Take-Two Interactive Software (TTWO) 17 May 232023 Q4 Earnings call transcript

Greetings, and welcome to the Take-Two Q4 Fiscal Year 2023 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded.

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

you for our fiscal the XX, ended Thank discuss year call our March results fourth XXXX. for afternoon. conference joining to XXXX Good quarter and

be our President; Lainie Chairman will Today's Zelnick, Officer. Chief and by Officer; Slatoff, Executive Goldstein, Take-Two's call Karl and led Financial Chief our Strauss

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

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

significantly from forward-looking on in no quarterly factors. important most entitled variety report on SEC, based obligation These Form summarized these of XX-Q, update report section a the company's the and have the are recent filings Factors. statements. with to annual Risk risks our the vary on including described Actual including in factors forward-looking statements We may these operating Form results XX-K

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

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

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

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

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

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

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

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timelines of to Additionally, the our release development especially of of the titles of standards for our some affect excellence which we the lengthened industry, slate as year. creative redefine strive our

highly anticipated Looking a our year company. ahead, fiscal XXXX is for

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to the turn over I'll Karl. now call

Thanks, Strauss.

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expanding As returns we believe inflection in our significant margins for our scale the shareholders. industry-leading approach and business, we will point generate our

the now to I'll turn Lainie. over call

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

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

major year. February, the portfolio area Zynga We announced incredible process, canceled rates. progress our of I'm We several announced in of exciting and internal their our part games meet on titles our would and and of from content execution fantastic program our a with integration pipeline. several new made throughout we focus so high-quality team Efficiency we cost hurdle for also delivered anticipated proud our not management our strong as unwavering focus. reduction was ongoing that

these all for structure scale, will returns that grow our confident ultimately sustainable margin enhance deliver stakeholders. long-term are help steps We our our and

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and acquired from related game increased a console were $X.XX revenue $X.XX delivered billion included unreleased title, assets of forecast XX% console to from impairment XXX% lot XX% results. sales of digitally, cost quarter, increased million titles PC capitalized our last to charges intangible the and a costs relating management reflecting million development GAAP and billion, to to was During revenue year. of up $XX $XXX software canceled few XX% net Zynga, and and included in changes which for of for which

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our net above fiscal $X.XX to were to Total bookings our guidance XXXX which $X.X of Turning results. was $X.XX billion. billion, billion

strong industry-leading certain we affected within our portfolio, had backdrop Zynga macroeconomic the challenging the and performance components While a catalog experienced our of of favorable finish properties intellectual year. to

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unrestricted $XXX operating adjusted million our outlook as compared flow $XX over Non-GAAP million. was of to cash

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assumes delivered digitally. console game XX% forecast sales of Our will be

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net expect and billion of cost revenue GAAP to from revenue $X.XX to We $X.XX billion. $X.XX range to to from billion range $X.XX billion

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GAAP $X.XX million. to of expect range million range billion to from from $XXX We $X.XX net to billion revenue revenue $XXX to and cost

increase based from per expenses the over range to to Operating to $XXX factors to an And shares. represents Zynga midpoint, is on basic expected to year, range quarter At $X.XX or loss from assumes higher $X.XX stock I and IT which million, net last are a share, $XXX which million the million. XXX.X expenses of XX% the million personnel expected compensation, $XXX mentioned $XXX GAAP count this reflects full previously. and million of share

very grow that more our our industry you. as We're we excited deliver label, thing chapter sharing extremely is next about good the on have focus and our positioned The are projects detail share in the quality we growth, efficiency. look gain scale Thank and we many exciting underway. forward of we our and we about to our market profitability to enhance our content, highest believe well maintain

Strauss. I'll now back to turn call the

you dedication, of Lainie, results. Thank your and for and work to terrific colleagues your and hard you, all Karl, thank these our

We take Operator? will your now questions.

with from Uerkwitz Instructions] [Operator comes question you. proceed Please Our Andrew with Thank your Jefferies. question. first

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

the has Maybe and it months leverage now this sure just hot in aggressive X will that latest topic. two had flow influence headcount the on just still infrastructure kind need think digest business trying and to some from have that to think And we how we been have I'm out remains pursue another just me. kind the at of and about through of secondly, curious where a the a more to have OpEx and are as kind to it. thoughts you you you need more I'm the place, what team think place about of think about time pipeline? Strauss and industry. Or years? think do as we your and then of how investment. we the I'm you AI we about

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

guidance. long-term one about first is the The just

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then on the question And mobile. second is just

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You Hunters? do want to

On Yes. Star asked the Wars, Hunters, market about you backdrop.

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Sebastian is question. your from question next Our Colin with Baird. with Please proceed

talk guess, we What than bookings be And I'd big of games, portion setting that, would RCS standards billion you $X.X commentary, specific that sales? innovation would about in of then, keep into of of a your that. what quality beyond curious of incremental in portfolio should competition? industry, think piece I the next say, the as within areas 'XX know ahead Thank new to know regarding is just and that falling Strauss, how versus, I more year. the fiscal of you also But the you. curious be unit

Yes. Thanks for your question.

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Operator

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

Dead the bring your guess, curious I quite is to aggregate. now the in already is the mean, other strategies about a if the marketing against different were, maybe awareness bookings launch. thinking ought the highly higher words, titles title level IP fact I'm guess of in Red prior I'm of I high. larger marketing that support overall different of say, than for notwithstanding efficiency some marketing level is materially anticipated big generation, X of I now number these the in a they of maybe

So on just that. curious

overall levels say Clay. spend Hey, I the that marketing different. are wouldn't

we think spend in continue consistent a manner. to I

it heck this items in media that the Although lot spending TV, in timing don't than past. not of makeup of spend of has a are been those of definitely lot really, if a point. is the the a plan. on at the money and different now really spending We our any, Outdoor, of

spending did a portion marketing, big have more release. of be weeks in performance prior that the prior couple weeks spent the the release before, also certainly following the to the was of a lot the We release And used spending we it social targeted to cetera. within than marketing to and et budget

market opportunities around because date, content will the significant to still ability marketing a spend have additional of out it for longer and in to time, amount are there We more of and much but much we is a for us drops. period monetize launch certain the spread

the than see in marketing are longer past. would you definitely So spread would have budgets out, they been our

really change we of in those what two a there'd the be But are spend. scale So the no, significant really changes. don't I think

And was, to of sounded Thanks. in about give about that there we sense kind just of general wanted tax was what a mean issue I And some confirm what framework And commentary for that. taxes that cash like onetime thinking us I Got QX. repeat? maybe forward? going just it. a to cash expect just

issue. a It a one-time like timing wasn't taxing. It was really

tax but So repeat, year. for it will is balances something not our each it's that

something it's So forward. that we'll have going tax year payments every

But there's have rate moving to sense that's direction is one you no been the the guys or that speaking other. that

the XX% use in annual we our tax every rate Well, is management for that's it's that rate rate and like in year. estimated

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

little guess you I guidance, mobile if operating maybe out was versus console. a bit implied wondering PC I So income in could your parse

number And guided was you of tell or as your follow-up your a 'XX I think me could implied levels I And down, for just starters, was guide profits peers if I up calendar 'XX. calendar have wondering, a just then question. roughly that? at whether is for the same

Can you repeat the first question? I'm sorry.

I number revenue the like-for-like, moving course, is cost including down. last a there's problem. up have Zynga. And year XXXX as and number No advertising A Zynga implies and, your for Yes. But Mobile wondering full business up cost was of similar guidance your guided realize at your guide of profits only that your peers for your implied year. publish such versus whether or potential of of synergies, days reducing of down games mobile XXXX mobile pieces in full XX levels as profitability or year, I Take-Two synergies.

Yes.

year-over-year. months, So Zynga is on a the business comparable like-for-like basis up a XX for mobile

Okay.

annual million also Okay. Great. in of opportunities net glad addressed presentation. $XXX guys bookings that And you the the I'm

second. wanted I for into to that So dig a

sense guys The of to cadence would ago, million? The the update 'XX, that a $XXX I the in you did first but obviously, of great. 'XX, is, long on any can fiscal fiscal is a time be In like asked because S-X, question you of get give reason there fiscal cadence any you that's us terms might out that put how 'XX.

So first. the cadence

games second our And a bullet popular second, and ramp from And million. then markets of meaningful the the properties. have here key the establishing some then a most of intellectual you emerging more is in first mobile couple $XXX to points improvement one presence introducing mobile

fidelity So Asian you're mobile that appreciate markets, high potentially there? I that specifically PC games? responses. using Lots some And your what console Is your to IP. of include for referring questions does of

Hey. It's Karl.

So still million to the obviously, opportunities that, around in those we're cadence very revenue terms good of synergies, about for committed the us. $XXX of and we feel some very

are meaningful in think actually that can fiscal year. we our begin there start really our And around games. of efforts are in several to some believe those our more expanding other I meaningfully near-term, opportunities more the DXC to activate this teams

also some that in bold across And be library the company, things integrating next beats databases obviously then implementing that acquisition customer the with creating user Take-Two to as those year All well. of marketing things years optimization, the we're the going and centralized across the databases. few this realizing accelerate data of company, like able beats, to start fiscal into new Zynga

et core specifically but the would games. not reference I more having mobile nothing I some and of questions. the think I that terms properties your vision high announce some about something We answer space. cetera. about type are side excited fidelity, think of think In both I'm on will as properties and of I sort introduce a of really intellectual them characterize positive, as of immediate opportunity. games sure long-term, our That's the Asia have the people conversations that are and to now, some this very to mobile popular our to to into the we're most and right them understood But happening, of conversations are do TX these

don't would those that don't again, And by in because we do I anything announce because necessarily be any little definition, right market games have for have games a believe expect a more in would you development bit that we that now and to that. regard, there's upmarket

games I in expect I You've think that several a titles folks our of that is mid-core seen to the that with those would bit that little to question. be your kind a their towards there mobile success some opportunity. Duty We hope other of space bringing is have market. example perfect more of the titles arena. And Call answers that.

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

headcount Zynga's First developer it was question growth us you on since Zynga, can acquired? that tell

say don't internal break X,XXX at label we the but we have Yes, that out label, did development about by the company. people we headcount

franchise what or the get certain question is past the past Take-Two on your do view I overall When broader. for for to second release My plan for want gen consoles into supporting gen stop goes games? console decision stopping of you broader to consoles? cycles. And

do basis. meaningful It the I for a audience the And platforms. where mean, obviously, pretty believe when stop labels ongoing we an our and supporting general, to audience. diminishes on so, it's really we're supportive continue they support to a which varies. economical in will platforms if point not But there's to

your Our with Fitzgerald next is with question from question. go Wells proceed Fargo. Please Brian

A were they couple weeks. of your anticipated of some questions on but within recent discounting with on and AAA seen titles being consumer days but competitors' we've releases pricing, your discounted were titles, not

spend gamer the performance. of pricing the $XX is, been terms gaming macro think one you to is hour the macro because as in been? has RCS maybe At evolving has live resilient And second still the cost do bit related So the even resilient still to Historically, saw you RCS. Is again, strong a with model same get low then little to price narrative points, is impacted? struggling a coming the spending that because you that per more services, RCS entertainment. more consumer is relatively of for historical bang industry spend as buck, just time,

is think more the first. do Yes. your We've live talked question services We about spend. macroeconomic by because conditions don't need past. probably I to affected in take mean, spending you that second to this

of you certain you have into kind can you the game. that this are boots. There put enjoy the titles have we where don't game, really If ours toll category

of pay, If console. can't our titles that doesn't mobile really don't you any describe or but play, you

to in consumer, if nice pinch So is that more an environment the is influenced area as have to we a be be that feeling consumer live services result, think a might not a for be likely the And would spending must-have. a negatively. a

stuff spending the we're of is seeking the value. limit going frontline raised, blockbusters you seeing by really, on really What or price. seeing we're about their are pushback to that either to to care not terms consumers they pricing point a In

have like be have we and blockbusters, we the And wonderful a sometimes it could of both. bunch news good a catalog. is And

change. something schedule a and news consumer yet a necessarily a is a regard result. release other that is will without not If huge pressure price, The market. blockbuster. is frontline we interesting is been have robust business, sees as this there but a This We has also unique think and growth some to a

in view inconsistent pandemic. we with the outlined that's expectations greatly worse And home. odd an post-pandemic, We time, home than our of better pre-pandemic events. be were people from that people place benefiting set nothing during on as said a at And an being when place time at than industry were a the is going now at that in we and turn we during sheltering

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that to. torture Now intend the metaphor, winds to to the deliver and we at our we But in back. context, still have

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

$X guys 'XX on pressure billion revenue. in on guide, Congrats your no

view. above Just didn't consensus that bit now billion to $X curious, expecting you little was a profitability guide to

that timelines we how should on just on especially on think profitability, over have 'XX, have? either that impact in for to $X I is and thoughts I curious how about think think Just we we that should profitability now could way, confirm EPS. you but development what consensus expect given don't extended about

on question, your That's Strauss. I'm And one second then another to it. just nice. glad AI, the positive hear on

and Just entry. with barriers curious to on AI side mobile the

will terms of any to challenges more guys. market? Just that coming the in Thanks you think have if competitors curious

have profitability cash Thanks, flow. our basically we operating Well, Mike. talking indicated by about

You're right.

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Markets. from Gerrick Instructions] proceed question with Capital Johnson next your Please Our question. with [Operator BMO is

of targeting on would mobile what And see as are share topic of kind basis? the a delivering consolidated for in of what MTX? well On downloads as kind you basis games then, a direct-to-consumer, lift you margin game-by-game

opportunity our So do us. we significant We for think haven't is. it's disclosed target what a

a think now. We XXX%. is and don't to certainly grow direct-to-consumer, room in think greater it lot makes sense where to all but we that than there's right to for are us do less cases than zero from it we go So of

second it's the second? was question. think the I What

What question? was second the of part your

list. Margin

much about of back ourselves and Yes. mean, mean don't Well, the can doing the much, I into to but we're that talked about and other you I rate, things margins, we've them again, rates do go much, the clearances think When you is payment it you're talking that rates, in of lower sort because be of obviously, take yourself. kind really nature. may them. I the

Soff from question. Benjamin your is Deutsche Our with next Please proceed Bank. with question

Just slide. one on the

mid-core Drive seems updates. seem like but $XX year the a full LEGO is an listed point AAA section, with would a to seasonal me it So like price And of under title. that

Thanks. you but line between the 'XX? then you So bit and immersive top both if difference mind? mind do expanding apologies mid-core your missed growth and on a fiscal And in I it, bottom-line in are expecting

debated it asked you a is whether question involved. it this internally, isn't And a LEGO title, for mid-core/arcade funny we've a thing that's because exact and quality the or gameplay of or a like example, of really amount immersive. is It's question not

is world the example, storyline, of the et you it's Theft -- herring. with would red there's of say, the compare the bit. obviously, so a bit LEGO quite over the a even if not think there's experience itself for experience experience. look cetera, So the City of Grand vastness depth at sort that but the price But a probably of Santos, world, to the Auto, is Drive driving $XX you with a a difference. is point, Los In experiences, worthwhile I We open NBA. game the It's big that certainly that when an not

particular is field case, there's terms the term this kind bit thought other it this right in particular how little case, guideline things. probably in kind than the of of of the that given So game, But But we of mid-core/arcade no in that in of specific a of felt the was categorization art we classify way. the just it. look

mid-core necessarily mid-core our say, also should about a versus the other or question. success or that's indicate have successful was arcade to expectations that sorry, answer it's I Whether about core immersive, because doesn't Lainie commercially title, And casual. or you can commercial

Yes.

Got ahead. Okay. it. Go

than what be is fiscal to fiscal we For higher bookings expect we've and 'XX, 'XX. said net that operational results

that So would both growing. imply be would that

with with your Our next from question Ju Stephen Credit proceed Suisse. is question. Please

Okay. Thank you.

not words And about of in to one you prior but I guess, sounded like to the Strauss, similar dollars, what industry So talking It in the were do only mouth, your questions. your I certainly in are and want then seeing you I environment the the financial crisis. to going during an were incremental where stuff answer trouble. value put of barbelling the dollars and may in AAA guess the be to middle games some capture

what to adjust might adjust So at is are you like that level now private doing division what the environment. to level doing for Karl, different you Thanks. at that to are maybe new normal? what be the And studio the

the day, it quality. But means that's at think just right. I of the end

is this well that where should the as less business. out sits. put speaks be reflection because and return, case. a And we about and to to private of out strategy that will is have just always consumer you a just put stuff great is means the Just changing more going division everything spectacular growth that the and and be consumer to our This that's strategy

titles, fine. the just quality make we should highest as do long As we

on their never Private products able we in can Private approach virtually done, fact, Take-Two. been might economical successful. And has we proven and Division's a been not lot has than do an everything, might virtually quality. more approach into generated everything been otherwise they've And the has let's based sort be certain out developers on of but XX shortcut And deliver level in in-house. a Division been has a titles. successful bring on to not title that's everything instances, to taking Its of who A+ bring

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

guys. Hey,

on about follow-up. for talked side. Just Strauss mobile if I'm the or We've a Karl. this quick is not DTC sure

the You the guys couple have at the white to world launch a starts going as DTC given be if experience take with side, scale or Rockstar you're more we out on PC the of perhaps to think towards a couple years, end partner on label on opportunity Do streaming to go be years. end streaming, back you the perhaps of scale or steps streaming. to given you'll again, back the see DXC in the the

kind you're Just of if Thanks again. about that yet. curious thinking

in the of that one a compliance. leader did we very has whose strategy We broadest everyone to us terms the sense business possible participants in digital market have basically who distribution. to well distribution the made security were always were been we beginning. of were in reasons willing Our with terms And so and and good to is do

is And streaming our extent viable and for technology to the business industry. a that opportunity

But were unlikely past. it. have for certain to in we're be didn't third consumer do I'm it we'll to avail to we'll of one we I that, exclusively course, will there think with equally parties own as our the We And example, were We too. or to to extent is. first makes very sense ourselves we we want And the not that work Stadia, have other. support limited the Of where the platform, in license sorry, for out, work effort. direction the the be but

I we on thrilled so up thank shareholders with our We're run make smiles. of these do passions. mostly our market our with for less business I that teams results. to think bring teams fashion. the the today. with our to more best course, questions Have gratitude their reiterate day great sure day. first-class much joining want So their more I who and world that's outlook. And Thank want have all to I to with you business their in their around smiles thrilled every us. us. and we to with We're thank for confidence to show who very support faces, our than a pursuing their in work our Aiming a want work in great or

This you. today's teleconference. concludes Thank

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