBA 2K15" for PS3, PS4, Xbox 360, Xbox One, and PC. Last week, 2K announced that Oklahoma City Thunder superstar, four-time NBA scoring champion, and recently crowned 2014 NBA Most Valuable Player, Kevin Durant, will make his solo debut as the game's cover athlete. We're thrilled to have him aligned with our brand, which underscores 2K's commitment to continually strengthen the franchise through the integration of the NBA's best athletes. 2K has kicked off their pre-order campaign, and we're confident that "NBA 2K15" will once again set new benchmarks for sports realism and gameplay. Wrestling fans can look forward to a new annual release from our "WWE 2K" franchise, which promises to take the series to new heights.
This will be our first next-generation "WWE 2K" title and also the first in the series to leverage the development expertise of Visual Concepts, which has made "NBA 2K" a perennial favorite and one of our most successful franchises. This fall, 2K will launch "Evolve" for Xbox One, PS4, and PC. Developed by Turtle Rock Studios, the creators of the cooperative shooter classic "Left 4 Dead," "Evolve" is a new intellectual property that blends first-person and third-person shooter action with cooperative and competitive multiplayer, resulting in a fast-paced and deeply fun entertainment experience. Set on a frontier planet on the edge of the galaxy, players will have the opportunity to be one of four hunters, each with their own special abilities, who will work together to fight a powerful, constantly evolving, player-controlled monster in a unique four versus one gameplay experience.
The media's response to "Evolve" has been very positive, with GameSpot declaring, "Evolve is one of the most unique ideas we've seen in a while, and a well-executed one at that. Definitely one to watch." Entertainment Weekly writing, "Evolve feels like a real evolution of the co-op shooter genre." Also this fall, "Borderlands: The Pre-Sequel" will be available for the Xbox 360, PS3, and PC. For the first time in the series, "Borderlands: The Pre-Sequel" transports players to Pandora's moon, where they will experience intense gravity-bending gunfights using an array of all-new weapons and loot. Co-developed by Gearbox Software and 2K Australia, the title takes place in between the stories of the original "Borderlands" and "Borderlands 2," as players take control of Handsome Jack's four lieutenants and experience the fan favorite villain's rise to power.
Borderlands: The Pre-Sequel" will continue the franchise's tradition of innovative cooperative multiplayer action, allowing players to drop in and drop out of the game online or to play together via split screen. The Borderlands universe has become one of our company's most popular series, and we're thrilled to provide its passionate and dedicated fans with even more ways to experience its incredible gameplay. Firaxis Games will also send players into space this fall with the launch of "Sid Meier's Civilization: Beyond Earth" for PC, a new science fiction-themed entry into the award-winning franchise that has entertained audiences for nearly a quarter of a century and sold in more than 24 million units worldwide. "Beyond Earth" features the core and tactical elements for which the series is famous, while propelling players beyond the traditional timeline of the Civilization game by exploring humanity's future on an alien world.
For the first time, players will lead factions divided by contrasting cultures and evolve their new civilizations to reflect their chosen destinies. Players will experience an array of new gameplay possibilities in an alien world that will change the very identity of each faction based on the choices they make. I'm pleased to share that "Beyond Earth" will be featured on the cover of the July issue of PC Gamer magazine, which will include an in-depth preview of the title. "Evolve," "Borderlands: The Pre-Sequel," and "Sid Meier's Civilization: Beyond Earth" were featured last month at PAX East in Boston. This annual event provides consumers with the opportunity to meet some of our creative talent and get hands-on time with our new titles. The response was fantastic, with thousands of fans coming to 2K's booth each day, many standing in line for over three hours just to see our games.
IGN's readers voted 2K as having the best booth of the show. Entertainment Weekly, Game Informer, and Kotaku each listed our titles among their favorites at PAX. 2K experienced similar fervor at previous PAX shows for titles such as "Borderlands 2," "BioShock Infinite," and "XCOM: Enemy Unknown," which helped set the stage for their successful launches. Next month, 2K will have a large presence at E3, featuring many of their upcoming releases. We encourage you to stop by our booth and see how we'll build on our trend of delivering the most groundbreaking offerings in our industry. Rockstar Games will continue to support both "Grand Theft Auto V" and "Grand Theft Auto Online" with new content updates, including the upcoming launch of cooperative heist missions, which will allow players to work together in new ways for substantial rewards.
In addition, Rockstar Games plans to release more updates throughout the spring, holiday-themed event updates, and story mode content. We'll have more to share about our unannounced fiscal 2015 releases in the coming months. Fiscal 2015 is poised to be another strong year for our organization, highlighted by a diverse array of the highest quality new releases and innovative offerings that drive incremental profits from recurrent consumer spending. Our positive outlook extends well beyond this fiscal year as we enter an exciting new chapter for Take-Two. In closing, I'd like to join Strauss in thanking all of our colleagues around the world for delivering a record year and for their dedication to our continued success. I'll now turn the call over to Lainie.
Thanks, Karl, and good afternoon, everyone. Today, I'll review our results for the fourth quarter and fiscal 2014, and then discuss our outlook for the first quarter and fiscal 2015. All of the numbers I'll be providing today are non-GAAP results from continuing operations, and all comparisons are year-over-year, unless otherwise stated. I've carefully provided the reconciliation of our GAAP to non-GAAP measurements. Starting with our results for the fiscal fourth quarter, net revenue decreased 23% to $233.2 million as last year's fourth quarter benefited from the release of "BioShock Infinite," and we had no significant releases during this year's fourth quarter. This exceeded our outlook range of $170 million-$200 million due primarily to the continued strong performance of the "Grand Theft Auto" series. Digitally delivered revenue grew 51% and accounted for $122.3 million of net revenue.
The largest contributors to digital sales were the "Grand Theft Auto" series, the "NBA 2K" franchise, and offerings for "Borderlands 2." Approximately 60% was derived from recurrent consumer spending. Catalog sales accounted for $75.7 million of net revenue led by "Borderlands 2," "BioShock Infinite," the "Grand Theft Auto" series, and "Civilization V." Gross margin decreased 1.9 percentage points to 47.7% due primarily to higher internal royalties. Operating expenses were $88.4 million, down by $16.7 million, due primarily to lower marketing expense. Interest and other expense was $2.2 million, and non-GAAP net income was $21.5 million, or $0.21 per share, as compared to $42.9 million, or $0.38 per share in fiscal fourth quarter 2013. This result exceeded our outlook range of breakeven to $0.10 per share.
On a GAAP basis, we reported revenue of $195.2 million and loss from continuing operations of $30.8 million or $0.40 per share. Turning now to our results for the full year. Net revenue increased 97% to a record $2.4 billion. This growth was driven primarily by the extraordinary success of Grand Theft Auto V. Revenue from digitally delivered content grew 65% and accounted for $435.1 million of net revenue. The largest contributors to digital sales were offerings for the Grand Theft Auto series, Borderlands 2, the NBA 2K franchise, Civilization V, and BioShock Infinite. Nearly 50% was derived from recurrent consumer spending. Gross margin decreased 0.7 percentage points to 41.5% due primarily to higher internal royalties. Operating expenses were $468.5 million, up by $1.7 million due to higher personnel expenses in our development studios, higher professional fees and IT expenses, and higher research and development costs.
Which were offset by lower selling and marketing expense and the absence of the $15 million one-time contractual obligation recognized in fiscal 2013. Interest and other expense was $10.8 million, and non-GAAP net income was $510.7 million or $4.26 per share as compared to $33.1 million or $0.36 per share in fiscal 2013. On a GAAP basis, we reported revenue of $2.4 billion and income from continuing operations of $361.7 million or $3.20 per share. Turning to some key items from our balance sheet on March 31, 2014 as compared to December 31, 2013. Our cash balance decreased to $935.4 million. Our accounts receivable balance decreased to $53.1 million, primarily reflecting the collection of receivables associated with our third quarter releases and holiday sales.
Inventory decreased to $29.8 million due primarily to shipments for replenishment orders of Grand Theft Auto V. Software development costs and licenses increased to $225.7 million, reflecting the development efforts around our pipeline of upcoming releases. Now I will review our financial outlook for the first quarter in fiscal 2015, which is provided on a non-GAAP basis. Starting with the full year, our initial outlook is for non-GAAP net revenue to range from $1.35 billion to $1.45 billion and non-GAAP net income to range from $0.80 per share to $1.05 per share. Turning to the details of our full-year outlook. The majority of our revenue is expected to come from our slate of announced new titles, including NBA 2K15, Evolve, WWE 2K15, Borderlands: The Pre-Sequel, and Civilization: Beyond Earth, new releases that we have not yet announced, and catalog sales led by the Grand Theft Auto series.
We expect the revenue breakdown from our labels to be roughly 45% from Rockstar Games and 55% from 2K. We expect the geographic revenue split to be about 55% U.S. and 45% international. We expect gross margins in the mid to upper 40s. Total operating expenses are expected to increase by approximately 14%, driven primarily by higher selling and marketing expense to support our fiscal 2015 release schedule. Selling and marketing expense is expected to be about 20% of net revenue based on the midpoint of our outlook range. We project interest and other expense of approximately $9 million, tax expense of about $33 million, and weighted average fully diluted shares of approximately 118 million.
This reflects weighted average basic shares of approximately 81 million, 11 million participating shares for unvested stock-based compensation awards, and 26 million shares representing the potential dilution from our convertible notes under the if-converted method of accounting. As a result of working capital needs, we currently expect our operations to use a modest amount of cash in fiscal 2015. We expect to generate cash from operations in fiscal 2016 and to be net cash flow positive over these two fiscal years. Turning to the first quarter, we expect non-GAAP net revenue to range from $120 million-$135 million and non-GAAP net loss to range from $0.25-$0.35 per share. The majority of our revenue in the first quarter is expected to come from "NBA 2K14," the "Grand Theft Auto" series, and "Borderlands 2." We expect first quarter gross margins in the high 50s.
Total operating expenses are expected to increase by approximately 4% from the prior year's first quarter, primarily due to additional staffing at our studios to support our release schedule. Selling and marketing expense is expected to be about 30% of net revenue based on the midpoint of our outlook range. Our first quarter outlook also reflects interest in other expense of approximately $2 million, no tax expense, and weighted average shares of approximately 79 million. Take-Two's record results for fiscal 2014 were due to our global organization's ability to deliver the highest quality interactive entertainment within a disciplined fiscal framework. We have entered the current year with the strongest financial foundation in the history of our company. Take-Two is well-positioned to pursue its numerous creative endeavors while also continuing to generate positive results for shareholders both in fiscal 2015 and over the long term.
Thank you. Now I'll turn the call back to Strauss.
Thanks, Karl and Lainie. On behalf of our entire management team, I'd like to thank our colleagues for delivering a record year and setting the foundation for our consistent long-term success. To our shareholders, I want to express our appreciation for your continued support. We'll now take your questions. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Eric Handler with MKM Partners. Please proceed.
Yes, thanks for taking my question. Two things. First, when you look at your cash on hand, you're now sitting at about over $8 of cash, and I think investors were pleased that you guys returned some of the capital this year through your buybacks in the third quarter. Fourth quarter, there was no buybacks. Given all the cash that you're sitting on and understanding that you're not expecting to generate any positive free cash flow in fiscal 2015, is there anything in particular that you feel a need to just sit on that level of cash right now?
Thanks, Eric, for your question. We've said before about the cash balance, and this is a high-class problem to have, is that there are at least three potential uses. One is to support our organic growth. Our history of organic growth around here is pretty great, actually. If you just look over the course of a few years, the bulk of our growth indeed has been organic. In certain instances, for example, our Asia initiatives, we turned to partnerships to make sure that we could both mitigate the risk and fund those growth opportunities at a time when we were capital constrained. Thankfully, those constraints are lifted. Those opportunities have largely turned out to be very beneficial, and now we are in a position to finance more organic growth internally. Secondly, there's the opportunity for inorganic growth driven by acquisitions.
We've been really selective about acquisitions, and I don't expect that our discipline will be in any way reduced. Historically, when we've acquired something, is the intersection of a high-quality team with high-quality owned intellectual property, and that is the lens through which we tend to look at the world. We're not interested in pie in the sky deals. We are only interested in accretive deals. Again, our balance sheet now gives us the opportunity to look at those deals in a more fulsome way. Finally, in the last year, we have demonstrated a desire to return cash to the shareholders by buying back $277 million of our stock. We do have an open authorization still for share repurchase, and we'll contemplate that as well. There are any number of options in front of us, and that's the palette from which we can choose.
It's a nice position to be in.
Okay, just as a follow-up, more for Lainie. Lainie, your G&A in the fourth quarter was $51 million. That seems to be a line item that fluctuates quite a bit quarter-to-quarter. How should we think about that line as we sort of progress through to FY 2015?
Usually, G&A stays pretty flat from quarter-to-quarter and will probably be in line with last year's balance. The way to look at it, though, it can depend on if there's a one-time write-off of something. Last year in 2013, we had a one-time $15 million contractual obligation that we had written off during that period. Otherwise, it should be pretty flat to last year's number.
Okay. Thank you.
Thank you. Our next question comes from Justin Post with Merrill Lynch. Please proceed.
Thank you. Obviously, you have quite an installed base for Grand Theft Auto V and not a lot about your plans there. I'm sure Rockstar is part of that, but what can you tell us about how digital is tracking versus your expectations and how that has factored into your guidance for next year? Bigger picture, next year, 2015, is expected to be a big year for the console cycle, so next calendar year. How are Rockstar and Take-Two approaching what could be finally a growth year for software sales next calendar year? Thank you.
Yeah, I think when you talk about digital, I assume you mean recurrent consumer spending related to Grand Theft Auto Online. We've said is that continues to be a very good story indeed, and if anything, has exceeded our expectations. It's early days yet, and there's a lot of great content out there. There's great engagement. We're all anxious to see how that develops. By any standard, it's a very good story, and Grand Theft Auto Online is a big generator of recurrent consumer spending for us. I'm glad you're optimistic about what the next-gen rollout looks like in the coming calendar year. We tend to be highly optimistic as well. We have more than 10 titles in development for next gen.
We've had a great experience with our basketball title, which was the number 1 sports title for next gen and the number 3 title overall for next gen from last fall. We've announced a number of titles. We've said we have more titles to announce for this fiscal year and for the future. The fact that the install base looks sound and growing is potentially a benefit for us. As far as Rockstar goes, we've confirmed that they're hard at work on their current lineup, and we're very excited about what they have in store for next-gen systems in this fiscal year.
Great. Maybe one follow-up. Will Rockstar have a presence at E3 this year?
Hi, Justin, it's Karl. At this point, Rockstar hasn't announced that they're going to be attending E3.
Thank you.
Thank you. Our next question comes from Daniel Ernst with Hudson Square Research. Please proceed.
Yes, good evening. Thanks for taking my call. A couple questions, if I might. First, if you look at your lineup for this coming year, you have a very balanced portfolio of titles coming out, which is a nice thing following up a big blockbuster year with GTA. Without giving guidance beyond that, is that kind of a balanced portfolio approach that you can have in subsequent years where you don't have as big a swings in between the GTA years? Can you sort of give us a sense of how you're timing and allocating resources to have a more consistent earnings schedule? Then as a related question, if you look at your R&D budget, including capitalized expenses, how much of that is dedicated towards new IP versus putting out new versions of previously successful IP? Thanks.
Thanks, Daniel. Look, I think you've identified the way the year is penciling out, and it's a reflection of our strategy. Historically, what we found when we came to the company some years ago was a company that was dominated by one franchise and operated within one business model. Everyone knows what the franchise was, and the business model was you create a game, and you put it in a box, and you ship it, and then maybe you ship a budget edition or a Game of the Year Edition, and perhaps you ship some expansion packs. Well, in the past seven years, we've launched a multiplicity of new franchises. The company now has 10 franchises that have each sold at least five million units for an individual release.
In terms of business model, we, and frankly, the rest of the industry, have diversified so that we have revenue that comes after the initial release of the game that's not related just to the sale of the full game, whether that's digital or physical revenue, and we call that recurrent consumer spending. What's exciting about the coming year and subsequent years is it's sort of both of those features that we're releasing a balanced portfolio of franchises year in, year out, in addition to new intellectual property that we hope will become new franchises.
We're aggressively pursuing this new business model, which means that we make a game available physically, we make it available digitally, we make downloadable content available when it makes sense, and when it makes sense, we allow consumers to engage in the game, both in terms of gameplay and in terms of spending money. We call that recurrent consumer spending, and that's become a very powerful engine here, both creatively and economically. Of course, we start with the creative engine, and then we move on to the economic engine. Lainie can answer your question about the balance sheet.
In the R&D, the capitalized and the expense, we haven't shared before the breakdown for new and both old IP, but both of our labels work on new IP and then old franchises all the time, that's all included in that balance.
Daniel, I will say, it's Karl talking. We've said this many times before that we have a very strong philosophy around here that you just can't come out and just re-release franchises over and over and over again. It's very important to us to constantly be reinvesting in new IP, that is a stated objective of our company. We don't feel comfortable just sitting on our accomplishments and not trying to push the bar forward, not only with them, with those franchises, but obviously coming out with new franchises as well. You've got to keep the pipeline going, that's the only way to do it.
Great. That's great, Karl. If I could just have one other question. If you look at your planned split for domestic versus international, 55/45, a lot of media internet companies, it's kind of flip-flopped from that. What are the prospects of moving towards having a bigger presence overseas than you do domestically?
We've already moved that number meaningfully in the past few years, remember, that includes our sports revenue, which does tend to skew for us still towards the U.S. We've made a big push internationally by aggressively focusing on Asia, with headquarters in Singapore and offices over much of Asia. We mentioned the progress we've made with "NBA 2K Online," that's just one reflection of the progress we've made in the market. International, we are a worldwide company, international revenue should continue to increase.
Great. Thank you.
Thank you. Our next question comes from Arvind Bhatia with Sterne Agee. Please proceed.
Yeah, thank you. I'd like to say congratulations on putting up another solid quarter. I was wondering if you might be able to give us some more color on digital that's baked into your fiscal 2015 guidance. Should we be thinking in terms of the percentage, I think about 20% of your fiscal 2014 was digital, I think about 18%-19%. Is that the right way to think about it? Then, I know you had NBA 2K14 on the Next Gen. Are you able to tell us what percentage of your games on that game were full game downloads, what you're hearing maybe from other companies? Lastly, in the fiscal 2015 slate, the unannounced titles, can you talk to how dependent that is on AAA titles versus, I don't know, AA or more average type titles? Thank you.
Yeah. In terms of the percentage of revenue attributable to digital distribution, it's a work in progress. There's no doubt in the year where we initially launched Grand Theft Auto V shipping 33 million units, that's a year that's going to skew to physical distribution. As revenues are lower, one could imagine digital revenues being somewhat higher. That remains to be seen, and it depends on a release schedule and how our recurrent consumer spending develops. I wouldn't want you to extrapolate from this past fiscal year to the subsequent fiscal year. In terms of a breakout for NBA, full game downloads versus virtual currency, we haven't broken that out. In terms of our unannounced titles, it's tempting to be flippant and say everything we do is going to be a hit.
We know that as much as we'd love to say that isn't always the case, but it is very much our goal. We really only work on AAA titles, and our teams only work on titles they're passionate about, and they only work on titles they believe can and will be massive hits. We are right much more often than we're wrong. According to Metacritic, we have the highest Metacritic scores for the past six years, including this past year. That's a reflection of both that objective and the execution of the objective. That doesn't guarantee that everything we'll do in the coming year will be a hit, but that certainly is our goal. We don't have double A titles. We don't have single A titles. We only work on triple A titles.
It is more than one triple A title that's in the guidance?
Yes.
Okay. Thank you, guys.
Thank you. Our next question comes from Drew Crum with Stifel. Please proceed.
Okay. Thanks. Good afternoon, everyone. I wonder if you could talk about the confidence in the fiscal 2016 positive cash flow guidance that you mentioned, Lainie. Separately, Strauss, could you talk about, maybe it's better asked to the studios, but you've got Evolve on new-gen and Borderlands sequel on past-gen. What's the philosophy behind not making them available on both generations of systems? Thanks.
To our outlook for fiscal 2016, going forward where we say that we plan to be profitable in the foreseeable future, it's based on a multi-year plan which projects ongoing profitability for the company. In 2016, it also shows positive cash flow. In addition, our development pipeline, which extends out further, gives us confidence in our ability to remain profitable over the long term.
Lainie, are there any working capital items or one-time items that are influenced in that guidance?
When we look at 2015, we were growing our capitalized software balance to support our exciting pipeline of titles. When we look at the timing of our new releases, which is why we're modestly going to be down in 2015. That cash will be collected in 2016 as well as the profitability ongoing in 2016 will affect the overall two-year cash flow.
Okay.
Drew, it's Karl. In terms of Evolve and Borderlands for next-gen, current-gen. For Evolve, this is a title we're obviously extremely excited about. We've gotten a lot of great press about it. There's a great buzz. There'll be some more about it on E3, and hopefully you get a chance to check it out because it really is a fantastic title. The bottom line is the strategy there is that it's a next-gen game built on a next-gen engine, and it's meant for next-gen. To truly take advantage of what the game has to offer, and I think you'll understand more about that as you get to know the game better. I think you'll understand what we mean, because it really is something that we think is going to take the cooperative and competitive multiplayer to a new level.
It really fits best, the experience will be best on next-gen consoles. In terms of Borderlands, really the opportunity there is you've got an enormous installed base, and you've got a platform where there's a lot of folks out there, they're still hungry for content. There's not a lot of other content coming out that's exclusively for, or specifically for current-gen consoles. We just saw a market opportunity, and we think that our title fits very well in that regard.
Okay. Thanks, guys.
Thank you. Our next question comes from Timothy O'Shea with Jefferies. Please proceed.
Yeah. Hi. Thanks for taking my question. Just to date, all the fiscal 2015 titles are coming out of 2K. Just wondering the likelihood of seeing a Rockstar title in fiscal 2015. I may have missed exactly how much full-year revenue Lainie said to expect from Rockstar, but I think it was 45%. Thanks.
Yeah. We basically have said that Rockstar is hard at work on their lineup, and there's news to come for this fiscal year, and that we expect Rockstar to account for about 45% of the year's revenue.
Fair enough. Thanks.
Thank you. Our next question comes from Todd Mitchell with Brean Capital. Please proceed.
Hi, this is Yung Kim for Todd. Just a quick question in regards to the balance sheet. There were some step-ups in both restricted cash and for accrued expenses. Could you walk us through what drove those two?
Restricted cash balance of about $194 million is for payment of certain software development royalties. Those are included in our accrued expenses at the end of the year.
Great. Thank you.
Our next question comes from Neil Doshi with CRT Capital. Please proceed.
Great. Thanks, guys. Karl, just another question on Evolve. It's going to face probably some tough competition this fall in the shooter category. How should we think about the opportunity for this franchise? Maybe a question for Strauss. Google and Apple are now trying to strike deals with developers for exclusivity. How do you think this impacts the industry and impacts Take-Two's business? Thank you.
Thanks, Neil. In terms of Evolve, you're right. There are a lot of products coming out this fall, and I think it's going to be a really great year for the entire industry. In general, I think that's a really good thing because a lot of people will be in the stores, and they'll be talking about games, and they'll be buying a lot of games. We happen to believe that Evolve is so different and unique that the game will stand on its own. In general, we understand that there is the notion of consumer wallet share out there, and people only have a certain amount of money that they're willing to spend on entertainment experiences. We really don't see ourselves as specifically competitive with any other company or any other game, with the exception perhaps maybe in the sports business.
In general, we don't really fear the competition in that way, and we think that this game specifically will stand out in a crowd. We actually like the fact that there are a lot of games coming out because, again, it gets people in the stores, and it gets people buzzing about the industry.
This is Strauss. In terms of Google, Apple, and others perhaps seeking developer exclusivity, look, it remains to be seen. Our stated strategy is to make our products widely available on whatever platforms consumers are using, and we're flexible about the nature of the platform, the size of the screen, as well as the business model. We're not rule-based in that way. Generally speaking, we've looked for wider rather than narrower availability. If for some reason the business evolved differently, we would evolve with it. I doubt that it's going to become a business of platform exclusives. That would be costly, and it's hard to imagine that would really benefit consumers. The analogy is pay television.
In the early days of pay television, there was an awful lot of exclusive content and exclusive deals, and pretty quickly the pay television services determined that didn't make a whole lot of sense. I'm skeptical that that's how the business will develop, but if it does develop that way, we'll take the opportunities as we find them.
Thank you. There are no further questions. I would like to turn the floor back over to management for closing comments.
Well, I want to thank you first of all for joining us today and just take another moment to express gratitude to our entire team worldwide, many of whom are on the call today. We've had an amazing time of development and growth and success driven, of course, first and foremost by the incredible creative efforts of our teams at both Rockstar and 2K. We're immensely grateful to the folks who show up at work every day and try to think out of the box and do something that's never been done before. We're equally grateful to our marketing, distribution, and business teams who make sure that we get the very best out of those products as we market and distribute them around the world and then as we run this business in a very high-class way.
I think all those efforts are reflected in the results that you see. It's a lot of work every day, but it's work that we're passionate about and that we love, and we very much appreciate all of our shareholders' support, and we endeavor to deliver another great year for you. Thanks very much.
This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.