The operator welcomes participants to Take-Two's Third Quarter Fiscal Year 2024 Earnings Call and introduces the speakers. The speakers remind listeners that statements made during the call are considered forward-looking and may differ from actual results. They also mention the SEC filings and note that all numbers discussed are GAAP and year-over-year comparisons. Additional details can be found in the press release.

The company achieved solid results with net bookings of $1.3 billion, driven by successful titles such as Grand Theft Auto V and Red Dead Redemption. However, there was some softness in mobile advertising and sales for NBA 2K24, leading to a decrease in the company's full year outlook. The company plans to enhance performance for NBA 2K24 and invest in marketing for Zynga's new mobile game, Match Factory!, which may decrease profitability in the current fiscal year but is expected to increase the franchise's lifetime value.

Take-Two is confident in their long-term growth potential and is implementing a cost reduction program to increase profitability. Grand Theft Auto V continues to perform well, with a holiday update and record-breaking trailer for the upcoming Grand Theft Auto VI. The game is also seeing success on subscription services, with a recent partnership with Netflix.

Rockstar's membership program, GTA+, continues to grow with enhanced benefits for members and Red Dead Redemption 2 has sold over 61 million units worldwide. The game was supported with free updates and holiday promotions. NBA 2K24 remains the top basketball simulation game and has sold over 7 million units. The Gen 9 version of the game is seeing a double-digit percentage increase in sales. The Borderlands 3 Ultimate Edition was launched for Nintendo Switch. Zynga has also had success with their new mobile game, Peak's Match Factory!, which has high retention and monetization rates.

Zynga is planning to invest in new features and marketing for its popular title, Top Troops, to increase engagement. Their in-app purchases exceeded expectations, led by Toon Blast, but ad revenues were below expectations due to changes in the hypercasual business. The direct-to-consumer business had a record holiday season and Zynga has several titles in development for release in fiscal 2025 and beyond. Despite lowering their outlook for the year, Zynga believes in their potential for growth through their creative talent, owned intellectual property, and upcoming releases.

The company is confident in their strategic priorities and believes they will deliver unparalleled entertainment experiences. They have several upcoming launches, including Penny's Big Breakaway, WWE 2K24, and No Rest for the Wicked. They will also be returning to the tennis genre with Top Spin 2K25, developed by Hangar 13. More details will be revealed in the coming weeks.

Zynga is set to release highly anticipated games, Star Wars Hunters and Game of Thrones: Legends, in 2024. They also have a strong pipeline of mobile titles and plan to continue providing new content to drive engagement and spending. In the past year, they saw solid holiday results, with net bookings of $1.34 billion, led by Grand Theft Auto V, Grand Theft Auto Online, and the Red Dead Redemption series. However, there was a decline in recurrent consumer spending, partially due to weakness in mobile advertising and NBA 2K.

During the quarter, the company launched several mobile titles and saw a decrease in GAAP net revenue and cost of revenue. Operating expenses also decreased, but on a management basis, they increased slightly. The company has lowered its outlook for the full fiscal year due to softness in mobile advertising and a planned release for NBA 2K24 being pushed back. They expect net bookings to be split between their labels, with the majority coming from Zynga, and a geographic split of 60% in the US and 40% internationally. Recurrent consumer spending is expected to increase slightly, with Grand Theft Auto Online and virtual currency driving growth. The company also plans to generate $100 million in non-GAAP adjusted unrestricted operating cash flow and invest $150 million in capital expenditures. GAAP net revenue for the fiscal year is forecasted to be between $5.27 billion and $5.32 billion.

In the fourth quarter, the company expects net bookings to range from $1.27 billion to $1.32 billion, with a decrease in recurrent consumer spending of approximately 5%. Operating expenses are projected to range from $896 million to $906 million, with a 17% increase on a management basis due to marketing expenses, personnel costs, and depreciation. The company is focused on efficiency going forward.

The company has announced a rigorous analysis to identify areas for cost optimization, which is expected to generate incremental savings and be more expansive than previous cost reduction programs. The management team expresses confidence in the company's growth prospects and thanks colleagues and shareholders for their support. The first question from a shareholder asks for more details on the cost-cutting program, including how much has been saved so far and the expected impact on margins. The response includes information on over $100 million in savings from a previous program and an expected enhancement of margins from the new program.

Strauss Zelnick, CEO of Zynga, discusses the company's plans for the next quarter and the advertising weakness they are currently experiencing, which is primarily related to the hypercasual business. They are working on optimizing the business for profitability and moving towards a hybrid model. Lainie Goldstein, CFO, provides an update on their fiscal year forecast, which is still tracking for significant growth. The launch of Match Factory! is expected to be a major new release for the company, and Zelnick briefly discusses the process of launching new mobile games and the potential for improved UA and content generation.

Strauss Zelnick discusses the challenges of creating a new mobile hit and mentions that one of their competitors has given up on trying. However, Zelnick believes that the market is becoming more receptive and reactive, citing the success of recent titles from Zynga and competitors. He also mentions that the investment in Top Troops and Match Factory! will be profitable in the next fiscal year. He believes that the team at Zynga is doing a great job and that the acquisition was a good move for the company.

During a recent earnings call, a question was asked about the impact of a guidance cut on the fiscal year. The company's CFO responded that the biggest drivers were changes in user acquisition spend and marketing, lower mobile advertising, and the shift of an unnamed title out of the year. The order of magnitude for these changes was in that order. Another question was asked about the company's partnership with Netflix for the GTA Trilogy on mobile. The CEO responded that they support all emerging platforms as long as they serve consumers and the terms make sense. The CEO also mentioned that the quality of hypercasual games is what drives player behavior and willingness to make in-app purchases.

Rollic has been focused on creating more robust titles for their hypercasual games. They are now seeing longer-lasting and more durable games that could potentially last for years. This allows for the opportunity to incorporate in-app purchases and move towards hybrid casual games. The company believes that the entertainment industry is always moving towards higher quality content and they are excited about the potential growth in the mobile and interactive entertainment markets. They have a 3-part strategy that includes innovation, which allows them to adapt to consumer preferences and create deeper and more compelling games. The hypercasual team, led by Barak Verdal, is highly skilled.

The speaker discusses the success of the GTA Trilogy on mobile and the potential for future partnerships with Netflix. They also address the performance of NBA 2K, noting strong engagement and growth in the Gen 9 SKU, but underperformance in the Gen 8 product. They express confidence in the franchise's continued growth.

During a conference call, Oppenheimer & Company's Martin Yang asks Take-Two Interactive's CEO Strauss Zelnick about the reception of the Grand Theft Auto trailer and its potential impact on future marketing events. Zelnick expresses satisfaction with the trailer's performance and acknowledges the excitement surrounding the upcoming game. He also mentions that Rockstar, the studio behind GTA, is skilled in marketing their titles. Yang then asks about the marketing strategy for other upcoming games, to which Zelnick responds that it is driven by the labels and studios and not based on a fixed timeline.

In response to a question about the level of anticipation for GTA VI compared to GTA V, Strauss Zelnick states that it is possible to do research on this but their sense is that anticipation is much higher for GTA VI. He also discusses the decision-making process for when to launch the game, stating that they strive for perfection and align the interests of the company and shareholders. There may be tension between releasing the game and creating perfection, but the company prioritizes perfection. The questioner expresses their own excitement for the game.

The operator introduces a question from Mike Hickey about Take-Two Interactive's updated financial projections and their cost-cutting strategy. Lainie Goldstein explains that the changes in the release schedule have affected the projections for fiscal year 2025, but they still expect growth in 2026. Strauss Zelnick adds that their three-part strategy of creativity, innovation, and efficiency has supported them well and that cost reduction is a challenge in the entertainment industry.

The speaker is confident in their company's focus on efficiency and maximizing revenue, and sees the recent Disney and Epic deal as a potential positive for the industry and their own company. They believe that the deal will keep consumers engaged with their own properties and are not worried about competition from the two companies.

During the fourth quarter call in May, the company gave a $1 billion operating cash flow guide for fiscal year 2025. However, they have not updated this number yet as they are still working on their budget. The company also refrained from discussing potential trans-media properties for Grand Theft Auto, preferring to let their labels make announcements. When asked about the revenue synergies from the Zynga deal, the company stated that they have made great progress in this area. They also mentioned that they are closely monitoring the iOS fee changes in Europe and how it may affect their mobile strategy.

The company has had success with their direct-to-consumer initiative and expects to see more growth in this area. They are also making progress in other areas, such as reducing distribution costs. There is speculation about Microsoft making some of their exclusive titles more widely available, but the speaker does not want to speak for Microsoft's strategy and does not want to bet against their management team. The development of big console titles is expensive and time-consuming.

Strauss Zelnick is thanking the teams for their hard work and dedication, and acknowledging that everything at the company is a team effort. He also thanks the shareholders for their support and expresses excitement for the future. The operator then thanks everyone for participating and ends the conference call.

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