The paragraph is an introduction to Take-Two Interactive's Second Quarter Fiscal Year 2025 Earnings Call. The conference operator introduces the call and informs that it is being recorded. Nicole Shevins, the Senior Vice President of Investor Relations and Corporate Communications, then introduces the key speakers: Strauss Zelnick, Karl Slatoff, and Lainie Goldstein. She also mentions that there will be a Q&A session following the prepared remarks. Additionally, she provides a disclaimer about forward-looking statements, noting they are based on current beliefs and information and can change due to various factors as outlined in SEC filings. All figures discussed will be GAAP and compared year-over-year unless otherwise noted.

In the second quarter, Take-Two Interactive reported strong financial results with net bookings of $1.47 billion, largely due to the success of Grand Theft Auto and Borderlands franchises. Grand Theft Auto V sales exceeded expectations, selling over 205 million units, while Grand Theft Auto Online saw increased engagement from new content and features. GTA+ subscriptions grew by 35% year-over-year, and Red Dead Redemption 2 also performed well. The company reaffirmed its fiscal 2025 net bookings guidance and anticipates record levels in 2026 and 2027.

The paragraph highlights the commercial success of several gaming titles and companies. Rockstar Games expanded its audience with the PC launch of Red Dead Redemption and Undead Nightmare. NBA 2K25 by 2K and Visual Concepts achieved high ratings and significant financial growth compared to its predecessor, thanks to major updates like new pro play animations and a dribble engine. The Borderlands franchise performed well as Gearbox joined the 2K and Take-Two family, opening up growth opportunities. Zynga reported strong quarterly results, with Match Factory! set to become its second-largest title by year-end due to increased user engagement and strategic user acquisition investments.

The paragraph discusses the growth and success of Zynga's mobile gaming portfolio, highlighting significant increases in net bookings and the introduction of engaging features in Toon Blast. The text mentions the successful application of monetization strategies and the performance of other games like Screw Jam and Toy Blast. Nordeus has released the 2025 edition of Top Eleven, resulting in record in-app purchase spending. Zynga launched Game of Thrones: Legends and is looking forward to future launches like CSR 3 Street Car Racing. The company is optimistic about its direct-to-consumer business and confident in its mobile business outlook. Overall, Take-Two is well-positioned for sustained success, backed by its strong portfolio and talent.

The paragraph discusses the company's gratitude to its teams for executing its strategy and highlights upcoming releases and future plans. Firaxis Games is set to release Sid Meier's Civilization VII, heavily promoted through various channels. Visual Concepts will launch WWE 2K25 later this fiscal year. Looking ahead to 2026, there are plans to release several blockbuster titles, including Grand Theft Auto VI, Borderlands 4, and Mafia: The Old Country. Rockstar Games will update GTA Online for PC with new features. The company is also refocusing efforts on core and mobile businesses by selling its private division label.

Take-Two is committed to supporting "No Rest for the Wicked," which launched in Early Access on PC in April. The company acknowledges the contributions of the Private Division team and remains optimistic about its future success. They are focused on releasing a strong and diverse lineup of games, aiming for sustainable growth and shareholder returns. Lainie Goldstein highlights strong quarterly results, with $1.47 billion in net bookings, driven by franchises like Grand Theft Auto and Borderlands. Recurrent consumer spending rose by 6%, and mobile gaming showed growth with titles like "Match Factory!" and "Toon Blast." NBA 2K had slight growth, while Grand Theft Auto Online remained stable. Notable launches included NBA 2K25 and Game of Thrones: Legends.

The paragraph outlines the company's financial performance and future expectations. GAAP net revenue increased by 4% to $1.35 billion, while costs declined due to a previous impairment charge. Operating expenses rose by 7%, but managed expenses increased by 24% year-over-year, positively affecting results. The company reaffirms its full fiscal year net bookings outlook of $5.55 to $5.65 billion, with strong contributions expected from franchises like NBA 2K, Grand Theft Auto, and several mobile games. Recurrent consumer spending is projected to grow by 4%, with particular increases expected in mobile games. A breakdown of net bookings by label and geography is provided, with Zynga contributing the most. The forecast for non-GAAP adjusted unrestricted operating cash flow remains an outflow of $150 million.

The company plans to invest around $140 million in capital expenditures for technology and office expansions, with expected GAAP net revenue of $5.57 billion to $5.67 billion and cost of revenue between $2.4 billion and $2.42 billion. Operating expenses are projected to decrease to $3.77 billion to $3.79 billion from $5.83 billion last year, with anticipated 10% growth in operating expenses due to increased marketing for new game launches and higher personnel costs, offset by a cost reduction program. For the fiscal third quarter, net bookings are expected to rise to $1.35 billion to $1.4 billion, driven by releases like Red Dead Redemption for PC and contributions from various games including NBA 2K and Match Factory!. Recurrent consumer spending is projected to increase by 9%, fueled by growth in mobile games like Toon Blast. Operating expenses for the third quarter are estimated between $913 million and $923 million.

The paragraph discusses the company's expectations for operating expenses and future growth. Operating expenses are projected to increase by 11% year-over-year, mainly due to additional marketing for "Match Factory!" and the acquisition of Gearbox, though some costs will be saved through a cost reduction program. The company is optimistic about upcoming opportunities to achieve record net bookings, expand product offerings, and deliver significant shareholder value. Strauss Zelnick and the management team express gratitude to colleagues and shareholders for their support and strong quarterly results, emphasizing the importance of creativity, innovation, and efficiency. The paragraph concludes with a Q&A session with analysts, where questions about upcoming software titles and guidance are addressed, with Lainie Goldstein noting that more details will be shared when available and that release expectations are not updated unless financially necessary.

In the paragraph, Karl Slatoff discusses the mobile gaming industry's growth, emphasizing the success of their games "Match Factory!" and "Toon Blast" as key contributors. He notes a positive trend where consumers reward innovative and engaging new titles, which benefits their strategy of investing in new intellectual property (IP). Slatoff believes this trend is industry-wide and sees it as vital for long-term success. He is optimistic about upcoming releases and acknowledges other hits in the market. Additionally, he is asked for his thoughts on mobile advertising and user acquisition strategies.

In the discussion, Karl Slatoff from Take-Two explains that the company doesn't rely solely on Chartboost for customer acquisition, instead using a mix of third-party services and its extensive internal database due to its broad portfolio of mobile games. Colin Sebastian from Baird asks about industry trends like market consolidation among fewer publishers and the implications of rising game development costs and changing distribution on new IP development. Strauss Zelnick remarks that as the gaming industry matures, there's a growing demand for higher-quality products, leading to major companies growing stronger while smaller ones struggle, reflecting a common pattern in the entertainment industry.

The company is proud of its growth over the past 18 years, primarily organic until acquiring Zynga in 2022, marking a significant inorganic expansion. They are now the second-largest pure play in the global industry, benefiting from a diverse portfolio and strong owned intellectual property. Their strategy focuses on creativity, innovation, and efficiency, aiming to support organic growth, make strategic acquisitions, and return capital to shareholders. Acknowledging the increasing difficulty of producing hits, they credit their creative teams for driving success and emphasize their commitment to delivering top-tier entertainment to consumers, even amid rising complexities and costs, including those brought by technological advances like generative AI.

The paragraph is part of a discussion involving multiple individuals about the financial and operational performance of a gaming company. Colin Sebastian asks about the improvement in GTA's performance, to which Lainie Goldstein responds that it's broad-based and engagement is strong. Andrew Marok from Raymond James inquires about the company's future content releases and assumptions for fiscal '26 and '27, particularly with big titles like Mafia, Borderlands, and GTA VI. Strauss Zelnick humorously notes that while the company now shares more about upcoming releases, he won't disclose specifics for 2027, though they are confident about their future pipeline. Andrew Marok also asks about the new paid gravity ball mode in NBA 2K, seeking more immediate details.

The paragraph features a discussion led by Strauss Zelnick about the introduction of "Gravity Ball," a mini-game incorporated within a larger game, and how it reflects the innovative approach of their creative teams. Zelnick praises the creativity and innovation from Visual Concepts and 2K in developing this mini-game, highlighting the willingness to experiment with game design and business models. Although it's a promising concept, he notes it's too early to consider it a definitive future trend of including paid mini-games in larger platforms. The paragraph briefly shifts to a question from Cory Carpenter of JPMorgan concerning Take-Two Interactive's decision to sell Private Division, with Zelnick expressing it was challenging to part with the successful unit led by Michael Morris, which had launched several successful titles.

The paragraph discusses the challenges faced by a company in working with independent developers to create new intellectual properties, as their core focus is on producing major hits like those from 2K and Rockstar. It mentions that Private Division has found a new home and any impact on the profit and loss statement from this transition is minimal, with the NBA franchise's success offsetting any negative effects. Additionally, despite improved reviews for NBA 2K, sales remain flat, prompting a discussion about the relationship between review scores and sales performance.

The paragraph discusses the increased engagement and monetization success of a game, particularly with its Gen 9 PC version positively impacting sales despite Gen 8's decline. The expectation is that Gen 9 will eventually dominate as more users transition. The focus then shifts to hypercasual games, noting a dual revenue strategy of advertising and in-app purchases, with "Screw Jam" highlighted as a successful example of incorporating in-app purchases, despite the general focus on profitability impacting revenue.

The paragraph discusses the impact and strategy of adapting games into films or shows, highlighting a specific example with Borderlands. Despite the film's disappointing performance, it had a positive effect on game sales, indicating that high-quality intellectual property can boost catalog sales. However, the company remains selective about licensing its brands for adaptation to ensure success. Additionally, there's a note on a shift in the timing of marketing expenses for the second quarter, emphasizing this was due to timing changes.

The paragraph is a part of a conference call where Mike Hickey from Benchmark asks Strauss Zelnick about the potential commercial opportunities related to the new gaming consoles, like the PS5 Pro and the anticipated Switch 2, and whether these platforms will be viable for their game portfolio. Strauss Zelnick refrains from commenting on hardware decisions but acknowledges that successful platforms positively impact the business. He also expresses confidence in Nintendo's potential with new platforms. Additionally, Hickey asks about feedback on a project, referred to as "Project Eagle." Zelnick praises the team behind the game for their work and the positive consumer response during play tests, emphasizing the importance of feedback in developing a great gaming experience.

Arthur Chu asks about the future growth of the NBA franchise in terms of average revenue per gamer compared to user growth. Strauss Zelnick responds that they are optimistic about both user growth and spending per user, emphasizing that quality drives both. He highlights the potential for expansion due to the NBA's international growth and new broadcast deals. Zelnick praises the partnership with the NBA and its players, and expresses confidence that improving the game will lead to a larger player base and more profitable revenue. Eric Sheridan from Goldman Sachs asks about the long-term opportunities at the intersection of sports and gaming and potential investments to expand the IP portfolio.

The paragraph discusses the challenges and opportunities in expanding a sports video game portfolio, highlighting the competition in major sports like baseball, football, basketball, and soccer. Strauss Zelnick, likely an executive at a gaming company, acknowledges their success with titles like WWE and other sports games while emphasizing the difficulty of competing in the major sports markets. The conversation also touches on the company's approach to developing new intellectual property (IP) versus relying on sequels of existing franchises. Zelnick points out the risks associated with new IP but stresses the importance of innovation despite the typical industry tendency to stick with proven franchises due to lower risk. He concludes that even successful franchises face decay and entropy over time, underscoring the need for continual growth and innovation.

The paragraph discusses the inevitability of decay in all things, including popular titles, and emphasizes the importance of creating new intellectual property to avoid stagnation. Despite the risks and occasional failures involved, the company takes pride in its high success rate, particularly in mobile gaming, citing successes like Match Factory, Toon Blast, Top Eleven, and Screw Jam. The commitment to innovation is portrayed as crucial for long-term value creation. The speaker reflects on past risks taken to illustrate the necessity of continuous innovation, emphasizing that without it, the organization wouldn't have reached its current position. Finally, there is a mention of Clay Griffin from MoffetNathanson, who questions the challenges and advantages of the long-lived Gen 8 platform.

In the given paragraph, Strauss Zelnick, responding to Clay Griffin's question, discusses the challenge of differing technical specifications between the Xbox Series S and other consoles like PlayStation, especially in the context of technically advanced games like GTA VI. Zelnick expresses confidence in supporting various platforms despite their differing technical capabilities. He emphasizes that they focus on platforms with significant consumer presence and growth potential. Zelnick notes the importance of the PC as a platform due to its open format and growing importance in the gaming industry. Ultimately, Zelnick stresses that the key is to support platforms where there is a substantial audience, as the consumer demand drives their decisions.

The paragraph features a discussion on the potential growth of third-party Android app stores and their economic benefits. Strauss Zelnick expresses support for a vibrant app ecosystem, mentioning that while they benefit from their own distribution channels, they also support diverse retail options. He anticipates a decline in take rates, though this isn't factored into their current plans. In a Q&A segment, Chris Schoell from UBS asks about the expected acceleration in bookings growth for fiscal Q4. Lainie Goldstein attributes this to the upcoming releases of Civilization 7, a PGA title, and a WWE title. Additionally, Strauss reflects on insights gained from a partnership with Netflix, acknowledging Grand Theft Auto’s success on the platform and pondering future opportunities to license other IPs.

In the paragraph, Strauss Zelnick highlights the expansion of WWE titles and an increase in new releases in Q4 compared to the previous year. He addresses a question from Chris Schoell about the potential of scaling games like Grand Theft Auto and discusses the company's approach to licensing intellectual property to platforms like Netflix. Zelnick emphasizes the importance of interactive entertainment and the strong relationship with Netflix, hinting at more collaborations in the future. He concludes by thanking the creative and marketing teams for their efforts.

The paragraph concludes a corporate event, where the team expressed enthusiasm about their current success and optimistic future. They thanked participants for their support and extended holiday and New Year wishes. The operator then wraps up the Take-Two Interactive second quarter fiscal year 2025 earnings call, thanking everyone for attending and wishing them a good day.

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