Take-Two Interactive Software (TTWO) 16 May 242024 Q4 Earnings call transcript

Greetings, and welcome to the Take-Two Fourth Quarter and Fiscal Year 2024 Earnings Call. [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 Investor Relations and Corporate Communications. Thank you.

You may begin.

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

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

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

these We a based operating statements. on Actual vary of forward-looking have to results factors. statements no variety update forward-looking significantly obligation may from these

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

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

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owned more Our to to accretive direct-to-consumer to our business this each channel. continues grow, add highly titles are working quarter and actively distribution teams

development fiscal Looking that year, of Star has titles numerous we're including Thrones: launch ahead, and Zynga Legends. release Wars and Game worldwide in soft Hunters this eager to

efficient In in balance property, closing, top confident our business, portfolio creative owned our highly and industry-leading I'm our sound talent, increasingly infrastructure. of led sheet our our intellectual by

we core tenets deliver And to years, industry-leading also of and creativity, teams efficiency. growth deliver are our innovation we're several laser-focused Our as next over our poised the shareholder on groundbreaking pipeline and returns.

to call the over I'll Karl. now turn

build and work hard like foundation for future, their more as teams to is for I'd dedication believe ever. which thank to Strauss. the continue promising Thanks, we our than our we

pipeline, We excited upcoming approximately fiscal are titles extremely through our XX about which includes XXXX.

believe canceled were franchises which the franchises opportunities affect Our to net cost growth. we our expected we through core not reduction critical commercial and and recent achieve our bookings efforts success. These the program titles of reflects did updated our not any best of several resources our release represent actions to to focus include significant schedule titles our and on materially

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Hunters Thrones: mobile XK We Playmakers, Legends. NFL have Star of X titles, Wars Game including and

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Lastly, X year. in this we planned for have iterations new releases prior

our continue labels across will spending always, and consumer offerings. many content drive of key new recurrent As and that experiences provide engagement to our

sports XX and titles titles. releases, XXXX immersive fiscal mobile including of XX X released are independent previously and for pipeline simulation of games, our new iterations X ahead, X Looking XXXX X title, have games which core planned,

margin that closing, a period growth, long-term of returns. we the expansion of will deliver believe meaningful and shareholder ahead In us many opportunities

over to I'll Lainie. now call the turn

successful year, the everyone. finish engaged Throughout momentum, good trends cadence with entering and strong a XXXX afternoon, delivered Thanks, in-game released and the fiscal our content continue and term. steady are with titles, franchises. of healthy we across key to Karl, our for fiscal organization long XXXX We position players a including head to

which We to decisions or align of also the our we that made deepened difficult our to resources for some the while conviction. efficiency levels initiatives highest and have commitment

drive time, new that and are We industry-leading confident enhance margins returns steps deliver scale, for shareholders. our our will over our

their and dedication. to thank our I'd for like teams passion vision,

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popular our wresting quarter, ability we to which the launched the XKXX, further successfully During series. Concepts WWE Visual and raise for XK bar demonstrates

billion $XXX revenue $X.X net revenue million declined included an related million and acquired assets. decreased impairment GAAP XX% X% $XXX to to cost while intangible to of of charge

by increased our to and billion expenses of reduction billion expenses charge XXX% related impairment cost announced $X.X due goodwill a of business Operating to to $XX program. reorganization $X.X million recently

slightly basis, was higher and due and On which rose expenses fees. above year-over-year, operating our professional a guidance expenses management XX% IT to personnel

XXXX, billion of $X.XX bookings. slightly fiscal billion. for net bookings For $X.XX spending revised consumer which above of was net billion, accounted range of our X%, outlook Recurrent we to which our and exceeded $X.X grew achieved XX% guidance

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our was $XX technology external outlook $XXX to and We primarily for flow game Non-GAAP as cash interest million expenditures, capital cash to tax office of payments. approximately and advances, adjusted build-outs. due higher million $XXX approximately compared spent on operating developer million unrestricted

and to charge of GAAP net revenue was to an million $X.X included acquired impairment billion intangible X% $XXX billion, increased $X.XX related cost assets. revenue which flat at of

and expenses increased the related $X.X earlier Operating to cost I related of to quarter. due to charge and reorganization were a guidance mentioned basis, management slightly charge fourth operating above due reduction billion goodwill an affected $XXX our rose million $X.X XX% expenses that programs. On impairment to the business our factors XX% billion to year-over-year

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$XXX We approximately plan expenditures, expect for operating from non-GAAP and to million an $XXX build-outs. flow and we cash be capital million game of adjusted office outflow unrestricted primarily technology deploy to

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expected to a of expenses. implemented $XXX operating business. is program entire over that to savings cost Turning million We annual cost recently across reduction deliver our

As part have projects would financial anticipate of we these eliminated efforts, our development that not we in several benchmarks. meet did

streamline organizational existing both structure, hiring headcount our and We reduced future also took which needs. actions to

marketing approximately year. year-over-year, $X.XX a compared Our range management total billion to On operating $X.XX growth X% billion expect of operating as offset planned $X.XX from the expenses Factory! are support mobile we to which year, our from Match billion expected basis, savings immersive by as and last to events is ongoing largely for program. other core increase to launches in well cost reduction partially due as an for

XXXX. as and Auto the fall from calendar VI ahead, mentioned to Grand calendar XXXX of earlier, Looking when we established Strauss Theft release have previously narrowed

the advances, grow. continue title potential confidence in As commercial our its impacts development and to

not That modest numerous specific on beyond even have in said, providing guidance as each and includes results our year effect period. can schedule significant fiscal a XXXX are we given any shifts release titles

XXXX. as remains net for sequential lifetime XXXX outlook Our expect of the and as in in our we fiscal value XXXX, pipeline strong and bookings growth ever,

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

the rate PC quarter and for Hunters. of Wars No for lease Spin Wicket for and XK Playmakers, Our includes have XKXX, access the already Top all on Rest NFL Star which early released

& and NBA recurrent by series, and Words our Series, to Online. XK, Friends We mobile mid-single-digit results increase Auto largest XK which assumes hyper-casual Toon consumer bookings Puzzles; Zynga decline Grand Match project Redemption Red for the Grand Theft to net approximately with mobile, Auto Empires Factory!, in Poker. expected to the flat be portfolio, X%, Theft The NBA spending contributor are growth the Blast, Dead for

are expenses range from approximately marketing $X.X from by to expected GAAP to On year-over-year, Operating to grow Factory!, to to We management program. our expect cost primarily expenses driven revenue Match million net billion reduction operating $X.XX offset planned by which $XXX XX% are million. for $XXX billion. a additional range partially basis, was by

content In profitability our to forward our excited closing, and about look to more for extremely ahead efficiency. our many well we our believe industry on in our We're about the that enhance maintain we are scale very company. details we our to positioned we catalysts grow deliver the the path sharing future, as and highest to quality focus and

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

most our our our of highest captivate our to to entertainment quality, engaging I our for your audiences. team, continued to appreciation thank the business Lainie and Karl. shareholders, colleagues to like for And want Thanks, dedication global and behalf On express entire for their support. to our I'd creating management franchises

We'll now Operator? take questions. your

ROTH Our Handler question of Instructions] [Operator comes line first Eric MKM. the from with

Gearbox. here Can I a you now and owning to need In about Strauss, Gearbox, that you really that if have all think you bit Gearbox wonder of are Gearbox that? to little the of how past, some of you've about the all you could the you the of about acquisition. own never with you about felt opportunities talk own talk all expressed

long-term sold when mutually asked, referring publishing my have that's company was was What have Gearbox any been I and Gearbox caused because . for or our to as agreement, was concern, we Eric. beneficial that was embrace and us a no Embracer. for to to response and whether when Thanks, for is it

the the we company opportunity presented terms reasonable, felt frankly itself at when However, for the jumped we acquire to us that on were opportunity.

the Tiny his He hit team. rather And cadence. new the We to hard a very a very was all responsibly Randy on new ability world goes maker. for from AAA reliable hit, Pitchford and bring respect strength strength. and And to he's make a and products Borderlands rapid to to Tina has and And a course, have in market just of the hit. it's

So family. the in we're thrilled have to Gearbox

to Lainie, be cost much should Okay. that with of that then, savings seen you regards And fiscal annual how 'XX? the announced, in

So we'll fiscal see we'll to of 'XX, full start it see but in fiscal annualization in a 'XX. year it

will pieces executed but come it this So QX majority in the of was through year. of QX, plan the and

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

top grossing The XXX ability launch really of surprise. games pleasant is a Rollic to

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so We really start. we're a off done yet, but good haven't to

line Baird. the Colin from comes Sebastian And our of question next with

Strauss, mobile how on me. GTA Or of VI? the spend curious and specific to you're the are more that What more outlook. launch much And and on of the talk any that calendar is change behind to expectations seeing your is in marketing 'XX that's broadly for confidence, your guidance there year? for the to guess, else I'm secondly, then titles in you a off first is recovery growth. postponement? gaming? level single-digit is any anything mobile of the this increase in Maybe about high specific And that can the that outperforming couple I related these

and release industry. year down hits, what's Obviously, at year actually the come. up feel driving XXXX Thanks, about that slightly Colin. title XXXX, a we're then of Factory!, we into mobile, be And date. driven results it with that our feel And down market to for we heading year the would our which we expected a really is flatter Match including fall that calendar a is regard though, UA on performing narrowed is Zynga said a live. is because that of to And we are fourth do quarter obviously, spending the good And gratifying spending. great well. We we to about really, what lot the a turned by did, we in out and be to market which really and were leader, that's course, productive we in we after

Our next Morgan the Cost question Matthew comes of from with line Stanley.

perspective? the investing marketing seems and are profitable guess is should Factory! investment targeting about side? there's and what great with think mobile, to we the a or Match which margin marketing It you've from date the like we this more for Star Wars And mobile when incremental into behind analytical business, a guess in flow-through mobile. to see. you turn when payback Hunters launch I expect release framework see I new titles that then your setting success behind for from in definitely had momentum the between some

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expect -- incremental cost Great. that profit? mobile And in this see making would you center flip you're when a driving mobile due to from to investment

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

for for you is growth could forecast Or 'XX this view? So address slight fiscal NBA that's digits for increase, is that a XK going influencing RCS forward? there your in something the 'XX in normal new unique fiscal low single

is we little the fantastically in because well. the on Gen side transition our also expect not Gen side This game we're a doing a full And more X still are say expectations So outperforming bit X Gen Gen that's in bit NBA. and to little challenging I'd the sales on challenged absolutely but is well. X on from X. as just And we year side. the more RCS growth

in off Gen look As you we that it specifically headwinds it And the -- X, regard. more at spending, continue to recurring tailwinds specifically relates transition, it's to see the It's to we're than at I consumer fantastic. you going chart. look think as when when

growth So we've seen significant there.

RCS X to see very in continue to more strong to we're going transition So Gen and game, continue people we have just growth. the as deeply engage momentum again, think as I we will to

Deutsche line next with of question the from Benjamin Soff Our comes Bank.

year a And there. were shifts the moving other I'll quarter, then, comes if could talk you yes, bookings I restructuring? GTA this versus talking little versus how stop what guess, from I any last in about guys versus wondering was bit much you more about guys change the

previously fiscal There of calendar that plan that from So for also the reflects as year. is release also mentioned. XXXX also with the within movements results window outlook fall, cost-cutting some of Games 'XX, the a year schedule part the Rockstar and are we for narrowing our overall established other to

then your a after current next question. it. reflects housekeeping or Does acquisition updated And outlook the going be closed? is it's Gearbox, Got quarter that of to

No, closed it's included hasn't not since transaction the yet.

we expect results. to it next when we close, it slightly we and be will quarter expect So to include accretive management to our

next Oppenheimer. Our comes of from line question the Yang Martin with

First window With associated statistics. plan a question to the narrow of of release, your VI? there service any regarding changes on GTA live portion is

been So on what Rockstar are its expectations that a fullness come details out time. wonderful the from It's in news broke more Rockstar of the that they will the for put and hasn't given trailer Internet, release. any

from market, I How the either on external XK or on to a compared from the is market? question competitors? attribute other you challenges or challenges have releasing NBA. to And second to annually NBA's in console XK generations to titles do transition other between mostly

console I'm your the sorry, generation transition from this to from last question transition? was the transition about

Right.

Okay.

back So frankly, is Gen year, in time. have front that say generally between I would And quite the that around. we more And case, completely the games figures obvious back delta in the me. But quite game think that I any But X exact speaking, don't creates then. had of creates games. this I the And remember difference if in X can't a delta games much separate I the broader. significant do X that's going X time this some the frankly, -- between to

pronounced second question. And is your is transition the effect there the Was one? So the -- I would that expect forget generation. this more in console of more I transition another

On does how [indiscernible] to annual recurring with compare it this studios other titles?

we really competitors. much our not And -- commenting out comes other as our year. studios, on most NBA don't have of We're Yes. every

wouldn't comparable comment to have more experiences. but going So their effect competitors would, be again, And that of see rightly. same transition our games the in We we don't to -- other NBA said, really they and games. like Occasionally, most you're our I the don't we about anyway.

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

on explain curious the you increased. prepared that why You've if term? medium GTA guidance, is the comments, your for enthusiasm you're curious not for what's second game? could And mentioned that just the commercial I'm impact and in it the providing here question driving quarter. like VI on before, your then Strauss, that done from [indiscernible] feels you Congrats your expectations you have at least sort primary confidence And 'XX, growth. of 'XX? that and that games AAA on or 'XX better growth you wondering that I'm other is driving on you that your the combination is then ecosystem where that the Is into of it in plan question, grow can catalysts that that tying visibility primarily GTA of a release? driving to

Thanks, those questions. Mike, for

about than release. perform up extraordinary And in years every to continues the million growth We've Grand game Auto XX% continues sold over full so believe. year initial was units. ongoing online the sales well. we to this continue Theft be because to quarter, and the of now V confidence in by increase think the our with Auto of just and That's XX%, I pleased stage game, the XX more fiscal past engagement was Grand Theft up I about [indiscernible] at after with XXX

expectations I is at as delivers. So feel what of course, boardroom very fever in are all a around everywhere pitch. the high Rockstar of the and though for market's And perfection the we typically this think world anticipation

clarify not didn't we specific a have question, to generally that where when question, your your number second you were we is, of asking answer terms necessary top done think very provide In guidance except line was going it for I why speaking, We question, forward? And we line. the third fiscal now about we saying the top felt this question. specific pretty and much couple the think your of we growth relating sequential think expect on very to years answers fiscal company we're next was that by year going. about the And being

given releases years second in that we a same many certainly, for number that card optimistic. accelerating. powerful ecosystem. by hits driven we only have third to hit question expectations have that later. time, the of have sales At this marketplace. V be of also the which we we're The other about answer full And and highly continue the GTA course, the GTA strong your And of for is Factory! again, a huge Finally, coming Match part is is ecosystem. game

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

just your organization in key resource through for of content across forward? When the much are one of allocation going going now reevaluating refinement right, went view? to on of pipeline were guys of you learnings a ahead? key setting the right you ask the rate terms pipeline some to in what some marry I IP decisions hurdle parts. learnings the of up to mix your Or you as are the what do picture the the come you multiyear that's look how there a is resource think of Maybe you at continued big activity meet on and allocation X out and resources the were And the years just company be of looking a

what those years look we're now the understand the we the as that more are for in that think And noticed is took mean a really in biggest and -- we have and seriously. We're highest we're we've projects a looking obviously to at around -- -- and this not This we looking commercial critical we least right through of and that choices. new share. that's been specifically the to difficult but been taking is coming simply go is pipeline through I've here. through that process It's the games for they're through at And our then success. any us. the industry that going always making very we looking take going last And through and us winning, terms tough for or -- XX [indiscernible] looking the So the just pipeline, for I this chance and that for that going fact success projects. cancel

of normalized But part process. that was was and our in something really it this context, necessary

big pretty was that look So expect tough the we a in look. pretty This absolutely continue that, a will and future.

new life That's part few will important. behind the if invest adding, And us. we subtracting both we as we I blood will the be And be That's mistake. not we that you're is think years, of we investing it level off and table for most not over the IP, with will of well. a and So it's biggest next to in industry. very do. think the what new us. But IP continue will That is be -- of in that's

question next the from Jason Citi. Bazinet of Our with comes line

sort the to such sort This with any confer one question XX%. feel is syncing had GTA doesn't fall Do benefit just powerful calendar a 'XX like franchise that you benefit? GTA there's I of ancillary the Or really of from of incremental you on that think of of season? VI. do an narrowing holiday it up

it at Well, in think we'd all looking we're probably doesn't rather be that release matter, now. I the window

next line comes Heaney of the from Our question James Jefferies. with

side mobile of have on the business. the of been What unlocks some the

just but could business, say IP Zynga's on you in results specifically business? the there's better-than-expected of the anything out side curious if call the advertising did You

Look, casual we both and mobile it the business our business took important on purchases hit a purchases where they hybrid rethought X well. relevant. they're blended hyper-casual and within advertising into as businesses advertising are in-app turned as We in-app we and have

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with Our of from comes MoffettNathanson. Clay the next Griffin question line

I'm you tons that of curious if on broader about gets not PC, I guys engagement, know would for strategy. particularly the talk all GTA tons and monetized. there's just of that PC

past, have maybe I think that in the that a there. you've as it's describe thing good to

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about I'm PC? monetization to so unlock are seeing curious or And thinking on you your maybe just what guys opportunity

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next question line UBS. our the from And Schoell with of comes Chris

increase price help I but to games recognize you franchise around thoughts And get look general pricing at in you years, think with your what latest portfolio the GTA experiences? us as it's can a been for your VI, announce for so as rationale? the Rockstar saw these continue more robust or dynamics through We the X GTA+. are larger

for we content constantly given We're the value what available, rubric. focused cost. it's and we more to context of being sort any made time. good to That's want the we more great we any there's price, so delivering the that's time that of really the Look, aim at charge. sure in make And value consumer And the on over vastly the our goal. news than deliver experience that delivers establish

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

sequential then questions, have X one and on growth. mobile I again just one on the

Dead of sequential there. square fiscal that growth in 'XX, any released Theft tough in X lapping Rockstar look really a just just such 'XX in fiscal seems more a all fiscal it last Will couple things I'm going would It was there just times, 'XX, Auto going grow to continues fiscal comp at there When I of color you be is in not to how us Rockstar after GTA XX% launch. give title. grow. great. VI 'XX? 'XX And fiscal color Any V 'XX when trying back more at fiscal to Grand those Redemption sequentially is Red kind fiscal counterintuitive. can that in the So be on down you're did 'XX to mega drive

now a VI XXXX and obvious by project do since and in Look, it's is ways coming. business we the company. certainly question. our now have diversified XXXX growth has fair and and large driven in we're overall changed that since sequential a and And that are Yes, pipeline, ways the in and GTA we really absolutely future. The

we've their competitors as aspirations other I selling great continue in we standalone earlier, GTA game, even company. year, a than releases at selling more first have VI. GTA XX Vs And been big sell for given said over full We our years. And for to most year

compelling have So game exciting. both the that robust years continue to a we actually full very a announced for will be to Equally, there's unannounced, think case that's pipeline and sales come. we

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focused. remain and Africa, who Our in in Asia, geographies largely we isn't where underpenetrated. are located and think opportunities are enormous business And deeply else U.S. there and businesses everyone those for we India competitors' Western our growth and Europe

kind your schedule is opportunities release So your there our this of pipeline. our finger and ease, This for and but mind numerous it stick hope number. driven by and the air are at to for put in mouth isn't growth, hold in the best

same make Okay. kind And Because the bring -- people the VI a installed growth you ecosystem lot Do lines, sales? lot reacceleration the of in super excited your coming your or about GTA of a to I gamers about forecasts. of of be are assumptions along base the going back console console in may lapsed into title out. perhaps think any a

IDG's are pretty using We're projections, which substantial.

consoles million about was is XXX last So project that will the they're view that year, this they for alone, XX to currently Gen of that the XXX year by of of and X end worldwide the end end their at by XXXX. rise the

those not And very of don't attach lot subscribe we expect that but Now growth. subscribe views, we shows do or to necessarily awful significant a an rate.

Thank you.

of our that, to CEO, the would back session. with And over to closing end floor comments. Zelnick have question-and-answer We I any like for turn Strauss the reached

all shareholders. delivering here in works about the have dig morale asked want of And which amazing we're position These that's for just who operating and in, the highly for fiscal we're to of deliver our And and every in our challenging. been our Before currently to day pipeline I our about for We're ahead. hits, customers our both focus year who in customers, -- first we everyone deep rightsized. efficient, the to and the our foremost, the And Take-Two about most common affiliates. sign the our and to thank our good. colleagues we're the is for on about excited extraordinary business make things years and everyone extraordinarily times. sure we've off, addition and And is at challenging amazing one organization

Thank you us joining for today.

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