Take-Two Interactive Software, Inc.

experienced strong engagement throughout the quarter with players logging nearly 22 million hours of gameplay and facing off in 170 million matches. 2K and Visual Concepts continue to support the title with a series of five DLC packs that can be purchased individually or as part of a season pass. 2K also continues to support PGA Tour 2K23 with additional pros, courses, and clubhouse passes. In May, 2K and Visual Concepts launched LEGO 2K Drive, the first game in a multi-title partnership between 2K and the LEGO Group. Following the launch, our teams released the first of four Drive Pass seasons for the title, which features 100 levels and new content inspired by the Fast and the Furious saga. Also in May, Private Division and Piccolo Studio launched After Us on PlayStation 5, Xbox Series X and S, and PC, which has been praised by critics for its striking visuals in game world. Zynga had a solid start to the year, performing in line with our plans, and we're pleased with the ongoing progress of our mobile business. Ad revenue grew approximately 11% year-over-year, driven by the addition of PopCore and our ability to open new inventory supplies in our portfolio. Toon Blast has been introducing strong feature releases, such as the Toon Race event, which drove our performance versus our forecast, and helped the game recently surpass $2 billion in lifetime gross bookings. We made excellent progress on our profitability initiatives in mobile. We expanded our offerings on our direct-to-consumer platforms, and we continue to believe that over the next few years, the majority of our mobile games will leverage our highly profitable proprietary distribution channel. We continue to enhance the performance and profitability of our hypercasual business with multiple new games scaling quickly and several titles generating bookings from in-app purchases in addition to ads. A few key highlights of Zynga's live services during the period include Empires & Puzzles grew quarter over quarter, driven by the new Path of Giants Battle Pass featuring daily and weekly challenges to unlock rewards. Rolex Twisted Tangle reached the number one free game spot on the U.S. Google Play Store. Social Casino again delivered strong results, driven by Hit It Rich's best quarter in two years and Game of Thrones Casino's second best quarter in its history. Casual games continued to improve participation and engagement, with Words with Friends launching the new Club Daily puzzle and Harry Potter puzzles and spells adding bonus levels and special delivery prize events. With numerous games in development and soft launch across Zynga Studios, we're excited to start delivering several new offerings in the coming months. Turning to our outlook, we're reiterating our prior guidance of $5.45 billion to $5.55 billion in net bookings for fiscal 2024. We remain highly optimistic about our future and our ability to deliver record results in the coming years. Laney will provide more details on our outlook shortly. In closing, as we continue to execute our strategy, we believe that we can increase significantly our scale and prominence within the industry grow margins, and pursue the vast opportunities to engage even larger audiences around the world. Led by the passion, creativity, and innovation of our world-class development teams, Take-Two is in a powerful position to set new benchmarks for our player communities, which we believe will drive long-term returns for our shareholders. I'll now turn the call over to Carl.

Thanks, Strauss. I'd like to thank our teams for a strong start to the year. turning to our announced launches for fiscal 2024. Yesterday, Rockstar Games announced that the beloved Western experiences Red Dead Redemption and Undead Nightmare will be coming to the Nintendo Switch and PlayStation 4 for the first time in a new single package arriving August 17th. In a new conversion by Double 11 Studios, the Switch and PS4 versions bring the two classic experiences together again for new players and original fans to enjoy across modern consoles, including backwards compatibility with the PlayStation 5. On September 8, 2K and Visual Concepts will celebrate the 25th anniversary of our industry-defining NBA 2K series, and once again redefined basketball simulations with the launch of NBA 2K24, featuring the iconic Kobe Bryant as the game's cover athlete for the second time in the history of the franchise. Players will be able to celebrate Bryant's legacy and replicate his skills in the brand new Mamba Moments mode. Players in the U.S. and Canada can also purchase the WNBA edition of the game exclusively at GameStop, featuring WNBA All-Star Sabrina Ionescu, as this year's cover star. NBA 2K24 will introduce Crossplay, a community requested feature for PlayStation 5 and Xbox Series X and S. Available in every multiplayer mode, players will be able to compete with or against others from around the world in dynamic co-op matches, thrilling online tournaments, or casual pickup games between new generation consoles. The title will also introduce ProPlay, a groundbreaking new technology that directly translates actual NBA footage into gameplay. 2K will have more to share on NBA 2K24 in the coming weeks. In addition, 2K and visual concepts remain hard at work on WWE 2K24, the next installment of our popular wrestling series, which set new creative and critical benchmarks with last year's highly successful release. In June, Private Division and Evening Star announced Penny's Big Breakaway, a new 3D action platformer from the team behind Sonic Mania. This kinetic yo-yo adventure is expected to launch in early 2024. Zynga Star Wars Hunters, which offers players the opportunity to join the greatest hunters from across the Star Wars galaxy, is expected to launch later this fiscal year. Players will engage in thrilling third-person combat in a range of competitive game modes across battlegrounds from the iconic worlds of Star Wars. Also in mobile, Social Point's latest game, Top Troops, a medieval fantasy-themed title in the PvP merge genre, is progressing well in soft launch and is expected to launch worldwide this fiscal year. In addition, our hypercasual studios will release a steady cadence of mobile titles throughout the year, focusing on games that have the potential for enhanced retention rates and a mix of in-app purchases and advertising to drive higher monetization and profitability. Our labels will also continue to provide new content and experiences that drive engagement and recurrent consumer spending across many of our offerings, including Grand Theft Auto Online, Red Dead Online, WWE 2K, Lego 2K Drive, PGA Tour 2K, Kerbal Space Program 2, and Zynga's mobile portfolio. Throughout fiscal year 2024, we look forward to launching additional releases from what we believe to be the strongest and most exciting development pipeline in our company's history. I'll now turn the call over to Laney.

Thanks, Carl. Good afternoon, everyone. Today I'll discuss the key highlights from our first quarter before reviewing our financial outlook for the full year and second quarter of fiscal 2024. Our combination with Zynga closed on May 23, 2022, which affects the comparability of our results relative to last year. Additional details regarding our actual results and outlook are contained in our press release. We had a strong start to the fiscal year, powered by our portfolio of iconic, industry-leading intellectual properties. As we approach our next phase of growth, our teams continue to make excellent progress advancing our development pipeline and capitalizing on our revenue-driven opportunities and synergies. We also partner together to maintain our focus on efficiency amidst a challenging macroeconomic backdrop and cautious consumer spending trends. I'd like to thank our incredible teams worldwide for their determination and passion for our business. Now, moving on to our results, we achieved net bookings of $1.2 billion, which was at the high end of our guidance range. In the current backdrop, many consumers are purchasing established franchises and those that offer great value. Our catalog stands at the intersection of these two trends. Accordingly, our performance reflects better-than-expected results from Grand Theft Auto Online and Grand Theft Auto V and NBA 2K23. During the quarter, we launched Marvel's Midnight Suns for Gen-A consoles, Lego 2K Drive, and After Us. Recurrent consumer spending rose 38% for the period, which was above our outlook of 35% growth, and accounted for 84% of netbooking. The outperformance was primarily driven by Grand Theft Auto Online and NBA 2K23. GapNet revenue increased 17% to $1.28 billion, and cost of revenue increased 39% to $606 million, driven by $187 million of amortization of acquired intangibles. We also recorded an impairment of $18 million related primarily to capitalized software and development costs for an unreleased title, which affected our management results compared to our guidance. Operating expenses increased by 25% to $883 million. On a management basis, operating expenses grew by 46%, which primarily reflected a full quarter of Zynga, higher personnel costs, and depreciation related to office build-outs and capitalized IT expenses. Turning to our guidance, I'll begin with our full fiscal year expectation. As Strauss mentioned, our business is performing well, and we are reiterating our Net Bookings Outlook range of $5.45 billion to $5.55 billion. The largest contributors to Netbookings are expected to be NBA 2K, Grand Theft Auto Online, and Grand Theft Auto 5, our hypercasual mobile portfolio, Empires and Puzzles, Toon Blast, Merged Dragons, Words with Friends, Red Dead Redemption 2, and Red Dead Online, and Zynga Poker. We expect the Netbookings breakdown from our labels to be roughly 51% Zynga, 30% 2K, 17% Rockstar Games, and 2% other. And we forecast our geographic net booking split to be about 65% United States and 35% international. We continue to forecast the current consumer spending growth of 5% compared to fiscal 2023, representing 78% of net bookings. Mobile trends are projected to remain stable, and Zynga's ad business continues to deliver growth. We expect to generate approximately $100 million in non-GAAP adjusted unrestricted operating cash flow and deploy approximately $180 million for capital expenditures, primarily to support our office build outs and larger footprint. We continue to expect GAAP net revenue to range from $5.37 to $5.47 billion. Our total operating expenses are expected to range from $3.38 to $3.4 billion. as compared to $3.45 billion last year. On a management basis, our operating expenses are expected to grow by approximately 15% year-over-year, due primarily to a full year of Zynga, an increase in personnel and marketing expenses, and higher depreciation of office build-outs and capitalized IT expenses, which are being partially offset by the realization of synergies from our combination with Zynga and savings from our cost reduction program. As we announced previously, our teams are taking extensive measures to review our cost structure and reduce discretionary costs whenever possible to offset the current consumer backdrop and inflationary environment while still investing for growth. Now moving on to our guidance for the fiscal second quarter. We project net bookings to range from $1.4 to $1.45 billion compared to $1.5 billion in the second quarter last year. Our release date for the quarter includes Red Dead Redemption and Undead Nightmare for Switch and PlayStation 4 and NBA 2K24. The largest contributors to Netbookings are expected to be NBA 2K, Grand Theft Auto Online and Grand Theft Auto 5, our hyper-casual mobile portfolio, Empires and Puzzles, Tomb Blast, Words with Friends, Merged Dragon, Red Dead Redemption 2 and Red Dead Online, and Zinger Poker. We project recurring consumer spending to decline by approximately 7%, which assumes modest declines in our mobile business, NBA 2K, driven by changes to its summer promotional cadence, and Grants.Online, as well as a reduction in DLC revenue from several titles that were released in prior years. We expect gap net revenue to range from $1.26 to $1.31 billion. operating expenses are expected to range from $811 to $821 million. On a management basis, operating expenses are expected to grow by approximately 5% year over year, driven by last year's acquisition of PopCorp and higher personnel costs, which are being partly offset by the Zynga synergies and our cost savings initiative. In closing, we are confident that the actions our teams are taking this year are preparing us for a strong trajectory of growth. Through our collective efforts, we continue to believe that we are positioning our business for a significant inflection point, fiscal 2025, that will culminate in us delivering new record levels of operating performance next year and beyond. We thank all of our stakeholders for their continued support, and we look forward to delivering on this exciting next chapter. Thank you. I'll now turn the call back to Strauch.