Greetings, and welcome to the Take-Two Interactive Software Second Quarter Full Year 2019 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Hank Diamond, SVP of IR. Please proceed.

Good afternoon. Welcome, and thank you for joining Take-Two's conference call to discuss its results for the second quarter of fiscal year 2019 ended September 30, 2018. 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 financial 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. 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 www.take2games.com. And now, I'll turn the call over to Strauss.

Thanks, Hank. Good afternoon, and thank you for joining us today. I'm pleased to report that during the second quarter, Take-Two delivered better than expected operating results, including growth in net bookings. This outperformance was driven primarily by Grand Theft Auto V and Grand Theft Auto Online as well as the successful release on NBA 2K19. On September 11, 2K launched NBA 2K19 to critical acclaim. Forbes noted there is no such thing as a perfect sports game but this is as close as it gets. IGN called NBA 2K19 the best of the series. And Game Informer said the title isn't just a game, it's a lifestyle. During the second quarter, net bookings from NBA 2K19 grew 10% over last year's release, driven by better-than-expected growth and recurrent consumer spending. In addition, digitally delivered sales of the game increased significantly. According to The NPD Group based on combined physical and digital sales in the U.S., NBA 2K19 achieved the highest launch month in terms of dollar sales of any sports game release since it began tracking industry sales in 1995. NBA 2K19 represents the biggest launch of any title in the NBA 2K series. And NBA 2K19 is now the best-selling sports game of 2018 year-to-date. Our industry-leading basketball series continues to benefit from strong engagement and recurrent consumer spending. For NBA 2K19, online games played, percentage of players who buy virtual currency and average revenue per user all have increased double digits over NBA 2K18. During the second quarter, recurrent consumer spending on NBA 2K grew approximately 70% to a new record. In fact, NBA 2K was the single largest contributor to recurrent consumer spending in the period. We expect the net bookings from NBA 2K19, including recurrent consumer spending will be the highest ever for a 2K…

Thanks, Strauss. Today, I'll begin by discussing our other recent launches. On October 9, 2K returned to the ring with WWE 2K19, the latest installment in our popular sports entertainment series. Developed collaboratively by Yuke's and Visual Concepts, the title received positive reviews from critics, including Bleacher Report, who called the game phenomenal, and IGN who noted, my career, this year, is fantastic and it's exactly what the template should look like in future years. WWE 2K19 is being supported with a series of [ development ] level content, including a Season Pass as well as the WWE 2K19 Million Dollar Challenge, where 1 finalist will compete one-on-one against AJ Styles for the chance to win a $1 million grand prize. On October 16, 2K bolstered our NBA basketball offerings with the release of NBA 2K Playgrounds 2, titled the fun throwback to the classic 2-on-2 arcade-style basketball that continues to earn worldwide fans and critical acclaim. IGN rated the game an 8 out of 10, and said, "NBA 2K Playgrounds 2 proves that pick-up-and-play arcade basketball is still alive and well." NBA 2K Playgrounds 2 features multiple ways to play on your own with friends or against the world. The game is being supported with a series of post-launch updates featuring 180 additional players, including NBA legend, Kareem Abdul-Jabbar, as well as additional playgrounds. Yesterday, 2K launched Carnival Games for Nintendo Switch, PlayStation 4 and Xbox One. This new offering from our popular franchise that has sold in over 9.5 million units worldwide is perfectly timed for the upcoming holiday season. Offered at a family-friendly price point of $39.99, Carnival Games is fun for gamers of all ages. On Nintendo Switch, the title can be played alone or with up to 4 people simultaneously, leveraging the unique accessibility of…

Thanks, Karl. And good afternoon, everyone. Today I'll discuss our second quarter results and then review our financial outlook for the third quarter and fiscal year 2019. Please note that additional details regarding our actual results and financial outlook are contained in our press release. Strauss mentioned our business delivered better-than-expected operating results in the second quarter. Total net bookings grew to $583 million, which exceeded our outlook range of $500 million to $550 million, due primarily to the outperformance of Grand Theft Auto V and Grand Theft Auto Online as well as the successful launch of NBA 2K19. Digitally-delivered net bookings grew 20% to $426 million and accounted for 73% of the total. During the second quarter, 47% of our sales of current generation console games were delivered digitally up from 35% last year, a result that exceeded our expectations. Turning to some details from our second quarter income statement. GAAP net revenue increased by 11% to $493 million and cost of goods sold decreased 5% to $235 million. Operating expenses increased by 11% to $232 million, due primarily to higher marketing spend as well as R&D expense for titles that are not technologically feasible. And GAAP net income was $25 million or $0.22 per share, up from a loss of $3 million or $0.03 per share in the prior year period. Now I will review the highlights of our fiscal 2019 operating and financial outlook. Starting with the fiscal third quarter. We expect net bookings to range from $1.4 billion to $1.45 billion, up from $654 million in the third quarter last year, driven by the record-breaking launch of Red Dead Redemption 2. I would like to join Strauss and Karl in congratulating Rockstar Games for delivering this incredible creative and commercial achievement. The largest contributors to net…

Thanks, Karl and Lainie. On behalf of our entire management team, I'd like to thank our colleagues for their dedication and hard work and for delivering another successful quarter. To our shareholders, I want to express our appreciation for your continued support. And we'll now take your questions. Operator?

[Operator Instructions] Our first question comes from Mike Olson with Piper Jaffray.

I realize we're only 10 days into this, and it'll only be relevant over probably a longer period of time, but at this point, do you think you're seeing any material cannibalization of GTA online from the launch of Red Dead Redemption 2? And somewhat related to that, is it likely that Rockstar will release content updates for GTA V and Red Dead Redemption 2 in a staggered man in the coming quarters? Or will they just kind of be released when they're ready?

I've been asked repeatedly over prior calls about whether I felt cannibalization would potentially be an issue. And my view is that all games, all products, all entertainment products stand alone. They compete with everything in the market. They compete with themselves, then they compete with nothing at all. Because if there's a bunch of good stuff out there, you want to consume it all, and if there's nothing that appeals to you, you don't need entertainment at any given time. The fact that Red Dead Redemption 2 has come from Rockstar Games does not make it more or less competitive with any other title in the marketplace. And specifically to answer your question, we do not see any cannibalization nor do I expect any.

Our next question comes from Tim O'Shea with Jefferies.

I'm just curious what kind of marketing promotional activity should we expect for Red Dead through the holidays? I'm just wondering if this is the type of game that will be a gifted item? Was this the type of game that could see a nice boost during the holiday shopping season? And just given the strength of the early sales of Red Dead, I'm wondering how strong this game could sell through the rest of the December quarter?

I think you can obviously expect that we'll be very supportive of the title on an ongoing basis. More specific details would be given by Rockstar.

Our next question comes from Ryan Gee with Barclays.

So maybe for Lainie. If we just do some rough math, it puts Red Dead Redemption somewhere at already around the $700 million in net bookings to date. And that compares to your -- now your new guidance for the Rockstar business to do about $1.7 billion up from the $1.5 billion that was in the guidance last quarter. So how should we think about that gap being made up by the rest of the Rockstar products? Should we think that that's really, in your guidance, primarily unit sales? Or is it really a catalog of GTA or perhaps the 2 Rockstar online businesses? Any color you could give there would be great.

So what you're referring to are retail sales not just what our sell-through would be and our wholesale sales would be for our digital and physical. So those numbers aren't comparative, but if you think about just Q2 in general, and we've lifted the full year, and that is due to the increased outlook for Red Dead Redemption 2 and then higher RCS on NBA, partially offset by reduced unit sales expectations for NBA 2K19 and WWE 2K19.

Our next question comes from Eric Handler with MKM Partners.

A couple of things on Red Dead. Lainie, in particular, I wondered if you can talk about the dispersion between the base SKU and how you did versus the 2 other premium SKUs, wondering if you might give a little insight there? And then also, as you know, when you think about the game and the online portion of the game, can you maybe talk about some -- possibly some similarities in how GTA Online ramped when it first started and how you think that might progress with Red Dead?

Eric, it's Strauss. No, we don't break down how the different editions have sold. We will break down some details, but we don't tend to break that down. And it's way too early to talk about Red Dead Redemption 2 Online. It hasn't launched a yet. It will launch in public beta towards the end of the month. Rockstar will have a lot more to say about it, but we're not making any current predictions.

Fair enough. And then, I guess, just 1 quick follow-up. I wondered -- I'm not sure if I missed it or not, but the -- how Red Dead did in terms of full game downloads versus physical sales?

We're not giving the detail by title, Eric, but we did say that we have seen a higher proportion of digital sales versus physical than we already had originally expected. So for the full year, we're expecting on current gen, our full game downloads to be 37% up from 34% last year, and we had expected it to be 32% when we gave out guidance last time.

Our next question comes from Justin Post with Merrill Lynch.

Great. Congrats on Red Dead. Now we'll move over to NBA. Can you talk about the dynamics that might be driving units a little bit below your forecast but RCS higher? And then Lannie, I think -- Lainie, I'm sorry. I think you have about $800 million of long-term capitalized software on the balance sheet. I imagine some of that's related to Red Dead. Wondering why that's not in the short-term side and then how that will flow through the income statement for the next few quarters?

Justin, it's Karl. Just to address your first question about the dynamics of the units we'll have forecast at this point. So yes, I mean, we -- well, today, the units of NBA 2K19 are down modestly versus '18. So we're forecasting them down a little bit for the full year. You don't ever have exact answers of why that's the case, but we have seen a higher number of consumers who bought NBA 2K18 continue to be engaged with that title and they haven't kind of converted over to 2K19 yet, which certainly could have an effect on the unit sales on NBA 2K19. There's also some competitive dynamics that could be affecting it. There are a lot titles in the market now. But 2K continues to pursue strategies to increase the number of units out there. So we're obviously not taking it sitting down. In terms of RCS, I mean, you're right. I mean, consumers are much more engaged. I think the good news on here is that consumers actually are, in the title, all the key metrics are much better than they had been in the past. And that just shows you to credit to how engaging the title is and how much visual content has improved in that title year upon year.

So for a cap software for long term, we wouldn't see Red Dead Redemption move into short term until the game releases. So you wouldn't see a movement of that until Q3. And that number, that $800 million, includes capitalized stock expense and that won't go through our management reporting, you'll only see that go through our GAAP reporting. And once we release the game, we'll be creating a lifetime estimate of the title. And we don't share our lifetime estimates, but a blockbuster title, you can imagine, has a bit of a longer life and that will help to determine what the amortization period is over the life of the title.

Our next question comes from Ben Schachter with Macquarie Group.

Congratulations on the launch. Just really a great experience and I'm personally spending probably too much time chasing the legendary bear. On sales, can you talk about a little bit about the international opportunity, where it's done well, where it's not done as well as you would have liked? And where you think you could grow? And then, separately, Lainie, you listed Red Dead Online second when you talked about a contributor for FY '19, I believe, in the script. Can you clarify what that means in terms of the magnitude of Red Dead Online for this year's guide? How you're thinking about monetizing there? And then just one more on the capitalized part. If we assume that the success of the GTA was so long, for this one, obviously, it's going to be more than a year of capitalized offer amortization. Is it 2 years? Is it 3 years? And is it straight line? Or would it be relative to sales?

So thanks for your questions. I'm glad you like the game. We're -- I actually went into Karl's office right before this meeting and he was playing it, that is the truth. So it's beloved already here. It's selling great around the world. It's incredibly strong everywhere. It's doing very, very well in the international markets. And in terms of online, we're not breaking out Red Dead Online for the year. And Lainie will take the third question.

Sure. So yes, since GTA did have a really long life and we would look at all of our titles and similar titles to determine the lifetime. But we have to look at history of all of our titles. And GTA is definitely an unusual circumstance. But a blockbuster, you would assume that it would be more -- it wouldn't be just 1 year, it would be a longer life than that. And in terms of how we would amortize, it would probably be over the revenue stream, it's the higher of the -- that are straight line and based on the launch quantity, I would assume that it will go over the revenue stream.

Great. And just a quick follow-up. So you did say Red Dead Online when you're talking about revenue, so should we assume that, that means there is monetization in Red Dead Online and that's part of the guide?

I didn't say Red Dead Online, I was talking about Red Dead, the launch of Red Dead.

Our next question Brian Nowak with Morgan Stanley.

I have 2. The first one, Strauss, just as you kind of -- you stepped back. You've done a great job the last couple of years sort of a building up a stable of software engineers and the ability to put out more content. How do you think about the potential to sort of put out more recurring titles on an annual basis for the next 2, 3, 4 years? Where are you now as far as capacity? And the second one, you mentioned 2 new games -- sorry, 10 new games in development at Social Point. Any talk on timing and all you can share with us? And which genres of mobile are you most excited about?

So thanks for your question. And regarding our upcoming release schedule, we've said that our goal in any year is to have a handful of really powerful frontline releases, and those would be taking advantage of our extraordinary collection of franchises. We have 11 franchises that have each had at least 1 5-million-unit release. We have over 60 that have sold at least 2 million units in an individual release. So we will certainly bring back beloved franchises to market. And we aim to create new intellectual property every year as well. We haven't always been able to do that, but that's our goal. And in so doing, that looks an awful lot like annualizing titles without bringing really high-quality titles or trying to bring really high-quality titles to market too frequently, which we think is exceedingly difficult to do. We think, if you're able to do that right, we should be able to have an incredibly powerful frontline release program without asking too much from either our development teams or the consumers in terms of over and over again bringing a non-sports title to market. Our sports entertainment titles, on the other hand, are annualized. They work really well. So I think that's what you should expect going forward. The second question was with regards to Social Point. The games are sort of described as mid-core. They're deeper. They're engaging. They're intended to be deeper and engaging. Beyond that Social Point will talk about their upcoming releases because it's important that our labels speak for themselves from the point of development and marketing. But it's a diverse array of titles that are expected to be highly competitive. We're thrilled that they have hits in the marketplace, and we're excited about what is to come.

Our next question comes from Evan Wingren with KeyBanc.

Just wanted to ask quickly about the RCS outlook for 3Q. I think you mentioned it was flat, respecting that The Doomsday Heist did launch a bit later in the quarter last year for GTA. Just trying to understand the puts and takes, given your comment that NBA 2K is growing and with respect to Strauss' comment that you don't expect cannibalization. So just trying to understand that dynamic. And then, just to be crystal clear because I was actually a little still confused, you're saying there is no -- nothing in the guide for Red Dead Online?

No. We didn't say there wasn't anything in the guidance. We just said that when I was talking about the amortization of capitalized software, I was talking about the core products of Red Dead Redemption 2 and the full game that was already released. For recurrent consumer spending, what we're talking about in terms of the full year is that NBA 2K is going to be up for the full year. We will have Red Dead Redemption 2 launch and that's sometime later this month. And so, it won't be like a full quarter. So that's why the number wouldn't be up significantly. And we did say it was offset by GTA Online, which is reduced and we had given out original guidance for GTA Online to be down for the full year and also for Q3 and for Q2. And these are expectations every time the title comes out each quarter.

Okay. And then just 1 quick one on the NBA 2K. Do you have a sense for what -- why this title, given that it was so well reviewed relative to last year, has sort of underperformed your expectations slightly?

The title has not underperformed our expectations at this point. I mean, actually, from a revenue perspective, we still anticipate this is going to be our highest title ever. We did say that the units are a little bit below where we expected them to be at this point in time. And as I said in an earlier question, it could be a vast array of reasons. We've got a lot more people engaged in 2K18 for a longer period of time that may have not transitioned over. There is -- there are a lot of games in the market. But like I said, 2K is obviously focused on trying to bring the audience base as high as it possibly can be and grow it.

Our next question comes from Todd Juenger with Sanford Bernstein.

At this point, it's hard not to overlap a bit with some previous ones, but can I go back to the NBA 2K number? I want to make sure I heard it right. I thought I heard 70%, 7 0 percent increase in recurring revenue. If I heard that right, that's obviously a very big number. I know you said it had to do with more players, higher attach rate, more ARPU. Any more detail about that would be helpful? But I guess, more broadly, what do you think about the game is driving such a change in behavior? Was there any change in the game design? Is it just -- is there some timing issues? Is it just the evolution of just that concept generally being accepted by consumers? Trying to understand what drove that result if I heard it correctly.

You did hear right. It's up 70% recurrent consumer spending over last year's quarter. And it is a great result, and it's reflective of a lot more engagement. And the increased engagement we think is that the consumers who are inside the game are avid consumers. They love what Visual Concepts is bringing to market. And they're voting. They're voting that they love it. So I wish I could give you a better answer. Lord knows, we'd like to know, too. I can confirm that our approach every year is to make the game better, deeper, more entertaining, more captivating, more engaging. That's the goal. And when you see this kind of change in recurrent consumer spending, that obviously is reflective of engagement.

Our next question comes from Ray Stochel with Consumer Research.

So a couple here on Red Dead Redemption 2 and Rockstar. So the first would be whether or not Red Dead Redemption 2 changes how you're thinking about your current cash position now that you are sort of through the launch of the game and you know it's been successful? Then in addition to that, could you isolate any key driver of Red Dead's success relative to your expectations? Would that be review scores or preorders or just the general customer reception? And then, one thing, with Rockstar, broadly, do you guys think about Rockstar's Social Club as a big competitive advantage? And is there any way that we can think about Social Club in sort of a bigger context if you have any data points on Social Club that would be great.

So in terms of the successful year that we expect to have affecting our cash position, we expect that adjusted cash flow from operations will be over $700 million and CapEx will be, as expected, around $60 million. We announced that we had cash of a little over $1 billion at the end of this quarter. So you can do the math. We obviously expect to have a significant cash balance at year-end. We said that our expectations, with regard to our cash, are, first, to support our organic growth on an ongoing basis, that's really our story. This is a company that's been driven by organic growth, largely. Secondly, when we find great opportunities to support inorganic growth opportunities, for example, the purchase of Social Point, we look through a very narrow lens, though. We want a deal to be accretive, if not immediately, then very quickly, and that does matter to us. And then of course, we're prepared to return capital to our shareholders and we've bought back around $300 million of stock in the last 12 months or so. Those are the 3 uses of cash. But, it's obviously a great place for us to be with no debt. I would observe that if you have concerns about the economy, and I think many of us feel like it's riding high and when -- we don't know when it will change. We do know that at some point it changes, that having a significant cash asset is strategically beneficial. And we do want to be well positioned for long-term growth, we are not a quarter-to-quarter company. So the second thing, I think you asked what drives the enormous success of Red Dead Redemption 2. And the answer, I think is that Rockstar's known to make the best…

Our next question comes from Mike Hickey with The Benchmark Company.

Congrats on Red Dead and the Rockstar as well, truly an amazing success. Curious on Red Dead Online. This is a bit of a stretch. Obviously, there's competitive game play elements to it, at least I think that's what you said. Do you see any sports opportunity at all for that game? I think just more broadly speaking, it's hard to get a read on what Rockstar's thinking philosophically. Obviously, they've nailed single-player, they've nailed live-service, but do you since have any ambitions to compete in the eSports market over time?

I think, if there is any sports interest, Rockstar will talk about it. I think, as always, we want our labels to be out in front with marketing announcements. I would observe that, so far, Take-Two's eSports ambitions have centered around NBA 2K and the NBA 2K League.

Okay, cool. The last one from me. You said 17 million units sold, and any perspective on what the channel looks like on the physical side, obviously?

It's selling rapidly.

Our next question comes from Brandon Ross with BTIG.

It's just a follow-up on the capital allocation question from earlier. M&A opportunities seem obvious within gaming, whether kind of bulking up in mobile or console. Maybe you can update us on your -- what your ideal opportunities within gaming would be besides being accretive and if there are any other strategic opportunities in adjacent businesses that might make sense for you guys? And then, on Social Point, you called out Social Point's success this past quarter and the number of titles that are coming. Are there any ways you see them working with 2K or Rockstar to make those mid-core games based on, I guess, 2K or Rockstar IP now that Social Point is well integrated?

Thanks for your good questions. I know you said, yes, we know you want acquisitions to be accretive, but believe it or not, that's a relatively unusual approach in our business. And it shouldn't be. It really is relevant because, in the absence of thinking about that, you would look at a whole bunch of things, and in the presence of that as a metric, you don't look at so many things at all. Generally, what we've said is, an acquisition should bring us owned intellectual property, teams and, potentially, technology. It doesn't have to bring all 3. We've done acquisitions that have brought us 1 of 3, for -- 2 of 3, 3 of 3 would be even better. And we are, indeed, very selective. Most corporate acquisitions fail. And thankfully the ones we've done around here, at least so far, have succeeded. We'd like to keep it that way. To your second question about Social Point, their focus, as is the focus of all of our labels, is to create their own intellectual property. And I would just note that, in terms of the biggest titles in mobile, they're all native to mobile. They're all made for that platform. There's no doubt that we've have success with intellectual property brought to the platform, WWE SuperCard being a great example. But the really huge successes are native. And that's what Social Point is trying to achieve. I wouldn't rule out the possibility of Social Point working with another label inside the Take-Two family, but that isn't the current approach, and it wouldn't be our primary approach.

Our next question comes from Drew Crum with Stifel.

So can you talk about the frequency of content updates we should expect for Red Dead 2 Online? And I think -- and I apologize if I missed the response to the question, but I think there was an earlier question on whether Rockstar will stagger the release schedule between Red Dead Online and GTA Online. And then separately, Red Dead 1 was not on PC. Any updated thoughts on making Red Dead 2 available on PC down the road?

Sorry. Could you just repeat the third question?

Yes, Strauss, just on making Red Dead 2 available on PC?

Making it available on PC. So Rockstar would normally update everyone on upcoming releases and that would sort of answer all of your questions, but it's too early to talk about content updates for Red Dead 2 Online because it hasn't launched yet, obviously. Historically, obviously, we have updated content for our online offerings. And in terms of ongoing releases, Rockstar will talk about what their intentions are going forward with regard to all upcoming products and the same would hold true for platforms. So in this particular instance, I can't really give you too much clarity, apologies.

Our next question comes from Andrew Uerkwitz with Oppenheimer.

Gentleman and Lainie, one of the big benefits, I think, GTA V experienced was the fact that it was such a great game that, when a new console cycle came, people all went out and bought it again. Sony and Xbox tend to talk a lot about forward/backwards compatibility. Does that change that dynamic as we approach the next console cycle because it looks like Red Dead could easily have the legs to last for multiple years? And then, as the second question, you showed NBA 2K at the Apple event, Civilization VI is -- the full game, I think, is on iPad and iPhone and mobile. Are those devices becoming powerful enough that they become an entire another medium for you to push a lot of your content to?

Yes. I don't think backwards compatibility is actually all that important. I think the reason that we had such a great experience with Grand Theft Auto V, when we brought it to new generation, is, first of all, the content was meaningfully operated with amazing new features. And secondly, because the title was so extraordinary, that it remained the standard bearer for the new generation straight through until the release of Red Dead Redemption 2 because nothing stood up to it technically or creatively. So how Red Dead Redemption 2 fares going forward is hard to know, but it's certainly off to a great start. But we don't -- our success is not built defensively by managing platform transitions. They're -- those things are really out of our control. Our success was built by making the very best entertainment that we possibly can, and we're grateful that, at least so far, it appears that it's some of the best entertainment made. And that's the whole drill. On your point about technical abilities, and thanks for referencing the Apple event, we were really thrilled to participate for NBA. I do think that it's just a matter of time before mobile devices are every bit as powerful. The question is whether the form factor is going to appeal to every kind of title, and I'm skeptical that it will. I say that and then you can find people who like to watch movies on their smartphones. So I'm sure you can find some people who, when the platforms are powerful enough, and to be clear, they're not yet. But when they are, we'll be really happy to play our very deep, very robust, very memory intensive, technologically intensive titles on platforms like iPads or smartphones. But right now, we're not quite there yet, but if you believe in Moore's law and I do, it's just a matter of time, probably not that long a time, before that's the case.

Our next question comes from Doug Creutz with Cowen & Co.

This is for Strauss. You were recently named Interim Chairman of CBS and congratulations on that, by the way. They're a company that's facing a lot of important decisions over the next 2 years both internally and externally. And I've even seen your name mentioned in the press release in one spot in conjunction as being a possible CEO candidate. Do the responsibilities there at all affect what you're doing at Take-Two? Has there been any kind of reshuffling of responsibilities? And how do you think about kind of balancing those roles off against each other?

The CBS role is specifically interim and nonexecutive, so you have to think of it as a board seat with the responsibility to convene meetings, and I'm grateful for any opportunity to be of service to friends in the industry. Take-Two is where my head and my heart remains. I'm really proud of what the team here has accomplished in the last 11 years. I'm firmly committed to the company. I love what I do every day, and it keeps all of us plenty busy. I would observe that I'm 1 of only 4,300 team members. And this is a team effort and I'm really proud of what we, together, accomplish, but it is not a singular activity. So it's kind of you to ask the question, but the much more relevant question is, how does the team feel about continuing to do this together. And my primary job is to make sure that we constantly have a fantastic strategy backed up by an amazing culture, that this remains the place of choice for people who want to do the very best work in entertainment. And that when they are here, they get to pursue what they're passionate about because, more often than not, that yields the kind of results that we're talking about today. So I'm really grateful to be able to do this every day and I'm quite -- and to be specific, entirely committed to continuing to do so.

At this time, I would like to turn the call back to management for closing comments.

I just want to thank, everyone, for joining us today. We're obviously grateful for a terrific second quarter. We're thrilled that we're able to guide up for the year. And it is a gross understatement to say that we're excited for the initial release of Red Dead Redemption 2, and we have wonderful hopes for how the title will continue to unfold. Thank you, again, for joining us. We really appreciate your support.

This does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.