Majesco Entertainment Company Reports Second Quarter Fiscal 2012 Financial Results

Zumba Fitness Franchise Has Now Surpassed 7 Million Units Sold

 
EDISON, N.J., June 11, 2012 /Marketwire/ -- Majesco Entertainment Company (Nasdaq: COOL), an innovative provider of video games for the mass market, today reported financial results for the second quarter ended April 30, 2012.
 
For the second quarter ended April 30, 2012, Majesco's net revenues were $30.4 million, down 5 percent versus $32.1 million in the same period a year ago. During the second quarter of 2012, the Company reported operating income of $2.8 million, compared to operating income of $5.3 million in the second quarter of 2011.  Net income for the quarter was $2.7 million versus net income of $2.1 million in 2011.  On a non-GAAP basis, net income for the quarter was $3.0 million compared to non-GAAP net income of $5.4 million last year. Please refer to the Reconciliation of GAAP to Non-GAAP Financial Measures table included later in this release for additional information and details on non-GAAP items.
 
The Company's basic and diluted net income per share for the quarter ended April 30, 2012 was $0.07, compared to basic and diluted net income per share of $0.05 in the same period last year.  Non-GAAP diluted net income per share for the quarter ended April 30, 2012 was $0.07 compared to diluted net income per share of $0.13 last year.  Please refer to the Reconciliation of GAAP to Non-GAAP Financial Measures table included later in this release for additional information and details on non-GAAP items.
 
For the six months ended April 30, 2012, the Company's net revenues increased 20 percent to $96.6 million versus $80.6 million in the year ago period. The Company reported operating income of $10.3 million compared to operating income of $13.4 million in the same 2011 period. Non-GAAP operating income for the six month period was $11.2 million compared to $14.0 million for the comparable 2011 period. In the six months ended April 30, 2012 net income was $10.4 million compared to net income of $8.8 million for the six months ended April 30, 2011. For the same period, Non-GAAP net income was $10.3 million this year compared to $12.8 million in 2011.
 
The Company's basic and diluted earnings per share for the six months ended April 30, 2012 were $0.26 and $0.25, respectively, while basic and diluted earnings per share were $0.23 and $0.22, respectively, for the corresponding period in 2011. The Company's Non-GAAP basic and diluted earnings per share for the six months ended April 30, 2012 were $0.25 compared to $0.33 in the corresponding 2011 period.
 
Jesse Sutton, Chief Executive Officer of Majesco, said, "While the overall retail environment for interactive entertainment remains challenging in both North America and Europe, we are pleased to announce that in the second quarter, sales of Zumba Fitness remained solid, and Majesco delivered another profitable quarter.  Zumba Fitness has now sold over 7 million units worldwide, and is the second best selling fitness game of all time.  We are very excited for the upcoming holiday season, during which we will launch both Zumba Fitness Core, as well as the much-anticipated, highly innovative Kinect title, NBA Baller Beats.  Lastly, we are about to ramp up our social/mobile efforts with the launches of Mini Putt Park on Facebook, as well as at least four exciting new mobile games coming to iOS over the next few months.” 
 
Highlights
  • Second quarter 2012 net revenues were $30.4 million, down slightly from $32.1 million compared to the prior year.  Sales were driven by the continued strength of Zumba Fitness 2 and the release of Zumba Fitness Rush on Kinect for Xbox 360.  International revenue grew over 100% to $6.5 million, accounting for 21% of net revenue in the second quarter. 
  • As of April 30, 2012, the Company had $31.7 million in cash and cash equivalents, compared with $18.5 million on April 30, 2011.
  • Zumba Fitness Rush was released on Kinect for Xbox 360 in February, and has been well received.  Official Xbox Magazine gave Zumba Fitness Rush a 9 out of 10, while GamerFitNation gave it a 9.5 out of 10.   Additionally, Zumba Fitness remains the best-selling fitness title on Kinect, and in April, Zumba Fitness Rush was the #2 best-selling Kinect title overall.  
  • In April, Majesco announced NBA Baller Beats; a fun, high energy and first-of-its kind innovative basketball video game launching this fall exclusively on Kinect™ for Xbox 360.  NBA Baller Beats gets players on their feet mastering ball handling skills using a real basketball while playing to the beat of an eclectic soundtrack. The Kinect motion sensor captures every movement of both player and ball to create an entirely new basketball gaming experience.  NBA Baller Beats will come packaged with an officially-licensed NBA Game Day replica ball from Spalding, and retail for $59.99.  
  • In early May, Majesco launched a beta version of Mini Putt Park, its first internally developed and published game on Facebook.  The game gives players their very own mini-golf park, letting them build the course of their dreams and play against friends from around the world. 
  • Building on the momentum of Zumba Fitness 1 and 2, Majesco announced the next exciting iteration of the franchise will be coming this fall; Zumba Fitness Core is the first game to feature choreography specifically designed to deliver tight and toned abs as well as an effective total-body workout. This energized dance-fitness party is expected to launch this fall on Wii™ and Kinect™ for Xbox 360.  
 
Announced Product Line-up
 
Third Quarter Fiscal 2012 Ending July 31, 2012
To date, the Company has announced the following titles that were, or are expected to be, released during its fiscal third quarter 2012:
  • Mini Putt Park, Majesco’s first internally developed social game, is now live in Beta form exclusively on the Facebook® Platform . Players of all ages can design their very own miniature golf course in this ultimate mini putt social experience.  As the world’s first-ever virtual mini putt construction kit, Mini Putt Park lets players build a replica of their real-life home course, a fantastical otherworldly course or something in between.  Players can either visit Putter Island and conquer course after course, each complete with a crazy boss to defeat, or take the fun to their friends list by sharing their own custom courses with friends to complete.
  • Zumba® Fitness Rush Bollywood Style Pack, Majesco’s first downloadable content pack for Zumba Fitness, was just released in May, and features three exotic Bollywood songs to spice up your workout and build your track library. Featuring stylized Indian choreography that has won fans over with its fun, high energy movements, the Bollywood Style Pack lets you dance with Zumba® creator Beto, and celebrity Zumba® instructors Kass Martin and Tanya Beardsley. Additionally, Majesco Entertainment launched a Zumba® wear Avatar Collection so fans can customize their Xbox LIVE® avatars with virtual apparel inspired by the fan favorite Zumba® Wear apparel and accessory line currently worn by millions.
 
Fiscal 2012
To date, the Company has announced the following titles that are expected to be released during the rest of fiscal 2012:
  • Zumba® Fitness Core, the latest release in the best-selling fitness game franchise, will be coming this fall to the Wii and Kinect for Xbox 360.  Zumba Fitness Core is an energized dance-fitness party featuring choreography specifically designed to deliver tight and toned abs as well as an effective total-body workout.  Dance your way to toned, sexy abs with Zumba® Fitness Core, featuring 40 new songs and routines, more than 20 international dance styles from around the world and hot new choreography that’s designed to sculpt stronger abs through an exhilarating full body workout.  Lose yourself in the music as celebrity Zumba® instructors guide you through choreography set to contagious new Zumba® fitness originals and a broader mix of smash hits from hot artists including Enrique Iglesias and Don Omar.  
  • NBA Baller Beats, the first ever full body motion-based NBA video game will be available this fall exclusively on Kinect™ for Xbox 360®.  NBA Baller Beats is a fun, high energy basketball video game that lets you perform like a pro using a real basketball.  NBA Baller Beats even comes packaged with an officially-licensed NBA Game Day replica ball from Spalding, and challenges players to time their dribble to the beat of each song and perform a variety of skill moves displayed on-screen.  Bounce the ball to the beat of 30 licensed tracks spanning decades and genres including hits from Kanye West, LMAFO, Run DMC, Queen, Common, Janelle Monae, and more.  Perfect 20 different baller moves and increase your stamina in single player mode, break it down and practice different skills in Move School mode or show-off in multiplayer mode and go head-to-head against up to 8 players.  From novice to pro, every baller can raise their game with three difficulty levels available on every song: Rookie, Pro, and Baller.  The NBA Baller Beats and Spalding ball bundle will be available for the suggested retail price of $59.99 when it launches exclusively on Kinect for Xbox 360 September 11th.   
  • Harley Pasternak’s Hollywood Workout, the interactive game that gives you direct access to the fitness program used by many of today’s Hollywood celebrities, launches this fall on Kinect for Xbox 360 and Wii.   Renowned fitness and nutrition expert, best-selling author, and acclaimed celebrity trainer Harley Pasternak will introduce you to his breakthrough 5-Factor program that is an easy yet effective approach to reach your personal fitness goals.  Hollywood Workout provides players with direct access to Harley Pasternak, the trainer behind many of Hollywood’s hottest bodies including Lady Gaga, Megan Fox, Katy Perry, Hilary Duff, Jennifer Hudson, Robert Pattinson and Kanye West. The secret is Harley’s 5-Factor Fitness program that requires just 25 minutes a day, five days a week. Run, jump, squat, and work out in stylish A-list environments, including a beach front condo, downtown L.A. loft, and a Hollywood Hills home. Never miss a session and stay motivated by following your progress with the Fitness Tracker, a detailed calendar that tracks workouts, points earned per day, and time left in your program. You can even take before and after pictures to monitor your progress on Kinect for Xbox 360.  Choose your goals, follow Harley’s advice and 5-Factor program and you too can achieve the Hollywood body you’ve always dreamed of!  
  • Double Dragon Neon will be released as a full-scale digital game on Xbox LIVE® Arcade for the Xbox 360® video game and entertainment system from Microsoft and PlayStation®Network this summer. Majesco Entertainment has once again partnered with WayForward, the award-winning team known for bringing franchise favorites including BloodRayne: Betrayal back to audiences in exciting new ways, and is thrilled for the fan-favorite developer to put its signature spin on the father of all brawlers: Double Dragon! Double Dragon: Neon isn't a shoddy sequel -- it's a face-melting 80's tour de force! Featuring bodacious characters, gnarly combat, and a retro aesthetic, it's pure over-the-top baditude... to the max! 
  • Mama’s Combo Pack Volume 1 & 2 on Nintendo DS™ and Mama’s 2-Pack on Wii™ will hit store shelves this August for the terrific value of $29.99 each.  Cooking Mama, the iconic kitchen cutie who has sold more than 13 million copies worldwide, is serving up double the fun and terrific value with three separate combo packs that bundle together some of the hit franchise’s best-selling games. Mama's Combo Pack Volume 1 for Nintendo DS™ mixes up a recipe for fun by combining the original best-selling classic Cooking Mama with Camping Mama: Outdoor Adventures. Mama's Combo Pack Volume 2 for Nintendo DS™ includes Cooking Mama 2: Dinner with Friends and Crafting Mama. Mama's 2-Pack for Wii™ brings the culinary action to your console in Cooking Mama Cook Off and Cooking Mama World Kitchen. The Wii Remote™ transforms into your universal cooking tool as you chop, grate, slice, stir and roll in motion-based cooking activities.
  • Hello Kitty will make her Nintendo 3DS™ debut in Hello Kitty Picnic with Sanrio Friends.  Filled with loads of fun activities and cute collectibles, Hello Kitty Picnic is set to launch in North America this holiday season.  Hello Kitty Picnic with Sanrio Friends invites players to join Hello Kitty and her Sanrio friends as they prepare for a picnic adventure. Play 10 mini-games including Hidden Object, Spot the Difference, and Picnic Blanket Checkers to collect goodies for the party.  Explore and decorate whimsical 3D environments including Hello Kitty’s bedroom, kitchen, and more.  Interact directly with Hello Kitty using the 3DS touch screen and listen as the game guides you along.  Invite your friends to join the fun in using a variety of multiplayer modes as you play with your favorite Sanrio characters including My Melody®, Keroppi®, Chococat®, Badtz-Maru®, Little Twin Stars®, and many more! 
 
Fiscal 2012 Outlook
The Company expects fiscal 2012 full year net revenue in a range of $130 to $140 million, and non-GAAP earnings per share of $0.20 to $0.30. This reflects an anticipated challenging retail environment in our third fiscal quarter, as it relates to our catalog products; we have no new retail releases scheduled in our third quarter. This outlook is based on an estimated fully diluted share count of approximately 41.5 million, and assumes non-cash compensation of approximately $0.04 to $0.05 per share for fiscal 2012.  The Company has not provided a reconciliation of forward-looking GAAP and Non-GAAP financial measures due to the potential effects that changes in its stock price may have on the fair value of outstanding warrants.  
 
Conference Call
At 4:30 p.m. (ET) today, management will host an earnings conference call. To access the call in the U.S., please dial 1-800-860-2442.  Please dial in approximately 10 minutes prior to the start of the conference call. The conference call will also be broadcast live over the Internet and available for replay for 90 days from the "Investor Info" section of the Company's website at http://ir.majescoentertainment.com. In addition, a replay of the call will be available via telephone for seven days beginning approximately two hours after the call. To listen to the telephone replay in the U.S., please dial 1-877-344-7529 and for international callers, dial 1-412-317-0088. Enter access code 10014835.
 
Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics
To facilitate a comparison between the three and six months ended April 30, 2012 and 2011, the Company has presented both GAAP and non-GAAP financial results. GAAP financial measures, including operating income, net income, and basic and diluted earnings per share, have been adjusted to report certain non-GAAP financial measures.
These non-GAAP financial measures exclude the following items from the Company's consolidated statements of operations:
  • Expenses related to non-cash compensation
  • Change in fair value of warrants
These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance and the Company's prospects for the future. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.
For more information on these non-GAAP financial measures, please see the tables in this release captioned "Reconciliation of GAAP to Non-GAAP Financial Measures."
 
About Majesco Entertainment Company 
Majesco Entertainment Company is a provider of video games for the mass market. Building on more than 20 years of operating history, the company is focused on developing and publishing a wide range of casual and family oriented video games on all leading console and handheld platforms as well as online, social networks and mobile devices. Product highlights include Zumba® Fitness, Cooking Mama™, and Alvin and the Chipmunks. The company's shares are traded on the NASDAQ Stock Market under the symbol: COOL. Majesco is headquartered in Edison, NJ with offices in San Francisco, CA, Brockhampton, UK, and a social games development studio in Foxboro, MA.  More info can be found online at www.majescoent.com or on Twitter at www.twitter.com/majesco.