The operator introduces the Take-Two Interactive Second Quarter Fiscal Year 2024 Earnings Call and reminds participants that the call is being recorded. Nicole Shevins, Senior Vice President of Investor Relations and Corporate Communications, will host the call with Strauss Zelnick, Karl Slatoff, and Lainie Goldstein. The speakers will be available for a Q&A session after their prepared remarks. The call will include forward-looking statements and the company's actual results may vary. All numbers discussed will be GAAP and year-over-year comparisons.

Take-Two Interactive reported strong financial results for the quarter, with net bookings of $1.44 billion and management results exceeding expectations. The company is reiterating its fiscal 2024 net bookings guidance and is optimistic about its multiyear growth trajectory. Grand Theft Auto V and Grand Theft Auto Online continue to perform well, despite being ten years old.

Grand Theft Auto V has sold over 190 million units and Grand Theft Auto Online has seen continued success with new updates and features. The game's developer, Rockstar Games, has also announced the addition of CitizenFX to their team and the upcoming release of the first trailer for the highly anticipated next installment of the Grand Theft Auto series. Red Dead Redemption 2 has surpassed expectations with over 57 million units sold and Red Dead Online continues to receive updates. Additionally, Rockstar Games has expanded the audience for the franchise by releasing Red Dead Redemption and Undead Nightmare on new platforms. 2K and Visual Concepts also achieved success with the launch of NBA 2K24.

The new NBA 2K24 game has been a huge success, selling over 4.5 million units and offering exciting features such as season passes and a combined reward system for my career and my team. Other franchise extensions, such as NBA 2K Mobile and NBA 2K Online, have also been performing well. The launch of the Borderlands Collection has been well-received and Zynga continues to deliver solid results. Rollic's new game, PowerSlap, has been a hit with over 1 billion slaps recorded. Overall, the company is pleased with the ongoing performance of its mobile business.

The company thanks their partners and colleagues for their successful partnership in creating a new mobile game. They also highlight the success of other recently launched games and their efforts to increase advertising and improve profitability. The company is optimistic about leveraging their direct-to-consumer platform for future games and sees promising growth in their hypercasual and live games portfolio. They also mention updates and events in various games that have led to audience growth and increased engagement.

The company is currently experiencing growth opportunities and is focused on delivering strategic priorities to create engaging entertainment experiences and expand their audience. They recently launched Top Troops, a successful mobile game, and Borderlands 3 Ultimate Edition for Nintendo Switch. They also launched the WWE 2K23 Bad Bunny Edition, featuring Bad Bunny on the cover and a playable version of him in the game.

Zynga's Peak Games studio has released a new puzzle game called Match Factory, which has received positive reviews and high engagement. Private Division has several upcoming releases, including Rollerdrome, Penny's Big Breakaway, and WWE 2K24. Star Wars Hunters is currently in soft launch, with a worldwide launch planned for 2024. Private Division is also working on a game set in the Middle Earth universe, and Zynga plans to launch a new mobile title called Game of Thrones Legends.

In addition to releasing new games, our company will also focus on providing new content and experiences for existing games to drive engagement and revenue. We are optimistic about our development pipeline and had a strong second quarter, with net bookings at the high end of our guidance range. Our teams are working hard and we released several new games during the quarter. Recurrent consumer spending accounted for 78% of net bookings, which was in line with our expectations.

The company's GAAP net revenue decreased by 7% to $1.3 billion, while cost of revenue increased by 24% due to impairment charges and amortization of acquired intangibles. Operating expenses increased by 3% and included a loan impairment charge. The company is reiterating its net bookings outlook for the full fiscal year, with the largest contributors expected to be NBA 2K, Grand Theft Auto, and its hyper-casual mobile portfolio. They expect to generate $100 million in non-GAAP adjusted unrestricted operating cash flow and plan to deploy $150 million for capital expenditures. The company forecasts GAAP net revenue to range from $5.37 billion to $5.47 billion.

The company's total operating expenses for the fiscal year are expected to be higher than the previous year due to a full year of Zynga, increased personnel and marketing expenses, and higher depreciation. However, the company is still working to optimize its cost structure and reduce discretionary costs. For the third quarter, the company projects a decrease in net bookings, but an increase in GAAP net revenue. Operating expenses are also expected to increase, but at a slower rate due to cost savings initiatives and synergies with Zynga. The largest contributors to net bookings are expected to be NBA 2K, Grand Theft Auto, and various mobile titles.

The speaker discusses upcoming catalysts that will lead to record levels of financial performance for the company. They thank stakeholders for their support and express excitement for future projects. The speaker also mentions a recent acquisition that could help the company learn more about user-generated content and potentially expand their audience. The company's guidance for fiscal years 2025 and 2026 has been revised slightly, but they still expect growth in 2026.

Strauss Zelnick, CEO of Take-Two Interactive, discusses the company's recent acquisition and its potential impact on the company as a whole. He explains that the company is excited about the acquisition and sees it as an opportunity to reach consumers who are interested in role-playing games and streaming on platforms like Twitch. The company also hopes to protect its intellectual property and potentially monetize it through this acquisition. When asked about the behavior of players who engage with GTA+, Zelnick states that there is not a significant difference compared to non-subscribers. Additionally, Take-Two's CFO Lainie Goldstein clarifies that there is a difference between GAAP revenue and advertising bookings.

The company took a write-down in the quarter due to an updated projection for one of their reporting units. They are not giving any further details. The company has been offering a subscription to avid consumers and believes it will bode well for the future. The company's labels handle the details of the subscription content. There is a greater prominence of licensed IP in upcoming mobile titles, but the company does not see a difference in the value of licensed IP on mobile versus console and PC.

The speaker explains that both owned and licensed intellectual property (IP) are valuable, with owning IP having higher margin potential due to not having to pay royalties. However, licensed IP can help attract attention in a tough mobile market. They prefer to focus on owned IP, but will pursue good licenses if it fits with their game ideas. In terms of pricing, they are aware of media inflation and balancing it with attracting a wider audience. They also mention that the direct-to-consumer platform will continue to evolve and make up a percentage of their mix.

The speaker discusses the increase in subscription pricing in linear entertainment and how it reflects the fact that many streaming services were underpricing to acquire customers. They also mention the algorithm for determining the value of entertainment and how their company offers a high value for a low price. The speaker emphasizes their strategy of delivering more value than what they charge and mentions a recent price increase, the first in many years.

The speaker expresses confidence in the company's upcoming holiday season, citing the strength of their product catalog and the potential for a strong hardware season. They also mention the positive results they have seen so far.

The company has a strong lineup for the holiday season, with a focus on profitability and shifts in their pipeline. They have not yet issued guidance for fiscal year 2025, but anticipate being slightly below $8 billion. The SAG-AFTRA has voted to authorize a potential strike for video game performers, but negotiations are still ongoing.

The speaker, Strauss Zelnick, is optimistic about the negotiations with voice and motion capture actors and values labor relations. He also answers two questions about AI and the impact of a trailer release on Rockstar's product catalog and the strategic value of Grand Theft Auto Online.

The speaker discusses the use of computers and AI in creating entertainment properties and mentions the potential for increased efficiency and competition. They also state that AI will not replace the need for creative individuals and that it will likely result in shifts in productivity and product. The speaker also mentions the potential impact of a new trailer on the company's revenue.

Strauss Zelnick discusses the success of GTA Online and the company's reluctance to enter the film and television industry due to the risk involved. He states that the company would only consider licensing their IPs for such projects and uses Mattel's expected profits from licensing the Barbie IP as an example.

The speaker discusses the potential for licensing properties in the motion picture business, but notes that the risk of failure and low hit ratios make it a high bar to meet. They mention two properties that have been licensed and state that they will be selective and cautious in future licensing. The speaker also briefly mentions the use of in-game advertising in mobile and console titles when it fits creatively.

The speaker discusses the use of advertising in their games, stating that they only allow it in appropriate situations and that it is not a major source of revenue. They also mention their separate mobile advertising business and express gratitude for their colleagues' hard work.

The company values creativity, innovation, efficiency, hard work, excellence, and kindness. The speaker is proud of the company's culture and believes that following their strategy and culture will lead to success in the future. The conference has ended and participants can now disconnect.

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