TTWO - Earnings call 2 2024 | Take-Two Interactive Software, Inc.

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Operator

Greetings, and welcome to the Take-Two Interactive Second Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nicole Shevins, Senior Vice President of Investor Relations and Corporate Communications.

Nicole Shevins

Good afternoon. Thank you for joining our conference call to discuss our results for the second quarter of fiscal year 2024 ended September 30, 2023. Today's call will be led by Strauss Zelnick, Take-Two's Chairman and Chief Executive Officer; Karl Slatoff, our President; and Lainie Goldstein, our Chief Financial Officer.

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

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

may section unless report today forward-looking to have factors. from Form vary company's and quarterly obligation are entitled Form described results update with Actual We otherwise the on These on Factors. I'd the XX-K on of SEC, note and recent filings numbers GAAP also year-over-year. the are discussing significantly these forward-looking variety statements. stated, like be based including no factors statements we in these will our the annual most all including operating that to XX-Q, comparisons a report all Risk are risks in important summarized

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

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

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

Strauss Zelnick

our the results, of delivered $X.XX by guidance of Thanks, high consecutive Nicole. net Good afternoon, excellent at that management for results our which today. thank and highlighted end was exceeded and billion, another us plans. you quarter of joining We bookings

the to well and uncertainty, that billion. we're holiday billion reiterating bookings $X.XX fiscal guidance continued we our $X.XX expect positioned macroeconomic we net XXXX season While of are believe for

deliver ability ahead, company's exceedingly growth I'm to to trajectory and about shareholders. optimistic value long-term multiyear Looking our our our

that titles closer we're is eagerly. groundbreaking delivering world have been the and anticipating to diverse, the our pipeline robust audiences and development getting throughout Our

and Our being that efficient unwavering players' to entertainment company industry. commitment excellence the our innovative of us expectations surpass and confidence standards creative, gives offerings our will in our the the most most new set creative most great

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together released the the addition, harness a offering at single box launch acclaimed with into Collection, add-on In of power content which our industry-leading X Pandora's Borderlands of all value. bundles Borderlands in games catalog the the label an their amazing previously

relationship. pleased great have solid results ongoing and for quarter, with the team and remain we its Zynga performance. we at value once the again We deeply Gearbox during long-term respect our delivered

is from business. Zynga's games, new distinguishing benefit a ability our to to which create of engaging capability continue mobile We

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titles Karl mobile increase our the our in and quarter greater efforts by advertising in inventory of strategic driven to will these Other bookings our highlights include Popcore, detail. live partnerships from business addition contributions grew this year-over-year adamant discuss from many games.

progress continue including make our expanding We profitability to number games to mobile initiatives, excellent platform. in leverage direct-to-consumer of our the

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Our also continued live games deliver. to portfolio

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turn your delivering and forward like look the of over continued for you we to phase Karl. to next I'd call all our I'll of support, thank to now growth.

Karl Slatoff

our adding quarter thank the I'd of for like strong ongoing to teams our Strauss. to delivering and Thanks, another momentum business.

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our full releases, to drive content game across will spending recurrent our labels that offerings. key new our consumer continue and to many and addition experiences engagement provide In of

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highly in of to balance now are I'll this call year our and most believe what and over exciting development we company's be the the beyond, fiscal strongest about turn at the Lainie. optimistic Looking we to history. pipeline

Lainie Goldstein

fiscal good Thanks, the third afternoon, before quarter full and discuss key our financial and year Karl, everyone. quarter of highlights second reviewing the of our I'll XXXX. outlook Today, for

for deeply our engaging which of delivered At thank trajectory. I'd advancing our another enduring results We incredible excellent continue teams regarding pipeline, Additional release. disciplined us press our content quarter, confidence our contained deliver make strength our the hard [indiscernible] and our like and time, ability which great multiyear catalog, our in the our same for teams actual in to details execution. outlook worldwide and to their gives to business. progress our are growth our work passion to development commitment demonstrates

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our begin expectations. I'll with guidance. our fiscal full year to Turning

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We year. to $X.X to Now guidance last billion to fiscal moving in on the range compared net to project for billion $X.X billion from $X.XX third bookings third the quarter. our quarter

Redemption ultimate Our X bookings have release slate Factory Borderlands as Match hyper-casual X Auto Grand as of mobile Online, & for Top largest mobile Red Poker. and Merge net XK, edition, titles Dragons been expected Toon and with Red Words Theft V, contributor and X the Online The Friends, to quarter Puzzles, released. are which Dead NBA blast, Grand well includes be and Zynga Empires to portfolio, all Troops Auto our Theft

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management approximately being creativity our performance. talent, basis, to which depreciation by and and by development higher enhancing achieve exciting expected are enable record expenses that new of new Powered closing, X% Zynga incredible In offset for driven a On our by savings industry by while expenses, cost there significantly believe profile. grow partially personnel set operating are and year-over-year upcoming the will believe our are to many initiatives. that synergies our company levels in financial will engagement we our we also in projects standards our financial catalysts

We'd thank turn now us, Thank journey to can't with this wait details the you. our to with stakeholders being to more share we all Strauss. on for call I'll like you. back and

Strauss Zelnick

our to . enabling Operator? for I appreciation management Karl. On thank and goals of team, take express our questions. our strong Lainie achieve to I'd to entire support. We'll our and your colleagues Thanks, our now for behalf like continued shareholders, deliver want To to us quarter. another your

Operator

Our Andrew the with from of Uerkwitz comes first Jefferies. question [Operator line Instructions]

Andrew Uerkwitz

I The and first just follow-up. one one, have

one, reiterated you guidance. first 'XX fiscal 'XX last The in your quarter, and

you X mentioned, any announced the we'll get of those X I you trailer December. reiteration are think you reason Theft Houser guidance? a . feeling in for I Grand years And mentioned Auto, about How think, years? those in why Sam

Lainie Goldstein

that necessarily. below now are net expectations our be pipeline, our in billion, $X but shifts not [indiscernible] bookings will

really in isn't well. it we expect So and a growth as XXXX change, big

Andrew Uerkwitz

acquisition of ways guys In about could more to interesting. as but expand high-level just Theft The of and user-generated maybe fits whole? like it to your content that audience. thought of to and seems that it acquisition Grand And company just that with the the broader making not find allow Auto, how then maybe kind in, question. you monetize XM an What's turning and super learn . a

Strauss Zelnick

#X, in us. really monetize small it bonding We're consumer really consumers are about important in interesting. people in a modest X And economic to And of that's We the going would really our is on cost and playing what role And audience. Difficulty] in servers is. what's is where are playing clear, to can. interested people I huge We're audience. on a ways. old right Twitch. like is Both the they're be But be and people The is relatively small and the activity. finally, people is watching it. property, a excited thousands. one, if we're our the certain the this It's a in hundreds where mean, the that meeting in now watching, playing to want actual are first consumer really actually intellectual a we playing really to [Technical Number consuming and the ensure people are consumer doing interested property we intellectual also to protected. for opportunity

We above. opportunity the of think to this an gives us do all

Operator

with comes question Eric the next Our of from ROTH line MKM. Handler

Eric Handler

I you seeing talk wonder they not game about who subscriber. who's you're the there different GTA+? with Are engage could little what players bit someone a how interact with with a versus if

Strauss Zelnick

gratifying think more materially and be way. see to relevant more a to but addition. our don't this more that consumers. different with We and also And a it's and consumers We experience, to it's grow great more We're in GTA+ learning behavior. it's continues engage thrilled

Eric Handler

clarification. Is GAAP there Then, Lainie, At was maybe advertising a you quick and advertising can for advertising least GAAP between on difference basis, revenue just a a down. bookings?

Lainie Goldstein

the all, there gap, some for Yes. advertising. the has been of There

showing the us difference the quarter gap between in that's up being So versus flat. the

Operator

with the comes question next TD of Doug Cowen. line Creutz from Our

Douglas Creutz

your had that that to Just can the could the whatever you give, other do I'm any you with write-down color you but assets, give on more wondering be of would some guessing mobile color quarter. if in helpful. took

Lainie Goldstein

assets of partial as reporting that projection million for related $XXX units. long-term of not charge an a this unit, representing recorded of that. intangible is an we impairment one of giving goodwill any to million our than we're details reporting and impairment other of $XXX more So And a updated result but

Operator

of the Marok comes Our Raymond next with question Andrew from James. line

Andrew Marok

and have how trying what The out from types and subscription particular. content the kind had that additions months about thinking included last uptake? of I Trilogy of in the content subs couple different learnings weeks some of the guess different drives GTA+ of in it you for

Strauss Zelnick

of leave the that detail kind That's tools. typically we

add said to to consumers, subscription a more for future. much I we are really that have thrilled think well don't we Avid the is probably we today, which offering it Rockstar what except is So and earlier, bodes

Andrew Marok

And then heard one of lot of Lord of licensed of some Star the a IP in Game mobile, more, if Rings. a I of could. greater I kind prominence like coming the with things about Thrones, Wars, titles

difference any Just value console and the as of versus IP in license on mobile to PC. thinking

Karl Slatoff

be. this the and Karl. be comes So But do way The there get both the to the very, in tough attention. to is very is you [indiscernible] out out Obviously, break to in owning that margin is potential you fact having valuable. is IP fact we can get tough it with own new with a outright. attention. It's for mobile, and both, any full higher a much And to it Obviously, is you known mobile have brand value IP. context also because the market can't argue

we a see focus changed. continue owned I something going we IP. think In to exclusively pursue. to a have a perspective But more have would -- when So world, we say for [indiscernible] that good we it's our for perfect on and and a take it is great to license to idea the would we're that hasn't a want would game truth give take.

Operator

Eric comes Sheridan next Goldman the with Our from Sachs. of question line

Eric Sheridan

picture strategy. one Maybe one first for bigger

the the in pipeline How of array be, the going when years prices media between might content and piece to of of of evolution question inflation you mind striking right in of you terms the the continue would platform? landscape. about any the keeping [Technical or cadence as of think subscription mix lot a percentage then seen there to a think are next between couple balance increases And capture You've to bring mix. do the media, in be should we broadly market that Difficulty] audience X over about what to DTC those the And dynamics. guardrails second evolve in you're

Strauss Zelnick

to I that upside subscription then increase [indiscernible] mean of reflection down. and is in generalize much realize too don't entertainment pricing durable were really going a acquire linear on LTVs to were want Yes. the fact and those what's services were the linear too and entertainment customers the from underpricing in not many you streaming they customers because

were eloquent services, for pricing sure And I our pain the with basically it are think do wax their and [Technical adjusting that nothing to make you come LTVs they can want, still to potentially more Difficulty] I positive. So business. to there's although has if

And that for In usage, entertainment basically of value hour expected value ownership by terms or the algorithm is you'll out kind the bears expected that of vehicle. value of to. per entertainment in the of that's is customer not which perceived pricing the entertainment that, every terminal the in plus owned, any number actually if say see property, hours title the to subscribed the the [indiscernible] is times

are we engagement The standard, is engagement. high. the very still prices that our By hours very, value offer many very of low frontline because of

as industry, pricing or the that the price-to-value to a consumers. whole, power pricing for offers opportunity terrific industry have mean think I doesn't wants So power. a necessarily has That

experience the what the experience nature quality offer, the we pay also knows is that you value we everyone what However, always charge just We to it's strategy anecdotally. deal for more sure make the and it, there consumers. much what not look, deliver want our And than our to great it's offered. been value is a of here strategy class of is of It's here. first

it. increase for The many for the price we business. generations. example, have price certain in after few been So products at how precious increases frontline $XX look the increase, price first There many that's in the was years

terrific consumers. we think offer a I again, to So value

for a platform, great part to margins. be for To and of small there, It's be also question business. will consumers deal again, we of work the our want There where do support. a strategy have marketing are when the is. you relationships, to consumer is growth. above. a the bring to relatively retailers. On times do relationship. direct-to-consumer our When always direct We upside That's with think third-party opportunity provide important consumers a can both. there can everything we great our do retailer to We There's to continues We are all not they still be for the second third-party us. want of regarding clear, in-house. It

Operator

Our the next line Andrew Crum question of from comes with Stifel.

Andrew Crum

what's XQ line? like the fiscal the adjustment to for It your confirm that mix in to half want change So around is you business second then based on net positioned know Strauss, would is behind you for that that figure driving that. health confidence? a the RCS, Zynga, mentioned looks bookings how consumer of What's separately, the holiday it's commentary well the but the subtle And the but season. given I just just to your assess and of

Strauss Zelnick

and I had holiday releases simply, on of and our engage So everyone time I hardware think strength that our table of strong. and heading lot with. And into the our the season releases. have are results -- speaking the think go-to a going of year. also of phone to you're to very do a products working we've I is we holiday the confidence you're And the of titles to obviously strength people date, season. titles also, must-have we're that strong the that to off our are think sort catalog season, a we're for which any around very are We look it's and this helpful of

like lineup be a good in perspective, it's particularly So consumer the got And positive. a season a pretty place. We've holiday to from feels space. it momentum gaming going the looks great in

Lainie Goldstein

driver RCS, And Zynga's the the for remainder of in the the year. the business reduction for is main

forecasted including the including our the expectation based some focus also is Hunters. Star our top we hyper-casual, titles we're line a reducing also then to there's And trends. which profitability And in on shifts for Wars holiday enhancing some of So our on margins. current in the continuing but muted pipeline, more

Operator

line America. Our from Bank the with Omar Dessouky next question of comes of

Omar Dessouky

what If Is I just about causing below pipeline your of wanted 'XX in on that. materially that games billion. Then fiscal not very AAA a to AAA clarification follow-up. get in said on your pipeline the you because have to could I pipeline provide bit be games? your little of games shifts some largest you appreciate clarity it. in shift I $X the or mobile your a your in smaller

Strauss Zelnick

Yes.

more around We do of the haven't even give we'll issued and initial year, year. guidance spring in that's new release a the the when We that for lot specificity the schedule.

However, to fiscal I in want 'XX, going billion of materially shy reiterate, $X we be to not are but so.

Omar Dessouky

No problem.

voted coming under other to agreement. Media Interactive the Sam for Grand strike authorization game covered September the obviously, soon. the video to XX, about is, question trailer see then performers -- super Union's SAG-AFTRA Houser's happy So approve Auto message the Theft Auto next On Theft Grand

haven't the next I Grand of to down production Does contracts the actors would Rockstar. they there slow and at if of voice would motion the Theft the workers, whether actors Now negotiations. on were Rockstar to type allow have strike, actually it Auto work but -- the wanted are yet, to strike that actors through strike. know a capture employment go

Strauss Zelnick

career, in fine. always they've every just entertainment my that been There labor an expected agreement out excellent always greatly We're the in involved week. Negotiations I've labor worked negotiations In of and my fine. out resume is reaching been industry. that to value with talent looking they everyone and we're optimistic That's and and just well. we are event our value all serves relations forward to approach. don't work next

completely Now are protected. we

Operator

of line the from comes question next Our Hickey Benchmark. Mike with

Michael Hickey

questions. Two

of updated some one, -- the on AI productivity in first be like the use product I'd curious and terms unlock is we're of seeing here very here. accelerating at thoughts technology and the It seems that your of least cases The is sort seems remarkable.

-- So catalog. I'm of what just second think on value would you could of sort Obviously, been trailer that if already in boost or you on of be a catalog [indiscernible] the that December, curious up experienced have that if that's your haven't And of early think into what on Auto release then thinking strong. the what the Grand for impact GTA strategic the live sort has not? curious Theft Rockstar catalyst different And curious curious might the Online, other there, next. question that it product you're you set vitality before. given I'm the service

Strauss Zelnick

in the Look, AI industry. since business this we've of the been dawn

buy and and but and that properties computers, are I us help and and value And tools But developments and really as create AI well, publicly to entertainment to do we create our it's those as allow competitors internally, said haven't efficiency certain in created believe license in external that the that Our largely to we are instances, things exciting. we new before. tools I've in and been allow going for repeatedly, well. we able do tools they'll

come Do that go generative I the of think that these away, I is need see. recent Do tool for games? So that that see be I will not. others sets think out creative will people we to quickly. No. the the hit going developments AI absolutely And efficiencies commoditized make think will

They sets, better. bar. give tool opportunity I do just raise the if better do think, and to more anything, us the

menial be will reduced work changes the enhanced So is is or high-level importance. probably in work eliminated

our you'll games. in shifts we I see what can do think So with

product. So you mentioned

the productivity, hope. I story. sets, and you shifts see you'll typically, our set our productivity because just line think I'm but will generated you sights those sure, bottom ones, higher. see some sure not that's will, in productivity, tool for mentioned positive to with drop shifts And when think product we've And some I shifts we've I

price creative, most be tags and and ticks to to is I themselves in not can down, most and think, become able to expect the go afford. everything that just probably the all the intense get but X strategy efficient expect company people most the who more are for we avail the the AI, to better resources innovative business competition of Our boxes, don't

updates the frankly, and because and indeed. Online, potentially, continues revenue on be strong. doing impact that, already we excited XX regard anyone as else. one to it I is Because And content that mean, more in going phenomenal are regard that Houser and well initial to posted is positioned, long as amazing really the catalog today, space. as GTA as keep an after things With well going [indiscernible] supply Sam story expected be very later and with them GTA Online we release we're think there to And Rockstar that business entertain effectively trailer the else I will it's Why than, in going consumers do it's about we'll our years strong? anyone are

Operator

Instructions] question the next Griffin MoffettNathanson. Clay line from [Operator with of our comes

Clayton Griffin

guess to partner perhaps and even so Redemption extend has from willingness and to Auto [indiscernible] a been that Zelda I I we'll [indiscernible] couldn't live time. help your willingness find I Theft question because notice announced close a year also this the to action maybe up know relative successful it this ways all IP, What's Grand IP, film. comes film, way. Red Dead perspective. it just

wanted get that. updated Just to thoughts your on

Strauss Zelnick

this But prepared to or a make television are times. about to we the profile many challenging. difficult business them unappealing They're that benefit in way super balance They're company's much what successfully. profile we're if of to from sheet us. I've use spoken been we're in. to If then not because it. sheet the the We risk/reward a balance the of risk/reward we're use we the is to prefer very the in movie show not willing we're company's do. These the businesses. use -- event would company success, willing great We've

the only So in announced, it in put from they Barbie movie that context. said expected IP licensing third a license be let's business we with through that can a the profits party. is their that million. a profits, way Mattel that arrangement $XXX And be about would means for

massive, hit. Now Barbie and extraordinary massive hit is it's a

for many at So you failure. hit against be to massive a that numbers thereof that news of properties, not and in really the the there's license chance entertainment studio or good ratios in movie that in XX% XX%, to ratios which Even vastly to are want lower too a of business properties our for a weigh motion hit here the that well-run the XX%. could is in for meaningful risk be than way. our have console we hit would movie license business, say really fees and the picture a they pause here hit the a The we XX% fail. ratio around don't look fraction to are And enough interactive scenario, the is

the material it's around what it's X, benefit in to not minimis, do not we our success, in really the number here. but de of to it's so bottom terms And not line

risk the And property. intellectual the compromising we in of failure, run underlying

it's So high bar. a

picture We be have we're to as licensed and but We've very forward announce, Borderlands, properties. selective X careful. We're we other And titles looking licensed licensed to anything in to discussions, very, going that BioShock. very ready not have well. Lionsgate's coming. We've

Operator

comes of Fitzgerald with next the Our question Wells Brian from line Fargo.

Brian Fitzgerald

discussion and your been And more in-game things of that [indiscernible] seeing billboards. intrinsic for games business the seems outlook how are comfortable thoughts like broader What on evolves. getting more in-game as We've more mobile, beyond with games within ad your advertisers maybe like in-game there advertising, are brand and and it well as opportunity beyond advertising.

Strauss Zelnick

you we're mean what mobile. in I doing understand already

So to that. cover think all you're I going don't

feels to sense With have creatively we organic titles, alluded console that. makes it when to You title. to and the regard

So for basketball you see advertising NBA, example, the in going a an to you're game, if to arena. go

to we're it's in placement So to inappropriate. see perfectly do But kind our where going it's of product game. reasonable the advertising not same

small we of that So create can revenue. a amount

takes secondly, consumer the of of all, out numbers But do a huge. First the we is anything experience that aren't problematic. that

all He's but to -- driven right was it anyhow. time iteration clearly I they Martin. little only there, ago, the made bond there were a potshot, movie look, wow, an So Years years it little BMW. like, saw do I but Bond, to cars he which a was Because don't there ruined bit BMW everyone that's BMW, movie advertisement, look, the knows me. bit was, a drives I'll And of take movie the don't one in every me, ever a I deal -- Martin. it ago, placement Aston only an where a know Aston disaster. with I for and James of product a iteration mean and was

It's in where it's basketball. doesn't perfectly It's WWE. fit. fine in not fine fine advertising perfectly So perfectly

expect should although As a again, think numbers business will result, really that I the have when material, be we advertising don't it do an you makes sense.

advertising That's completely a us. for for separate, risk repetitive, again, being the of growth category business. That's at

feel mobile that. was Our up about advertising year-over-year. really We good

Nicole Shevins

us thrilled our a the about innovation us are everyone We're company and and a hard the think the of again culture, future. questions of thank want way we please. our kindness. we creativity with just of commitment today. driven in seeking you again results, say commitment I have. those of and that's We're do consistent really to are every This culture for you efficiency, pursue Thank the work, and I'm get and our colleagues, joining do passion with we've If the for really and strategy I level, hard by that. XX,XXX to great optimistic and of it and today. all joining strategy the work of results to is level. corporate level, we unusual, is creativity, proud it to that, the excellence, have really done studio very But our of the well. here. feel we a day, them over we They we ambition, talk over at all around This seen label and And at the at world. about work is and the proud

Operator

This concludes today's Thank conference. you.

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

Take-Two Interactive Software (TTWO) 8 Nov 232024 Q2 Earnings call transcript