Greetings, and welcome to the Take 2 Interactive Software 4th Quarter Fiscal Year 2014 Earnings Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hank Ziamond, Senior Vice President of Investor Relations. Thank you.
Good afternoon. Welcome, and thank you for joining Take Two's conference call to discuss its results for the fourth quarter fiscal year 2014. Ended March 31, 2014. Today's call will be led by Strauss Zelnick, Take 2's Chairman and Chief Executive Officer Carl Sladoff, our President and Lainie Goldstein, our Chief Financial Officer. We will be available to answer your questions during the Q and 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. Important factors are described in our filings with the 13 and Form 10 Q for the fiscal quarter ended December 31, 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 fee may be obtained from our website at www.take2games.com. And now, I'll turn the call over to Strauss. Thanks, Hank. Good afternoon, and thanks for joining us today.
Fiscal 2014 was a record breaking year for Take 2. Rockstar Games Grand Theft Auto Five reached $1,000,000,000 in sales faster than any entertainment release in history, NBA 2 K14 enjoyed the franchise's strongest launch. Borderlands 2 became 2 K'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 $1,000,000,000 in cash after spending $277,000,000 to repurchase our stock and 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. Grant Theft Auto5 has been a commercial blockbuster that shattered numerous entertainment industry records. To date, the title is sold in more than 3 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 champion 2 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 1st next generation title and already for past NBA 2k13 as the top performing release in the franchise's history, with selling of more than 6,500,000 units to date. Moreover, the title is dominated next generation sports sales, surpassing both FIFA and Madden as the 3rd highest selling title of any genre on PS4 and X 1 in the United States according to the NPD Group. Quarterlands 2, which launched in September 2012, continued to be a significant contributor to our results. The title is the top selling and release in the history of 2K with over 9,000,000 units sold into date.
Important driver of Borderlands 2 success of Bennett's superb array of add on offerings. During fiscal 2014, 2K released 8 new downloadable content pack for the title as well as a game of the Year edition. The Borderlands franchise was launched less than 5 years ago and has quickly become one of the most beloved brands and interactive entertainment. We look forward to expanding it with new offerings in the current year. Our fiscal 2014 results also benefited from successful launch of WWE 2K14 and continuing demand for Grand Theft Auto IV bioshock infinite.
Is now sold in more than 6,000,000 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 is sold in over 5,000,000 units and was supported by 2 critically acclaimed expansion packs, along with the selection of downloadable content. The Civilization franchise will move forward this fall with the launch of Civilization beyond Earth. Cluding 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 a consumer spending, including virtual currency, downloadable add on content, and online gaming. During fiscal 2014, recurrent consumer spending accounted for nearly 50 percent of our record $435,000,000 in digitally delivered revenue and approximately 75% of its growth.
Revenue from Grand Theft Auto Online outperformed our expectations in the 4th quarter and was a single large contributor to our digitally delivered revenue in the fiscal year. More than 70% of those have plagued Grand Theft Auto V while connected to the Internet have plagued Grand Theft Auto online. Rockstar Games have supported this vibrant universe with additional content, including the Valentine's Day massacre special, the business update, and today's release of the highlights 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 7,000,000 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 played by fans of our basketball franchise, including multiplayer gaming, grew significantly with the release of NBA 2 14 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 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 recurrence consumer spending. In addition to Borderlands 2, we released successful downloadable offerings BioShock Infinite, Sigmayer Civilization5 and WWE 2K14.
We'll continue to support many of our new releases with immersive add on content. Finally, our online projects major contributed to growth in recurrent consumer spending. In particular, usage and player engagement with NBA Fanline continue to gain momentum and it's now the number one PC online sports game in China with 19,000,000 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 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, K2 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 15,000,000 unit selling release and more than with numerous successful offerings generation titled Development, including unannounced releases planned for fiscal 2015. The successful evolution at Take 2 in its vast is reflected in our significant profit outlook for the current fiscal year as well as our expectation for continued non GAAP profitability every year the foreseeable future. I'll now turn the call over to Carl.
Thanks, Ralph. 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 the launch of NBA 2k15 for PS3, PS4, Xbox 360, Xbox 1, 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 Duran will make his solo debut as the game's cover athlete. We're thrilled to have him aligned with our brand, which underscores 2 K's commitment to continually strengthen 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 once again set new benchmarks for sports realism and gameplay. Westlake fans can look forward to a new annual release from our WWE UK franchise, which promises to take this series to new heights. This will be our 1st 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 X Plus 1, PS 4, and PC. Developified Turtle Rock Studios, the creators of the cooperative shooter classic, left for dead, Evolve as a new intellectual property that blends first person and third person shooter action with cooperative and competitive multi play, 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 1 of 4 hunters each with their own special abilities who will work together to fight palatable, constantly evolving player controlled monster in a unique 4 versus 1 gameplay experience. The media's response to evolve has been very positive with game spot declaring. Evolve is one of the most unique ideas we've seen in a while. A well executed one at that, definitely want to watch. In entertainment weekly writing, Evolff 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 a gearbox software in 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 4 lieutenants and experienced the fan favorite villains rise to power. Borderlands the pre sequel will continue to franchise this tradition of innovative cooperative 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 dedicated fans with even more ways to experience its incredible gameplay.
For Access games will also send players to the space this fall with the launch of Sid Meier's Civilization, the On Earth for TC, 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 24,000,000 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 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 Direct will be featured on the cover of the giant issue of PC gamer magazine, which will include an in-depth preview of the title. Evolve Borderlands to pre SQL, concid Meier 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 2 k's booth each day, many standing in line for over 3 hours just to see our games. IDN's readers voted 2 k as having the best booth of the show and entertainment weekly, game informer, and Taku, each listed our titles among their favorites at PAX. Two k experienced similar fervor at previous back shows for titles such as Borderlands 2, BioShock Infinite and XCOM enemy unknown which helped set the stage for their successful launches. Next month, 2 K 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 5 and Grand Theft Auto Online with new content updates. Including the upcoming launch of cooperative HEIGHTS commissions, 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 theme by event updates, and story mode content. We'll have more to share about our unannounced fiscal 2015 releases in the coming months. Fiscal 2015 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 outlooks extend well beyond this fiscal year as we enter an exciting new chapter for Take 2. 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 Lane.
Thanks, Carl, and good afternoon, everyone. Today, I'll review our results for the fourth quarter fiscal 2014 and then discuss our outlook for the first quarter of the of 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 press release provides the reconciliation of our GAAP to non GAAP measurements. Starting with our results for the fiscal 4th quarter, Net revenue decreased 23 percent to $233,200,000 as last year's fourth quarter benefited from the release of BioShock incident, and we had no significant releases during this year's fourth quarter.
This exceeded our outlook range of $170,000,000 to $200,000,000 due primarily to the continued strong performance of the Grand Theft Auto Series. This rate of revenue grew 51 percent and accounted for $122,300,000 of net you. The largest contributors to digital sales were the Grand Theft Auto Series, the NBA 2K franchise, and offering support lands too. Approximately 60% was derived from recurrent consumer spending. Cadillac sales accounted for $75,700,000 of net revenue, led by Borderlands 2, BioShock Infinite, the Grand Theft Auto Series And Civilization V.
Gross margin decrease 1.9 percentage points to 47.7 percent due primarily to higher internal royalties. Operating expenses $88,400,000, down by $16,700,000 due primarily to lower marketing expense. Interest and other expense $2,200,000 and non GAAP net income was $21,500,000 or $0.21 per share as compared to $42,900,000 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 $195,200,000 and lost from continuing operations of $30,800,000 or $0.40 per share.
Turning now to our results for the full year. Net revenue increased 97 percent to record $2,400,000,000 This call is driven primarily by the extraordinary success of Grand Theft Auto V. Revenue from digitally delivered content grew 65% to dollars and accounted for $435,100,000 of net revenue. The largest contributors to digital sales were offerings to the Grand Theft Auto Series Fortilance II, the NBA 2K franchise, Civilization5, and BioShock incident. Nearly 50% was derived from recurrent consumer spending.
Gross margin decreased 0.7 percentage points to 41.5 percent due primarily to higher internal royalties. Operating expenses, $458,500,000,
up by
$1,700,000 due to higher personnel expenses and our development studios, higher professional fees, and IT expenses and higher research and development costs, which were offset by lower selling and marketing expense on the absence of the $15,000,000 one time contractual obligation recognized in fiscal 2013. Interest and other expense was $10,800,000, and non GAAP net income was $510,700,000 or $4.26 per share as compared to $33,100,000 or $0.36 per share in fiscal 2013. On a GAAP basis, we reported revenue of $2,400,000,000 and income from continuing operations of $361,700,000 or $3.20 per share. Turning to some key items from a balance feet and March 31, 2014 as compared to December 31, 2013. Our cash balance decreased to $935,400,000.
Accounts receivable balance decreased to $53,100,000, primarily reflecting the collection of receivable associated with the our third quarter releases and holiday sale. Inventory decreased to $29,800,000 due primarily to shipments for the punishment orders of Grand Theft Auto V. And software development costs and licenses increased to $225,700,000, reflecting the development efforts found our pipeline of upcoming releases. Now I will review our financial outlook for the first quarter 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 $1,350,000,000 to $1,450,000,000, 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 announcing titles, including NBA 2k15, Evolve WWE 2k15, for a land to 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 label to be roughly 45% from OXXO gains and 55% from 2K. We expect the geographic revenue split to be about 55% in United States and 45% international.
We expect gross margins in the mid to upper 40s. Total operating expenses are expected to increase by approximately 14 and 15 release schedule. Family 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 $118,000,000. This reflects weighted average basic shares of approximately $81,000,000, 11,000,000 participating shares for our unvested stock based compensation boards and 26,000,000 shares representing the potential revisions 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. However, we expect to generate cash from operations into fiscal 2016 and to be net cash flow positive over these 2 fiscal years. Turning to the first quarter, we expect non GAAP net revenue to range $120,000,000 to $135,000,000 and non GAAP net loss to range from $0.25 to $0.35 per share. The majority of our revenue in the first quarter is expected to come from NBA 2k14 to Grand Theft Auto Series and Borderlands 2. We expect 1st quarter gross margins in the high 50s.
Total operating expenses are expected to increase by approximately 4% in the prior year's first quarter, primarily due to additional staffing at our studios to support our reschedule. Selling and marketing expense is expected to be about 30% of net revenue based on the midpoint our outlook range. Our first quarter outlook also reflects interest and other expense of approximately $2,000,000, no tax expense and weighted average shares approximately $79,000,000. In closing, K2'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 any.
As a result, Take 2 is well positioned to pursue its numerous creative endeavors, while also continuing to generate positive results for shareholders both in this 2018 over the long term. Thank you. Now I'll turn the call back to Jeff.
Thanks, Carl and Lainie. On behalf of our entire management team, I'd like to thank our colleagues for delivering a record our appreciation for your continued support.
Now be conducting a A confirmation Our first question comes from Eric Handler with MKM Partners. Proceed.
Yes. Thanks for taking my question. Two things. First, when you look at your cash on hand, you're now sitting at about 8 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.
But fourth quarter, there was no buybacks. And 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 said before about the cash balance and this is a high class problem to have.
Is that there are at least 3 potential uses. 1 is to support our organic growth. And our history or 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. And in certain instances, for example, our Asia initiatives, we turned 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 that 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, what we've acquired when we've acquired something is the intersection of our high quality team with high quality owned intellectual property.
And that is the lens to which we tend to look at the world. And we're not stated in Pine And Sky deals, we are only interested in accretive deals. But again, our balance sheet now gives us the opportunity to look at those deals. In a more fulsome way. And finally, in the last year, we had demonstrated a desire to return cash to the shareholders by buying back $77,000,000 of our stock.
We do have an open authorization still for share repurchase, and we'll contemplate that as well. So are there any number of options in front of us and, that's the power from which we can choose. It's a nice position to be in. Okay. And then just as a follow-up more for Lainie, Lainie, your G and A in the 4th quarter was $51,000,000.
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 2 fiscal 15.
Do you, like, Gina usually stays pretty flat from quarter to quarter? And it'll probably be in line with, next next year's last year's balance. The, the way to look at it, though, is, you know, it can can depend on, if, you know, there's a one time write off or something in last year in the in the, in 2000 and we had a one time $50,000,000 contractual obligation that we have written off during that period. But 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 a quite quite an installed 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. And then bigger picture, next year 2015, it's expected to be a big year for the console cycle.
So next calendar year, how are Rockstar intake to approaching what could be finally a growth year for software sales next calendar year? Thank you. Yes, I mean, and so I think by when you talk about digital, I assume you mean recurrent consumer spending related to Grand Theft Auto Online. And, we've said as that continues to be a very good story indeed and 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. But by any standard, it's a very good story and Grand Theft Auto Online is a big generator recurrent consumer spending for us. And, I'm glad you're optimistic about what next gen, the next gen roll out looks like in the coming calendar year. We tend to be highly optimistic as well.
We have more than 10 titles in development for NexGen. We've had a great experience with our basketball title, which was number one sports title for NextGen and the number 3 title overall for NextGen from last fall. So, we've announced a number of titles. We said we have more titles to announce for this fiscal year and for the future. And, the fact that the installed 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 we're very excited about what they have in store for for next gen systems in this fiscal year. Great. Maybe one follow-up. Will will Rockstar have a presence at at e 3 this year? Hi, Justin.
It's Carl. At this point, roster hasn't announced that they're gonna 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 of questions if I might. First, 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 a big blockbuster year with GTA. Without giving guidance beyond that, is that kind of a a balanced portfolio approach that you could have in subsequent years where you don't have as big as swings in between the GTA years.
Can you sort of give us a sense of your how you're timing and allocating resources to have a more consistent earnings schedule? And then as a related question, if you look at your R and D budget including capitalized expenses. How much of that is dedicated towards new IP versus putting out new version of periods of successful IP? Thanks.
Yes. Thanks, Daniel. Look, I think you've identified the way the year is penciling out and it's a reflection of our strategy. So historically, what we found when we came to the company some years ago was company that was dominated by 1 franchise and operated within 1 business model. Everyone knows what the franchise was, And the business model was you create and create a game and you put it in the box and you ship it and then maybe you ship with budget addition or game gear addition.
And perhaps you shipped some expansion packs. Well, in the past 7 years, we've launched a multiplicity of new franchises. The company now has 10 franchises that have each sold at least 5,000,000 units for an individual release. And 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. It'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 sort of both of those features, though, that we're releasing the balanced portfolio of franchises year in, year out in addition to new intellectual property that we hope will become new franchises. And 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. We start with the creative engine and then we move on to the economic engine.
And Lainie can answer your question about the balance sheet.
So in the R and D, the capitalized in the expense. We haven't, shared before the breakdown for Newenberg's old IP, but, both of our labels, you know, work on new and old, new IP and then old franchises all the time. So that's all included in that balance.
Yes, Jason, I will say it's Karl talking. We 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 to us to constantly be reinvesting in new IP. And that is a state of objective of our company. We don't feel comfortable sitting on our accomplishments and, and not trying to push the bar forward or not only with them, with those franchises, but obviously coming out with new taxes as well.
You've got to keep the pipeline going and that's the only way to do it.
Great. That's great color. And if I could just have one other question. If you look at your plan split for domestic versus international 5545, a lot of media and internet companies, it's kind of flip flops 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. And remember, that includes our sports revenue, which does tend to skew for still towards the U. S. We've made a big push internationally by aggressively focusing on Asia. We've had quarters in Singapore and offices over much of Asia.
And we mentioned the progress we've made with NBA 2k online. So that's just one reflection of the progress we've made in the market. But on international, we are a worldwide company and international revenue should continue to increase.
Thank you. Our next question comes from Arvin Badia with Carnegie. Please proceed.
Thank you. 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 'fifteen guidance, should we be thinking in terms of the percentage. I think about 20% of your fiscal 2014 was a digital thing about 18% to 19 percent. Is that the right way to think about it?
And then I know you had NBA 2k14 on the NextGen. Are you able to tell us what percentage of your games, you know, on that, on that game or full game downloads, what you're hearing maybe from other companies. And then lastly, in the fiscal 15 slate, the unannounced titles, can you talk to whether, you know, how dependent that is on AAA titles versus, I don't know AA or, you know, more average type titles? Thank you.
Yes. In terms of percentage of revenue attributable to digital distribution, it's a work in progress. There's no doubt in the year when we initially launched Grand Theft Auto V, shipping 33,000,000 units that's a year that's going to skew the physical distribution. So as revenues are lower, you one could imagine digital revenues being somewhat higher, but that remains to be seen depends on our release schedule and how our recurrent consumer spending develops. But I wouldn't want you to extrapolate from this past fiscal year to the subsequent fiscal year.
In terms of a breakout for NDA, full game downloads versus virtual currency, we haven't broken that out. And in terms of unannounced titles, you know, it's something to be put in. So everything we do is going to be hit. We know that, you know, we'd much as we'd love to say that. That isn't always the case, but it's very much our goal.
And we really only work on AAA titles, and our teams only work on titles of passionate about, and they only work on titles, I believe, Ken, and will be massive hits. And we are right much more often than we're wrong. And according to Metacritic, We have the highest, net accrued scores for the past 6 years, including this past year. And that's a reflection of both that objective and the execution of the objective. That doesn't guarantee that everything will do in the coming year will be a hit, but that certainly is our goal.
We don't have AA titles. We don't have single A titles. We only work on AAA titles.
So it is more than 1 AAA titles. So that's in the in the guidance?
Yes.
The right bit of the okay. Thank you, guys.
Thank
you. Our next question comes from Drew Crum with Stifel. Please proceed.
So I wonder if you could talk about the confidence in the fiscal 2016, a positive cash flow guidance that you mentioned, Lainie. And then separately, Strauss, could you talk about maybe it's better asked for the studios, but you've got Evolve on new and borderlands equal on path, John, what what's the philosophy behind not making them available on both generations of system
Thanks. Drew, our outlook for fiscal 'sixteen and going forward where we say that we plan to be profitable in the foreseeable future. It's based on a multiyear plan, which projects ongoing profitability for the company. And in 'sixteen, it also shows positive cash flow. In addition to our development pipeline, which extends out further gives us confidence in our ability to remain non profitable over the long term.
Lania, are there any working capital items or one time items that that are influenced in that guidance?
So when we look at 15, We were growing our capitalized software balance to support our exciting pipeline of titles. And then when and we look at the timing of our new releases, which is why we're modestly going to be down in 'fifteen. And then that cash will be collected in 'sixteen as well as the profitability ongoing in 'sixteen. Will affect the overall 2 year cash flow. Okay.
And Drew, it's Carl. In terms of Evolve And Borderlands for next gen current gen, So 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.
Hopefully get a chance to check it out because it really is a fantastic title. And the bottom line is the strategy there is that the next gen game built on a gen engine and it's meant for next gen. And it's a 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 multi player to a new level.
So it really fits best, the continuously best on 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 market opportunity and we think that our title fits very, very well in that regard.
Thank you. Our next question comes from Tim O'Shea with Jefferies. Please proceed.
Yeah. Hi. Thanks for taking my question. Just today the fiscal 2015 titles are coming out of 2 K, just wondering the likelihood of seeing a rock star title in fiscal 2015. I may have missed exactly how much full year revenue Wayne you said to expect from Rockstar, but I think it was 45%.
Thanks.
Yes, we basically have said that rockstar is hard to 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. Our next question
comes from Todd Mitchell with Brean Capital. Please proceed.
Hi, this is Young Kim for Todd. Just a quick question regards to the balance sheet. There were some step ups in both restricted cash and for accrued expenses. Could you walk us through what, what drove those to?
Restricted cash balance, of about $194,000,000 is for payment of certain software development at the end of the year.
Great. Thank you.
Our next question comes from Neil Doshi with CRT Capital. Please proceed.
Great. Thanks, guys. Carl, just another question that involves. It's gonna face probably some some tough competition this fall in the sugar category. Should we think about the opportunity for this franchise?
And then maybe a question for, for Strauss, you know, Google and Apple are now trying to strike deals with developers for exclusivity. How do you think this impacts the industry and impacts take these business? Thank you. Thanks, Phil. So in terms of Evolve, you're right.
There are a lot of products come out this fall. And I think it's going to be a really great year for the entire industry. And 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. And 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.
But we really don't see ourselves as specifically competitive with any other company or any other game. And with the exception perhaps maybe in Sports business. But in general, we don't really fear the competition in that way. And we think that this game specifically stand out in a crowd. And we actually like the fact that there are a lot of games coming out because, again, it gets people in the store and it gets people buzzing about the industry.
And 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 explable about the nature of the platform, the size of the screen, as well as the business model. So 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, then we would evolve it. But I'm I I doubt that it's going to become a for business of, platform exclusives. That would be costly and it's hard to imagine that really benefit consumers. The analogy is pay television in the early days of pay television. There was not a lot of exclusive content and exclusive deals.
And pretty quickly, the pay television services determined that didn't make a whole lot of sense. So I'm I'm skeptical if that's how the business will develop. But if it does develop that way, we will, you know, we'll take the opportunities as we find.
Thank you. There are no further questions. I would like to turn the floor back over to management for closing comments.
Well, good morning. Thank you, 1st of all, for joining 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, 1st and foremost, by the incredible creative efforts of our teams at both Rockstar and 2K. And we're we're immensely grateful to to the folks who show up at work every day and try to try to think out of the box and do something that's never been done before.
I'm 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, and I think all those efforts are reflected in the results that you see, it's 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.