Take-Two Interactive Software, Inc.

Greetings and welcome to Take-Two first quarter fiscal year 2021 earnings conference call. At this time, all participants are on 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, Mr. Hank Diamond. Thank you. You may begin.

Good afternoon. Welcome and thank you for joining Take-Two's conference call to discuss its results for the first quarter of fiscal year 2021, ended June 30th, 2020. Today's call will be led by Strauss-Zelnick, Take-Two's chairman and chief executive officer, Carl Sladoff, our president, and Lainey 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 risk 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. Our press release also contains a reconciliation of any non-GAAP financial measure to the most comparable GAAP measure. In addition, we have posted to our website a slide deck that visually presents our results and financial outlook. Our press release and findings 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'd like to start by expressing on behalf of our entire management team our deepest sympathies for those who've been and continue to be affected by this pandemic. We're immensely grateful to everyone who serves on the front lines caring for people in need and helping the world navigate this crisis. Turning to our business, fiscal 2021 is off to a terrific start with first quarter operating results that significantly exceeded our expectations, including fiscal first quarter records for GAAP net revenue and net bookings. Our outstanding results were driven by the outperformance of MBA 2K20, Grand Theft Auto V and Grand Theft Auto Online, and Red Dead Redemption 2 and Red Dead Online, and Social Point's mobile games. I remain incredibly proud of our entire organization, which exemplifies our core tenets of creativity, innovation, and efficiency, and continues to deliver industry-leading entertainment experiences to our audiences during these challenging times. In the first quarter, NBA 2K20 significantly outperformed expectations and recently achieved a franchise milestone of $1 billion in netbooking since launch. Consumer engagement with MBA2K continues to increase, with daily active users growing 82%, my career users growing 78%, and my team users up a remarkable 108% as compared to the first quarter last year. Recurrent consumer spending at MBA2K grew 126% to a new record and remained the largest contributor to that part of our business. To date, NBA 2K20 has sold in over 14 million units, up over 18% compared with NBA 2K19 in the same timeframe. We expect that lifetime units, recurrent consumer spending, and net bookings for NBA 2K20 will be the highest ever for a 2K sports title. Nearly seven years after its initial release, sales of Grand Theft Auto V continue to exceed expectations. The title is now sold in nearly 135 million units, and remains the standard bearer of the current console generation. In addition, recurring consumer spending on Grand Theft Auto Online outperformed our forecast, growing 155% to a new record. In April, Rockstar Games released Gerald's Last Play, a series of six new contact missions for Grand Theft Auto Online. The first quarter was the second best period ever for new player acquisition since the title's launch in 2013. The unprecedented player volume trends that started with the superlative performance of the Diamond Casino and Resort update in July 2019 and drove record average multiplayer MAUs through August 2019 persisted with sequential records in average multiplayer MAUs from December 2019 through May 2020. We now expect Grand Theft Auto Online to establish a new net bookings record in fiscal 2021. In addition, the partnership with Epic Games Store, where Grand Theft Auto V was offered free for a week in mid-May, was a contributing factor to the strong performance of Grand Theft Auto Online and did not come at the expense of paid sales of the title. In fact, Grand Theft Auto V sold through more units in the period than any first quarter since the title's launch in 2013. And in the six weeks following the Epic Store promotion, Grand Theft Auto V sold more units than in the same period in any previous year. Red Dead Redemption 2 also outperformed and to date has sold in more than 32 million units worldwide. The title sold through twice as many units compared to last year. Engagement with and recurrent consumer spending on Red Dead Online continues to increase. The title acquired nearly twice as many users year over year, and average multiplayer MAUs grew 50%. Net bookings from Red Dead Online surpassed expectations, growing 118%, excluding digital content bundled with the Red Dead Redemption 2 Premium Editions. During the first quarter, Rockstar Games added new content to Red Dead Online, including six new maps to Showdown mode. Through the coming year, Rockstar Games will continue to support both Red Dead Online and Grand Theft Auto Online with more content updates to keep new and returning players excited and engaged. Borderlands 3 continues to expand its audience, and to date has sold in over 10.5 million units worldwide, up 69% over Borderlands 2 in the same period. During the first quarter, 2K and Gearbox launched Bounty of Blood, the third of four announced paid campaigns that are included in the Borderlands 3 Super Deluxe Edition and the Season Pass, or are available for purchase separately upon release. The Season Pass attach rate for Borderlands 3 continues to be the highest in 2K's history, and there's more content coming. In the period, MAUs grew as sales continued at a steady pace with the consistent release of free and paid content. We attribute this ongoing success in part to 2K's and Gearbox Software's continued efforts to support Borderlands 3 as a live service game, which should continue to benefit the title and series over the long term. Private Division's critical and commercial success, The Outer Worlds, outperformed expectations in the first quarter and is now sold in 2.8 million units. On June 5th, the title was released for Nintendo Switch. In addition, Private Division launched Disintegration, a new sci-fi first-person shooter experience that blends real-time tactical elements for PlayStation 4, Xbox One, and PC. During the first quarter, 2K released Mafia II Definitive Edition and Mafia III Definitive Edition as part of the Mafia Trilogy, which combines all three previously released Mafia titles into a single package for PlayStation 4, Xbox One, and PC, curated by 2K's Hangar 13 studio. Mafia 1 Definitive Edition will become available on September 25th, as Carl will discuss shortly. 2K also bolstered our offerings for Nintendo Switch with some of our most beloved and successful franchises, including Bioshock the Collection, the Borderlands Legendary Collection, and the XCOM 2 Collection. In addition, 2K and Firaxis Games released XCOM Chimera Squad, an all-new standalone title in the award-winning turn-based XCOM series for PC. Our first quarter results were also enhanced by a variety of other offerings led by SocialPoint, Sid Meier's Civilization VI, and the WWE Series. During the first quarter, recurrent consumer spending exceeded expectations, growing 127% to a new record and accounted for 65% of net bookings. In addition to virtual currency for NBA 2K, Grand Theft Auto Online, and Red Dead Online, recurrent consumer spending was enhanced by the following offerings. In the free-to-play category, Social Point outperformed expectations, growing 54% to a fiscal first quarter record, driven primarily by the exceptional performance of its two biggest games, Dragon City and Monster Legends. The studio continues to invest in its broad and innovative pipeline of more than 10 new games planned for launch in the coming years. WWE Supercard also outperformed during the first quarter, growing 54%. The title has now been downloaded more than 21 million times and remains 2K's highest grossing mobile title. And NBA 2K Online in China remains a significant contributor to our results. The title is the number one PC online sports game in China with nearly 50 million registered users. Add-on content grew 135% and outperformed expectations led by offerings for the Borderlands franchise, Sid Meier's Civilization VI, and XCOM 2. As a result of our outperformance in the first quarter, along with a higher forecast for the balance of the year, We're raising our outlook for fiscal 2021, which is well underway to be another great year for Take-Two. Looking ahead, our company has the strongest development pipeline in its history, including sequels from our biggest franchises, as well as exciting new IP. We've made great strides to increase the scale of our enterprise, and our current pipeline is more than double what it was five years ago in terms of number of games, including 54% internally developed titles and 46% externally developed titles. In closing, we continue to prepare for our industry's forthcoming transition to a new console cycle, which will provide our world-class development teams with a better platform on which to captivate and engage our audiences. Our company remains superbly positioned, creatively, operationally, and financially, to capitalize on the many positive trends in our industry and to deliver returns for our shareholders over the long term. I'll now turn the call over to Carl.