Earnings call transcript Q3 2023

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Operator

Greetings, and welcome to the Take-Two Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Nicole Shevins, Senior Vice President of IR and Corporate Communications. Nicole. you, Thank

begin. You may

Nicole Shevins

be Thank President; discuss you fiscal conference afternoon. Financial Officer; call joining XXXX Chairman Zelnick, and Officer. Chief Lainie for results for Goldstein, to Executive will Today's our XXXX. of Slatoff, December call by the Strauss ended Take-Two's our Good Karl XX, our led and third year Chief quarter our

Q&A be to answer session the following available during our will We questions remarks. prepared your

statements securities I'd made not based begin, Before to forward-looking our like well assumptions of that considered everyone that management, statements beliefs this to are available as during us. we made historical forward-looking remind call statements laws. are are and facts by the currently as under on federal These information

these no statements. obligation update have to forward-looking We

vary report Form Actual entitled are important These from the SEC, including Risk most operating of XX-Q, the Form statements the filings the Factors. risks these quarterly factors variety a including summarized based section with on may in company's significantly XX-K annual results and on report factors. on described our in forward-looking recent

comparisons I'd year-over-year. also that unless all will be otherwise note discussing today like GAAP and all numbers are stated, to we are

outlook are operating performance. including details our results uses order evaluate our in our in to actual Additional items GAAP our press adjust regarding release, that to contained and the internally management our financial results

the most measure. also release non-GAAP GAAP a measure reconciliation comparable press contains to any Our of financial

In website outlook. visually addition, slide financial we and posted results presents have to our our that a deck

the our and obtained at release takeXgames.com. from with filings be may press Our SEC website

Strauss. to over call the turn I'll now, And

Strauss Zelnick

joining us you Thanks, Nicole. today. for Good afternoon, thank and

captivate to entertainment across execute highest the to to franchises create to of the our interactive them most the During quality, global audiences. quarter, third continued array and deliver on industry platforms in engaging an our we ambition

The of world-renowned we're and strength of sold acclaim, catalog All of Americas. significant have reflects and portfolio the in on sales of our artistic based units releases have acumen and new we're and our quality. commitment game highest content development to hard the passion, proud long-standing pleased vision, to work teams critical post-launch immensely received our our the and studios,

Notwithstanding creative prior believe franchises offered a that holiday conditions, blockbuster slightly consumers with We billion were quarter were result achievements, net our our spending our toward bookings guidance. promotions. of $X.XX that as below and of macroeconomic third pricing shifted titles established

long-term the catalog of for releases benefited new our create success spending affected performance our will this franchises entertainment consumer driven and and be certain ability and including While properties. from our we our introduction it of consistent intellectual believe of engaging to some beloved trend, experiences, the current recurrent market, by games. Despite console of of that sequels the new PC the our our best

And our expectations date, units. has V exceeded Theft the Grand of the holiday XXX Sales million in sold title Auto to season. during more than

During Games Wars. released Los Halloween new and an holiday content for update as Rockstar the season story-driven Santos as well the of a Drug new quarter, array both,

which our emissions events. to business, players is more with and to launched the season, new which story Red promotions We expectations drive pleased the race. holiday engagement outpaced continuous successful performance Redemption also player by stronger were Dead to of driven X, with new our across and a in deliver gameplay features The update and exciting come, winter continues tax December including and to much

units. than the has in sold XX To-date, million title more

entertainment locations for experiences. to and Call holidays. for new Rockstar to updates quarter, of the a Arms pleased the Mission Telegram Games Online, new Red release and During We quality Halloween including remain Hardcore enduring incredibly with continued Halloween new the Dead these

Steam. calendar the in was on for all number ranked number overall platforms three year units Theft during and sold two XXXX Grand for was Auto XXXX V US on

five top was game on XXXX X tenth quarter selling as Additionally, GTA one in continues for sales. number resonate Steam XXXX. number NPD V's Red the ranking with year also the strongly Dead Redemption players, for for the to unit end, consecutive three

NBA which North continues sold audience game XKXX date year-over-year, units. stars its competition. in all-time more MyTEAM expand the of in and users last over sports are X Full grew over up America XKXX, one for dominate to year, and rosters title selling the to remains enjoyed NBA assembling NBA's million the has than number sales as players X% greatest XX% the to

branded included in that remains limited-edition Arcade and the Edition bundle XK its game since XKXX Studios holiday In in Beach, HB the Studios Pebble cost XKXX Thieves, and ranked and Sports, the number gear featuring addition, new functionality HB supported NBA Barstool XXX will content October. release with launch and more addition Apple of making. XKXX play NBA TOUR Perfect. Arcade from one content including patch PGA and Dude features,

completely called as of the the Series with acclaim out games. Suns X|S. a On game Superhero The best be Gamer classic. one Rock Midnight of title five, is it post-launch launched content X The seasons that Marvel's title Games five December pass. strategy Steam part brilliant, and X, can Epic critical scoring XK purchased a Windows individually it at and at of BGC supported a Games out on of Store, PlayStation of PC launched said Firaxis calling PC XX Xbox was series modern and being XXX it or and Paper rating a with via Shotgun

we During market players the improve saw expectations, the from we're continued during in with share. its to purchases particularly believe experience in-app and season. mobile The global engagement our that quarter, our Zynga's holiday trends label strong line we lows, active prior and maintaining performed among

continue can our business our Our roll the our to top optimize margins Empires the Friday mobile platform and for & and broader to mobile leverage to ad titles believe introduce purchases, increase throughout one of we years. quarter key during yields due A outpaced new products, networks to include the first Chart Puzzles offerings enhance next industry, as ad out few for is performer direct-to-consumer boost the portfolio a significantly few advertising our highlights supply inventory. and our our seasonal Black in-app strong This was over content which we offerings. of

Balls’n downloads number the most look number that a spot one total the or Rollic in game hyper-casual Apple's two US among in App offers spot hyper-casual which revenue. XX a We with Store. long-term US that have Rollic’s of a giving reached acquired number December, our respect This prioritize for one balance games strengthens retention the reached of unique also Popcore, downloaded rates. in leadership experiences Ropes to in publishers player

celebrating updates World quarter its X times Tap Cup. Slots Pass, stronger remained XX retention number quarter Zynga's ever. Racing which driven are the game Apple's innovative reached new Popcore's spot downloaded throughout for features CSR App Top Store. best titles in with released and a US Game by posting acquisition, the various the of strong Race one quarter, most resilient casino Away game Following multiple driving rewards monetization. had the in-game that Thrones

Our million close. our within business. combination to savings way synergies, to planned on Zynga remain in our years remains with the target our well and We highly annual to post accretive we're two delivering of $XXX cost first our committed exceed

and the bookings. XX% During XXX% net for recurrent rose accounted consumer quarter, spending of

backdrop billion We're challenging take our we many operating net outlook. into $X.XX ways, an we're this account. lowering And than is, anticipated. to to in more XXXX billion Turning bookings to environment to fiscal $X.X our that in guidance

trajectory. guidance. expectations. while revised program for to structure, take To particularly fall be our company-wide optimize short there's always clear, responsibility to growth anticipated I expense believe reduction our personal on also on will embarked downward our when that achieve, a more we We of We've us deliver positioning cost our

to savings in million expect initiative. a of result as of achieve We this $XX excess

and balance term managed as synergies business strong, times with from savings we and uncertain initiatives we the combination Zynga, execute record on cost years. the expect our multiyear our long robust new several allowing Our these sheet navigate titles over achieve us the sequential performance remains We've for to next our with confidence. always from growth release our deliver to powerful pipeline

for Our initiatives. also done creative key to their phenomenal our thank their you and a these to all and on our times, I'd continued colleagues work. look tireless all progress I'd with have shareholders like like for our I forward job teams of to support. of during thank business our sharing challenging

the now over turn call to Karl. I'll

Karl Slatoff

Strauss. Thanks,

on experiences forward for expected entertainment the in year steadfast of commitment is remain and beyond, and and As our growth long-term all and driving audiences captivating best path our remainder our goals, our we we across engaging and most our bringing to platforms the the to to shareholders. achieving believe focus strategy providing value this We the geographies.

impressive an array releases. purchased Store access visually Those promises the directly title. explore in title KSP most storefronts. on Division XX, to inform to content game February launch its leading development future will launch help and players game Steam, other up for Turning early creators of will On Space Games X, the to the the to upcoming will feedback Kerbal franchise. Games by X providing full the KSP X bring its Intercept and of the early the and our be access PC for Program in Epic to of Private that

riveting during fiscal Division Xbox debenture Studios new this excellence. game Private After to and has Series spring us, Piccolo PlayStation a from XXXX PC, addition, is projects. exploration announced expected In several launch X for

Private to mentorship calendar survival harder a we XXXX. team and financing after a with our opportunities. partnership new to project new Private And Division independent smaller development Division support teams fund Bluebird announced unveiled publishing develop expected to game launch with

celebration will a XK of Champion’s consoles soundtrack as addition be and Steam. game. and In WWE and will Executive release XKXX XXth WWE philanthropist and producer of the PC on superstar, the On cover of PlayStation for the featured Concepts John Cena’s XX-time on March World Xbox anniversary each Visual record-setting WWE XX, XKXX

Bad the make music world bonus. as artist will streamed in WWE In addition, a global debut phenom XK XXXX's his Bunny, preorder most

marquee WWE the roster the WarGames on more. and year's WWE features deep Brock the post-launch showcase, Reigns, an expenses a and forward or several array Austin game Rhodes, Ronda upon through introduction Cody installment look pass. matches of including Stone can unique with American will a Nightmare Superstars of purchased and support XK Roman individually Lesnar, the to this Steve of may the content Cold XKXX, games. Building Fans Rousey, Legends, be of and a to XK fan-favorite success take season

Online Auto additional support Theft Rockstar XK Sid continue Midnight Leader Throughout Games Pass. and the and Civilization games And balance year, of to Suns content updates. VI: fiscal Firaxis from content add-on to with release continue Meier's will Marvel's Grand will the

will as expect previously, to studios that at on release in several studio other work titles Rollic launch a we a soft including Zynga’s of label’s mobile, vast games, XXXX. while In fiscal variety of the remain array release in they've done

on to results we our pipeline our more share have May. when report quarter in will We fourth

turn now I'll call over to Lainie. the

Lainie Goldstein

discuss the third our quarter, year highlights year. for I'll XXXX Today, to Karl, results fiscal our that Zynga, Thanks, everyone. key from of results our the and our with guidance note with afternoon, fourth good and third before last include comparability respect reviewing to our Please quarter. relative combination our quarter

Additional details press regarding actual contained in our are release. and our outlook results

bookings billion, As slightly as $X.XX net which consumers more prior Strauss cautionary of our purchasing holiday guidance, during mentioned, was season. displayed we the delivered below behaviors

catalog periods As of properties economic game our resilient. intellectual of industry-leading relatively in were full prior headwinds, sales from

However, our earlier that spending. some softness their consumer newer in we felt building pressure of alongside on stages of in player recurrent are base, releases

During the XX% with rose bookings. expectations. purchases our accounted revised Zynga’s spending net XXX% in-app line performed for in and period, consumer recurrent of

PC several for and was in spending this consumer by However, of our console offset weakness games. recurrent

Digitally bookings XX% delivered for XX% net accounted total. increased the of and

sales During the delivered from digitally, were console game of last up year. XX% XX% quarter,

increased GAAP as higher and by million, the intangibles million, revenue Operating addition marketing XX% $XXX $XXX of million. to acquisition impacted The increased net and cost amortization billion, primarily of $XX was increased as of revenue share, stock-based loss GAAP which Zynga, and by of net well expenses $XXX to by driven $X.XX XXX% to business compensation million $X.XX per costs. million expenses. of was $XXX acquired XX%

quarter with to down year as of result with our Our as Zynga. paid our management ended prior the compared was $XXX XX% borrowings, over in and reducing million a investments $X.X period of the billion revolver XX% billion. $X.X for and to short-term debt the cash We rate of tax combination

full Turning net fiscal now to $X.XX to expect to of billion billion. begin $X.X deliver our our with We expectations. guidance. year bookings I'll

our focus for hyper-casual economic which current including to consumer some business. experiencing, been into fourth and for purchasing expectations profitability that takes shift softer game consumer as forecast account title and we continue trends our Our a the recurrent enhanced recent have we releases into quarter, of and expect the on spending well an as mobile of unannounced lower the environment

The largest Empires contributors to Red portfolio, mobile Redemption Puzzles, be and Auto hyper-casual to V, Blast, Red Toon Online. and Dead XK, NBA & Grand Auto are expected net Rollic’s bookings Theft and Theft Grand Dead X Online

bookings our about XX% breakdown XX% X% XX% division. expect net and to be to labels We We from private geographic Rockstar XX% our the forecast United split international. Zynga, be Games and States XX% net XK, bookings

expect spending to approximately XX% We of and grow bookings. recurrent XX% net total consumer by represents

net of represent XX% XX% are workings by total. approximately and digitally delivered Our to expected the grow

Our of XX% will forecast XX% digitally, year. that game assumes up be console sales from delivered last

cash million generate million deploy expect flow, We to in operating and more we to expenditures. $XXX approximately adjusted expect than for $XXX non-GAAP unrestricted capital

amortization million range to $X.XX range net from billion billion $X.XX from acquired which intangibles. of approximately of billion, $XXX and GAAP to revenue billion $X.XX revenue Our $X.XX to of to cost includes

to compared of expected we billion last reflects the offset This costs acquisition business be anticipate with billion Zynga, range $X.X compensation from integration will year. synergies which $X.X personnel our and marketing our expenses are billion Total expected to Zynga. from to inclusion slightly higher and cost as expenses, $X.XX increase operating by

mentioned to program to over to backdrop, annual $XXX with processes, particularly which have comprehensive delivery believe from Zynga we in current and addition this over savings the of will review, quarter our we This a and company we've combination on and execute funding. margin structurally long-term. opportunities make light the that After savings, and publishing opportunities personnel, begin efficient enhance our expected the other synergies we our and annual the calls, is cost million can evaluating multiyear cost areas, that include deliver more of for corporate infrastructure pipeline. can not now is our we in of on impact robust of nimble $XX million As in prior been

from which $X.XX million XXX.X shares. expect We per million to $X.XX loss basic ranging to or net the $XXX the million GAAP of $XXX count assumes share, share

tax the rate We expect management XX% our year. throughout to be

moving Grand fiscal bookings in last fourth fourth our to and $X.XX to and XKXX guidance for year. million are be Blast, Theft Auto largest XK, The Online net net Theft to to billion Grand $XXX Empires Now to We $X.XX mobile V, and Toon WWE NBA contributor the the compared billion, bookings Rollic’s Puzzles, project Auto from portfolio, expected quarter. range quarter hyper-casual to and

book and spending to XXX% consumer XX%. recurrent project approximately We to grow increase approximately digitally delivered net

game forecast assumes will sales last console Our XX% up delivered that XX% be digitally, of year.

from range net cost We to billion expect and GAAP revenue $X.XX of to $XXX range approximately from $X.XX billion revenues intangibles. of acquired million, includes to million amortization million to $XXX which of $XXX

this $XXX Zynga, of XXX assumes which million expected expenses the marketing $X.XX million $XXX to count of the realization from over Operating range represents At increase basic per last is offset to and a which million year. costs loss $XXX acquisition are increase of to believe some GAAP $XXX a This inclusion by to of to share, will range from midpoint, share the cost $X.XX business slightly million. expenses, anticipated personnel reflects XXX% of and net higher shares. be synergies. expected And our we million

next support. anticipate of to the years, like In closing, actions you. taking are stakeholders drive several for record long-term shareholder will confident believe position lowered have potential. us value. our their meaningful year, I'd now while that to our We over are sequential we are the deliver growth for all the and in Thank disappointed to performance we will which our again outlook we we thank growth highly

now back the call turn I'll Strauss. to

Strauss Zelnick

support. creativity, our to management innovation like a take we navigate Karl. our thank their to to Operator? and for to efficiency for commitment of like now and landscape. continue our On shareholders also as firm continued I'd questions. our challenging your Lainie colleagues I'd entire team, behalf economic to Thanks, appreciation express We'll their

Operator

you. Thank

Please question. with be Eric session. your Our We Handler conducting from first with will MKM now Instructions] question-and-answer Partners. is a question [Operator proceed

Eric Handler

into for specifically, that able previously talk games you XK not wonder the Zynga bit And been integrate a if afternoon, to advertising? mobile about And purchasing. about I if have more advertising, Strauss, included Good Besides could secondly, what have about little talk and thanks you to bit advertising the you little had question. mobile acquisition of Puzzles, virtual & other the currency a the games games prior with just direct-to-consumer integrated Zynga? then how platform could Empire DTC capabilities? many the

Strauss Zelnick

titles regard no we there Thanks, well. regard to Zynga To not portfolio we have at the within With Eric. enhanced their did change. XK, portfolio. appreciate answer there's titles, that limited there's amount I but have do. as to of no have a your advertising, and Certain question, mobile advertising with titles, it. now within And console advertising change

to direct-to-consumer, for regard rolled Zynga at a With out being modestly. team that's the that's initiative for us and new

We And on a early contribution our has success. margins. very of are seeing signs obviously, that significant effect

Eric Handler

you Thank very much.

Operator

you. Thank

Matthew with proceed Our question question. next Please from Truist with your is Securities. Thornton

Matthew Thornton

I if with Strauss, back Hey. apart to ATT. hard thoughts about you this maybe versus side but everybody. level us think Apple going it's higher on don't May And know on, know be your give for macro Good I user could. acquisition the Coming to I you two, as tease mobile if the mobile. one’s what's afternoon, market? can

franchises, structure, thinking ad opportunity of putting mobile revenue But, new different mix the about think if of how versus I more And you over business? versus next market or of IP think there. do maybe you genres that growth about purchase the rate macro cost years, existing you there's the guess, couple or are right about aside, the how the in-app the right

then market but has that I'll obviously there. have thinking Just how are dynamic? as been And follow-up, stop you a that I about very

Strauss Zelnick

is like. it how can follow-up do see what determine I you then your I'll Well,

were part the we the is combining to business, market, belief. So of are the that in look, interested fastest-growing the mobile we we mobile and still that of of interactive in continue entertainment will with believe reason Zynga be terms

Yes, our We and is, there's view, And a in portfolio Zynga trends fact, the probably, positive the recently been near terms best changes are some in year-over-year And of of business. in post-pandemic are in in has sort demand. lesser extent, the economy games which think primarily to related to pressure, mobile the quite those of, term. demand.

that matter. four Most of one, they have two, our competitors, as be, good may titles three,

that. We have than lot more a whole

have We also leadership blessed division. with in these that franchises. phenomenal forever And we are

the in but future. sure the optimistic the not remain can growth continue So we growth business. a rate, an you highly it do be I'm about will part I to of rapidly growing exact give think I

as a company also audience It console more and that part in every diverse PC We mobile interactive different titles, on the we of mobile and older. skews address It having side, find the by skews and ourselves diversifies a three plays pure attach business. the one entertainment of us. And top female. we business, the has

With about ad regard the something they're our going for users, only interested relevant of are purchases to not about and the still forward, XX% that's expectations look, XX% for market revenue in-app of in-app purchases in.

the So not advertising engagement, spending, world, if business. to the particularly because sense in you're be to to in monetize about ought of not engagement selective the toll the leads to because all we're it, booth the way and you able that find just the a of target all how all careful viewing, we makes

consumers business. that's Zynga intrusive, have the enjoy consumer we we can experience consumer advertising than building. regard We're not in Spending sure, order that's But And is should should for titles deliver positive and to without a experience, business to want does. to in to what enhance be robust entertainment the and that's exactly spending. that commercial, for be the it able

new down I'll I regards IP to your, finish your With wrote -- questions.

business but new the grab working in remains excited, about hard. me you stop hits really new in mobile of to a the and are talking. biggest IP, On new very challenge it's is titles on mobile let hits. just We're the IP And we're which then bunch really, make making super So low. I'll Hit on ratios really, hard in that business.

Matthew Thornton

Yes.

that you got I keeping way. one Strauss, and was by those, follow-up, Just really all quick that's the note. impressive

that's So impressive.

about any you the of years a On which the about while -- -- record now. next you've bookings, talked couple back getting for talked to

XXXX? just apply can you growth. early hop about any And back Thanks talked think I I'll I about Does the again. then we thoughts sequential XXXX? guess to in start fiscal how about queue. that thinking fiscal

Strauss Zelnick

our including sequential What outlooks, today you years, expect we the in expectations. give couple said remains and the growth we record next is over coming of results and months. guidance We'll that exact

Operator

Thank you.

Matthew with Stanley. question. proceed your Our Please is Morgan next from question Cost with

Matthew Cost

the spending compare how taking the weakness questions. for you console Thanks on or and Could some a periods about into Was everybody. that past sales? it PC strength where you more more Hi, where of of does versus in the you've recurrent little go was? to that saw unit detail seen? macro consumer softness And

Karl Slatoff

that PC before the of in the -- the time said terms what that strength those really the and been mean quite have in So been particularly and experience over well period we've folks discounted we over quarter, I that have console, catalog. observed last has what that well. is this as of our our was is strength big that established did of franchises,

well us. the So business for of did that part very

new that choices between that familiar player can with. know obviously releases And basis. games when bit they their little to play, afford of sort they're things if towards tougher to they're still gravitate establishing are making on more going difficult they A folks that

new younger the the a for releases bit on So, tougher little games.

And advertising. that RCS, PC in expectations, dynamic we of console that expect in economic is of our this again, trend in what the we already continue and experience were some dynamic on the in-app mobile kind did terms In we side in buck with And on to said purchases we environment. and RCS. side, softness line the

little it originally -- to but that. bit see we maybe are more we So continuing a exacerbated expected, really than was

Matthew Cost

mobile reduction is general overhead? cost just And areas? focused business you. Thank it the Great. just kind or it Or of is then program, on corporate particularly side, the various is on savings the cost

Lainie Goldstein

our and of also publishing a of corporate our combination functions. some It's departments

And plus about between that do of Zynga all our outside the acquisition to synergies of includes has and it $XXX of So labels. Zynga. that the in Take-Two already it's million with we've talked

Matthew Cost

Thank you. Great.

Operator

you. Thank

Our question. your Crum with Stifel. is next question with from Please Drew proceed

Drew Crum

Hey, afternoon. Okay, good thanks. guys,

improved, think with a And you I mentioned in have sticking there? trend your on Just were you've can little that net detail continue maybe And up had you more Zynga, seen into bit line improving current And if then quarter? preamble the I trends whether mobile bookings quarter-on-quarter. Zynga's this comment a follow-up.

Karl Slatoff

Yes, I think improvement is have the it the seen some of describe the to it's it been we've the way to seen way that is characterize really and off we in trends past. improving some lows

Drew Crum

shifting in your titles conditions does Okay. become are you competitors impact you across favorable? some this with of more your any until Strauss, market the if agree with Curious pipeline? you towards premise? how these launch hold then And way development to And is market invest you have inclined suggested Thanks. the back that franchises. if mega of do, And

Strauss Zelnick

company bring of out to property in across We been always strategy marketplace. make Yes, iterations we And collection the believe hits have intellectual to PC owned we The of emphatically our console, approach has new the agree. franchises. of board. best our is beloved that the and mobile across

anyone else can well each sold an in that. We units over franchises X say don't units think XX have individual in million million over XX sold X have release, that an that individual release. have over I

thanks created the walls, sort we any four focus the to our entertainment property of of within highest look, have And of grossing ever Rockstar.

or XX our to and top is, business approach. is always And strategy. good less We a has that the there the So business that entertainment good it XX need been of much business on a day the business be day. truth on is not, like and whether you very a top entertainment our

Drew Crum

guys. Thanks,

Operator

Thank you.

question. with next Omar of proceed Our Please Dessouky question your from with America. Bank is

Omar Dessouky

Hi, everybody.

XX So not Zynga's bookings grid looks acquisition? million then fiscal it you get And that you the mobile, the next games. And to confident those XXXX was were your games fiscal in that And you XX to them $XXX games still to that level like of Zynga for release can plan looking Games. still to follow-up, at to Are from I'm all annual please. grid, scale? XXXX it aspire have you of prior and a you franchises the as have I is to forever

Karl Slatoff

I'll one. take Sure. that

would bookings. sure any So I for annual that would released the But $XXX context release. say, in tell title be that, that I for of case be can entire won't we the that release, million mobile you aspiration with the the

mobile a little So in, going invest you What expectation and out, our take titles out then is you the does, order how revamp titles will that rebalance -- need again, you how put it from you we to you that million more, be to the in that release more, know little out idea we we the you can it that or level find see to it, a is invest bit bit grow plus. it, there. are the there put going the reach that ones fall $XXX on mobile that we But side. you

the going is that path our be -- strategy, certainly going is that to and forward. So that's

still our So expectation. that's

Omar Dessouky

think you to next -- of when it's Zynga, be launching will new that over affect you Okay. to be harder $XXX the you going that two? threshold, versus it's of to kind get year games will and or acquired do And the that potentially number million guys

Strauss Zelnick

has gotten the or business I don't easier think harder. No,

it's pretty expected. think I we much what

in about are As mobile I hit low, we what's said, really developed. being ratios good

Omar Dessouky

here. as have follow-up And quick one I just --

in ads notices interruptive sending Google interstitial for back this other July. and exposures have new formats and noticed that rejection poll ads compliant This announced with among experts has So begun some practices, are was better it its not that allows ads policy. experience

hyper effects games So are you Android? this policy on starting the casual to Rollic of for see

Strauss Zelnick

largely are We not. compliant. We're

Omar Dessouky

That's question. you. Thank Okay. my

Operator

is Our from Mario with Please with Barclays. next your question Lu proceed question.

Mario Lu

question. for Thanks taking Great. the

on in quarter a bit came of RCS expectation. below is in one growth the this first The terms

You Zing or was line in to any expectations to was franchise that kind underperformance. in mentioned factors weakness that Any led came that highlight this and of below PC. the from console

Lainie Goldstein

really was across games. several and No, there's out. console nothing really of to It PC point our

Mario Lu

a Okay. Got NBA follow-up it. then on And XK. just

fairly You is up were mentioned MyTeam's year-on-year, XX% large players which a that amount.

main mode? gains there was declines are were drivers in potentially of Or And kind these So any MyCAREER it partially highlight offset Thanks. there? additive? by to mostly

Karl Slatoff

Yes. mode. I in declines by would necessarily offset it wouldn't say that MyCAREER

NBA over that path we've how the across to modes, of so the to more in been growing involved more and -- is loans. driving growth is to for the all players think our how the get and I years in future goal

everybody that titles to we're that not play game a loyal mode, because every know we is engagement, the single grow. and for for also and but path to certainly better to better us get RCS audience the is performance it's the more the more going the Now the those ultimately across XXX% goal, the much a

our the see getting focus those as had MyCAREER, really on great -- you in we've players but has can across but board. and on some the success, not on across So modes, been across MyTeam area, -- just

Mario Lu

Thank you. Great.

Operator

next your Our question Eric Sheridan question. is Sachs. from with proceed Please Goldman with

Eric Sheridan

for Maybe if Thank could. the I questions. you taking two,

user of That'd engagement, you're sort successfully in once marketing monetization lapped IDFA. of to mobile mobile your obviously, still you whether address front, be landscape, the demand number in strategy we've or on the back post-IDFA And growth so in world you get the sort in one. it's like, I sort work launch whether a it? is that a capitalize mixture your and realigned in-game on perspective driving can whether of in-game a thinking mobile of progress, you've of on to of and terms First, wanted feel

season. of earlier two, talked from number your about love of pulling implementing the about in earnings get I'd withdrawing thinking format? be and been AAA or a developing, sort AAA titles think on how competitor alongside titles? how what mobile And back mobile-only shooter to quality you Or PC console perspective Thanks, of should the mobile either market we about titles yours the traditional launching in historically even much. formats type so have

Karl Slatoff

point. then. this road for terms we're a are been to expecting we're IDFA, think would has -- in effect of there's the quite living I say that certainly expecting And stabilized. no we've there's don't So while improvement I since target been And we some of surprises down And able at that how that that, the in now.

So on. I some there's going been think adjusting

I back we're hands around were, we don't mischaracterization. a got of and direction. like because the be going we're would characterize that But that other in it, certainly want we've where sort we then to as our to feel

target. So in of ability to terms that's our positive

I does would -- it is not much business. also space, normal mention, as too, that it require in it mobile much in doesn't the targeting and wider as the is funnel hypercasual targeting a

helped also to our audiences. that's new So ability attract

Strauss Zelnick

but it of all and on we in hit with mobile when is Yes. the low. Zynga, very are opportunity, very great. the hard Take-Two today, most the the exciting a obviously, second said we've And mobile part it's announced my said well, the the And question, you're potentially answer take current to business IP question not going that ratios I was, along, to do. combination really really, And was, is to

really do based that and But we're give it's it. They for by One The are optimistic come of we is. IP. a on and our mobile. not competitors that a to majority of are from in existing it how with that we'll have to mobile with slam and I'm we're hopeful title, impressed respect done the do admire not native vast well has hits difficult well it. not a it a try, healthy very really it I'm dunk. But They console. going

Eric Sheridan

Thanks so much.

Operator

you. Thank

with Our Cowen with next your Doug Please question is from and question. Creutz Company. proceed

Doug Creutz

Hey, thanks.

of in new about Just commentary some the underperformance. your release

due least but same the or macro, macro have problem. two at who attributing to other You're companies there's essentially had of to partially sort been

You versus quarter, macro-related the have And overall pretty console released, you stable a and spending What think versus going data the rethink other it just launches issue is that cause in record is on? now that seems makes video the been if year forward? that's ago. had is this to does the be your pipeline from you case, was from going have to the way patters several how that's industry game

Strauss Zelnick

out question. related based our causes us prior we titles We good that within our of similarly What rated that expectations don't the on to performance year. genre. really a just believe that it's pull is of macro expectations It's

basis and sales and comparison yet of critical to apples-to-apples by were case had releases scores terrific periods. titles, and the an expected the we've in certain these on acclaim than so prior great And unit lower prior of

to probably that okay, result. believe, that's macro that leads sort us of a So -- is

quality biggest continue to will minute But doesn't imply to the and I don't matter, quality obviously titles mean market with regard for that does matter to perform conditions.

So put and what short should out. can't put only you're of an out anything you saying is, expected that's does you that blockbusters blockbuster, mean

something case. been out It's to We B a answer never semi-yes. the put we is think title. can't going is that be think the I

We have AAA titles. out to put

Auto. be Borderlands everything the new way. Grand Tiny In to more franchises. going not recently, just isn't Wonderlands. have that to we we going Theft be have to of that or the case However, Tina's launch ability And shown ever is It

to BioShock, Dead and the in our These we us changing. team's and recent to were not risk are invest back take nothing passion, big in and should create in to this properties, invest say, hits. support to I Rockstar, And able we this way continue Going farther believe we've our to creative new That's vision leads there's the performance Redemption. way. been from we and Red contrary. intellectual shouldn't willing that

fuel But to selective. expensive selective, they're go is when go to And titles selective? to Sure. food little promotional going more more when right blockbusters. more a be going they're now, people the and more times tougher are In they're is and to market going to worried, they're and

Doug Creutz

Thanks, Strauss

Operator

Thank you.

from question. Our next Please proceed question Griffin your is MoffettNathanson. with with Clay

Clay Griffin

that get helpful mostly Thanks. a in in if been as I monetization, engagement that I it, actually metric pretty sounds as Good It for but just Is market would to releases now. apart sounds quarter a had titles it your like new the solid fair? from It of like some sense of right overall evening. has missed be the this base apologize engagement. the

Karl Slatoff

been just well. but monetization console in across PC also and And on certainly we've board. And modernization the the not that -- business, as seen issue. Engagement would has characterize a a the as it as strong I definitely mobile business

specifically the to is is for that So, issue be that not seems engagement us. --

Clay Griffin

engagement that. a a sense Right. changing over impact if way And guys that or of that last anything the to on suggest has of quarter be just Is Pass titles there in had the just an with that the have people engage may seen quarters? several Game you new in follow-up terms

Strauss Zelnick

I subscription still time. to to talking subscription subscription. don't right small think We're relatively mean, that's with I way think don't the a really support we for make so. day thrilled is services in And businesses. appropriate in our be at the catalog business you're our We frontline about date. titles titles available business --

I Pass cannibalizing case, XX business the And yet. huge in is believe business Game was no, think last announcement We're any I don't our the subs. about business. million broad-based of not talking

Clay Griffin

you. Okay. Thank

Operator

you. Thank

with next Martin Our with from question. Yang is proceed your question Please Oppenheimer.

Martin Yang

afternoon. taking you us question. effort? a more Good the for you responded on Zynga's certain user see Do details Thank or my region have to Hi. Can first give direct-to-consumer strongly cohort I two. more channel? you

Strauss Zelnick

seeing I'm not though, for regional still. because them not early looking been we're any No, really we've differences, sure particularly. it's

Martin Yang

the March on you discounting the discounting My is in you. for in March? how more December. guidance the on Thank is second question negatively characterize impact the quarter, affecting environment still of And it. would Got

Strauss Zelnick

particular in our expectations demand. think don't quarter quarter. is just driving our for that the the market I is for What's driving expectations perception our of discounting

Martin Yang

Okay. Thanks, Strauss.

Operator

you. Thank

question with from next Littunen is Our Bernstein. Matti

Matti Littunen

you if in discussed? what typical that season you. holiday you quarter plan in launched to current market you marketing if Thank you're in the and response changed seeing in do -- these trends the approach that wondering your for Just to the new do not, titles

Strauss Zelnick

change we approach to marketing. No, didn't our

example, did Our sort marketing what results? worse is little less, Unfortunately, self-inflicted at thought. opportunity we've self-inflicted your approach results. we in the the to a a was getting not like if on for view getting and the set varies somehow given spending our cost tailored opportunity. and for create and of context equally, we marketing spending The title by smaller wound We more But reflects the But answer of marketing by opportunity than marketing created programs. on is time the title no. of marketing wound not it's by any the a question is, and the

Matti Littunen

Very clear. Thanks.

Operator

you. Thank

your with Please Our Benchmark. with next question Mike Hickey proceed is question from

Mike Hickey

for of the Hey, Service, expectations you know feel point Charles, questions. Lainie for they're the did of the your about your each, And spend it you service time? haven't XK from in or Auto thanks recurrent And for Online cost have portion games? those of Obviously, question, Live curious, growth called sort $XX taking but quarter second Grand NBA grow on they quarter? like business. million, reduction and enough. the meet Thanks, over like Karl, you you view specifically, the Theft I my titles, weakness do Two you out starting changed that's that's as just big forward from you sort on do think plan, a guys. live Or feel your a that of more ex-oil your

Lainie Goldstein

expectations. with So for business line our the was in quarter, our NBA

bit lower we than what Our were expected. other had titles a

expected. And our our mentioned, for I lower cost ongoing initiative. was reduction for console As we and business this like RCS had what than an the overall PC $XX is million,

this number expect we over time. grow So will

core tenants a one is company. So of as our efficiency

expenses permanent reduce are our structure, to the the overall efficiency these to And So expect we're corporate always organization. for and so organization's that these throughout structure are time. we over looking structural overall changes overhead

Mike Hickey

Thanks, Lainie.

Operator

you. Thank

is question Jason Citi. Bazinet next question. your from proceed with Please Our with

Jason Bazinet

Can fore to I next on business, does think cloud the your years? you about or of And, just in not business? about a had gaming five a Thanks. talk guys a bit have whether moving it what the believer implications, so, little slightly you question. if longer-term any, if you're sort how over the

Strauss Zelnick

time. the It's license if first always down And thing believe project. can technology. broader distribution our properties, distribution been to remember, Yes. first gaming over in cost consumers any with broader is business terms Stadia, more It's I time will in our reach a us not We including do we're happy believers the number is, long we sorry, as I which of that a make a were go licensees, is the distribution, cloud to we’ve our think I model. to good support in probably of of -- But a over ways, benefits distribution view mean, entertainment it not If licensor, the gaming. one sense. as technology. business. And

you're I've $XX buy size said, a would I seismic found prepared change. to gaming you're be And Because that represent to title, or console. pay think never for like out. would cloud $XX I felt a Stadia prepared think That also if -- frontline

more consumers evolution So a be who don't be in an I but technical think titles have edges, be probably addressed. it revolution the there's will to in an challenges the to And around bringing it still business, high-quality think will I consoles have don't effect business. will the

Jason Bazinet

Thank helpful. Very you.

Operator

Thank you.

Thornton question. with next proceed your Please question Matthew from Truist with Securities. is Our

Matthew Thornton

Yes, question. Strauss, Hey, another big picture thanks.

AI. maybe or your look helpful, years, you next see I'm years, next to X on what again. Thanks, the opportunity? disruption impact on Just the out thinking several would potential horizon thoughts particularly any Or the how bad? XX business As the about as good be again, AI curious, in how over kind thoughts you you're of, can there

Strauss Zelnick

I'm will I it structure do that that I because we're like forward excited right intelligence. what ChatGPT with intelligence, artificial seeing artificial tools enhance probably really of skeptical development no we bar. some and that, do leaps going You on thing see today. and the cost for machine think creating we'll be know, what But you're think learning. side. stands I'm reduce would overall And to will other just such don't the to that think All the of to other about effect intelligence have and have of it in the costs note will business, be first now as raise others and is our to an be the I person people's and And there for artificial AI said, I

question is teams submit I going easier, the question, a Paul our do what going them query I everyone's ChatGPT, to everyone allow if to make The just make question, not which of that's and time same will more is going things and actually everyone do we're their the Revere's to ChatGPT same in want to belief you to among sending any class the gets night more. ride, time students, want and The checked. the uses the think -- the do describe happened you college on last in problem homework. to whoops, is assay

And so ChatGPT calculator. hand today's is

was a I but such hate I was kid, true. it's thing. When admit, no there to

along yes, longhand. math learn came I then kids do parents in learn had were to hand you thought, won't calculators the that turns up answer 'Oh, math have is And to still have to And arms and So anymore. math, out.

do. absolutely that you makes And tool a math. have the You learn it to ChatGPT to easier have Like same is thing.

they're We our are and teams efficiently. a really of things very to in new our And tools. ushering more allow going exciting do competitors' interesting era teams to

send Auto, want and And be to no, then to be than just to better it and the more. digitally to and People We're happen. competitor that but going ship will we're that that. Theft Grand that's So Auto develop please to out going Theft more it's will want won't do then creative. they say, going allow will Grand even to not it to try, someone

Matthew Thornton

I'll in -- one, sneak second a as Maybe Okay. if one could, I well.

to return that pretty about again. guys a that laid productivity. big out, like along around in Obviously, you and really When that, now the productivity along things do back standpoint think again, far and all step return office. you Just pipeline you've how are the Thanks feel are from progressing the pretty to in far you projects you're office.

Strauss Zelnick

great. flexible We've been have about our teams pretty office, to been and return

attrition people we industry than strong things around lower remains One work average. And much, the amazing working the our than Take-Two, that of much wonderful rate at We're the with. many the XX,XXX world. more about people

the -- seek encourage this on and where an pursue brightest the work extraordinary I people business side, And and excellence we and that's the passions their both we to the same to and the think is at place because best time. creative

with long We So never of strong. productivity titles up performing. our is Performance or strong. this showing a had is probably all period

keep best And the frustrating, two deliver because and we the we as the doing are people a time reviews as I the bit in over the that's challenges our last will had. that's why years, are long ever we've and plan. business believe had we've And scores best that, delivering.

Operator

at comments. further no are the time. There Strauss to I'd any over floor like to this for you. Zelnick back closing Thank questions turn

Strauss Zelnick

you Thank so is today. us board. and joining There you news for here, were really proud good across the better we're news it. we I wish much of giving

I results, plan As And the we thing the most are support. minute for for all We of your you so whom is just thank proud as said of us a to world we're grateful. colleagues do better. ago, phenomenal around to our our all

Operator

This concludes conference. today's

lines your at may time. this you Thank your for disconnect participation. You

Take-Two Interactive Software (TTWO) 6 Feb 232023 Q3 Earnings call transcript