Greetings. Welcome to the Take-Two third quarter 2023 earnings conference 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 Shevlin, Senior Vice President of IR and Corporate Communications. Thank you, Nicole. You may begin. Good afternoon. Thank you for joining our conference call to discuss our results for the third quarter of fiscal year 2023 ended December 31st, 2022. Today's call will be led by Strauss Zelnick, Take-Two's Chairman and Chief Executive Officer, Karl Slatoff, our President, and Lainie 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. 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 take2games.com. Now I'll turn the call over to Strauss. Thanks, Nicole. Good afternoon, and thank you for joining us today. During the third quarter, we continued to execute on our ambition to create the highest quality, most engaging interactive entertainment franchises in the industry, to deliver them across an array of platforms, and to captivate our global audiences. All of our new game releases and post-launch content have received significant critical acclaim, and we're pleased to have the highest catalog sales based on units sold in the Americas. The strength of our portfolio reflects the passion, vision, artistic acumen, and hard work of our world-renowned development teams and studios, and we're immensely proud of our long-standing commitment to quality. Notwithstanding our creative achievements, our third quarter net bookings of $1.38 billion were slightly below our prior guidance. We believe that as a result of macroeconomic conditions, consumers shifted holiday spending toward established blockbuster franchises and titles that were offered with pricing promotions. While our catalog benefited from this trend, it affected the performance of certain of our new releases and recurrent consumer spending for some of our console and PC games. Despite the current market, we believe that our long-term success will be driven by our consistent ability to create the best entertainment experiences, including sequels of our beloved franchises and the introduction of engaging new intellectual properties. Sales of Grand Theft Auto V exceeded our expectations during the holiday season. To date, the title has sold in more than 175 million units. During the quarter, Rockstar Games released an array of new content for both Halloween and the holiday season, as well as a new story-driven update, Los Santos Drug Wars. The update launched in December and continues to deliver exciting new story and gameplay features to players across the winter season, including a new business, taxi missions, and much more to come, which is continuing to drive strong engagement with our player base. We were also pleased with the performance of Red Dead Redemption II, which outpaced our expectations, driven by successful holiday promotions and events. To date, the title has sold in more than 50 million units. During the quarter, Rockstar Games continued to release new updates for Red Dead Online, including a new Halloween hardcore telegram mission and new Call to Arms locations for Halloween and the holidays. We remain incredibly pleased with the enduring quality of these entertainment experiences. Grand Theft Auto V was ranked number three for units sold in the U.S. during calendar year 2022 on all platforms and was number two overall for 2022 on Steam. 2022 was GTA V's 10th consecutive year in the NPD Top five for unit sales. Red Dead Redemption II also continues to resonate strongly with players, ranking as the number one selling game on Steam for the quarter and number two for 2022. NBA 2K23, which remains the number one selling sports title in North America, continues to expand its audience and to date has sold in over 8 million units. Full game sales for NBA 2K23 are up 3% year- over- year, and MyTEAM users grew more than 50% over last year as players enjoyed assembling their rosters of the NBA's all-time greatest stars to dominate the competition. In addition, NBA 2K23 Arcade Edition remains the number one game on Apple Arcade since its launch in October. 2K and HB Studios supported PGA TOUR 2K23 with a limited edition holiday bundle that included NBA 2K23 and new content featuring branded gear from Barstool Sports, 100 Thieves, and Dude Perfect. HB Studios will release more content and features, including the addition of Pebble Beach, cross-play functionality, and ranked matchmaking. On December 2nd, 2K and Firaxis Games launched Marvel's Midnight Suns on Windows PC via Steam and Epic Games Store, PlayStation 5 and Xbox Series X and S. The title launched to critical acclaim with VGC rating it a 5/5, calling it a modern strategy classic. PC Gamer said it was completely brilliant, scoring it 88 / 100, and Rock Paper Shotgun called it one of the best superhero games. The title is being supported with a series of post-launch content that can be purchased individually or as part of the game seasons pass. During the quarter, Zynga's in-app purchases performed in line with our expectations, and we saw mobile trends improve from prior lows, particularly during the holiday season. The label continued to experience strong engagement among its active players, and we believe that we're maintaining our global market share. Our advertising business outpaced the broader industry as we continue to introduce new ad supply and products, optimize our networks to increase ad yields, and roll out Chartboost throughout our inventory. A few key highlights of our mobile offerings during the quarter include Empires & Puzzles was a top performer due to strong seasonal content and Black Friday offerings. This is one of our first titles to leverage our direct-to-consumer platform for in-app purchases, which we believe can enhance significantly the margins for our mobile portfolio over the next few years. Rollic's Balls'n Ropes reached the number one spot for most downloaded game in the U.S. in December, giving Rollic a total of 20 games that have reached the number one or number two spot in Apple's U.S. App Store. We acquired Popcore, which offers a unique balance of hyper-casual experiences that also prioritize long-term player retention rates. This strengthens our leadership among hyper-casual publishers with respect to downloads and revenue. Following the acquisition, Popcore's game Tap Away reached the number one spot for most downloaded game multiple times throughout the quarter in Apple's US App Store. Zynga's casino titles remained resilient, with Game of Thrones Slots posting its best quarter ever. Top Eleven had a strong quarter, driven by various in-game updates celebrating the World Cup. CSR Racing 2 released Race Pass, which features innovative new rewards that are driving stronger retention and monetization. Our combination with Zynga remains highly accretive to our business. We remain committed to delivering our planned synergies, we're well on our way to exceed our target of $100 million in annual cost savings within the first two years post-close. During the quarter, recurrent consumer spending rose 117% and accounted for 78% of Net Bookings. Turning to our outlook, we're operating in an environment that is in many ways more challenging than we anticipated, and we're lowering our fiscal 2023 Net Bookings guidance to $5.2 billion-$5.25 billion to take this backdrop into account. To be clear, I take personal responsibility for our revised downward guidance. We believe there's always more to achieve, particularly when we fall short of our expectations. We've embarked on a company-wide cost reduction program that will optimize our expense structure while also positioning us to deliver on our anticipated growth trajectory. We expect to achieve savings in excess of $50 million as a result of this initiative. Our balance sheet remains strong, allowing us to navigate these uncertain times with confidence. We've always managed our business for the long term. As we achieve the powerful synergies from our combination with Zynga, release new titles from our robust multi-year pipeline, and execute on our cost savings initiatives, we expect to deliver sequential growth and record performance over the next several years. Our business and creative teams have done a phenomenal job during these challenging times, and I'd like to thank all of our colleagues for their tireless work. I'd also like to thank our shareholders for their continued support. I look forward to sharing our progress with you on all of our key initiatives. I'll now turn the call over to Karl. Thanks, Strauss. As we focus on the remainder of the year and beyond, we remain steadfast in our commitment to providing the most captivating and engaging entertainment experiences for our audiences across all platforms and geographies. We believe this is the best strategy and path forward to achieving our goals, driving our expected long-term growth, and bringing value to our shareholders. Turning to our upcoming releases. On February 24th, Private Division and Intercept Games will launch Kerbal Space Program Two in early access for PC on Steam, Epic Games Store, and other storefronts. KSP Two will bring an array of content for players to explore, and the title promises to be the most visually impressive game in the franchise. Those that purchase KSP 2 in early access will help inform the future development of the game by providing feedback directly to its creators leading up to the full launch of the title. Private Division has announced several new projects. After Us, a riveting exploration adventure game from Piccolo Studio, is expected to launch this spring during fiscal 2024 for PC, PlayStation 5, and Xbox Series X and S. Private Division announced a publishing partnership with Bloober Team to develop a new survival horror game expected to launch after calendar 2024. We unveiled our new Private Division development fund to support smaller independent teams with project financing and mentorship opportunities. On March 17th, 2K and Visual Concepts will release WWE 2K23 for PlayStation and Xbox consoles and PC on Steam. In celebration of John Cena's 20th anniversary as a WWE superstar, the 16-time world champion, record-setting philanthropist, and WWE 2K23 executive soundtrack producer will be featured on the cover of each edition of the game. Global music phenom Bad Bunny, 2022's most streamed artist in the world, will make his WWE 2K debut as a pre-order bonus. Building upon the success of WWE 2K22, this year's installment features a unique take on the 2K Showcase, the introduction of the fan favorite WarGames matches, and expansions to several more key game modes. Fans can look forward to a deep roster of WWE superstars and legends, including Roman Reigns, American Nightmare Cody Rhodes, Ronda Rousey, Brock Lesnar, Stone Cold Steve Austin, and more. 2K will support the game with an array of post-launch content that may be purchased individually or through a season pass. Throughout the balance of the fiscal year, Rockstar Games will continue to support Grand Theft Auto Online with additional content updates, and 2K and Firaxis Games will continue to release add-on content for Marvel's Midnight Suns and Sid Meier's Civilization VI: Leader Pass. In mobile, Zynga's Rollic Studio will release a vast array of titles as they've done previously, while the label's other studios remain at work on a variety of games, including several in soft launch that we expect to release in fiscal 2024. We will have more to share on our pipeline when we report our fourth quarter results in May. I'll turn the call over to Lainie. Thanks, Karl, good afternoon, everyone. Today, I'll discuss the key highlights from our third quarter before reviewing our guidance for fiscal year 2023 and our fourth quarter. Please note that our third quarter results include our combination with Zynga, 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. As Strauss mentioned, we delivered net bookings of $1.38 billion, which was slightly below our prior guidance, as consumers displayed more cautionary purchasing behaviors during the holiday season. As in prior periods of economic headwinds, full game sales from our catalog of industry-leading intellectual properties were relatively resilient. We saw pressure on some of our newer releases that are in earlier stages of building their player base, alongside softness in recurrent consumer spending. During the period, recurrent consumer spending rose 117% and accounted for 78% of Net Bookings. Zynga's in-app purchases performed in line with our revised expectations. However, this was offset by weakness in recurrent consumer spending for several of our consoles and PC games. Digitally delivered Net Bookings increased 72% and accounted for 95% of the total. During the quarter, 69% of console game sales were delivered digitally, up from 63% last year. GAAP net revenue increased 56% to $1.41 billion, and cost of revenue increased 97% to $692 million. Operating expenses increased by 123% to $889 million, primarily driven by the addition of Zynga, as well as higher marketing and stock-based compensation expenses. The GAAP net loss was $153 million, $0.91 per share, which was impacted by $302 million of amortization of acquired intangibles and $24 million of business acquisition costs. Our management tax rate for the period was 18% as compared to 16% in the prior year as a result of our combination with Zynga. We ended the quarter with over $1.1 billion of cash and short-term investments and paid down $200 million of revolver borrowing, reducing our debt to $3.1 billion. I'll begin with our full fiscal year expectations. We now expect to deliver net bookings of $5.2 billion-$5.25 billion. Our forecast takes into account the current economic environment and consumer purchasing trends that we have been experiencing, which we expect to continue into the fourth quarter, including lower expectations for some of our recent game releases and softer recurrent consumer spending, as well as the ship of an unannounced mobile title and a focus on enhanced profitability for our hyper-casual business. The largest contributors to net bookings are expected to be NBA 2K, Grand Theft Auto Online and Grand Theft Auto V, Empires & Puzzles, Toon Blast, Rollic's hyper-casual mobile portfolio, and Red Dead Redemption 2 and Red Dead Online. We expect the net bookings breakdown from our labels to be 46% Zynga, 36% 2K, 17% Rockstar Games, and 1% Private Division. We forecast our geographic net booking split to be about 65% United States and 35% international. We expect recurrent consumer spending to grow by approximately 85% and represent 77% of total net bookings. Our digitally delivered net bookings are expected to grow by approximately 60% and represent 95% of the total. Our forecast assumes that 74% of console game sales will be delivered digitally, up from 68% last year. We expect to generate more than $400 million in non-GAAP adjusted unrestricted operating cash flow, and we expect to deploy approximately $170 million for capital expenditures. We expect GAAP net revenue to range from $5.24 billion-$5.29 billion and cost of revenue to range from $2.53 billion-$2.55 billion, which includes approximately $694 million of amortization of acquired intangibles. Total operating expenses are expected to range from $3.4 billion-$3.41 billion as compared to $1.5 billion last year. This increase reflects the inclusion of Zynga, business acquisition costs, and higher personnel, compensation, and marketing expenses, which we anticipate will be slightly offset by our expected cost synergies from our integration with Zynga. As we've mentioned on prior calls, in light of the current backdrop, we have been evaluating cost savings opportunities that can structurally enhance our margins and make our company more efficient and nimble for the long term. After a comprehensive review, we now believe that we can deliver over $50 million of annual savings, which we will begin to execute on this quarter. Opportunities include personnel, processes, infrastructure, and other areas, particularly in publishing and corporate functions. This program is in addition to the over $100 million of annual cost synergies from our combination with Zynga and is not expected to impact the delivery of our robust multi-year pipeline. We expect a GAAP net loss ranging from $704 million-$721 million, or $4.40-$4.50 per share, which assumes the basic share count of 159.8 million shares. We expect our management tax rate to be 18% throughout the year. Now moving to our guidance for the fiscal fourth quarter. We project net bookings to range from $1.31 billion-$1.36 billion compared to $846 million in the fourth quarter last year. The largest contributors to net bookings are expected to be NBA 2K, Grand Theft Auto Online, and Grand Theft Auto V, Empires and Puzzles, Toon Blast, Roblox, Hyper Casual Mobile Portfolio, and WWE 2K23. We project recurrent consumer spending to grow approximately 105% and digitally delivered net bookings to increase approximately 70%. Our forecast assumes that 80% of console game sales will be delivered digitally, up from 75% last year. We expect GAAP net revenue to range from $1.34 billion-$1.39 billion and cost of revenue to range from $688 million-$708 million, which includes approximately $198 million of amortization of acquired intangibles. Operating expenses are expected to range from $871 million-$881 million. At the midpoint, this represents a 120% increase over last year. This increase reflects the inclusion of Zynga, business acquisition costs, and higher marketing and personnel expenses, which we believe will be slightly offset by the realization of some of our anticipated cost synergies. A GAAP net loss is expected to range from $197 million-$214 million, or $1.17-$1.27 per share, which assumes a basic share count of 168 million shares. In closing, while we are disappointed to have lowered our outlook for the year, we are highly confident in our long-term growth potential. We believe that the actions we are taking now will position us to deliver sequential growth and record performance over the next several years, which we anticipate will drive meaningful shareholder value. I'd like to thank all of our stakeholders again for their support. Thank you. I'll now turn the call back to Strauss. Thanks, Lainie and Karl. On behalf of our entire management team, I'd like to thank our colleagues for their firm commitment to creativity, innovation, and efficiency as we continue to navigate a challenging economic landscape. I'd also like to express our appreciation to our shareholders for their continued support. We'll now take your questions. Operator? Thank you. We will now be conducting a question -and -answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. Our first question is from Eric Handler with MKM Partners. Please proceed with your question. Good afternoon, and thanks for the question. Strauss, I wonder if you could talk a little bit about mobile advertising. Specifically, have you been able to integrate advertising into Zynga games that previously had not included advertising? What about, you know, the 2K games prior to the acquisition of Zynga? Secondly, if you could just talk a little bit more about the direct-to-consumer platform with mobile virtual currency purchasing. Besides Empires & Puzzles, how many other games have integrated the DTC capabilities? Thanks, Eric. I appreciate it. To answer your question, we have enhanced advertising within the Zynga portfolio. Certain titles within that portfolio did not have advertising and now do. At 2K, with regard to their mobile titles, there's no change. With regard to console titles, we have a limited amount of advertising, but there's no change there as well. With regard to direct-to-consumer, that's a new initiative for us, and for the team at Zynga. It's being rolled out modestly. We are seeing early signs of success. Obviously, that has a very significant effect on our contribution margins. Thank you very much. Thank you. Our next question is from Matthew Thornton with Truist Securities. Please proceed with your question. Hey, good afternoon, everybody. maybe two, if I could. Coming back to mobile, I don't know if this one's for Strauss, but can you give us your higher level thoughts as you think about the mobile market? I know it's hard to tease apart macro versus what's going on on the user acquisition side with Apple ATT. I guess, putting macro aside, if you think about the mobile market over the next couple of years, how do you think about the growth rate of that business, and how are you thinking maybe different about the mix of in-app purchase versus ad revenue or the right genres or, you know, new IP versus existing franchises, you know, the right cost structure, if there's more opportunity there. Just, you know, how are you thinking about that as that market's obviously been very dynamic? I have a follow-up, but, I'll stop there. I'll see how I do, and then you can determine what your follow-up is like. In terms of the mobile market, look, the reason we were interested in combining with Zynga is we believe that mobile will continue to be the fastest-growing part of the interactive entertainment business, and we still are of that belief. Yes, there's been some year-over-year pressure, which is, in our view, related to the economy primarily, and to a lesser extent, probably sort of post-pandemic changes in demand. We think those are near term. In fact, the trends recently are quite positive in terms of demand. Zynga has the best portfolio of mobile games in the business. You know, most of our competitors, good as they may be, have one, two, three, four titles that matter. We have a whole lot more than that. We have these forever franchises. We also are blessed with phenomenal leadership in that division. We remain highly optimistic about the growth in the future. I'm not sure I can give you an exact growth rate, but I do think it will continue to be a rapidly growing part of the business. It also diversifies us. You know, we attach a different audience on the mobile side. Skews more female. It skews older. By having a diverse company that has console, PC, and mobile titles, we address every part of the interactive entertainment business, and we find ourselves as one of the top 3 pure plays in the business. With regard to our expectations about in-app purchases and ad revenue going forward, look, in-app purchases still are only relevant for about 10% of the market. For 90% of the users, that's not something they're interested in. If you're selective and careful about how you target it, advertising makes all the sense in the world because we ought to be able to find a way to monetize all of the viewing, all of the engagement, not just the engagement that leads to spending, particularly because, you know, we're not in the toll booth business, we're in the entertainment business, and we wanna be able to deliver titles that consumers can enjoy without regard to spending. Spending should enhance the experience for sure, and it does. In order to be commercial, we should have a robust advertising business that's not intrusive, that's positive for the consumer and the consumer experience, and that's exactly what Zynga is building. With regard to new IP, with. Well, I'll finish your I mean, I wrote down your question, so let me just grab you on new IP, and then I'll stop talking. On new IP, that remains the biggest challenge in the mobile business. You know, making new hits in mobile is really, really, really hard. We're working on a bunch of titles about which we're very excited, but, you know, it's super hard to make hits. Hit ratios in the business are low. Yeah, just one quick follow-up, Strauss, and that's really impressive that you got all those, by the way. I was keeping notes, so that's impressive. On the, any, you talked about the next couple of years getting back to record bookings, which you've talked about for a while now. I think you even talked about sequential growth. Any, does that apply to fiscal 2024? I guess just any early thoughts about how we can start thinking about fiscal 2024, and then I'll hop back in the queue. Thanks again. You know, what we said today is we expect sequential growth and record results over the next couple of years, that remains our expectations. We'll give you exact outlooks including guidance in the coming months. Thank you. Our next question is from Matthew Cost with Morgan Stanley. Please proceed with your question. Hi, everybody. Thanks for taking the questions. Could you go into a little more detail about where you saw the strength in PC and console versus where some of the softness was? Was it more on recurrent consumer spending or unit sales? How does that compare to past periods of macro weakness that you've seen? In terms of the strength on PC and console, really our strength has been in the catalog. I mean, what we had said before is that, what we've observed over this period of time is that folks like the big established franchises, particularly those that have been discounted, did quite well over the last quarter. That was our experience as well. That part of the business did very well for us. A little bit tougher on sort of new releases that are still establishing their player bases. When folks are making difficult choices between games that they can afford to play, they're obviously gonna gravitate towards things that they know that they're more familiar with. A little bit tougher on the new releases for the younger games. In terms of RCS, we already said on the mobile side, our in-app purchases were in line with expectations, and we continued a positive trend in advertising. We did experience some softness on the PC and console side in RCS. Again, that dynamic is what we expect that dynamic in this kind of eco-economic environment. It really, it maybe it was a little bit more exacerbated than we originally expected, but we are continuing to see that. Great. Thank you. Then just on the cost-saving side, is the cost reduction program, is it particularly focused on the mobile business or, you know, various, you know, areas? Or is it kind of just general corporate overhead? It's a combination of our corporate departments and also some of our publishing functions. It includes all of our labels, and it's outside of the $100 million plus in synergies between Take-Two and Zynga that we've talked about already, that has to do with the acquisition of Zynga. Great. Thank you. Thank you. Our next question is from Drew Crum with Stifel. Please proceed with your question. Okay, thanks. Hey, guys. Good afternoon. Just sticking with Zynga, I think you mentioned in your preamble that mobile trends had improved. Maybe a little bit more detail there and, you know, can you comment on whether Zynga's Net Bookings were up quarter-on-quarter? If you've seen this improving trend line continue into the current quarter, I have a follow-up. Yeah. I think the way to characterize it is we have seen some improving trends. The way to describe it is it's really been some improvements off of the lows that we've seen in the past. Okay. Then, Strauss, you know, some of your competitors have suggested the market is shifting towards these mega franchises. Curious if you agree with that premise, and does this in any way, if you do, impact how you invest across your development pipeline? Are you inclined to hold back with the launch of titles until market conditions become more favorable? Thanks. Yeah. We emphatically agree. The strategy of our company is to make hits across the board. We believe that we have the best collection of owned intellectual property across console, PC, and mobile in the marketplace. you know, our approach has always been to bring out new iterations of beloved franchises. We have 11 franchises that have each sold over 5 million units in an individual release, well over 65 that have sold over 2 million units in an individual release. I don't think anyone else can say that. look, we have the highest grossing entertainment property ever created of any sort, within our four walls thanks to the folks at Rockstar. that is very much our approach. The truth of the entertainment business is whether you like it or not, the entertainment business is a top 20 business on a good day and top 10 business on a less good day. We need to be there, and that has always been our strategy. Thanks, guys. Thank you. Our next question is from Omar Dessouky with Bank of America. Please proceed with your question. Hi, everybody. I'm looking at your grid, the grid of games that you plan to release from fiscal 2023 to fiscal 2025. Next to mobile, you have 38 games, and it looks like 10 of them were not Zynga games. Are you still confident that you can get all those games to scale? Is $100 million in annual bookings still the level that you aspire to as it was for Zynga's forever franchises prior to the acquisition? Then I have a follow-up, please. Sure. I'll take that one. I would say the aspiration for any title that we release in the mobile context would be the $100 million of annual booking. I can tell you for sure that that won't be the case with every title that we release. Our expectation going in, again, how we release mobile is, you know, you take it out, you see how it does, you invest a little bit more, you revamp it, you rebalance it, you invest a little bit more, and then you grow from there. We know that there are gonna be titles that we put out that will fail on the mobile side. The idea is that we need to put the titles out in order to find the ones that can reach that $100 million level or plus. That is certainly the strategy, and that's gonna be our path going forward. That's still our expectation. Okay. Do you think versus when you acquired Zynga, it's gonna be harder to get to that $100 million threshold? You know, would that affect kind of, you know, the number of new games that you guys will be potentially launching over the next year or two? No, I don't think the business has gotten easier or harder. I think it's pretty much what we expected. As I said, hit ratios in mobile are low. We feel really good about what's being developed. Just, no, I have one quick follow-up here. Some experts have noticed that Google has begun sending rejection notices for ads exposures and formats that are not compliant with its new, Better Ads Experiences policy. This policy allows disrupt interrupted interstitial ads among other practices. It was announced back in July. You know, are you starting to see the effects of this policy for Rollic hyper-casual games on Android? We're not. We're largely compliant. Okay. That's my question. Thank you. Thank you. Our next question is from Mario Lu with Barclays. Please proceed with your question. Great. Thanks for taking a question. The first one is on RCS. This quarter, in terms of the growth came in a bit below expectation. You mentioned that Zynga was in line, and the weakness was from console PC. Any franchise to highlight that kinda came in below expectations or any factors that led to this underperformance? No, there's nothing really to point out. It was really across several of our console and PC games. Okay. Got it. Just to follow up on NBA 2K. You mentioned that MyTEAM's players were up 50% year-over-year, which is a, you know, fairly large amount. Are there any kind of main drivers to highlight there? Were these gains, you know, partially offset by declines potentially in MyCAREER mode, or was it mostly additive? Thanks. Yeah. I wouldn't say that it would necessarily offset by declines in MyPLAYER mode. I think that the goal for NBA is to, and how we've been growing over the years and in our path to growth in the future, is to get more players involved in more modes, to drive them across all of the modes. Now, we know that we're not gonna get everybody to play the game 100% across every single mode, but that is certainly the goal. Because the more engagement, the better ultimately the RCS performance is for those titles. Also the more loyal the audience and it's a much better path for us to grow. Our focus has really been on getting players to play across those modes, and we've had some great success, as you can see, on not just the MyPLAYER area, but across the, or MyTEAM area, but across the board. Great. Thank you. Thank you. Our next question is from Eric Sheridan with Goldman Sachs. Please proceed with your question. Thank you for taking the questions. Maybe two, if I could. First on the mobile front, obviously, we've lapped the launch of IDFA, and I wanted to get your perspective on whether you feel like in terms of driving a mixture of user growth and in-game monetization and in-game engagement, whether you've successfully sort of realigned your marketing strategy in mobile to address a post-IDFA world or whether you're still thinking it's sort of a work in progress so that once demand is back in the mobile landscape, you can sort of capitalize on it? That'd be number one. Number two, a competitor of yours talked about withdrawing or pulling back from the mobile shooter market earlier in the earnings season. I'd love to get your perspective on how you think about developing, implementing and sort of launching AAA titles, either alongside traditional PC console titles in a mobile format or how we should be thinking about even mobile-only formats of what historically have been AAA type quality titles. Thanks so much. In terms of the effect of IDFA, we've been living that with for quite a while now, and I would certainly say that that has stabilized, and I don't think there are no surprises down the road that we're expecting at this point. There's been some improvement in how we are able to target since then. I think there's been some adjusting going on. I don't wanna characterize that as we're sort of back to where we were, 'cause that would be a mischaracterization, but we certainly feel like we've got our hands around it and then we're going in the other direction. That's positive in terms of our ability to target. I would also mention too that in the hyper-casual space, it is a much wider funnel and targeting is not, it doesn't require as much targeting as it does in the, in the normal mobile business. That's also helped our ability to attract new audiences. Yeah. On the second part of the question, we've said all along, and I've said it today, that hit ratios in the mobile business are very low. When we announced the combination with Zynga, you know, the most current question was, well, obviously you're gonna take Take-Two IP to mobile. Isn't that great? My answer was, that is potentially a very exciting opportunity, but it's really, really hard to do. One of our competitors has done it really well with a title and we're impressed by that and admire it. We have a healthy respect for how difficult it is. The vast majority of hits in mobile are native to mobile. They are not based on existing IP. They do not come from a console. I'm very optimistic that we're gonna give it a try, and I'm really hopeful that we'll do well with it, but it's not a slam dunk. Thanks so much. Thank you. Our next question is from Doug Creutz with Cowen and Company. Please proceed with your question. Thanks. Just in your commentary about some of the new release underperformance, you're essentially attributing it to macro or at least partially due to macro. There's been two other companies who have sort of had the same problem. You have several other competitors that have had record launches in the quarter, and it seems from the data that's been released, overall console spending was pretty stable versus a year ago. What makes you think the issue is macro-related versus this is just the way the video game industry is gonna be from now on? If that's the case, how does that cause you to rethink your pipeline going forward? It's a really good question. What, what causes us to believe that it's macro-related is that we don't just pull our expectations out of the air. We base our expectations on prior performance of similarly rated titles within that genre. In the case of certain of these titles, we've had great scores and terrific critical acclaim, and yet the unit sales were lower than expected on an apples-to-apples basis by comparison to prior releases in prior periods. If that is, you know, that sort of leads us to believe, okay, that's probably a macro result. I don't mean to imply for a minute that quality doesn't matter. Quality does matter, and the biggest titles will obviously continue to perform without regard to market conditions. If what you're saying is, does that mean you should only put out blockbusters and anything that's short of an expected blockbuster, you can't put out? I think the answer is a semi-yes. We can't put out something that we think is gonna be a B title. It's never been the case. We have to put out AAA titles. However, not everything is ever going to be Grand Theft Auto. It just isn't going to be that way. We have shown that we have the ability to launch new franchises. You know, in the case of Borderlands or more recently, Tiny Tina's Wonderlands and, you know, going back farther, BioShock, from Rockstar, Red Dead Redemption. These are new intellectual properties, and we were willing to take the risk and support our creative team's vision and passion, and we've been able to create big hits. That's not changing. There's nothing in our recent performance that leads us to say we shouldn't invest in this way. To the contrary, I believe we should continue to invest in this way. Right now is the market more selective? Sure. In tougher times when food and fuel is more expensive and people are a little worried, they're gonna be more selective. When they're more selective, they're gonna go to promotional titles, and they're gonna go to blockbusters. Thanks, Strauss. Thank you. Our next question is from Clay Griffin with MoffettNathanson. Please proceed with your question. Thanks. Good evening. It sounds like this has been mostly a monetization issue. I apologize if I missed it, but, it'd be helpful just to get a sense of overall engagement in the quarter as a metric for the market right now. It sounds like apart from the new releases that some of your base titles actually had pretty solid engagements out there. Engagement has definitely been strong across the board, I would characterize it certainly as a monetization, as a monetization issue. We've seen that not just on the PC or console business, but also in the mobile business as well. That, that is specifically engagement that seems to be is not the issue for us. Right. Just to follow up on that, is there anything that you guys have seen to suggest that Game Pass may be changing, the way people engage with new titles or just a sense of if that it has had an impact in terms of, engagement in the quarter or the over the last several quarters? I don't really think so. I mean, we don't make our frontline titles available day and date. We're thrilled to be in business with subscription services for our catalog titles at the appropriate time. We think that's the right way to support subscription. Subscription is still a relatively small business. You know, you're talking about businesses. I think the last announcement on Game Pass was 25 million subs. We're not talking about a huge broad-based business yet. In any case, no, I don't believe the business is cannibalizing our business. Okay. Thank you. Thank you. Our next question is from Martin Yang with Oppenheimer. Please proceed with your question. Hi. Good afternoon. Thank you for taking my question. I have two. Can you first give us more details on Zynga's direct consumer effort? Do you see a certain region or user cohort responding more strongly to the channel? We're not seeing any regional differences particularly. I'm not sure we've been looking for them though, because it's really early still. Got it. Thank Thank you. My second question is on the impact of more discounting in December. How would you characterize the environment in the March quarter? Is discounting still affecting negatively on the guidance for March? I don't think that discounting in particular is driving our expectations for the quarter. What's driving our expectations for the quarter is just our perception of market demand. Got it. Thank you, Strauss. Thank you. Our next question is from Matti Littunen with Bernstein. Please proceed with your question. Thank you. Just wondering if you changed your typical marketing approach for these new titles that launched in the holiday season. If not, do you plan to do that in the current quarter in response to what you're seeing in the market trends you discussed? Thank you. No, we didn't change our approach to marketing. Our marketing approach varies title by title and reflects our view at any given time for what the opportunity is and in the context of the cost of the marketing programs. If your question is, did we create a sort of self-inflicted wound by somehow spending less, for example, on marketing and getting worse results? The answer is no. Equally, it's not like we created a self-inflicted wound by spending more on marketing and not getting results. We tailored the marketing to the opportunity. Unfortunately, the opportunity set was a little smaller than we thought. Very clear. Thanks. Thank you. Our next question is from Mike Hickey with Benchmark. Please proceed with your question. Hey, Strauss, Karl, Lainie. Thanks for taking my questions. Two from me. Just curious specifically, I know you haven't called out titles, but for the quarter on the weakness and recurrent spend, did Grand Theft Auto Online and NBA 2K live service, did they meet your expectations for the quarter? Have you changed your forward view of growth from those games? Obviously, they're a big portion of your ex-mobile live service business. The second question on your cost reduction plan, $50 million, do you feel like that's sort of a starting point or you sort of grow that as you think about it more over time or do you feel like that's enough? Thanks, guys. For the quarter, our NBA business was in line with our expectations. Our other titles were a bit lower than what we had expected. As I mentioned, our PC and our console business for RCS was overall lower than what we had expected. For the $50 million, this is like an ongoing cost reduction initiative, so expect this number will grow over time. Efficiency is one of our core tenets as a company, so we're always looking for efficiency throughout the organization. These are permanent and structural changes to the organization's overall corporate overhead structure. These are expenses that we expect to reduce our overall structure over time. Thanks, Lainie. Thank you. Our next question is from Jason Bazinet with Citi. Please proceed with your question. I just had a slightly longer term question. Can you guys talk a little bit about whether or not you're a believer in sort of cloud gaming moving to the fore, you know, over the next five years? If so, what implications, if any, does it have on how you think about the business, your business? Thanks. Yes. I mean, we've been believers in our gaming. We were one of the first licensees, if not the first licensee, license org, sorry, to Stadia to support that pro-project. Remember, cloud gaming is a technology. It's not a business model. It's a distribution technology, and our view is broader distribution is always a good thing in the entertainment business. If we can reach more consumers with our properties, we're happy to do it as long as the terms make sense. And I think, you know, broader distribution over time probably benefits us in any number of ways, including the cost of distribution, which I believe will go down over time. That said, I've never felt like cloud gaming would be, you know, would represent a seismic change because I think if you're prepared to pay $60 or $70 for a frontline title, you're also prepared to buy, you know, a console. I think, you know, Stadia found that out. Bringing high quality titles to consumers who don't have consoles, will probably have an effect around the edges, but I don't think it'll be, you know, a revolution in the business. I think it will be more an evolution in the business. There are still technical challenges to be addressed. Very helpful. Thank you. Thank you. Our next question is from Matthew Thornton with Truist Securities. Please proceed with your question. Yeah, thanks. Hey, Strauss. Another big picture question. You know, as you look out over the next several years, maybe the next five to 10 years, I'm curious kinda your thoughts on how AI can impact the business, good or bad, or again, what you see on the horizon as potential disruption, opportunity, just any thoughts there would be helpful, particularly how you're thinking about AI. Thanks again. You know I'm the first person to be skeptical of other people's hype. I would like to note that, you know, AI stands for artificial intelligence, and there is no such thing as artificial intelligence. All that said, I'm really excited about what we're seeing right now with ChatGPT and other leaps forward in artificial intelligence and machine learning. I do think that we'll be, and others will be creating tools that will enhance our development and probably reduce some of the costs for what we have to do today. I don't think you're gonna see it have an effect on the overall cost structure of the business 'cause I think it'll just, you know, raise the bar. I think, you know, anytime you make things easier, we're gonna wanna do more, and our teams will wanna do more. You know, the belief among, you know, college students that ChatGPT is now gonna allow them to, you know, just make a query and send in their homework. The problem is, the question is, you know, describe what actually happened, you know, on the night of Paul Revere's ride, if that's the question. Everyone gets the same question, which you do in class, and everyone uses ChatGPT. Oops, everyone's gonna submit the same essay last time I checked. ChatGPT is today's hand calculator. You know, when I was a kid, there was no such thing, I hate to admit, but it's true. I had to do math longhand. Then hand calculators came along, and parents were up in arms and thought, Oh, kids won't have to learn math anymore. The answer is, yeah, you still have to learn math, turns out. You absolutely have to learn math, but you have a tool that makes it easier to do. ChatGPT is the same thing. We are ushering in a very exciting era of new tools, and they're gonna allow our teams and our competitors' teams to do really interesting things more efficiently. We're gonna wanna do more. We're gonna wanna be even more creative. No, it's not gonna allow someone to say, please develop the competitor to Grand Theft Auto that's better than Grand Theft Auto, and then they will just send it out and ship it digitally, and then that will be that. People will try, but that won't happen. Okay. Maybe I'll sneak in one, a second one if I could as well. Just, really around productivity, obviously, you know, you guys are pretty far along in the return to office. When you step back and think about that big pipeline and all the products that you've laid out, how do you feel like things are progressing from a productivity standpoint now that, again, you're pretty far along in the return to office? Thanks again. We've been pretty flexible about return to office, and our teams have been great. You know, one of the many wonderful things about working at Take-Two is the amazing people that we work with. You know, we're more than 11,000 people strong around the world. You know, our attrition rate remains much, much lower than the industry average. I think that's because this is an extraordinary place to work, where we seek the best and the brightest on both the business and the creative side, and we encourage people to pursue their passions and excellence at the same time. Productivity is strong. Performance is strong. You know, we've probably never had a period this long with all of our titles showing up or performing. I believe in the last two years, we've had the best reviews and the best scores we've ever had. That's why the business challenges are a bit frustrating because our people are delivering. We will deliver over time as long as we keep doing that, and that's the plan. Thank you. There are no further questions at this time. I'd like to turn the floor back over to Strauss Zelnick for any closing comments. Thank you for joining us today. You know, I wish we were giving you better news across the board. There is so much good news here. We're really proud of it. As I said just a minute ago, the thing we're most proud of is our phenomenal colleagues all around the world, to whom all of us are so grateful. As for our results, you know, we plan to do better. We thank you for your support. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.