Take-Two Interactive Software Inc. (TTWO – Snapshot Report) posted solid fourth quarter fiscal 2016 results after market close today. Adjusted earnings of 41 cents per share and non GAAP revenues of $342.5 million easily surpassed the respective Zacks Consensus Estimate of 13 cents and $309 million.

However, the company’s revenues were down 20% year over year. Even non GAAP earnings per share of 46 cents were also down 6.1%.

On a GAAP basis, Take-Two Interactive’s revenues were $377 million, up 25.7% compared with $300 million in the fourth quarter of 2015.

On the basis of distribution channels, Take Two reported physical retail & other sales (non GAAP) of $115.9 million (down 48.5% year over year) and digital online revenues of $226.6 million (up 12%). Digital revenues contributed 66% of total revenue in the quarter.

On a geographical basis, revenues (non GAAP) from United States decreased 15.3% to $191.9 million, while International revenues were down 25.1% to $150.6 million.

Operating income (non GAAP) decreased 37.7% year over year to $49.5 million. Operating margin came in at 14.5% compared with 18.6% a year ago.

Cash Position           

Take Two exited the quarter with $1.27 billion in cash and cash equivalents and short term investments. Long-term debt was $498 million. Cash flow from operations was $261.3 million.

Outlook

For first quarter of 2017, Take Two expects non-GAAP revenues of $225 million to $260 million. Non-GAAP loss is expected to be in a range of 30 to 40 cents per share.

For fiscal 2017, Take Two expects non-GAAP net revenues in the band of $1.5 billion to $1.6 billion and earnings to range from $1.00 to $1.25 per share. The company’s tepid outlook stems from the fact that revenues from its key offerings like Grand Theft Auto V and Grand Theft Auto Online will eventually start diminishing. Revenue contribution from Rockstar games will likely be 75% while from 2K it will be 25%. Gross margin is expected to be around 50%.