Take-Two Interactive Software, Inc.

Interactive Software First Quarter Fiscal Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Hank Diamond, SVP of Investor Relations and Corporate Communications.

Good afternoon. Welcome and thank you for joining take whose conference call to discuss this result for the first quarter of fiscal year 2020 and the June 30 2019. Today's call will be led by Strauss Delnick takes us chairman and chief executive officer, Carl Slater for President and Lenny Goldstein, our chief financial officer. We will be available to answer your questions during the Q&A session following our prepared remarks. Before we begin, I'd like to remind everyone that statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management, as well as assumptions made by and information currently available to us. We have no obligation to update these forward-looking statements. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our filings with the SEC, including the company's most recent annual report on Form 10-K 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 in order to evaluate our operating performance. In 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 www.take2games.com. And now I'll turn the call over to Strauss.

Thanks Hank. Good afternoon and thank you for joining us today. I'm pleased to report that fiscal 2020 is off to a terrific start with first quarter operating results that exceeded our expectations. we delivered significant net bookings and cash flow growth driven by the performance of Grand Theft Auto Online and Grand Theft Auto 5, NBA 2K19, the Borderlands franchise, and Red Dead Redemption 2 and Red Dead Online. As we approached the sixth anniversary of their initial launch, sales of Grand Theft Auto 5 and recurrent consumer spending on Grand Theft Auto Online once again exceeded our expectations in the first quarter. Net bookings from Grand Theft Auto Online grew year over year, driven by the increased installed base of Grand Theft Auto V units, as well as numerous reward bonus programs tied to game mode events and promotions. Grand Theft Auto V also continues its unprecedented level of success, charting in the top ten games in five out of the past six months in the U.S. based on combined physical and digital sales, according to the MPD Group. The title has now sold in more than 110 million units, and remains one of the most revered and successful entertainment experiences across all art forms of all time. Our industry-leading basketball series continues to set new benchmarks for excellence. NBA 2K19 is now our highest-selling sports game ever, with selling to date of nearly 12 million units. During the first quarter, net bookings from NBA 2K19 more than doubled, driven by stronger current consumer spending and increased unit sales. Recurrent consumer spending on NBA 2K grew more than 140% and was the single largest contributor to that part of our business. Moreover, engagement with NBA 2K19 continues to increase, with average games played and daily active users growing 12% and 23% respectively. This was driven by a variety of factors, including an enhanced mix of game modes that appeals to a broader audience and play styles, the strong performance of recent sales promotions, new player virtual currency bundles, and engaging late-cycle MyTeam content. We expect the lifetime net bookings from NBA 2K19 will be the highest ever for a 2K sports title, including both record unit sales and recurrent consumer spending. Leading up to the eagerly anticipated September launch of Borderlands 3, which Carl will discuss shortly, we've seen a significant increase in sales of our Borderlands catalog offerings. During the quarter, 2K and Gearbox Software released the Borderlands Game of the Year Edition for PlayStation 4, Xbox One, and PC, which features all new Ultra HD visuals, numerous gameplay improvements, and all previously released add-on packs. In addition, we launched the Ultra HD Texture Pack that increases the visual fidelity of Borderlands The Handsome Collection on consoles and provides a graphical upgrade for Borderlands 2, Borderlands The Pre-Sequel, and all of the add-ons for both titles on PC. Turning to Rockstar Games' latest creative and commercial masterpiece, Red Dead Redemption 2 continues to expand its audience, and to date has sold in approximately 25 million units worldwide. On May 14th, Red Dead Online exited its beta phase with a massive update that brought a host of new gameplay modes, including new cooperative story missions, free roam activities, and the introduction of poker, along with a range of updates and improvements that strengthen and stabilize the foundational world of the Red Dead Online experience. In addition, throughout the quarter, Rockstar Games released additional content, such as numerous new weapons, clothing, emotes, and more. Both engagement and recurring consumer spending in the game continue to gain momentum, and Rockstar plans to continue to enhance and evolve the world of Red Dead Online with ongoing updates to drive growth over time. On July 1st, Rockstar Games and Twitch announced an exciting new program through which Rockstar Games Social Club members and Twitch Prime subscribers receive free in-game rewards, bonuses, and exclusive discounts in both Grand Theft Auto Online and Red Dead Online simply by linking their Twitch Prime and Social Club accounts. Benefits continue for months to come and include special in-game benefits for both Red Dead Online and Grand Theft Auto Online. Rockstar Games plans to support both Red Dead Online and Grand Theft Auto Online with much more content moving forward, and we now expect combined results from these titles to grow in fiscal 2020. Our first quarter results were also enhanced by Social Points Mobile Games, WWE Supercard, and WWE 2K19, as well as Sid Meier's Civilization VI. One of our key strategic priorities is to continue to drive growth and engagement with our titles after their initial purchase, Our ability to achieve this goal consistently results from our firm commitment to providing consumers with opportunities that are compelling, of the highest quality, and that meaningfully add to their overall gameplay experience. To that end, during the first quarter, recurring consumer spending exceeded our expectations, growing 55% and accounting for 67% of our total net bookings. In addition to virtual currency for MBA2K, Grand Theft Auto Online and Red Dead Online, where current consumer spending was enhanced by a variety of other offerings. In the free-to-play category, Social Point remains a meaningful contributor to our results through its two biggest mobile titles, Dragon City and Monster Legends, as well as World Chef and Tasty Town. In May, our Barcelona-based studio successfully launched Word Life, a new crossword game, and continues to invest in its broad and innovative pipeline of new games planned for launch in the coming years. Recurrent consumer spending on WWE Supercard exceeded our expectations, and the title has now been downloaded nearly 19.5 million times and remains 2K's highest-grossing mobile title. And recurrent consumer spending on NBA 2K Online in China also outperformed, growing 75% driven by the launch of NBA 2K Online 2 in August last year. Total combined registered users for NBA 2K Online 2 and its predecessor currently stand at 46 million, and the franchise remains the number one PC online sports game in China. Asia, and China in particular, continues to be a significant long-term growth opportunity for our business. Lastly, add-on content grew nearly 135%, led by offerings for the Borderlands franchise and Sid Meier's Civilization VI. As a result of our better than expected first quarter operating results and increased forecast for the balance of the year, we're raising our outlook for fiscal 2020, which is anticipated to be another great year for our organization. Looking ahead, we have the strongest development pipeline in our history, including sequels from our biggest franchises, as well as exciting new IP. Take-Two remains exceedingly well-positioned creatively, strategically, and financially, to capitalize on our industry's many opportunities, and to deliver growth and returns for our shareholders over the long term. With the promise of new consoles, along with emerging platforms, distribution channels, business models, and markets, we have tremendous potential to engage and expand further our global audience to our development team's passion and vision for creative excellence. I'll now turn the call over to Carl.