Take-Two Interactive Software, Inc. Price & Performance (TTWO)

These important factors are described in our filings with the SEC including the company's most recent annual report on Form 10 ks and quarterly report on Form 10 Q, including the risks summarized in the section entitled Risk Factors. I'd also like to note that unless otherwise stated, all numbers we will be discussing today are GAAP and all comparisons are year over year. Additional details regarding our actual results and outlook are contained in our press release including the items that our management uses internally to adjust our GAAP financial results order to evaluate our operating performance. A press release also contains a reconciliation any non GAAP financial measure the most comparable GAAP measure, addition, we have posted to our website a slide deck that visually presents our results and financial outlook. Our press release and filings with the SEC may be obtained from our website at take2gains.com Take-Two. And now, I'll turn the call over to Strauss.

I'm pleased to report that we achieved solid results during the holiday season. Our net bookings of $1,370,000,000 were within our guidance range as significant outperformance in MDA2K helped to At the same time, operating results passed expectations led by the upside from NBA two ks, as well as a shift in timing of expenses that benefited the quarter. We're reiterating our fiscal twenty twenty five net bookings guidance of $5,550,000,000 to $5,650,000,000 and our outlook for full year operating performance. While third quarter operating results exceeded expectations, we expect the fourth quarter to be affected by a continuation of current mobile trends as well as the shift of some operating expenses into the period. Looking ahead, this calendar year is shaping up to be one of strongest ever for Take-Two, as Sid Meier's Civilization seven launched an early access today with the official launch on February 11, And we also plan to release Mafia: The Old Country in the summer Grand Theft Auto VI in the fall and Borderlands four before year end. We also remain confident in Zynga's ability to create new mobile forever franchise [indiscernible] As demonstrated by their ongoing success with Match Factory. We're exceedingly optimistic about the commercial potential of our titles believe it will have a transformative effect on our business and our industry [indiscernible] As we execute on our mission to create our industry's most innovative and engaging entertainment experiences, we remain highly confident that we'll achieve sequential increases in and record levels of net bookings in fiscal twenty twenty six and 2027.

Now turning to our business highlights from the period. NBA 2K delivered a phenomenal quarter, yielding significant upside to our forecast To date, the title has sold in over 7,000,000 units and engagement was extremely strong compared to last year, which recurrent consumer spending up over 30% daily active users up nearly 20%, and monthly active users up nearly 10%. With community inspired enhancements to gameplay major technological updates, and the addition of new game modes, the team at Visual Concepts has once again demonstrated solidifying its position the center of basketball culture. Additionally, two ks continues to expand our industry leading basketball franchise with NBA two ks Arcade Edition, My Team, NBA 2K Mobile, and NBA2K Online in China, all of which contributed to another highly [indiscernible] The Grand Theft Auto series remains our industry standard bearer for excellence and to date Grand Theft Auto five has sold in over two ten million units worldwide. GTA Online delivered a strong quarter led by its holiday update Agents of Sabotage, which players praised for its depth, new upgrades and array of content. Moreover, GTA plus continues to grow its reach with membership for the quarter increasing 10% year over year.

Rockstar Games continued to expand the audience for Red Dead Redemption two. Which has sold in more than 70,000,000 units to date. The title is currently enjoying its highest level of concurrent players on Steam, In addition, Red Dead Online engaged its audience further during the period with the release of the fan favorite Halloween pass, featuring seasonal theme debonuses and rewards. [indiscernible] Turning to mobile, recurrent consumer spending grew mid single digits. While this was somewhat below our plan, we remain highly optimistic about Zynga's future. Tunblast and Toyblast both delivered double digit growth that by engaging features including new event types, improved player profiles, and enhanced tuning. Match Factory is performing very well and remains on track become XING's second largest title by the end of this fiscal year in terms of net bookings. We'd like to thank the Team Peak for their strong execution and for creating one of the top grossing titles in the puzzle genre. While Empires and Puzzles performed below our expectations in the quarter, we're confident in the future of this highly profitable forever franchise. Our team is launching new event types and corresponding heroes as well as increasing in game rewards. Zynga continued to leverage the Zeitgeist to pop culture and broadened its partnership with leading entertainment brands and personalities including Words With Friends with Bravo's Real Housewives [indiscernible] and PowerSlap with TKO.

Our teams are growing our direct to consumer offerings and deploying key learnings across our portfolio. During the holiday season, we achieved strong double digit D2C conversion in several major titles, are confident in Zynga's continued ability to launch successfully new titles as well as brand extensions for some of our console IP. The quarters ahead, we look forward to launching new hip mobile experiences including the latest installment of Zynga's highly CSR3. In closing, we're forecasting calendar year 2025 to be an inflection point for Take Two Take-Two. From the groundbreaking release of Grand Theft Auto six to the unmatched pipeline that two ks is set to deliver. As we introduce Hit products to our passionate communities of fans, we we're confident that we'll usher in a new period of growth and returns for our shareholders. I'll now turn the call over to Carl. Thanks, Strauss. I'd like to thank our teams for delivering another strong quarter and for continuing to captivate and engage our player communities with the highest quality entertainment We are excited to bring to market several releases during the remainder of fiscal twenty twenty five. On February 11, two ks and Faraxis Games will launch Sid Meier's Civilization seven, a highly anticipated revolutionary new chapter [indiscernible] The reception for the game within the media has been very positive including Gamespot, who said that its gameplay remains unrivaled and engaging for countless hours.

Civ seven has already set a new franchise record for preorders, and player sentiment is extremely positive with the title recognized as the most anticipated game of 2025 during the DC Gaming Show in December. We'd like to thank the entire ForExus team for once again challenging players around the world to take one more turn in this beloved series that has engrossed players for more than thirty years. On February 28, two ks and HB Studios will launch PGA Tour two ks twenty five. The latest entry in our golf simulation franchise that will appeal to both casual and hardcore golf fans The title features three of the major championships with their respective courses for the 2025 season. Several franchise advancements, more immersive and customizable MyCareer experience, and a robust suite of creation tools from leading equipment and apparel brands. In addition, fans can look forward to a diverse roster of pros at launch, including Executive Director and all time great Tiger Woods. On March 14, two ks and Visual Concepts will launch WWE two ks 25. Players on PS5 and Xbox Series X and S will enjoy The Island, an all new interactive and online WWE themed world that provides an immersive experience where players can prove they're worthy of the attention of the Tribal Chief.

WWE 2K25 will also include an an all new Bloodline theme showcase new brawl environments, match types and stipulations, and the largest ever roster with over 300 playable superstars. WWE 2K25 will be supported with a series of add on packs that can be purchased individually or together as part of the season pass. In addition, two ks and Netflix are collaborating to bring WWE two ks exclusively to mobile devices this fall. Looking ahead, we are highly optimistic about our planned pipeline for fiscal twenty twenty six which includes Grand Theft Auto six launching this fall. This summer, two ks and Hangar 13 will transport players to the brutal criminal underworld of 1,900 Sicily in Mafia: The Old Country, which builds upon the legacy of two ks popular organized crime franchise, that has sold in more than 35,000,000 units. Our announcement trailer received an outstanding response and we expect the excitement to grow as two ks and Hangar 13 unveil more of two ks and Gearbox Software are creating something truly special Borderlands four, which promises to take the series' signature gameplay and storytelling to an all new level. At the Game Awards, two ks and Gearbox revealed a new trailer which introduced the exciting new world of Kairos and a brand new villain, a timekeeper.

Borderlands four has quickly become one of this year's most anticipated games and players can expect an incredible action packed experience from Gearbox. The studio that created the looter shooter genre. In closing, we look forward to releasing these groundbreaking titles in the coming year that will set us in motion to deliver the strongest multiyear growth trajectory and pipeline in our company's history. I'll now turn the call over to Lainie.

Thanks, Karl, and good afternoon, everyone. We delivered solid third quarter results led by the power of our diversified business. During the period, our teams brought innovation to our existing franchises, enhanced our relationships with our player communities and made outstanding progress on our eagerly anticipated pipeline. I'd like to thank our teams for their disciplined execution and continued focus.

Turning to our results, we achieved third quarter net bookings of $1,370,000,000 which was within our guidance range of $1,350,000,000 to $1,400,000,000 We delivered outstanding performance in NBA two ks, which helped offset moderation experience in some of our mobile franchises. Recurring consumer spending rose 9% over last year which was in line with our guidance and accounted for 79% of net bookings. NBA 2K grew over 30%, which greatly surpassed our forecast led by new features and innovation in our game modes. Mobile increased 6% driven by the addition of match Factory and strength in June Blast.

Toy Blast and Words With Friends, However, this was below our guidance of low double digit growth primarily due to underperformance in our hyper casual mobile portfolio in Empires and Puzzles and as anticipated Grand Theft Auto Online declined GAAP net revenue was $1,360,000,000 and was flat to last year. While cost of revenue declined 13% to $600,000,000 as the prior year included an impairment charge related to acquired intangibles. Operating expenses increased by 10% to $892,000,000 On a management basis, operating expenses rose 8% year over year. This was favorable to our forecast largely due to a shift in timing of expenses into the fourth quarter. This shift along with the outperformance of NBA two ks drove operating results that were above the high end of our guidance range. Turning to our outlook. I'll begin with our full fiscal year expectations. As Strauss mentioned, we are reiterating our net bookings outlook range of $5,550,000,000 to $5,650,000,000 which represents 5% growth over fiscal twenty twenty four. Largest contributors to net bookings are expected [indiscernible] the Grand Theft Auto series, Tombblast, our hyper cash flow mobile portfolio Match Factory, Empires and Puzzles, The Red Dead Redemption series [indiscernible] and Words with Front.

We are raising our recurring consumer spending forecast to 5% growth which represents 78% of net bookings we are experiencing in NBA two ks, which we now expect to grow low double digits. Mobile is now expected to grow low single digits as we are factoring in the current business trends.

And Grand Theft Auto Online is still expected to decline. We project the net bookings breakdown from our labels to be roughly 49% Zynga, thirty four percent two ks 17% Rockstar Games. We forecast our geographic net booking split to be about 60% United States and 40% international. Non GAAP adjusted unrestricted operating cash flow is expected to be an outflow of $150,000,000 which is unchanged from our prior forecast. We remain on track to deploy approximately $140,000,000 of capital expenditures primarily for game technology and office build outs. We continue to expect GAAP net revenue to range from $5,570,000,000 to $5,670,000,000 We we now expect cost of revenue to range from $2,410,000,000 to $2,440,000,000 Total operating expenses are still expected to range from $3,770,000,000 to $3,790,000,000 as compared to $5,830,000,000 last year.

On a management basis, we expect operating expense growth of 10% year over year. Which is unchanged from our prior guidance. And is largely due to an increase in ongoing marketing support for Match Factory, well as other mobile and immersive core launches planned for the year. Addition of Gearbox and higher personnel costs, partially offset by savings from our cost reduction program. Excluding incremental marketing and the addition of Gearbox, our operating expenses are expected to grow single digits over last year.

It relates to our operating performance, while our third quarter results exceeded our expectations, we are maintaining our outlook for the fiscal year.

As we are factoring several dynamics including strength in NBA two ks, offset by a continuation of the mobile trends we have been experiencing and the shift of some operating expenses in the fourth quarter. Now moving on to our guidance for the fiscal fourth quarter. We project net bookings to range from $1,480,000,000 to $1,580,000,000 compared to $1,350,000,000 in the prior year. Our release slate for the quarter includes Sid Meier's Civilization seven, [indiscernible] WWE 2K25. Largest contributors to net bookings are expected to be NBA 2K The Grand Theft Auto series, Sid Meier's Civilization seven, Tomb Glass, Match Factory, our hyper casual mobile portfolio, Empires and Puzzles, WWE 2K25, and Words With Friends. We project for current consumer spending to increase by approximately 3% which assumes a high teens percentage increase for NBA two ks partly offset by declines in both mobile and Grand Theft Auto Online. We expect GAAP net revenue to range from $1,520,000,000 to $1,620,000,000 Operating expenses are planned to range from $900,000,000 to $920,000,000 On a management basis, operating expenses are expected to decline approximately 2% year over year. Which is primarily driven by a more normalized level of marketing from Match Factory as the title has now been in the market over a year, as well as savings from our cost reduction efforts.

In closing, we are forecasting milestone year ahead of us. And we look forward to showing our fans and the global gaming community how our new titles can take our industry to another level of creativity. We are also optimistic that the chapter ahead will set us on a path to achieving new financial goals, including reaching a record level of scale, enhancing our profitability, and unlocking significant value for our shareholders. Thank you. I'll now turn the call back to Strauss.

Thanks, Langi and Karl. On behalf of our entire management team, I'd like to thank our colleagues for embodying our core tenets creativity, innovation and efficiency and for delivering another consecutive quarter of strong results. Our shareholders, I want to express our appreciation for your continued support. We'll now take your questions. Operator, Thank you. And we will now begin the question and answer session. And your first question comes from the line of Doug with TD Cowen. Your line is open.

Hey, thank you. When you originally bought Zynga a few years ago, part of the thesis was that you saw the potential for revenue synergies down the line and I think most of us took that to mean marrying your existing IT to their mobile skill set. Know you're not going to talk about specifics, but as you look out at the pipeline for the next few years, do you feel like you're getting closer to realizing some of those synergies? Is that something that is a key component of your optimistic outlook for the next few years? Thanks for your question. Actually, at the time, I was pretty clear that while bringing legacy core IT to mobile could be an opportunity. I also noted that the biggest hits in mobile are native to mobile and there are precious few examples in the marketplace of very big mobile successes that are based on core game IP, Call of Duty mobile being one of them. That said, we actually are working on some interesting projects that we have not announced yet, which we feel good about. What I did identify as an area of revenue synergies though has come to fruition building our direct to consumer business inside our mobile business which was a combined project between Take Two and Zenga that we kicked off very early and that has turned into a very significant business generating meaningful incremental contribution.

Great. Thank you.

And your next question comes from the line of Eric Handler with ROTH Capital.

Your line is open.

Good afternoon. Thanks for the question. I'm going to keep it on the mobile side of things as well. One, You had said Match Factory, was, I believe, going to be either breakeven or profitable at the end of fiscal twenty twenty five, is that still the case? And then I'll follow-up. [indiscernible] Yes. So Match Factory towards the end of the year, is going to start to turn profitable. The title is doing extremely well. We're continuing to do a lot of marketing for the title. So it definitely is towards the very end of the year where it's turning profitable. But the game is continuing to do better and better as the game stays in the market.

Okay. And then just broadly speaking with mobile, it did seem like there was some broad based weakness just overall are you seeing this the markets becoming just more bifurcated that it's only the biggest games that are doing well now and you have to keep spending a lot to keep those games doing well.

No, that's actually not the case. It's still a pretty broad based business at Zynga. And that's one of the things that is so appealing. We think about our mobile business In the same way that our console business we think reflects the best collection of owned intellectual property in the industry mobile business, I think, has the greatest sort of breadth of owned and licensed IP in the mobile business, which we think is protective on the down side and offers great opportunity in the upside.

There are not the same kind of mobile tailwinds that the industry experienced up till mid-twenty twenty two. Of course, 2022 was a down year. And then the industry slowly returned to growth, but the growth is is still at a much lower rate than we would like, but it has yet and I don't believe it will turn into a kind of top five business. There's still a lot of opportunity for the top fifty fifty or 100 or even 200 titles to make a difference. There's one other challenge in the business, which is as you know in the mobile business, unlike the console business, We and our competitors do not capitalize development costs even after technical feasibility And your marketing expenses, of course, are currently written off, as well. Which is true for all of our businesses. But in the mobile business, you spent a lot of money on UA the belief and hope that it will come back to you in a subsequent period. We're very conservative in the way we do that, but nonetheless that burdens our current results So the more hits you have in mobile, the worse your current results can actually look for a period of time.

And that's one of the things that we did see with Match Factory. As Laney said, we expect that to turn and we're going to begin to benefit from that extraordinary hit in the coming periods We also hope that we'll have other big hits coming in the mobile side. So it's a really good story for Take-Two and its Zynga division it's a somewhat less good story for the industry and it is not an across the board great story for Zynga in that a couple of our legacy titles most notably Empires and Puzzles have faced some challenges. But that's not an industry problem, that's a game problem, that is problem that we're addressing and we're already seeing That's helpful. Thanks, Chris.

And your next question comes from the line of Andrew Marocque with Raymond James. Your line is open.

Hi. Thanks for taking my question. One on NBA to start, obviously seeing some pretty good rebound there, no pun intended. But how much of that do you think is just kind of one, the comp effect the Gen eight transition issues that you had last year and how much is just kind of an underlying resonant success with the NBA fan base? So I think on the certainly on the PC side of the business, a lot has to do with Gen eight versus Gen nine. And we're benefiting from that without question. But honestly, it's the game is just continuing to innovate. And the quality is amazing. And the folks that two ks and VC Visual Concepts have year upon year proven that they've been able to come out with new modes new innovations, not everything works all the time, but this team is just they define what sports gaming is and they define what innovation is. And I think there are enough design changes in this game? That have really just accrued to our benefit. And we're really excited about that and we still feel that we're that we've got a lot of upside from where we are right now.

So generally speaking, we're very pleased about the performance in NBA.

We think there's a lot of greenfield in front of us. And the Gen HN9 piece was a bit of a headwind for us historically, but no longer. All right. Much appreciated. And then maybe one more kind of along those lines. But with your franchises that have bigger audiences, but maybe take a little while between releases thinking like Mafia and Borderlands, How does your approach to building excitement around those launches differ from franchise with faster release schedules? And how has the response to those two games been among their communities versus your hopes? Look, I think we market everything as though it's a brand new title. We never sort of draft on prior success. And we also need to communicate to consumers that there's an element of what is tried and true and beloved and that there's an element of new. Which is, for example, what we always do in civilizations, today it's early access day for Civ seven. And once again, the team at FOREXIS has pushed the envelope. And it's mostly been really, really well received. It's also received a little bit of criticism too. So, I think in all instances, we benefit by having a franchise that gives us a marketing umbrella, but we never rest on those laurels.

We still have to be very engaged with our consumers to let them know what we have when it's coming and that it's worth engaging with.

And your next question comes from the line of Cory Carpenter with JPMorgan.

Your line is open.

Hey, good afternoon. Thanks for the questions. Carl, could you just expand a bit on the NDA game changes the team has made that are resonating with the players beyond the Jun eight to Gen nine console change. And Shosh, for you, now that we have more details on the Switch two that have been released and confirmed, just curious how you think about the opportunity to expand your relationship with them going forward?

I'm sorry to take the second one first, expand our relationship with whom? Now that we have the details on Switch two, Sorry, I I missed the switch to part. Look, we've had obviously a longstanding relationship with, Nintendo and we've supported the platform when it made sense for the individual release. There was a time when Nintendo platforms are really geared at younger audiences and that was reflected in our release schedule. And that now today with Switch and potentially with Switch too, the the switch device can support any audience. And as you've note, as you may have noted, Siv seven is available now on Switch. So while we have nothing specific to report, we actually would fully expect to support [indiscernible] And Carl is going to comment on your question regarding which elements of NDA two ks really have excited the consumers this time around? Sure.

So we introduced a bunch of new features that were designed for the core players. And I think, things like the new shooting and dribbling mechanics There's a new badge progression system that would very well received A smaller city which really concentrates the activities, so you don't have to run around as much. To get to the interesting things that players can do. There is a return of the old NBA two ks Parks Court that people love. And there was also a full overhaul to the My Team mode. So quite a bit of innovation for us.

We have another question? [indiscernible] The next question comes Your next question comes from the line of James Heaney with Jefferies. Your line is open.

Okay, great. Yes, thanks. For the question. Lainie, can you just talk about the right level of marketing spend needed to support the launches of your new titles? Soon before launches should we expect you to begin ramping up your marketing efforts? And how does that impact ramp of expenses Thank you.

So in terms of the marketing, it usually it it's around the launch of the title, but in more recent years, it has spread a little bit further along, especially if there is an online environment of recurrent consumer spending with the title. So the title's budgets are usually around the same size as they were in the past. They really haven't gotten smaller. Even when we have titles that are new versions of previous releases, There's just so much importance in terms of marketing and getting people excited about the titles. And it's just usually different types of marketing. It's been in the past.

So, there's a lot more, digital marketing and marketing to our consumers and analytics and different ways of getting to our consumers than we have in the past. So, it's usually a bigger amount at launch and then spread over the period of time, that the titles life cycle.

Great. Thank you.

And we will take our next question from the line of Matthew Kost with Morgan Stanley. Your line is open.

Hey, thanks everyone for taking the question. On the Netflix partnership for WWE, I'm just wondering how you evaluate the attractiveness of those opportunities in terms of partnering with new distribution modes like Netflix And if those will become plan initially material, as they're more nice have question one. The second question is just about some media reports in the past couple of months that you may have started using a new mediation partner for your the ad inventory at Zynga. That you may have received a payment, I think, one of the articles said of $150,000,000 to do that. Is that accurate? And if so, how and when would that payment be accounted for?

I'll take the first question and Laney will take the second.

We have numerous distribution partners in the business and we have a great relationship with Netflix in particular. And we'll evaluate an opportunity primarily to see if it benefits our consumers. We want to be where our consumers are. We're not precious or religious about limiting them to a particular platform or for example, Even our own platform, we have an opportunity for consumers to come directly to a store that one of our labels has or obviously to work through the app stores to work through third parties, we have physical distribution. And we've also worked with subscription services and we've worked with Netflix before. In every instance, there are obviously economics related to the particular opportunity, and we try to tailor the opportunity to the consumers we're trying to reach.

So when it comes to the Jamie, I'll take the question about mediation.

Yes. So in terms of the economics of the deal, we haven't given any detail on what they were around this deal, but when we do account for things like that, it is usually spread along, with value of the overall deal. To the organization.

Great.

Thank you very much. And your next Your line is open. Great. Thank you. Lenny, I recognize in recent years you've been investing ahead of the new pipeline. As we start to see the the benefit of these immersive core titles coming to market, can you just revisit how you're thinking about cash flow generation relative to the guidance you had given historically? And alongside this ramp how are you thinking about capital allocation and the options you have available to you? Thank you.

Sure. So when we think about going forward in the next couple of years and the strong cash flow that we expect to generate from our pipeline, Our capital allocation plan is definitely include paying down some of our debt over the next couple of years.

But we also have a lot of acquisition opportunities available to us So it's possible that if we make some acquisitions, the timing of the capital plans could be adjusted based on that. So I think there's a lot of things, that are big opportunities for us, going forward, and, you know, that all of that will be [indiscernible] Okay, great. Thank you. And if I can just put in one more.

SIV seven launching, can you just help us think through the uplift you're factoring into your guidance? And how does that expectation compare to prior of the franchise? Thank you.

So if you're referring to next year, we're in the middle of our budgeting process right now, so we're not providing any specific guidance. We do expect to give that out during our May call, but that said, we're really excited about the pipeline that's forecast to release next year and also that's released in this quarter. And as we've mentioned, we remain highly confident that we'll achieve some sequential increases in and record levels of net bookings in fiscal twenty twenty six and 2027.

Okay, great. Thank you. And your next question comes from the line of Michael Hickey with Benchmark.

Hey, guys. Strauss, Carlene. Just two from us. Curious on your Fiscal twenty twenty six pipeline to three games are you reaffirming launch and timing expectations or is this more of a a continuation of the previously provided slate with updates to come from your studios as new information becomes available. And the second question is on project details. It looks like Michael's now gone for gone from thirty first Union. So just curious how leadership is transitioning within the studio? How this impacts the future of the game? Thanks, guys.

So on the first point, yes, we did today reaffirm our schedule through the remainder of the calendar year. I think we're pretty clear about that. And regarding thirty first Union and Project Ethos, We are super grateful to Michael for the great work he did. In bringing this project to us and spearheading it and getting it to the stage that it's at. He's going to continue in an advisory role and for that we're also grateful The transition leadership will be provided by a combination of thirty first Union and two ks executives. And we feel highly confident that we're going to deliver a great project over time when we remain fully committed to Ethos. We're still really excited about it.

And your next question comes from the line of Jason Bazinet with Citigroup.

Your line is open.

I just had a very simple question. The $1,090,000,000 that sits on the balance sheet for capitalized software, Should we look at that as sort of apples to apples in terms of your accounting policy? Versus where you were five years ago? Or is there some change in accounting that would cause that number to be large. I'm just trying to get a sense of it, is it should investors look at that as indicative potentially the quality or number of games that are going to unspool onto the income statement over the next couple of years.

No, nothing has changed in terms of our policies. That's the capital software for the games that have been put up on the balance sheet based on the technology [indiscernible] and they'll get amortized as those titles release over the lifetime of those titles.

Understood.

Thank you. And your next question comes from the line of Omar Dusukhi with Bank of America.

Your line is open. Hi, thanks. So, Gladyssee GTA VI reaffirmed for a fall twenty five launch. I wanted to ask how much of the the total number of fans that have ever touched GTA and have brand awareness of GTA could potentially be reactivated once this GTA six launch actually happens. I gather that there is a much smaller percentage of those a small percent of those fans that today are highly engaged But with the launch of GTA six, it will become an intergenerational franchise the first title having been released around the year February. So I could very easily see a dad playing GTA with his son. After having not played the game for a couple of decades. So do you have a sense of relative to the current base of players that's highly engaged what the base of lapsed players that may potentially come back could be like is it one times as big, twice as big, any kind of framework there to help us think about this launch would be great. Well, I appreciate the question and sort of the sentiment underlying the question, it sort of falls into the category of how high is up.

And I declined to ever predict that. We believe that arrogance is the enemy of continued success. We run scared. We're looking over our shoulder our competitors are not asleep, and so what do we do about that? Try to be the most creative, the most innovative and the most efficient company in the entertainment industry. And Rockstar Games in particular seeks perfection in everything they do. And we believe that if we do that right, And we focus on delivering for consumers that's our best opportunity to succeed. To answer your question mathematically, it's I mean, it's pretty interesting if you look at GTA V because that title crossed three console generations, and still remains a best selling title having sold in over two ten million GTA Online now over ten years old still has enormous ongoing engagement. So there's certainly evidence that if you give consumers what they want, they will show up for it and they will stick around loyally for a very long time Equally, we have enormous respect for how hard that is to do. With regard to the upcoming release of GTA VI, obviously, this is a console release. We know what the current and console installed base looks like.

So there is the broad universe of console owners to look at and that is something to be mindful of. At the same time, we don't spend a lot of time looking at sort of attach rates, which I think is basically the question you're posing.

Because that will take care of itself if we do a great job. Now are we aware of who our consumers are and do we know how to market them and target them? We do. We have an extraordinary corporate consumer database with I think nearly 1,000,000 records in it. We observe, of course, all privacy regulations, but we are able to market to significant portion of that database. So we are mindful of who who's been engaged with GTA and GTA Online previously. We're mindful of those who we believe will be interested in the title going forward. And we can tailor our marketing accordingly. But we genuinely don't spend a lot of time thinking about well, is this going to be X number of units or Y number of units because that doesn't change anything that we can that we can do. We focus on what we can affect and we let the outcomes take care of themselves. And I'm sorry, I said a million consumer records, I meant a billion.

Thank you for your response.

I was only off by three digits. So And your final question comes from the line of Clay Griffin with MoffettNathanson. Your line is open.

Great. Good evening. Thanks for taking the question. Charles, I'd love to get your I cannot hear the operator.

Is the operator speaking?

Strauss, can you hear me now? Hello. Mr. Zelman, are you able to hear us?

Yes. Can you hear me? And Mr. Zelnick, are you able to hear us? You can't hear.

So we will Okay. Now I can hear again.

Okay. [indiscernible] Clay Griffin with MoffettNathanson? Yeah.

Hey, sorry for the technical difficulty. I'd love to get your impression of the momentum of the Roblox platform platform. You talked about, hey, we'll we'll be wherever our consumers are Do you view that as a a substitute product And what's your vision? What would have to happen for you guys to to develop content for that platform? Is it Is it a viable destination for the type of content that Take Two produces?

Look, Roblox is a combination of a platform and a collection of games user generated games largely and I understand that they market themselves as a platform However, from our point of view, it is a a competitive situation. So while I wouldn't rule anything out, it's hard to imagine that we would see Roblox as a destination for a take Take-Two labels game But again, if there's a reason for us to be there, then we would contemplate it.

Understood. And then just maybe turning back to NDA2K RCS, I assume that you're aware of the kind of mid quarter slip that happened at your competitors live service And credit to the team at Visual Concepts for a great product, but it does seem that we're seeing kind of small ish changes to these live services are driving bigger results than what we're used to kind of intra quarter. I wonder if that's your impression. I know it's like as you add complexity, perhaps maybe we're all losing a little bit of visibility. Is that your impression or is that it's just a function of [indiscernible] executing at a really high level versus maybe some mistakes elsewhere? Yes. I mean, I really can't speak to competitors and the decisions that they've made, but certainly it's very important in these type of live services games that the development of the game and the actual monetization piece of the game.

Are hand in hand. And you really can't have one or the other. And one thing that we've learned over the years is that the most important thing about developing particularly for sports games that you can't have massive innovation year over year and you have a significant life services component, is that, engagement is everything. And the more the consumer engages, the more ultimately that you're going to be able to benefit from the economics of the business. So for us, it's not necessary we don't necessarily look at the business about tweaking the economy. Of course, we do that. But the idea is really more the focus of the teams, marketing and development is to increase engagement and that's all about the quality and the execution. It's very the tweaking of the economy does that never is the leading factor. Always about engagement and quality experience. And I think if you stray from that, that's when I think you run into trouble. Totally understand that, Carl. I just I think I was maybe referring to kind of tweaks in actual gameplay. You mentioned some of the improvements that were made at MMA two ks seem I wouldn't call them massive changes, but it had a outsized effect and it sounds like we saw the opposite of your competitor.

And so the question is like, are you starting to see that as a general rule where perhaps maybe you're losing some visibility maybe even in internally for some of these live services intra quarter?

I'm going to take that. No, I don't feel that way. I think we are utterly focused on trying to present the very best possible experience Sometimes we fall a bit short in certain areas. Sometimes we miss the boat little bit. Two of our competitors as well, but I think the focus remains intense on every part of the experience.

Understood. Thanks, guys.

And that concludes our question and answer session. I will now turn the conference back over to Mr. Strauss Zelnick for closing remarks.

Well, first, thank you for attending, and I'd like to apologize to all of you for our technical difficulties today. Hopefully, the message came across despite that because the message is a powerful one. We had a solid quarter for which we're very grateful and we have what we believe is an extraordinary release schedule through the rest calendar year and of course our expectations are very rosy indeed for fiscal twenty twenty six and 2027 where we expect sequential increases in net bookings and we expect to set new financial records All of that is a reflection of what our creative and business teams do every day, which is to seek excellence in everything they do. And none of us could be more proud than we are of those teams and their commitment, their loyalty to this enterprise And we are so grateful. So I just want to say thank you to all of My many thousands of colleagues around the world, many of whom are listening right now, thank you for your fine work I'd also like to thank our shareholders for your support over these many years. We aim to continue to deliver and hopefully to over deliver going forward.

So thank you all.

And ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect.