This paragraph introduces the Take-Two Interactive earnings call for the first quarter of fiscal year 2024. It is being led by Strauss Zelnick, Take-Two's Chairman and Chief Executive Officer; Karl Slatoff, their President; and Lainie Goldstein, their Chief Financial Officer. The call is being recorded and statements made during the call are considered forward-looking statements. All numbers discussed are GAAP and all comparisons are year-over-year.

Take-Two Interactive reported strong results in the first quarter of fiscal 2024, with net bookings of $1.2 billion. Grand Theft Auto V, Grand Theft Auto Online, and NBA 2K23 all exceeded expectations. Additionally, new intellectual properties were introduced, development of eagerly anticipated titles was advanced, and cost management initiatives were maintained. Rockstar Games also released San Andreas Mercenaries for Grand Theft Auto Online, which includes story-based missions, Hangar upgrades, Smuggler Source and Sell Missions, and seven new vehicles.

The June update for Grand Theft Auto Online includes fan-requested experience improvements and a Career Progress feature which allows players to track their progression and claim rewards. Red Dead Redemption 2 has sold-in over 55 million units and Rockstar Games continues to support Red Dead Online with bonuses and rewards. NBA 2K23 has sold-in over 13 million units and engagement with the game remains strong, with approximately 2.6 million Daily Active Users. The NBA franchise extensions have also performed well, with NBA 2K23 Arcade Edition being one of the top games on Apple Arcade.

WWE 2K23 experienced strong engagement throughout the quarter, with players logging 22 million hours of gameplay and 170 million matches. 2K also released LEGO 2K Drive and After Us, and Zynga had a solid start to the year with ad revenue growth of 11%. Toon Blast surpassed $2 billion in lifetime gross bookings, and Zynga is making progress on its profitability initiatives in mobile.

Zynga had a successful period with multiple new games scaling quickly and several titles generating bookings from in-app purchases in addition to ads. Empires & Puzzles, Rollic's Twisted Tangle, Social Casino, and Casual Games all had positive results. Zynga is reiterating its prior guidance of $5.45 to $5.55 billion in net bookings for fiscal 2024 and is optimistic about its future. Take-Two is in a powerful position to set new benchmarks for its player communities and drive long-term returns for shareholders.

Rockstar Games announced that Red Dead Redemption and Undead Nightmare will be released on the Nintendo Switch and PlayStation 4 in August. 2K and Visual Concepts will launch NBA 2K24 on September 8, featuring Kobe Bryant as the cover athlete and Sabrina Ionescu as the cover star for the WNBA Edition. The game will feature cross-play, ProPLAY technology, and more. Private Division and Evening Star also announced Penny's Big Breakaway, a 3D action platformer from the team behind Sonic Mania.

In the first quarter of fiscal 2024, Take-Two Interactive had a successful start to the year due to their portfolio of iconic intellectual properties. They are expecting to launch a kinetic yo-yo adventure in early 2024, as well as Zynga's Star Wars: Hunters and Social Point's Top Troops later in the year. Take-Two will also be releasing a steady cadence of hyper-casual mobile titles throughout the year, as well as new content and experiences for their existing games. They believe this to be the strongest and most exciting development pipeline in the company's history.

The company achieved net bookings of $1.2 billion, which was at the high end of their guidance range. The performance was driven by Grand Theft Auto Online and NBA 2K23, and recurrent consumer spending rose 38%, which was above the outlook of 35%. GAAP net revenue increased 17%, and cost of revenue increased 39%. Operating expenses increased by 25%, and on a management basis, operating expenses grew by 46%. The company expects to have a successful full fiscal year.

Strauss mentioned that the business is performing well and they are reiterating their net bookings outlook. The largest contributors to net bookings will be a variety of games and the geographic net bookings split is expected to be 65% US and 35% International. They also expect recurrent consumer spending to grow by 5% and are forecasting non-GAAP adjusted unrestricted operating cash flow of $100 million. Total operating expenses are expected to range from $3.38 to $3.4 billion and are growing by 15% year-over-year due to personnel and marketing expenses and higher depreciation of office buildouts and capitalized IT expenses. Teams are taking measures to review the cost structure and reduce discretionary costs.

In the fiscal second quarter, the company projects Net Bookings to range from $1.4 billion to $1.45 billion, with NBA 2K, Grand Theft Auto Online and Grand Theft Auto V being the largest contributors. Recurrent consumer spending is expected to decline by 7%, and GAAP net revenue is expected to range from $1.26 billion to $1.31 billion. Operating expenses are expected to range from $811 million to $821 million, and are expected to grow by 5% year-over-year due to acquisitions and personnel costs, offset by cost savings initiatives. The company is confident that their efforts are positioning them for a strong trajectory of growth, with the goal of delivering new record levels of operating performance next year and beyond.

Strauss Zelnick of the digital entertainment company reports that the market for interactive entertainment was down in 2022, the first time in the mobile business. Year-over-year comps have stabilized, with console market showing growth and mobile being flat or slightly down. Live entertainment is doing well, but home entertainment consumed during the pandemic has been challenging. Zelnick believes the economy will bottom out in June or July.

Strauss Zelnick of Take-Two Interactive Software Inc. discussed the potential benefits of the Hollywood strike for the video game industry, but emphasized that they are not counting on it. He also discussed the potential for mobile advertising to monetize 100% of the audience, rather than just 10%, and that they are working towards this goal.

Strauss Zelnick and Lainie Goldstein answered questions about their mobile revenue, with Zelnick noting that their biggest competitor has reported 25% of their revenue is on the DTC platform and they are not in that vicinity. Zelnick also noted that Zynga's advertising net bookings were up 11% year-over-year. Goldstein then noted that there have been some small changes to the release slate for the year, however they are still able to achieve the same guidance for the year.

Strauss Zelnick and Lainie Goldstein answer questions about Zynga's mobile M&A and changes to the promotional cadence for NBA 2K. Zelnick states that they are in a position to grow organically and Goldstein mentions that the title is expected to be down from last year due to less promotional timing. Lastly, they are asked about lessons that could be drawn from the success of a competitor's game and Zelnick does not offer any specific advice.

Strauss Zelnick discussed the potential of cross-promotion, cross-play, and creating new mobile titles based on Take-Two intellectual property. He emphasized the importance of creating a quality consumer experience that consumers want. Eric Sheridan asked a question about how this might inform development cycles and pipeline dynamics, to which Zelnick responded that they believe there is an opportunity to engage on console and mobile.

Karl Slatoff discusses the upcoming cross-play feature and its potential impact on user engagement and recurrent consumer spending. He also explains that the decision to not include early access pricing for NBA 2K was an economic decision based on allocating resources.

Strauss Zelnick and Lainie Goldstein discussed the slight decrease in Zynga's mobile bookings for the year, which was due to a reforecasting of existing games. They also discussed their focus on hyper casual games, which have been more successful in terms of retaining users and leading to more in-app purchases. This strategy has the potential to increase ad revenue from Rollic and Bapcor.

Lainie Goldstein discussed the hybrid casual market, which monetizes with both advertising and in-app purchases, and how it creates new opportunities within advertising. She then discussed Zynga's release schedule and how it has changed, but the full year guidance remains the same. Finally, she discussed the direct-to-consumer channel and how it will be used for many of their mobile games in the future.

Strauss Zelnick and Karl Slatoff were asked if their direct-to-consumer platform could generate significant revenue. Zelnick responded that it depends on the game, and that there is no specific goal for revenue. Michael Hickey then asked about the potential for Take-Two's game IP to be adapted into other entertainment mediums, such as film or streaming episodic content. Zelnick mentioned that Take-Two has a lot of potential IP and creative talent to make it successful.

Strauss Zelnick discussed how the company is not looking to invest in film and television projects due to the fact that they are typically very challenged asset classes. He mentioned two successes, Boelens and BioShock, and mentioned that the reason for their success was due to great IP and a great project. He concluded that they will remain selective in their approach to licensing, and that the economic opportunity of their core business is much greater.

Strauss Zelnick and Karl Slatoff discussed the benefits of delivering content in smaller chunks (a phased approach) versus waiting for a larger delivery. They also discussed the economic opportunities that come with subscription services and game of the months. They noted that when they bring in new players, the engagement is strong and the conversion to RCS (recurrent consumer spending) is very favorable.

At the end of the question-and-answer session, Strauss Zelnick thanked their teams for delivering a successful quarter and expressed his excitement for the way the year was unfolding. He also commented on the competitive environment in the industry, noting that they were competing with themselves and that the best titles still attract large audiences even in a mixed economy. Lainie Goldstein explained that the update for Rockstar was based on the momentum in their current business, such as GTA 5 unit sales, Red Dead updates, and virtual currency with the GT Online updating.

The company is looking forward to their upcoming releases and the future beyond the upcoming fiscal year. They thank the attendees for their questions and their shareholders for their support. The conference was concluded with the operator thanking everyone for their participation.

This summary was generated with AI and may contain some inaccuracies.