Q2 2026 Take-Two Interactive Software Inc Earnings Call
Speaker #2: Thank you for standing by . My name is Carly , and I will be your conference operator today . At this time , I would like to welcome everyone to the second quarter fiscal year 2026 earnings call for Take-Two Interactive Software .
Speaker #2: All lines have been placed on mute to prevent any background noise . After the speakers remarks , there will be a question and answer session .
Speaker #2: If you would like to withdraw your question , press star one . Again , thank you . I will now like to turn the call over to Nicole Shevins Senior Vice President of Investor Relations and Corporate Communications .
Speaker #2: Please go ahead .
Speaker #3: Good afternoon . Thank you for joining our conference call to discuss our results for the second quarter of fiscal year 2026 ended September 30th , 2025 .
Speaker #3: 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 .
Speaker #3: 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 .
Speaker #3: These forward looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us .
Speaker #3: 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 .
Speaker #3: 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."
Speaker #3: 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 .
Speaker #3: Additional details regarding our actual results and outlook are contained in our press release, including the items that management uses internally to adjust our GAAP financial results in order to evaluate our operating performance.
Speaker #3: 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 .
Speaker #3: Our press release and filings with the SEC may be obtained from our website at Take-Two , Games.com . And now I'll turn the call over to Strauss .
Speaker #4: Thanks , Nicole . Good afternoon , and thank you for joining us today . We delivered fantastic second quarter results , including net bookings of $1.96 billion , which vastly exceeded our expectations and represent the best second quarter of net bookings in our company's history .
Speaker #4: We have many achievements during the period Twoc launched three major titles , including NBA two , K 26 , which set multiple records and has been delivering an unprecedented level of in-game spending .
Speaker #4: Our mobile business outperformed substantially , driven by our team's unparalleled innovation in live services and Grand Theft Auto Online , continued to benefit from its highly engaged community .
Speaker #4: Due to these outstanding second quarter results and our optimism for the balance of the fiscal year , we're again raising our net bookings outlook for fiscal 2026 to 6 point 4 to $6.5 billion .
Speaker #4: Rockstar Games has announced that Grand Theft Auto VI will now be released on November 19, 2026, giving the team some additional time to finish the game with the high level of polish players expect and deserve.
Speaker #4: Rockstar has our full support . Of course , and we're confident they'll deliver an unrivaled blockbuster entertainment experience . Turning to highlights from the period , our mobile business delivered another quarter of excellent results takes forever .
Speaker #4: Franchise Toon blast grew 26% year over year and approximately 90% over the past two years , driven by new gameplay elements and metagame features such as card collection , Match Factory , another hit title from peak , achieved record net bookings and grew 20% over last year .
Speaker #4: Players responded positively to innovative new features , including the Super Ball power up , which increased engagement and monetization within the game . Rolex hit title Colorblock Jam continues to engage and grow its audience with new features and levels , and remains the highest grossing title in the studio's history .
Speaker #4: In addition , Rolex surpassed 3.8 billion lifetime downloads and achieved a new net bookings record for the quarter . The CSR franchise achieved $1 billion in lifetime in-game spending , with more than 180 million players worldwide since its launch in 2012 , which we believe indicates great momentum .
Speaker #4: Ahead of the release of CSR three . Zynga Poker launched on steam with full cross functionality , enabling players to enjoy the game freely across mobile web browsers and PC through its mobile offerings .
Speaker #4: Had another strong quarter with WWE Supercard , surpassing 38 million lifetime downloads . NBA two K mobile continued to grow its audience . NBA two K 26 Arcade Edition , holding its top five position on the Apple Arcade charts and NBA two K All-Star in China , capturing 8 million registered users after just six months in market .
Speaker #4: We continue to focus on our mobile direct to consumer business and are achieving higher conversion , driven by new offers , events and enhanced personalization .
Speaker #4: Also , as a result of recent legislative changes , our teams have rolled out new technologies that enable direct transactions and new payment mechanisms , including solutions designed to support international growth , which should help us expand meaningfully net bookings and margins .
Speaker #4: Via this highly accretive channel . With the record breaking launch of NBA two K 26 UK and Visual Concepts proved once again their ability to create phenomenal gameplay , innovate with new features and optimize live service offerings .
Speaker #4: To date , the title is sold in over 5 million units , representing a double digit increase over NBA two , K 25 , and with average selling prices reaching an all time high , led by higher sales on premium editions .
Speaker #4: We were pleased to see daily active users in my career . Daily active users grow nearly 30% and nearly 40% , respectively , which contributed to recurrent consumer spending growth of 45% .
Speaker #4: Players love many of the game's new features , including a thriving hub of competition , a more accessible layout , all new rewards , and a fresh cosmetics .
Speaker #4: I'd like to congratulate UK and Visual Concepts for once again delivering a superb basketball experience led by innovation and an unwavering commitment to excellence .
Speaker #4: Czukay and Gearbox Software launched Borderlands four , the latest offering in our beloved looter shooter franchise . The game received high critical praise , with many reviewers calling it the best Borderlands yet .
Speaker #4: The series highly active community eagerly welcomed the title , and during its opening weekend , it reached the largest concurrent player count on steam and franchise history .
Speaker #4: Borderlands four also dominated YouTube with 300 million views , and earned the number one spot on Twitch during its launch , underscoring the franchise's enduring mass appeal .
Speaker #4: While we experienced some challenges with optimization and performance on PC , gearbox has been addressing these issues and releasing updates to improve gameplay .
Speaker #4: We're confident that Borderlands four will achieve strong unit sales over its lifetime . We're immensely proud of gearbox and look forward to robust post-launch content offerings that will support the game in the months ahead .
Speaker #4: UK and hangar 13 released Mafia The Old Country , the first new entry in our popular organized crime franchise in nearly a decade , which earned vast praise from critics and consumers alike .
Speaker #4: The title quickly surpassed our internal expectations and affirmed our belief that consumer demand remains strong for premium, narrative-driven experiences that over-index on value.
Speaker #4: The team at hangar 13 will continue to push the boundaries for cinematic experiences in this series , and in future creative pursuits . Grand Theft Auto five continues to grow its audience , and to date , the title is sold in more than 220 million units worldwide .
Speaker #4: Players remain deeply engaged with Grand Theft Auto Online , which added holiday themed jobs and rewards , as well as new vehicles . Community events and outfits .
Speaker #4: GTA plus continued to increase its membership , achieving over 20% growth year over year . We're pleased with consumers ongoing passion and engagement with the franchise , which we believe will help usher in a record breaking launch for Grand Theft Auto six .
Speaker #4: In closing , we're very pleased with our position as one of the largest , most diversified companies within the interactive entertainment industry , a sector that we believe will enjoy robust growth as we embrace our core values and focus on delivering the most captivating and engaging entertainment experiences .
Speaker #4: We expect to achieve . Record levels of net bookings in fiscal 2027 . Establish a new baseline for our business and enhance our profitability .
Speaker #4: I'll now turn the call over to Karl .
Speaker #5: Thanks , Strauss . I'd like to thank our teams for delivering another terrific quarter , which reflects our unique ability to consistently deliver the highest quality entertainment experiences our teams plan to sustain this momentum over the balance of the year by releasing an array of new content and product offerings .
Speaker #5: Following the successful launches of Mafia , the Old Country , NBA two , K 26 and Borderlands four , two plans to release new content and updates for each game that will provide our fans with even greater opportunities to engage with these franchises .
Speaker #5: Zynga will continue to enhance its portfolio with the introduction of new features and innovation in live services , while also pursuing new titles during the fourth quarter of our fiscal year two and Visual Concepts will launch WWE UK 26 , the next installment in our popular wrestling franchise .
Speaker #5: Since taking over the series , Visual Concepts has immersed players in the most intense and realistic action that the squared circle can hold , and WWE UK 26 will continue this legacy UK will have more to share about the game shortly .
Speaker #5: Looking ahead , we believe strongly in our long term pipeline , which includes the release of Grand Theft Auto six on November 19th , 2026 , as well as the future launches of Judas Project .
Speaker #5: Ethos CSR three topical . The next BioShock and many other exciting new titles from across our labels . In closing , we are thrilled with our performance for the first half of fiscal 2026 as we continue to execute our proven strategy and capitalize on emerging opportunities , we expect to achieve a period of meaningful long term growth and shareholder returns .
Speaker #5: I'll now turn the call over to Lainie .
Speaker #3: Thanks , Carl .
Speaker #6: And good afternoon , everyone . Our second quarter results were truly fantastic . We are excited to raise our annual net bookings outlook for the second consecutive quarter .
Speaker #6: Our outperformance was driven by many of our key titles , which underscores the strength of our core franchises and the power of our diverse portfolio of owned intellectual property .
Speaker #6: I'd like to thank our teams for their outstanding execution and unwavering focus on creativity , innovation and efficiency . Turning to our results , we delivered second quarter net bookings of $1.96 billion , which was significantly above our guidance range of 1.7 to $1.75 billion .
Speaker #6: This reflected better than expected performance from NBA , UK Mafia , the old country and several mobile titles , including Toon Blast Color Jam , Mash Factory and Empires and Puzzles , which more than offset softness in the initial launch of Borderlands four , recurrent consumer spending rose 20% for the period , which outperformed our guidance of 1% growth and accounted for 73% of net bookings .
Speaker #6: NBA two K grew 45% . Mobile increased mid-teens , and Grand Theft Auto Online declined as expected . During the quarter , we launched Mafia , the Old country NBA two , K 26 and Borderlands four .
Speaker #6: GAAP net revenue increased 31% to $1.77 billion . Cost of revenue increased 27% , $793 million and operating expenses increased 5% to $1.1 billion .
Speaker #6: On a management basis , operating expenses rose year , which 13% year over represented significant operating expense leverage on our strong top line growth .
Speaker #6: Operating expense dollars were above our forecast due to incremental user acquisition investments to support robust performance in our mobile portfolio and higher performance based compensation , which was partly offset by a shift in some console marketing .
Speaker #6: And IT expenses into the second half of the year. Turning to our guidance, I'll begin with our full fiscal year expectations.
Speaker #6: Our momentum is strong and we are raising our net bookings outlook range to 6.4 to $6.5 billion , which represents 14% growth over fiscal 2025 .
Speaker #6: At the midpoint , the increase reflects our second quarter outperformance and higher expectations for many of our core franchises . For the second half of the year , the largest contributors to net bookings are expected to be NBA two K , the Grand Theft Auto Series , Tomb Blast , Match Factory , Borderlands four , Colorblock , Jam , and Pirates , and puzzles .
Speaker #6: The Red Dead Redemption series and words with friends . We now expect recurring consumer spending to grow approximately 11% , representing 77% of net bookings .
Speaker #6: This growth percentage is more than double our prior forecast of driven by NBA two K and higher expectations for several mobile titles . Our revised recurrent consumer spending forecast assumes an NBA now grows in the mid 20% range .
Speaker #6: Mobile now increases approximately 10% , and Grand Theft Auto Online declines , which is unchanged from our prior forecasts . We project the net bookings breakdown from our labels to be roughly 46% .
Speaker #6: Zynga , 39% UK and 15% Rockstar Games 4% , . We are raising our operating cash flow forecast to approximately $250 million , reflecting the strength in our business .
Speaker #6: We now expect to deploy approximately $180 million in capital expenditures , which is above our prior guidance due to the acquisition of an office building to support our global footprint .
Speaker #6: We are also increasing our forecast for GAAP net revenue , which is now expected to range from 6.38 to $6.48 billion and cost of revenue , which is now expected to range from 2.66 to $2.69 billion .
Speaker #6: Our total operating expenses are expected to range from 3.98 to $4 billion , compared to $7.45 billion last year on a management basis , we now expect operating expense growth of approximately 9% year over year , which represents notable operating expense leverage on our higher net bookings outlook .
Speaker #6: Our forecast for operating expense dollars is increasing due to incremental marketing . To support our mobile portfolio and higher performance based compensation . Now , moving on to our guidance for the fiscal third quarter , we project net bookings to range from 1.55 to $1.6 billion , compared to $1.37 billion in the prior year .
Speaker #6: The largest contributor to net bookings are expected to be NBA two K , the Grand Theft Auto Series , Tomb Match Factory , the Red Dead Redemption series , Colorblock jam , Empires and Puzzles , Borderlands for and words with friends .
Speaker #6: We project recurrent consumer spending to increase by approximately 8% , which assumes low double digit growth in mobile . A mid-single digit increase for NBA two K and a decline for Grand Theft Auto Online .
Speaker #6: We expect GAAP net revenue to range from 1.57 to $1.62 billion , operating expenses are planned to range from 980 to $990 million on a management basis , operating expenses are expected to grow by approximately 12% year over year , which is primarily driven by incremental user acquisition investments to support our robust performance in our mobile portfolio and higher performance based compensation .
Speaker #6: In closing , we are thrilled with the strength in our business today and we are extremely optimistic about the future ahead as we execute on our strategic priorities , which include expanding our core franchises to even greater levels of commercial success , releasing groundbreaking new hits , driving efficiencies , and capitalizing on new business opportunities .
Speaker #6: We believe that we will meaningfully grow our scale and our profitability . I'd like to thank you all for your support and look forward to sharing more details on our exciting pipeline in the coming months .
Speaker #6: Thank you . I'll now turn the call back to Strauss .
Speaker #4: Thanks , Lenny and Carl , on behalf of our entire management team , I'd like to thank our colleagues for continuing to deliver outstanding results for Take-Two to our shareholders .
Speaker #4: I want to express our appreciation for your continued support . We'll now take your questions . Operator .
Speaker #2: At this time , I would like to remind everyone , in order to ask a question , press star . Then the number one on your telephone keypad .
Speaker #2: We'll pause for just a moment to compile the Q&A roster . Your first question comes from Colin Sebastian with Baird .
Speaker #7: Great , thanks . Good afternoon . Thanks for taking my questions . I guess I mean , on the RCS performance . I mean , that's really , really strong .
Speaker #7: And I'm curious if there are any common denominators across NBA , mobile , other titles where you're seeing that strength , anything specific you've learned from that , that maybe you can apply to to other franchises going forward ?
Speaker #7: And then considering the change in release date for GTA , just curious , does that change the cadence of content updates or marketing support for the existing franchise ?
Speaker #7: For GTA online over the next year , as we as you work to maintain engagement in in the meantime , thank you .
Speaker #4: So on the second question , first , I don't think you'll see any change in Rockstar has a history of supporting GTA online .
Speaker #4: And of course , the title continues to perform incredibly well . I also know that GTA plus was up 20% year over year in the quarter , which is just great news .
Speaker #4: So and Grand Theft Auto five has now sold in 220 million units . It's a pretty great story . We expect that story to continue in a similar way .
Speaker #4: In terms of your first question , I think , are you asking whether we think there are sort of industry tailwinds that are driving recurrent consumer spending across the board ?
Speaker #7: Well , actually , it could be that or more specific to the way that you're developing games . Is there something within RCS within the mechanics that that you're seeing ?
Speaker #7: Is resonating with gamers in particular? Or maybe they're just specific to those titles.
Speaker #4: But my sense is that despite what some industry observers are saying , that there are modest tailwinds in the business , I think we're seeing those and equally , look , our approach here is to seek perfection in everything we do and to try to engage and captivate our consumers .
Speaker #4: And when we do that effectively , monetization follows . And so I don't , you know , none of us is in the business of taking victory laps , even though we're very proud of the quarter .
Speaker #4: But I think the answer to your question is that our creative teams are delivering and they're delivering at the highest possible level . And so when I when I see commentary in the industry that's negative about what's going on , I think if you if you try to correlate quality with performance , you're going to find it's an exceedingly positive correlation .
Speaker #4: And and actually , I think you can you can find causation in there as well . Give people something great . They're going to come out for it .
Speaker #7: All right . Thanks , Ross .
Speaker #2: Your next question comes from Doug Creutz with TD Cowen .
Speaker #8: Thanks .
Speaker #9: It appears that you're soon going to be the last publicly traded standalone publisher of scale standing . I wondered your view on how that affects your ability to attract talent .
Speaker #9: Your ability to place games in the market just sort of... Is there anything about that strategically that affects your competitive position?
Speaker #9: Thank you .
Speaker #4: I think the answer is I'm not sure . You know , we're always running scared around here . I'm fond of saying arrogance is the enemy of continued success .
Speaker #4: And I do think we're in a terrific position . We're performing much better than expected economically , and that's because we're performing better than expected creatively .
Speaker #4: And that's always our story around here . And if we can maintain that , then we have a wonderful future ahead of us .
Speaker #4: It is true that at year end , we're really very underleveraged . It is true that in relatively short order , we expect to be a net cash company again .
Speaker #4: And it's true that we're independent and we have a public traded , publicly traded security . And I think all of those things can be advantages in the right hands .
Speaker #4: But none of that will will lead us to claim success before we deliver it . And , you know , whenever we have good results , our approach here is to , you know , take no victory lap and to get up the next day and try to do it again .
Speaker #4: So that's what we'll keep doing. We do think we're well positioned.
Speaker #9: Thank you .
Speaker #2: Your next question comes from Chris Shull with UBS .
Speaker #10: Great . Thank you very much . We saw one of your peers see outperformance on mobile margins due to the recent iOS changes .
Speaker #10: Can you just walk us through how widely available alternate payment mechanisms are across your portfolio today ? And did that provide any uplift to gross margins in the quarter or your expectations for the year ?
Speaker #10: And maybe just along these lines , any thoughts on the recently proposed changes to Google Play and what it means for your business ?
Speaker #10: Thank you .
Speaker #4: Look , I've been saying for years that I expected the cost of third party distribution to decline , and as soon as we close the Zynga transaction , we launched a direct to consumer initiative that has been successful .
Speaker #4: We value our partnerships with retailers . We don't have any reason to believe that those will ever become extinct . At the same time .
Speaker #4: Distribution costs naturally will decline with competition certain instances , with litigation and legislation . And you're seeing that now . So our direct to consumer business is doing really well .
Speaker #4: It has been rolled out almost across our entire mobile portfolio , not the entire portfolio , because it doesn't necessarily fit everywhere . And the most recent litigation result definitely puts us in a stronger position .
Speaker #4: And not only will net bookings rise more rapidly than expected , but margins will rise with them . So it's all good news .
Speaker #4: We're not specifically calling out how that margin change will affect our year , except obviously we've increased our guidance for the year .
Speaker #10: Got it . Thank you . And if I can just fit in one more , maybe just on the new GTA timeline , anything you can share as to what the drivers were and what gives you confidence that this date will stick ?
Speaker #10: Thank you .
Speaker #4: Yeah, the drivers are desired to deliver as perfect an entertainment experience as we possibly can, and to try to live up to consumers.
Speaker #4: Extraordinary expectations . And then exceed those expectations and it's always painful when we move a date . We have done so occasionally in the past , and we've never regretted it .
Speaker #4: In retrospect , I would like to point out that we have some competitors . You know , in in the event where more polish was required and it required slipping a date , they chose not to slip the date and , you know , they did so at their peril too .
Speaker #10: Makes sense . Thanks . Strauss .
Speaker #2: Your next question comes from Andrew Marek with Raymond James .
Speaker #11: Hi . Thanks for taking my questions . Maybe one on NBA and one on Borderlands as it relates to NBA . You know , we we saw some of the metrics that you disclosed today were not well above .
Speaker #11: They were well above what you would normally consider for kind of a mature sports franchise . So I guess where where are you getting these incremental audiences from ?
Speaker #11: Are there new cohorts of players that you're expanding into ? And I guess what inning would you say that you're in in terms of accessing the total NBA audience ?
Speaker #11: And then I'll follow up with the Borderlands question .
Speaker #5: So in terms of the cohorts that we're seeing , obviously returning players are huge cohort for us . And I would say we're every year we're getting a little bit better at bringing people back into the games .
Speaker #5: But and but there's still a lot of opportunities to improve on that . So you asked about what we're inning . We are we are certainly not getting 100% of our people back every single year .
Speaker #5: If we were to do be able to do that , we would have substantial , substantial upside . And I'm not saying that we will be able to do that .
Speaker #5: But there are certainly a lot of room for improvement . There . In terms of other players . We're having some success internationally as well , but also getting more engagement of the player base that we have .
Speaker #5: That's been a significant part of our ability to drive recurring consumer spending in NBA , which is has significant improvements year over year .
Speaker #5: We're doing more interesting things like bringing people in earlier for early access , with pre-order premiums and just making the game tighter and listening to our audience base .
Speaker #5: And like we always say , higher . The engagement , the more engagement , the monetization follows . It's not the other way around .
Speaker #5: And that's been our mantra pretty much from day one . So I'd love to say we're in the first inning . That's probably not true , but we're certainly not even to the seventh inning stretch at this point .
Speaker #5: So it's probably somewhere in between .
Speaker #11: Got it . Thank you . Really appreciate that . And then on on Borderlands in these kind of longer lived titles , how important is the launch period ?
Speaker #11: And I guess , you know , to the extent that the PC issues caused a little bit of a drag , how does player behavior change in one of those titles versus maybe an annual release ?
Speaker #11: Or maybe you don't have as much time to sort of make up anything that fell short of expectations around the launch period. Thank you.
Speaker #4: Well , we see it . I mean , your question implies that we see this the same way the release was a bit softer than we would have liked for the reasons that you said gearbox has been addressing the PC challenges .
Speaker #4: And I think in retrospect , we feel that there are things that we could have done better . That we intend to do better in the future .
Speaker #4: In the fullness of time , we think the unit sales on this title will be very solid , and the the economic results will be in line with our expectations .
Speaker #2: Your next question comes from Matthew Cost with Morgan Stanley.
Speaker #12: Hi , everybody . Thanks for taking the questions . I wanted to ask a little bit about mobile and Zynga . Obviously , it's been a stretch here of really strong outperformance for that business versus the broader mobile gaming market .
Speaker #12: So two parter , one , what is your level of confidence in their ability to sustain that continued outperformance through the market versus the market ?
Speaker #12: Do you see that as a function of , you know , new game launches , you know , growing , existing titles and then connected to that ?
Speaker #12: Is there an opportunity to to do M&A in the mobile gaming space ? Something that as an independent company , Zynga , I think had a lot of success with ?
Speaker #12: Is that something you're considering doing more of to build on the momentum Zynga has today? Thank you.
Speaker #4: Yeah , I mean , what do I attribute there outperformance to great leadership , great execution . So , Frank Gibeau is our is the CEO of Zynga .
Speaker #4: He's doing a terrific job leading the team and our creative teams . Peak Rollic all of our studios , frankly , right now are doing a wonderful job .
Speaker #4: Both running live services on existing titles and launching new titles . So we just have to keep doing more of that . What gives me confidence that we can ?
Speaker #4: I think our approach has been narrowed and honed down at the label where we're being very careful economically . We're pursuing far fewer titles at once .
Speaker #4: We're willing to walk away from titles that don't work earlier and focus on our winners . I also think , you know , our creative teams have really hit their stride .
Speaker #4: That said , you know , we take none of this for granted , and we know that , you know , looking backward is not going to help us except to learn from our errors .
Speaker #4: And to a lesser extent , our successes . We have to look forward . And we have some great releases coming up . So we're focused on those .
Speaker #4: So if top goal coming from Nordeus and other titles coming about , which I'm very optimistic . But the fact that I'm optimistic is irrelevant .
Speaker #4: What's relevant is what the consumer says on the M&A side . We're very selective here . We're very proud of the fact that I don't think we have had an acquisition in our history that didn't work out , and that's an enviable and unusual track record for any corporation , any public company .
Speaker #4: We'd like that to continue . How do we do that ? Well , make sure something is strategically aligned , of course , and don't step outside of that zone .
Speaker #4: Make sure that the cultures fit or can fit so that the integrations make sense , and make sure that the deal is immediately , if not to GAAP earnings , at least to management .
Speaker #4: And cash flow . So that has been our rubric and seems to have worked . So I guess what that implies is discipline and selectivity , which has served us well .
Speaker #4: Good news is we have really strong balance sheet and we have been able do acquisitions in the , you know , relatively recent past .
Speaker #4: It wasn't that long ago that we bought gearbox .
Speaker #2: Your next question comes from Eric Handler with Roth Capital Partners .
Speaker #12: Good afternoon . Thanks for the question .
Speaker #13: Strauss . You've been very vocal on AI and how it's not a positive for creative development for video games , but I'm curious if you're having any success AI in other sort of non parts of the video game development , be it QC , be it artwork or whatever , and how you're adding it to what your development .
Speaker #4: Yeah , to be clear , I didn't say that . I didn't see it as a positive . What I said was that , AI is based on backward looking data sets and using compute meeting LNS , and none of that replaces forward looking genius .
Speaker #4: But that's not an opinion . That's factual . I defy anyone to to controvert those facts . Of course , technology drives a lot of what we do around here now .
Speaker #4: Creativity is the lifeblood of the organization , but how do we express our creativity ? We do so with computers , with technical tools .
Speaker #4: We always have . So as toolsets improve , we can become more efficient . We can become more effective , and our creative people therefore are freed up to be more creative .
Speaker #4: So AI , depending on how you define it and properly deployed , of course , is positive for creativity . And and therefore is of course positive for hCG creation .
Speaker #4: Your question about what's the nature of the rollout ? We we have seen some efficiencies . I think there plenty of areas of business where the tools that we have rolled out at the enterprise are helping us .
Speaker #4: We are not either using this as an excuse to or frankly , seeing the opportunity to reduce headcount . We are seeing this as an opportunity to take our very talented people and release them from more mundane tasks so they can do more creative and more interesting tasks .
Speaker #4: And we can work better as an organization . But if you said , you know , can you cut your your cost profile by 5% tomorrow by using all things AI ?
Speaker #4: The answer is no .
Speaker #13: Thanks .
Speaker #2: Your next question comes from Ed Walters with Jefferies .
Speaker #14: Hi everyone . Thanks for the question . I appreciate the mention of the pipeline and especially specifically BioShock . You guys made a pretty key hire there with Ferguson during the quarter .
Speaker #14: We'd love to just get an update on that title and kind of what what his mandate there is at the studio .
Speaker #5: Sure , yeah . We're very excited that we brought rod on to lead Cloud Chamber , as he is the new head of the BioShock franchise .
Speaker #5: He's obviously an incredible industry veteran . He's got history with BioShock franchise , specifically with with infinite , but he's also been involved with Gears of War and Diablo , and it's we're just so grateful that he's come to to work with us at Cloud Chamber .
Speaker #5: BioShock is a very important franchise for us . It's it's one of our big , biggest franchises , and we're very excited about the release of the BioShock .
Speaker #5: We made some changes in the organization . We're shifting some things around . But right now we feel that the game is on , is on a great track for us to deliver something that's going to exceed consumers expectations .
Speaker #5: So not much more to update other than that . And the fact that the next BioShock is going to take the franchise to the next level , which is always our ambition with all of our franchises .
Speaker #14: Thanks. And then on ad revenue, it's been up two quarters, and now for the first time in quite a while.
Speaker #14: Can you talk about what's going right there ? Is that color block jam or is there broader rollout portfolio just performing across the board ?
Speaker #6: It's really across the entire mobile business , particularly Rollic , though they've achieved fantastic performance . And this is what's driving the higher ad revenue for the quarter .
Speaker #14: Great . Thanks .
Speaker #2: Your next question comes from Michael Hickey with Benchmark.
Speaker #15: Yeah , it's Strauss . Carl Laney McCall . Congrats guys on the quarter . And raising your numbers for the year . Obviously .
Speaker #15: Sorry to hear the the delay of GTA six , but November next year Strauss is going to be pretty awesome . Just curious I guess internally how the Rockstar team is holding up with the delays .
Speaker #15: I'm guessing you know , it could be challenges on motivation or culture . I don't know , but I'm guessing it's hard on them to have to deal with the delay as well .
Speaker #15: I'm sure they're very excited to get the the game out . And then in terms of polish , I mean , I think I know what that means , but just sort of curious what Rockstar defines as polish .
Speaker #15: And then how much of , you know , they have a huge team now . So how much of the team Strauss is as much as you can tell us , is focused on Polish versus maybe other content ideas or projects that could be part of that .
Speaker #15: GTA ecosystem or otherwise . Thanks guys .
Speaker #4: Yeah , obviously , Mike , you know us well . You know me well . I can't talk about , you know , how the inner workings of the studio are reflected in current activities .
Speaker #4: So I can't and wouldn't answer that question on the first point . I think the culture of Rockstar is extraordinary and we're all pushing hard to to seek perfection .
Speaker #4: And that's , you know , that's not just words . I mean , the Metacritic scores of Rockstar releases have , generally speaking , not just I mean , with very few exceptions , have been over 95 .
Speaker #4: And , you know , GTA five , as you know , has been the standard bearer , not just for our company but for the industry through three console generations .
Speaker #4: And to this day is still , I would argue , the most technologically advanced title in the marketplace . Despite that . But it's more than a decade old and that doesn't happen by accident .
Speaker #4: So it's Rockstar's culture is one of performance Take-two's culture as a whole , which is reflected in all of our labels , is one of seeking excellence , teamwork , and kindness .
Speaker #4: And that's a recipe that works really , really well . I can't deny that at any given time , if things don't go exactly as you'd like , but you know , there's some disappointment .
Speaker #4: But we're pretty good about brushing ourselves off and picking ourselves up and playing another day . And we've always done that . We learned from things that don't go as well as we'd like , and and we aim to exceed all expectations .
Speaker #4: Our own and those of our consumers . And we frankly , rarely fall short . But we don't let that divert us either , because we just try harder .
Speaker #4: I think that defines what Rockstar is doing now and how they're feeling now .
Speaker #15: Thanks , Josh .
Speaker #2: Your next question comes from Martin Yang with Oppenheimer .
Speaker #16: Hi . Thank you for taking my question . Can you talk about the premium SKU mix in NBA this year ? How much is it higher than previous years ?
Speaker #16: And then can you also talk about the impact of having more season passes embedded in premium SKU ? Whether or not that's a material uplift to your RCS growth for UK 26 ?
Speaker #16: Thank you .
Speaker #5: So one of the drivers and so generally speaking , the more the higher the mix of the premium SKUs , obviously the average selling price is higher .
Speaker #5: That is certainly the case this time around . And we've seen some really great reactions to our premium excuse . And we believe at least partly , if not in large part , was the effect of offering seven days of early access to our players , which is longer than we did last time .
Speaker #5: And there is some RCS embedded in that. As part of that, as part of that package, so it would have a really significant impact.
Speaker #5: And I think that's overall helped our average selling price . So it was a certainly a successful strategy that we undertook this year .
Speaker #16: And so .
Speaker #2: Your next question comes from Alec Brondolo with Wells Fargo .
Speaker #17: Hey , thank you so much for the question . I appreciate it . I actually want to go back to the first question that was asked .
Speaker #17: And maybe actually ask about macro and the mobile game , or in the game category in general . You know , I think people consider this a mature category , maybe low single digit grower , but suddenly , you know , takes up 20 .
Speaker #17: We have mobile game ad networks growing well in excess of 20% . Roblox seems to be growing bookings 50 or 60% . And so from your guys's perspective , is it possible or you maybe starting to feel like we're entering a more positive cycle for industry growth ?
Speaker #17: And to the extent that's true , perhaps you might on what the consumer behavior behind that is . Thank you .
Speaker #4: I do sense there tailwind as much as I would love to take credit for everything good that's going on and disclaim responsibility for anything bad going on , no , I sort of agree with you , I think it feels like there's the consumers are once again moving in our direction , sort of how it felt at the beginning of the pandemic .
Speaker #4: Maybe not . Not quite as much
Speaker #4: enthusiasm . And we're opine unaccustomed to the world feeling this way because of course , there was a decline in mid 22 and took a while to settle out .
Speaker #4: And then there was a return to modest growth . But as you yourself said , these are pockets of growth and these pockets are defined by quality .
Speaker #4: And so we have to still be an outlier to deliver results like these . And that's our goal .
Speaker #17: Thank you so much .
Speaker #2: Your final question comes from Clay Griffin with Moffett.
Speaker #18: Thanks . Good evening . I just want to circle back on mobile . Strauss you hit all of the points in terms of the margin improvement in the near term , but also over the course of the last several fiscal years .
Speaker #18: It looks like , you know , rough math that the mobile business in general will be pretty close to where it was called on a pro forma basis .
Speaker #18: Call it in 22 . I just would love to ask you if maybe you could just level set in terms of all of the whether it's the discipline in the titles , whether it's the efficiency in the UA spin , whatever it does seem like there's been a pretty notable expansion in margins from then to now .
Speaker #18: Notwithstanding the opportunities that you called out . But wondering if you could maybe just give us a framework in terms of the overall improvement , maybe in mobile margins from , you know , 2 or 3 years ago to now .
Speaker #18: call it
Speaker #4: Look , we're honestly we're just executing better . You know , there were things that we were doing upon the acquisition that , you know , we either stopped doing or we're doing a whole lot more efficient , efficiently and effectively .
Speaker #4: Look , we're honestly we're just executing better . You know , there were things that we were doing upon the acquisition that , you know , we either stopped doing or we're doing a whole lot more efficient
Speaker #4: transaction came about is that we had like minded cultures and I think we aligned on the culture . I described earlier , and we aligned on our pillars of creativity , innovation and efficiency .
Speaker #4: And we have , you know , an extraordinary leadership team that is open minded and wants to win . And and then we have .
Speaker #4: Amazing creative people throughout the organization who are bound and determined to do the very best work anyone can in the space . I think that's what it comes down to .
Speaker #4: And all of that done right is reflected in things like net bookings and margins . You know , if you think about all these calls we've been doing for all this time , you know , we talk about the numbers quite correctly .
Speaker #4: I think of what we do as a result of our actions, not a driver of our decisions. None of us wakes up in the morning and says, 'Let's talk about where our stock price ought to go.'
Speaker #4: We talk about where our company ought to go , and if we get that right , the stock price is going to do just fine .
Speaker #4: I think . I think and Nicole , are head of IR is sitting with me that in the 18 years that this management team has been responsible for overseeing Take-Two , our stock has appreciated something close to 5,000% .
Speaker #4: And and that's a result of our strategy that is not our strategy . And what we aim to do around here is make the best entertainment on earth .
Speaker #4: And bring it to everyone on earth , wherever they want it , whenever they want it , however they want it . If we do that right , if we keep doing that right , if we're willing to question ourselves and always try harder and and try again when we fall short , you know , probably ought to see continued performance .
Speaker #18: Thanks .
Speaker #2: There are no further questions at this time . I'll now turn the call back over to Strauss for any closing remarks .
Speaker #4: I'd just like to take a moment once again to express my gratitude for the nearly 13,000 people who devote their careers to take two , and all of our affiliates all over the world , because they're they're the ones who delivered these amazing results .
Speaker #4: I want to thank the team at Rockstar who's diligently working on delivering the best entertainment experience of all time. And of course, I want to thank our shareholders for all of their support.
Speaker #4: So thank you for attending the call today . We really appreciate it .