Take-Two Interactive Software, Inc.

Greetings and welcome to the Take-Two Q3 Fiscal Year 21 Earnings Call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Nicole Shevins, Senior Vice President of Investor Relations and Corporate Communications. Thank you, Nicole. You may begin.

Good afternoon. I recently joined Take Two, and I'd like to thank you for joining our conference call to discuss our results for the third quarter of fiscal year 2021 and to December 31st of 2020. I'm thrilled to join the team and look forward to working with all of you. 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. 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 this 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 filings with the SEC may be obtained from our website at TakeTwoGames.com. And now I'll turn the call over to Strass.

I'd like to welcome Nicole to our team, and I'm confident that she'll enhance our investor relations efforts going forward. On behalf of our entire management team, I'd like to acknowledge those who've been and continue to be affected by the global pandemic. No words can bring comfort to those who've suffered. However, we do remain hopeful that better days lie ahead and that we all may return to and enjoy our lives as we once did. We remain immensely grateful to frontline workers who are caring selflessly for those in need, ensuring the vaccines are being delivered and administered, and helping the world navigate further these troubling times. Turning to take two, due to an incredibly strong holiday season coupled with our ability to provide consistently the highest quality entertainment experiences, especially as many individuals continue to shelter at home, Take-Two delivered operating results that significantly exceeded our expectations. The outperformance of Grand Theft Auto Online, Grand Theft Auto 5, NBA 2K, the Mafia Definitive Editions and Mafia Trilogy, and Red Dead Redemption 2 reflects our development team's boundless passion, creativity, and commitment to captivate and engage audiences. In the history of the entertainment industry, there's perhaps no experience that's more loved, more expansive, more critically acclaimed, and more successful than Rockstar Games' Grand Theft Auto. Grand Theft Auto V remains one of the most iconic titles ever released and continues to exceed our expectations, having sold in over 140 million units. In fact, in calendar 2020, more copies of Grand Theft Auto V were sold than in any other year except for 2013 when it first launched on PlayStation 3 and Xbox 360. In addition, recurrent consumer spending on Grand Theft Auto Online outperformed our third quarter forecast and grew 28% year over year. In December, Rockstar Games released Grand Theft Auto Online's biggest update to date, the Cayo Perico Heist. Featuring a radical new approach to heist design, as well as a new tropical island to explore, The Cayo Perico Heist is an all-new Grand Theft Auto Online adventure in which players can choose to take on a heist with a crew of up to four, or for the first time, plan, prepare, and execute the daring island heist all on their own. Notably, more than 50% of those playing the Cayo Perico Heist are engaging with this as a new single-player experience. Cayo Perico Heist also introduces an array of exciting new weapons and vehicles, a new virtual nightclub and social space for players to get together and experience the world's best DJs, plus a host of updates across the entire world. In addition, overall engagement with Grand Theft Auto Online continues to set new benchmarks, as the title had more players in every month and for the entirety of calendar 2020 than in any other year since its launch. 2020 also marked Grand Theft Auto Online's highest participation rate ever by both new players and reactivated players who returned to experience Rockstar Games' array of new content offerings. Grand Theft Auto Online is expected to achieve a new netbookings record in fiscal 2021. Red Dead Redemption 2 also outperformed and to date has sold in over 36 million units worldwide. In December, Rockstar Games released a standalone version of Red Dead Online on PlayStation 4, Xbox One, and PC that for the first time allows new players who do not already own Red Dead Redemption 2 to experience everything Red Dead Online has to offer, including access to all future content updates. Players also have the option to unlock Red Dead Redemption 2's story mode via an additional purchase. In addition, during the quarter, Rockstar Games released an array of content updates for Red Dead Online, including new legendary animals and sightings missions for the Naturalist role, action-packed new missions for the Bounty Hunter role with the addition of the prestigious Bounty Hunter license, plus Outlaw Pass number four, and an assortment of new clothing, weapons, enhancements, and more. As a result of these offerings, engagement with Red Dead Online reached new heights, and there were more players, including more new players, in the month of December than in any other month since its beta launch in 2018. In addition, Red Dead Online grew its audience and had more overall players in calendar 2020 than 2019. Rockstar Games will continue to support both Red Dead Online and Grand Theft Auto Online with more content updates throughout calendar 2021 to keep new and returning players excited and engaged. Another beloved franchise that's both a perennial favorite among consumers and an integral contributor to our ongoing success is NBA 2K from 2K and Visual Concepts. Renowned for being our industry's leading basketball simulation series, each year NBA2K continues to reinvent how people experience basketball and its rich culture and influence. NBA2K21 once again raised the bar for the series and was our first offering that was built from the ground up for next generation consoles. The title boasts groundbreaking technological advancements, new modes, and many exclusive robust features. To date, NBA 2K21 has exceeded our expectations and is sold in over 8 million units across all platforms. In addition, during the third quarter, net bookings for the NBA 2K series grew 48%, and recurrent consumer spending significantly exceeded our expectations, growing 67%. Furthermore, consumer engagement with NBA 2K remains incredibly strong across daily active users, my career users, and my team users. Moreover, NBA 2K21 users have been more deeply engaged with the game, with average games played per user up 14% as compared to NBA 2K20 in the same period. During the quarter, 2K expanded further the breadth of its NBA 2K offerings with the releases of NBA's Super Card and NBA 2K Mobile Season 3 for iOS and Android devices. During the third quarter, 2K bolstered our initial offerings for PlayStation 5 and Xbox Series X, with our beloved shooter-looter title, Borderlands 3. The title was fully optimized for next-generation consoles, making Mayhem bigger and bolder than ever before. All players who own or purchase the game on prior consoles will be able to download the new platform upgrade within the same console family for free. This free upgrade will add several exclusive features, including 4K resolution at 60 frames per second in single-player and online co-op, plus support for three- and four-player split-screen co-op. Borderland 3's launch for next-generation platforms was well received, and we've seen the game's user base grow steadily. 2K is supporting the title with in-game events and new content, including the release of the Designer's Cut, which is the first of two offerings as part of the Season Pass 2 for all versions of the game. Our third quarter results were also enhanced by a variety of other offerings led by the Mafia Definitive Editions and Mafia Trilogy, the WWE Series, Sid Meier's Civilization VI, and PGA Tour 2K21. Driving engagement with our titles after initial launch remains among our most important long-term growth and margin opportunities and is a key strategic priority of our organization. We now support virtually all our new releases with innovative offerings to achieve this goal. That said, we're highly mindful that first and foremost, we're an entertainment company, and we're in the service of our audience. We strive to give consumers more of what they love and the ability to stay captivated and engaged within their favorite experiences and passionate communities. To that end, during the third quarter, we released an array of free and paid add-on content for our popular hit releases, including Kerbal Space Program, PGA Tour 2K21, Sid Meier's Civilization VI, and WWE 2K Battlegrounds. During the third quarter, recurrent consumer spending exceeded our expectations, growing 30%, which was double our original outlook, and accounted for 58% of net bookings. In addition to NBA 2K, Grand Theft Auto Online, and Red Dead Online, recurrent consumer spending was enhanced by the following offerings. Social Points live games, including Dragon City, Monster Legends, Word Life, World Chef, and Tasty Town outperformed during the third quarter and exceeded expectations. Live games delivered new fresh content, events, and experiences to boost engagement and enhance players' enjoyment, and net bookings grew 39%. The studio continues to invest in its broad and innovative pipeline of new games planned for launch in the coming years. PlayDots completed the rollout of their biggest feature update of the year for their popular Two Dots title, including competitive leaderboards. This update played a key role in driving average revenue per daily active user up 12% as compared with the second quarter of fiscal 21. 2DOTS is now experiencing its highest player conversion rate ever as a result of these new and expanded LiveOps features, which continue to perform very well. We expect PlayDots to be a significant contributor to our results and expect growth over the long term. WWE Supercard also outperformed during the third quarter, growing 16%. During the period, 2K launched season seven of this popular free-to-play sports entertainment mobile game. The title has now been downloaded more than 22 million times and remains 2K's highest-grossing mobile title. And NBA 2K Online in China grew 49% and remains a significant contributor to our results. The title is the number one PC online sports game in China with more than 51 million registered users. Add-on content grew 8% and outperformed expectations, led by offerings for the Borderlands series and Sid Meier's Civilization VI. As a result of our better than expected third quarter performance and increased forecasts for the remainder of the year, we're once again raising our outlook for fiscal year 2021, and we expect to achieve record net bookings of $3.37 to $3.42 billion. In closing, Take-Two is exceedingly well-positioned to capitalize further on the positive trends of our industry, to pursue our core mission to become the most innovative, creative, and efficient entertainment company in the world, and to deliver growth and returns for our shareholders over the long term. I'll now turn the call over to Carl.