Take-Two Interactive Software (TTWO) 8 Aug 232024 Q1 Earnings call transcript

Greetings. Welcome to Take-Two Interactive's First Quarter Fiscal Year 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

the Relations to and turn President Shevins, now Investor of Corporate will conference Nicole over Vice I Communications. Thank you.

You may begin.

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

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

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

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

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

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

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

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

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

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

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

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of business, our multiple purchases scaling generating addition performance hyper-casual few We and profitability Path to in in-app quarter-over-quarter, to games highlights and by services A titles live period with Giants rewards. Empires battle continue pass grew unlock of challenges from to several bookings new ads. during enhance the the of daily driven weekly new the Puzzles include: Zynga’s & key featuring quickly and

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strategy, in even and larger within In we closing, the powerful our innovation and as to benchmarks scale new that industry, communities, long-term our the around of prominence development a world-class believe returns the Take-Two margins, by increase significantly believe to Led teams, passion, position world. which set audiences will player for our creativity, we shareholders. the to drive is grow our pursue vast our continue execute engage we can and we opportunities for

I will now Karl. turn the call over to

year. the Thanks, start Strauss. I’d like our teams thank to to a for strong

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a hyper-casual of throughout steady that to games drive enhanced In our retention in-app and titles purchases mobile the studios on higher advertising of the for and a focusing have potential monetization will cadence rates year, profitability. release mix and addition,

be that content mobile PGA to we spending development strongest Space experiences labels most Zynga’s will recurrent year many Auto Grand and Throughout across provide to TOUR launching the pipeline Our history. Red and Program Online, Online, Theft from our and XK, XK continue and forward releases exciting to of also consumer LEGO additional company’s what in including believe engagement we Drive, portfolio. WWE drive Kerbal offerings, fiscal look Dead X, XK, new our XXXX,

over call the Lainie. turn now I’ll to

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

on XX, last to Our relative May results our combination of the XXXX, year. comparability with closed Zynga which affects

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

portfolio our by We strong had powered start the iconic, properties. a industry-leading to intellectual of year, fiscal

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to efficiency teams We consumer also thank I’d determination cautious on for macroeconomic together business. our challenging their for and maintain the amidst backdrop like focus partnered our passion incredible spending and to our trends. worldwide

and results. V, the catalog onto Theft many and value, and great of of achieved at Now, Grand the We Theft of Auto better-than-expected intersection bookings current results range. reflects offer the performance our two that consumers Accordingly, these our and XKXX. moving those are Auto at trends. end stands Online purchasing from NBA our guidance our Grand which backdrop, billion, net high In $X.X franchises was established

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increased revenue of to $XXX cost revenue net million, driven increased to XX% of billion XX% acquired GAAP $X.XX by of amortization $XXX and million intangibles.

to an charge guidance. unreleased costs results capitalized million, recorded $XX impairment development and compared also for our which title, of to our affected an primarily management related We software

and of capitalized million. reflected and expenses XX% to personnel increased by grew related Zynga, by primarily costs, full a $XXX Operating IT which quarter office expenses. a management expenses On depreciation higher to XX%, buildouts basis, operating

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

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are expenses to operating $X.XX range billion to year. as total expected Our $X.X from compared last $X.XX billion billion to

our synergies due realization full XX% by depreciation year and savings year-over-year, which from partially reduction of capitalized and operating basis, being expenses, to and and the program. to in our personnel are Zynga grow approximately management by a with expenses, On our an a are combination expenses IT of buildouts higher primarily Zynga, increase marketing of office cost from expected offset

consumer costs to to current and inflationary investing our whenever discretionary measures extensive taking environment, structure are reduce while for teams growth. our previously, announced and the review possible cost backdrop offset we still As

our to billion, onto We to billion the moving Bookings billion $X.X the year. range fiscal Net second in quarter $X.X guidance quarter. last compared to from Now project for $X.XX second

hyper-casual Our and be XKXX. Theft and NBA NBA Puzzles, and release Merge mobile Words Undead net The and quarter XK, Theft to Dragons, Dead X largest Auto Dead Nightmare Zynga and Red bookings Poker. Online, Redemption Blast, the expected Red our Grand Redemption Dead slate PlayStation Grand are Online Empires Friends, V, for and Auto includes to Switch X, With portfolio, Red contributors Toon & for

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

driven costs, expenses which by million Operating our $XXX operating grow expenses approximately the are last million. Popcore expected being and basis, offset to partly of are range year-over-year, year’s and initiatives. On from synergies Zynga expected a personnel by acquisition to management savings to $XXX by are X% cost higher

of teams inflection year efforts, are we a to we actions our closing, believe are continued exciting delivering to point culminate look are of In record us taking Through our our stakeholders in next will and and for are our confident we of trajectory year levels business growth. new chapter. strong thank operating that collective fiscal for XXXX their we performance positioning that in the for significant that preparing delivering continue We support, us all this next forward this beyond. a on

back Thank you. Strauss. I’ll to now turn the call

team, our for Thanks, our Karl. strong management and to the delivering for our want like Lainie On support. to to to of our year. your I And thank shareholders, colleagues entire express appreciation fiscal behalf a I'd start continued

questions. take We'll Operator? your now

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

particular there on an that's are kind segment -- the at. I Lainie consumer update you give of Could question. just update had consumer of out have on where I others? Just a today. is you. an think Thank you you Is kind just the consumers than think Yeah. just one weakness called where continuing. weaker

are board. but in in time lot over console hope improve. are We're growth. the people first Yeah. flat, The in down. will sort recession going for mobile comps early, the the we're months. part the slightly I mean entertainment seeing of some are that meaningfully love I a better. debating we we've XXXX, growth across for a history seeing entertainment have XX%, was from to of been Mobile in recession market. view company, down point that market XX The the Things much down business We be the a digital pretty interactive for a of the of It's stabilized. better year-over-year of whether looking in

I shoots U.S. do we're some a the all feel like definitely green it the mixed is seeing picture across economy. on But depending

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it. you guys. Got so it. Appreciate Thank much

next is proceed. MKM. Handler with question from Our Eric Please ROTH

and thank talk hyper business the wonder I could integrated afternoon mobile how advertising now? question. your how the Good with just if have Strauss, you beyond you many casual much of about games advertising -- for

are we than you direction Look, could app for the purchases, moving historically, make in XX% in less games audience Some, and where of that actually selectively. spent.

ought XXX% the a bit bit for audience so, game to audience. view more monetizing of of be monetizing XX% our or a it's And we fielding a are often we less. XXX% So the and perhaps that

I that think to there not not yet, through then can And that. among question that's but those answer We be the we're moving I monetize can experience. distinguish do that you direction. if We're think how to high-quality The advertising. we going in create and to they're spend, we audiences. great. able is a is ought to So someone's And spend, do if going do

give Thanks. this as follow-up, And of on willing and specifics -- is revenue how DTC you a I point platform wondered at how if just progressing? much the mobile any that's could to about the

that So actually we give don’t percentage. out

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say record our competitors, think, one number. And gone the and think I to it’s so I on biggest good a of XX% has that’s about

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us. good also happy our really and platform really can consumers news. growth And it’s direct-to-consumer of for for we’re about what that So mean the and

you. Thank

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

Hey. -- Two obviously quarter, of about and achieving I is charge apologize secondly relative north then Is for cash ones But slate. Strauss, kind three talked quick Lainie. billion change $X the $X those just Good and we've changes if me. year? flow. Thanks of where months for release are here. year were bookings year's this this just Any million there next year. $XX And we in boggies still the I I I'm this. got slate? curious if Last ago, so to north to we afternoon, operating impairment Karl, in much. next I any right saw missed billion to it guess of

Lainie question and to answer is, question answer the one will So yes, two.

Sure.

our So back slate, for able but year question to the within year, been still reiterating two, the the of the the for there movements achieve same guidance within some so has guidance. we’re part

within but it So the small impairment just some to nothing has do with the slate, charge. changes

the same. still the So is year

Thank Perfect. you.

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

the one. by opportunity or very be lean out deal you a the into Maybe the mean taking see activity fall part I'll M&A. start at Zynga the of after mobile about an M&A do big seems questions. year historically two. Zynga's like asking for business. business may of there It guess in market three I that was Thanks starting terms just the number everybody. to back Hi, I for past to

you. Lainie, promotional those remarks Thank is of about two number mentioned could detail changes size then are the I NBA you cadence in prepared impact? you the a for give some changes what XK. wondering financial the that and little And if the just, more just to was

the deal it's hard So on know. to side,

of to think strategy, we grow organically. a terms in position In our we're

from coming releases new about of Zynga. excited lot a really them. have We're We

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down So bit to expect the why little last year. we title a be that's versus

Thank you.

is Cowen. proceed. question next TD Please from Doug with Our Creutz

Hey. Thanks.

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spending value our to for careful sure user lifetime our that reflects acquisition customer. being make high we're a So

Okay. Thank you.

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

one question. much. so Thanks picture just bigger Maybe

so fed sort might sort elements your and next how across of cross-promotion, that updated last in having of the of Zynga As dynamics pipeline you much. into of longer-term some continue some or console the the couple AAA moved quarter. cycles some Curious years cross-play framework further Thanks bookings from development thoughts of back of acquisition. inform from of that how your elements mobile thinking the titles on of to away and about integrate you're

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Thank you.

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

Hey. Thanks for taking question. the

first The NBA on is one XK.

mentioned community. the was asked cross-play guys the You upcoming feature largely by on

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this Mario. So is Karl,

have cross we're play. excited very that that's for NBA. something been asking look, So customers our natural It's something and for about

to So new in don't we end That's going think love. up the consumer leading a a significant that's boats obviously, any impact we engagement. don't game put going is to consumer. And -- the we as do the to have anything something experience into increased unless on for

get say, then we when you get in regard. everyone's that increased as engagement, obviously, And and you happy monetization increased

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you. Thank Got it.

question next proceed. is from with David Karnovsky Please JPMorgan. Our

Thank you.

by for bookings label, Zynga. the follow guidance to up I the wanted on Just on

I think that's the down on bookings maintained slightly figure.

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see Just the that the wanted to and Rollic unpack been Bapcor. strategy has how and there, what from the potentially if ad traction you could the behind thinking Thanks. maybe revenue impacts

year. mobile, for So the the bookings within shifts for Zynga for there are some game

what that's of within there of has changed existing the and mobile. was So some reforecasting games, some

through seen of consumers just in time hyper through advertising, casual then for to of with but than particularly there Bapcor and typical stickier terms hyper business. And longer acquisition gains, they have what the the that opportunity monetizing purchasing. engage necessarily monetizing are is business, also not the are in-out potentially a And some bit casual also lead we've that periods to of the

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market and a a monetize little people with bit casual are deeper experiences last is they just I been where the the advertising, not longer. we've calling hybrid to you because purchases -- been only also have think bit out in the but have that ability

So it's creates certainly opportunities overall, don't us. but we think I exciting. opportunity new within very it advertising going that that know purchases that's to the necessarily impact for

you. Thank

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

taking Hi. question. Thank you for

excluding guidance on that wanted So the I David And all talked you basis, to And wanted is an implied last I at Karnovsky do I to I know didn't guidance. changed mobile bit. have like-for-like guided. since that, about on a question advertising whether expect you your change question. Zynga one Bapcor. within year grow organic has more little time asked you And the then to your -- and you what know, full think

movement So has little that bit some was forecast. we Zynga to a just because changed mentioned release schedule there the and the updates in

the have we the in changes did rest year. So of some

So there were some changes in the release schedule.

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we quarter, in terms we it year the kept grow, full but end yes, and the the full advertising So higher -- reiterated at to -- were to in year. expecting first grow we the do of then expect in we

Organically?

Organically, yes.

in your Strauss that part other years Okay. a Great. few mobile then terms the said of to of direct-to-consumer ask that of leverage in the channel, games question And the I I channel. will was wanted think majority

So you winners. over are of well them a lot all counted have games. Not big XXX. We've of your

there's think tail long of I games. a

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you. Thank

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

from IP creative Super kind and Of formulas been new in like story Mario mediums. is for thinking the what and this it's questions. guys. hard isn't big -- results maybe opportunity. upon, -- quarter, not on Strauss, Strauss, know guy, game an pardon lines. Us. Brothers historically, notice you're here the film And our of bandwagon to challenge great Thanks, Curious so Nice I Thanks to but area a to Last Trim have Karl, original looks taking success sort It piece of you're Lainie, Curious where have the not picture The this the Game that for involved

portfolio It a definitely seem And at look have talent, you've you a like when you ton of opportunities. would storyline. creative have IP, of got great certainly you your a

expand if term. questions episodic content. So two teams like or your IP then into Thanks, your film complement guys., can beam-like IP long film you the sort to their entertainment creative Strauss. think expansion if And are Curious over strategy into on new new curious growth mediums streaming motivated of that

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Thank you.

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

approach axle marketing said, -- the is a we about an had content get semantics, but hey, how you difference Anything delivering incremental Online. out around normal ones. now not Strauss of talking the quick with you evolution and wrapped to phased there more Two when call it's or or Thanks. to GTA a you're were MO? just

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Thanks, Awesome. Strauss. Thanks, Karl.

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

Hey, for guys. the question. Thanks

of that's like with bit percentage sheer revenue talk to talked And wanted Rockstar dig your for things you and wondering could for actually went that? studio. It those if by mobile the little so, Thanks. improved? that a a shift breakdown function into And the Just back other just if expectations from I'm looks the about more you or if segments about up.

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sales, the updating. some Online Dead Red some there's virtual unit GT and GTA some with currency updates the So X

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we I And times The the we in you're that a highest in seeing they'll So that, quality up good in economy. do titles bad. big and to audiences. have even mean still show best properties. if deliver mixed full

the to to have of would over We comments. conference management our I the turn for reached back end question-and-answer closing session. like

just a I our thrilled this year to delivering way teams a with minute we're is and thank quarter, to for the superb want really take again unfolding.

their we're a to titles phenomenal this excited excited really great of Our upcoming our about to for We're shareholders the continue obviously, grateful to naturally, thank you questions. for attending releases. quality. very future be continued we want your call the about And for fiscal year. And beyond all And also support. our

have a great thanks evening. so So and much,

Thank conclude you. conference. This will today's

at lines again participation. your thank and you this time, for disconnect may You your