Greetings. Welcome to the Take-Two Q3 Full Year 2022 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Nicole Shevins, Senior Vice President of IR and Corporate Communications. You may begin.

Good afternoon. Thank you for joining our conference call to discuss our results for the third quarter of fiscal year 2022 ended December 31, 2021. 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. And now I'll turn the call over to Strauss.

Thanks, Nicole. Good afternoon and thank you for joining us today. I'm pleased to report that we delivered another strong quarter, highlighted by net bookings of $866 million, which exceeded our expectations and increased 6% over the prior year. Our outstanding holiday season results were driven by our new and existing titles as well as strong, ongoing engagement from our player communities that continue to immerse themselves in their favorite experiences and exciting new content updates. We continue to position our company to deliver on its long-term pipeline, build scale and gain market share. During the quarter, we grew our pool of creative talent with the addition of more than 300 developers. This includes our highly complementary acquisitions of elite3d and Roll7. Based in Valencia, Spain, elite3d is one of the world's leading creative studios that is dedicated to innovative 2D and 3D artwork for the interactive entertainment industry. elite3D will form a second office for 2K's 31st Union studio and serve as a new publishing location for 2K's Global Services Division. Roll7 is the BAFTA award-winning studio behind OlliOlli World, which is launching tomorrow. Going forward, the team will help support Private Division's mission to bring games to market from the industry's top creative studios as well as to broaden the label's portfolio of owned intellectual property and internal development capabilities. Our most significant recent development was our agreement to combine with Zynga, which we expect to close during the first quarter of our fiscal 2023. We're very excited by the prospect of this transformative combination, which will significantly diversify our business; establish us as a leader in mobile, the fastest-growing segment of the interactive entertainment industry; and greatly enhance our positioning as one of the world's top 3 pure-play publishers of interactive entertainment. We believe there will be…

Thanks, Strauss. I'd like to thank our teams for delivering another outstanding quarter driven by their continued commitment to excellence and dedication to our business. I'll start by discussing our announced offerings planned for the remainder of this fiscal year. Tomorrow, Private Division and our recently acquired Roll7 Studio will launch OlliOlli World on Nintendo Switch, Xbox and PlayStation consoles and Steam. This skateboard and action performer has been eagerly awaited by fans and received significant critical praise for its unique art style and tight gameplay mechanics. Reviews for OlliOlli World have been extremely positive with multiple sites recommending or calling the title an essential purchase, with the game currently scoring an 85 on OpenCritic and 84 on Metacritic. We're thrilled to add this popular series to our portfolio and to pursue exciting new projects with the talented team at Roll7. In early March, 2K and Visual Concepts will launch WWE 2K22, which we believe will set a new benchmark in quality for the series. The game offers more features and enhancements than any prior WWE 2K release, including a redesigned gameplay engine, new controls, foundational improvements, upgraded visuals and an array of features specifically requested by our passionate player base. WWE 2K22 will hit different, giving players complete control over the game's universe, including a new look and feel, accessible but challenging gameplay and significant replay value. Rey Mysterio, one of the most renowned and respected WWE icons of all time, will grace the cover of this year's game in true Lucha Libre fashion. We can't wait for players to step into the ring with WWE 2K22 and experience all the groundbreaking enhancements on which our teams have been tirelessly working. On March 15, Rockstar Games will launch Grand Theft Auto V for PlayStation 5 and Xbox Series S…

Thanks, Karl, and good afternoon, everyone. Today, I'll discuss our third quarter results and then review our financial outlook for our fiscal year 2022 and fourth quarter. Please note that additional details regarding our actual results and outlook are contained in our press release. As Strauss mentioned, our holiday results were outstanding driven by strong engagement across our key franchises. Net bookings were $866 million, which was above our guidance of $800 million to $850 million and up 6% as compared to last year. Our outperformance was primarily driven by Grand Theft Auto: The Trilogy -- The Definitive Addition, Red Dead Redemption 2 and Red Dead Online and NBA 2K22. During the period, recurring consumer spending increased 2% compared to our outlook of a slight increase and accounted for 57% of total net bookings. Digitally delivered net bookings increased 12%, which was above our outlook of a 5% increase and accounted for 88% of the total. Our outperformance was primarily due to higher-than-expected digitally delivered full game sales. During the quarter, 63% of console game sales were delivered digitally, up from 56% last year. GAAP net revenue increased 5% to $903 million, and cost of goods sold increased 1% to $350 million. Operating expenses increased by 18% to $399 million, primarily driven by higher personnel and stock-based compensation expenses; the addition of Nordeus and the revaluation of its earn-out; partially offset by lower marketing expense. GAAP net income was $145 million or $1.24 per share as compared to $182 million or $1.57 per share in the third quarter last year. We ended the quarter with approximately $2.5 billion of cash and short-term investments. Turning to our guidance. I'll begin with our full fiscal year expectations. We are raising our net bookings outlook range to $3.37 billion to $3.42 billion. This…

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

[Operator Instructions] Our first question is from Mario Lu with Barclays.

Maybe first on NBA 2K. You guys mentioned that DAUs and bookings were up 10% year-on-year. So just wondering if you could dig a little bit deeper into whether this growth was due to macro-based factors or new modes within the game. Anything that you can point to that suggests that this growth is sustainable long term?

Mario, it's Karl. I'm not sure that there's any real macro issues that are going on that I would attribute to the game. I'm sure -- obviously, the NBA is having -- is incredibly successful and is having growth. So that always helps. And we're thrilled with that partnership. The game's just great. I mean the game is really out of the gate performed fantastically well. I think people are reacting, first and foremost, to the quality of the game and also to the expansive amount of content in the game. And we're just really focused on driving engagement. And I think every year, the team at Visual Concepts and 2K continues to add more and more content, more modes and actually enable those modes to work more seamlessly together with innovations such as the city, neighborhood, et cetera. So really for us, it's about the quality of the game and driving engagement through offering more and more and better content. And that's really what we see driving growth. And we're not finished. I mean there's -- we're not nowhere near saturation point at this point. There's a lot of greenfield in front of us. And as long as we continue to deliver on the quality of the content, then we expect the growth to continue for the foreseeable future.

Got it. And then maybe one on GTA. So yes, playing devil's advocate here a little bit. So one of the main drivers of outperformance this quarter, you guys mentioned, was The Trilogy. But I believe there were a number of bugs launched that affected gameplay. So one, has this issue been fixed? And then two, more importantly, has there been any changes made to the QA process to ensure that this does not happen to future launches such as GTA Enhanced next month and the next entry in the series thereafter?

Thanks for the question. Yes, we are totally focused on quality here. And we always want to deliver the best possible experience. Very occasionally, we fall short. And I think The Trilogy was an example of that. And the title was launched with some issues. We've addressed many of them. There are more fixes to come. And going forward, we remain highly focused on quality, and we are exceedingly confident in all of our upcoming releases.

Our next question is from Matthew Cost with Morgan Stanley.

So I guess on the 14% CAGR guidance, I think it implies something like $9 billion of revenue for the combined entity in fiscal '24. I guess that seems to imply a pretty significant amount of top line growth kind of for the core Take-Two business, excluding Zynga. So I guess what would you call out as kind of the biggest, most important drivers over the next 2 years to get to that higher revenue base? And which are the most important ones to get there? And then I just guess, secondarily on Zynga. You've talked about the opportunity to drive revenue synergies by maybe using the tools at Zynga to bring some of your tent-pole IPs on to mobile in a bigger way than they have been in the past. How long do you think that would take? What does it look like? How much investment would it take to get there?

Matthew, I'll start with the 14% CAGR. And when we're talking about Take-Two's pipeline of titles, we haven't given any detail deeper than that, but we have been talking about the growth of our pipeline over the last couple of years and the 20 titles per year that we've been growing over time. And that's really what's in those numbers. And we talked about more immersive core titles and how we were supporting the pipeline of title, and that's really where that growth is coming from.

And with regard to bringing Take-Two's core intellectual property to mobile with Zynga's help, look, we think that's one of many great opportunities. We've already said that we expect to achieve $100 million in cost synergies annually over the next couple of years. Additionally, we've identified at least $500 million of annual run rate revenue synergies, many of which are unrelated to new game launches, many of which are unrelated to bringing Take-Two IP to mobile. However, that is an opportunity. And while we haven't identified any heroics within there, we do think it's an interesting opportunity on a selective basis in the coming years. The actual investment is not significant compared to our core investment in console and PC IP.

Our next question is from Colin Sebastian with Baird.

I guess, first off, I'm just wondering for -- if you have any industry-level observations on the quarter that just passed. Several high-profile new releases in the industry underperformed expectations. Just wondering if you -- if there was a common denominator that you saw that might explain that or if they were really just title-specific. And then secondly, on the mobile business, and I know we're looking past the close of the acquisition, but just curious to learn a little bit more about the road map for converting a bunch of your really strong console and PC franchises to mobile, how quickly you think that can develop?

Thanks for your question. Look, this is -- it's really hard to make hits in any entertainment industry. It's really hard to make hit video games. And now and then, we fall short; and now and then, our competitors fall short. We don't believe there's any trend in the industry. We just think that, over time, as entertainment industries mature, consumers' expectations always increase, and they should. So it's always our goal to do better with each iteration of a franchise or with each launch of a new intellectual property. And one of the things we're really proud of in our track record is with regard to our franchises, and we have 11 franchises, for example, that have sold over 5 million units with an individual release, each iteration has always sold more than the prior iteration, which is not always true for the industry and lately has really not been true for the industry, but it is true for us. But it will only remain true for us if we continue to focus on quality mightily. And that's job #1 around here. In terms of bringing Take-Two's core intellectual properties to mobile, that remains a very interesting opportunity. As I said earlier, we've identified around $500 million of annual run rate revenue synergies to be achieved in the coming years in the combination with Zynga in addition to $100 million of annual run rate cost synergies. And only a small portion of those synergies on the revenue side are attributable to new releases based on core Take-Two IP. So we have not identified any heroics. We know it will take some time. The financial investment in the context of our investing in the console and PC titles is not significant because obviously, the creation of a mobile title is not as heavy a lift. Equally, the hit ratios are not as strong in the mobile space. So I think we have a sober view of where we can go in the future. And we're really excited that we think Zynga's extraordinary developers and their extraordinary publishing abilities will enhance our ability to bring core intellectual property to the mobile market.

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

A couple of questions on RCS. First, if you could just confirm what the RCS growth rate would have been on an organic basis without Nordeus. And then secondly, just to remind, I know that Tiny Tina is shipping with a premium addition that includes access to the season pass. How will that impact your RCS bookings in the fiscal fourth quarter?

RCS, I don't -- we didn't -- we don't break that out with Nordeus. So it's -- for the quarter, we had 2% up versus slight increase, but I don't have it broken out without Nordeus. But in total, for the year, we expect RCS to be slightly down by about 5%, and we originally expected it to be 15%. So RCS has been pretty strong for the year and beating our expectations for the year so far. So we're pretty happy with the performance for RCS for the year. And for Tiny Tina's, we're not breaking out the premium addition and how much that will impact RCS. So we're not giving that level of detail either.

Well, I'm not asking for details, just conceptually, if you sell a premium edition pass that $30 incremental buy-up, presumably, some of that does benefit your RCS revenue in the quarter, correct?

Some of it will be added into the RCS.

Our next question is from Martin Yang with Oppenheimer.

I was under the impression that GTA V Enhanced is not available for purchase yet. Can you confirm that? And how do you think about the pricing strategy for the GTA Enhanced relative to GTA V Premium? Do you intend to use pricing to differentiate the different value proposition between the upcoming Enhanced Edition and the current edition?

So the GTA Enhanced, so the next-gen version of GTA V are not, in fact, available for purchase yet, but they will be. And in terms of pricing, we haven't discussed any pricing models around those new releases.

So conceptually, how would you market the Enhanced Edition versus the Premium Edition? So besides the graphic changes and content, is there any reasons you would give the upcoming potential buyers to purchase the Premium Edition also?

Yes. It's an enhanced version for Gen 9 consoles, and there will be a lot of upgrades and plenty of reason to purchase it. And Rockstar, obviously, will be talking about that in the marketing materials.

Our next question is from Drew Crum with Stifel.

Share with us where the company is in terms of returning to the office or studio and your confidence in your label's ability to hit the title count you presented in the slide deck? Do you see ongoing work-from-home as a risk to that? And then separately, I think in past quarters, you guys have said that you expect fiscal '23 to see a re-acceleration in growth. Does that guidance still hold?

Yes. So look, return-to-office is sort of location by location question depending on the state of affairs in each location and what the local authorities are saying. And obviously, we comply with all local regulations. The expectation is that we're either back now or we will be back in the coming months. In any case, the company has proven that we can be very effective without regard to where people are working from. We've had great success in the context of remote work. And while I think all of us are anxious to get back to the office as soon as we possibly can, we're also mindful of the science and the circumstances. We haven't had a quality lapse. We haven't had a timing lapse. We haven't had a financial lapse, and we don't expect to.

So in terms of fiscal year '23, so it's a little early for us to start to give detailed guidance for next year, but we plan to share that on our year-end earnings call in May. But what I can tell you that on a stand-alone basis, we do continue to believe that we will achieve sequential net bookings growth in fiscal year 2023, driven by some of the exciting releases that our labels have been working on. And at the same time, we will make continued investments next year in marketing, talent, in IT and space expansion as we prepare for some of the major launches that our teams have underway, which we project will enable us to deliver record levels of operating performance in the next few years.

Our next question is from Matthew Thornton with Truist Securities.

Obviously, it's been -- fiscal 2022 has been interesting year. And Strauss, I was just wondering if we can get maybe your latest thoughts on maybe where we are in terms of reopening. Obviously, we had data privacy changes that had some impact on the mobile sector. Just kind of your thoughts as to maybe where we are there. And then just hiring and retention has been challenging. And I don't think that's gaming-specific thing. I think that's broad-brush. But just curious to get your kind of latest take on some of those countervailing forces this year.

Well, in terms of reopening, as I just said, certain of our offices are fully open. Others will be opening in the coming months, depending on what happens in the marketplaces. We will listen to local authorities. We will pay attention to the science, and we're mostly sensitive to the health and well-being of our colleagues around the world. However, my belief is that we will largely be back in office within the next couple of months. But I think the broader point is that working remotely has not been an issue for the company in terms of quality or performance. So we'd all love to be back in the office. Our team today, who is on this call, we're all together in the office today, and we like it that way. In terms of data privacy, we have not had any issues coming out from the change in IDFA. And we have an extraordinary customer database. And in the combination with Zynga, we expect to have more than 1 billion customer records, which gives us some massive opportunity from a marketing point of view despite the change in IDFA. So we feel just fine about being able to market and, at the same time, to maintain customers' privacy, which is an important value of ours. With regard to hiring, we brought on 300 new developers in the quarter. We continue to grow and grow rapidly, and that's been a good news story because we think people really like working at this company. And with regard to retention, it's an even better story. I think we have one of the lowest attrition rates in the industry, if not the lowest. I know our attrition rate is about half that of the industry average. We earn the right to say that every single day. We're really proud of our culture. It's of paramount importance to us.

Strauss, just one point of clarification, I guess, on the reopening point. I was kind of curious, maybe from the player side, just where you think we are in terms of engagement trends. Are we kind of back to a "norm"? I'm just kind of curious your latest thoughts there.

Yes. I think -- I don't think we're seeing enhanced demand because of the pandemic. I think we're seeing normalized demand at this point.

Our next question is from Brian Fitzgerald with Wells Fargo.

We wanted to ask about the platforms a little bit, maybe like Stadia. Google is reportedly diminishing the gaming focus there. And maybe they just never had enough critical mass in terms of subs. Is there just a limit in terms of, hey, market opportunity for that type of device or experience or yet another platform in the market? Maybe gamers are more excited about enhanced versions for the Gen 9 platforms versus cost. And then maybe a related topic, how do you view the recent market activity and the notion of exclusive titles or features of release Windows? Is cross-platforming really just diminishing the need -- actually, the ability to have exclusives?

On the first point, look, there's always a marketing story du jour in this business, and we're usually very sober about them. And a couple of years ago, the marketing story du jour was how cloud gaming would completely transform the industry and multiply demand by 20x. And what we said on these calls was we'd love to subscribe to that view, but we didn't subscribe to that view, that we thought streaming and cloud distribution was super interesting but probably wouldn't change the market size materially. And that's exactly what we've seen. It's super interesting, and it's not changing the market size materially. So there's broad distribution for our products now for those who want them. And I don't think that anything will occur on the platform side that will significantly change the marketplace going forward. The marketplace will change by virtue of putting out hits or not putting out hits. And I think you alluded to that. So as between platform-driven growth or product-driven growth, I'm going with product-driven growth, which means those who are great will do great and those who are good will have problems. Hard for me to opine about exclusive titles. I think in the event that a platform company acquires a label and that label's intellectual property, one could imagine those titles becoming exclusive in certain circumstances. I think outside of that, it's less likely, although there may be short-term exclusivity deals still as there always have been. And I do think cross-platform play is the wave of the future, and you're going to see more and more because consumers will demand it.

Our next question is from Benjamin Soff with Deutsche Bank.

I'd like to ask a little bit about RCS. It was sort of in line with your expectations, whereas over the past few quarters, you posted more meaningful outperformance. So the question is, were there any surprises, either positive or negative, that impacted RCS this quarter? And I've got a follow-up after that.

So for RCS this quarter, NBA 2K22 outperformed as well as Red Dead Online, and GTA Online was in line with our strong expectations. We had some mobile titles that were modestly -- came in below our expectations. So net-net, we were slightly above our expectations. But when we had forecasted for this quarter, we knew that Q2 we had been so much higher. So we put some strong expectations on the page. So that's why we didn't over-exceed as much as we did last quarter.

Got it. And then just how should we think about the trajectory of margins for the business over time? Specifically, what are the puts and takes that we should be mindful of as you guys bring to market a much larger number of games in the coming years?

So in terms of our bottom line margins, our expectation is as we build scale for the business is for our bottom line margins to continue to expand. So this year and next year, we have some investments that we're doing in terms of our operating expenses to drive our top line in terms of our organic growth and our pipeline of titles, as we've been talking about. And as that continues to build, our expectations are for our bottom line margins to continue to expand. And we've seen that on years where we've had some big hits, and we continue to expect to have those. And we expect to have some record years in the next couple of years. And with that, we would expect to see our bottom line margins expand.

Our next question is from Eric Handler with MKM Partners.

I wanted to talk a little bit about Red Dead Redemption 2. It looks like you sold on a quarter-over-quarter basis, an incremental 4 million units, your best quarter in a little bit of -- quite some time. I'm curious, was there anything special that led to that increase in unit sales? Or was this sort of seasonality around the holidays? And secondly, I'm just curious what you're seeing from new cohort spending on Red Dead Online versus sort of existing cohort spending?

So for Red Dead Redemption 2, we had a lot of holiday promos during the Christmas season, and that really drove a lot of the units as well as we had a series of updates. So a lot of people were playing the game. So that really drove a lot of those units. And in terms of the new cohort spending, we don't have any real details on that.

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

Congrats on the quarter, guys. Just 2. I'm not sure if you have given us the [ engine ] on this, but the GTA Trilogy for mobile, is that free-to-play? Or is that a premium offering? And then second question, just looking at sort of Microsoft's acquisition of Activision, maybe Sony's acquisition of -- or excuse me, acquisition of Bungie, thinking about sort of the rise of subscription plans over time, thinking sort of 3 to 5 years, how you think that sort of changes the competitive landscape, maybe in particular for sort of the mid-lane budget gains if they can still be competitive outside of that subscription plan that's obviously going with a lot of content.

So we haven't discussed pricing for Trilogy for mobile yet. And on the competitive landscape, hard to know really. I think there are probably puts and calls. I think assuming the Microsoft acquisition of Activision closes, that means there'll be really 2 very powerful leading pure-play interactive entertainment companies, and we'll be one of them. And I think that probably means there are some advantages in terms of attracting talent and being able to invest in really great experiences and to market them powerfully. At the same time, a platform enterprise having an even more robust product slate, there will be benefits. And again, perhaps there'll be some detriments. I think we're very focused on that which we can control, and we tend not to spend a lot of time worrying about things that are out of our control. What's within our control is making hits. And as long as we maintain our approach, which is try to be the most creative, the most innovative and the most efficient company in the business, as long as we focus mightily on quality, we'd do well. And if we have a lapse, if we miss a step, if we divert our attention from that strategy, we don't do as well. So we have our work cut out for us, and we're focused on that work.

Our next question is from Stephen Ju with Credit Suisse.

So Strauss and Karl, I want to put you on a spot a little bit. It seems like there has been and continues to be a lot of potential for Private Division publishing opportunities for the company, but there doesn't seem to be a ton of studios out there that you may want to look to acquire maybe. So can you square that dynamic with us? Is it just that access to capital is easy and for the most part, these independent studios value their freedom and maybe want to remain that way?

Well, the good news is that Private Division's business model doesn't require us to own the studios we're in business with. In fact, to the contrary. Private Division was set up to offer fantastic publishing marketing services and financing to creators who want to stay independent of the larger enterprises. And Michael Worosz and the team have done a great job building a business that does just that. At the same time, we are able to own certain intellectual properties like Kerbal Space Program. And we've just announced that we've acquired Roll7, which makes OlliOlli World, which is being launched tomorrow incidentally and has great Metacritic scores on Switch, and we couldn't be more excited about it. So I think right now, Private Division is able really to offer opportunities for those who want to stay independent and opportunities for those who want to be part of the Private Division system. We obviously have plenty of capital to deploy when the opportunity presents itself to own intellectual property. And the sky is the limit. It's still early days for Private Division. We're really excited about what will come in the future.

[Operator Instructions] Our next question is from Andrew Marok with Raymond James.

With the performance of the contract so far and its greater emphasis on single player, I guess, how does that inform your road map for future GTA Online content releases? And does it necessarily say anything about the appetite for single-player experiences more broadly?

There was a time when a couple of our competitors were taking a position that single player was dead. We never took that position. We know that there's a role for single player. I believe there will be a role going forward. Then there are certain games that are meant to be only multiplayer experiences. Rockstar is known for its storytelling. And yes, Rockstar's also known for these fantastic open-world experiences. They clearly do both really well. And the contract shows, as you just said, that consumers are really excited about Rockstar's storytelling ability. And at the same time, we had a great quarter with Grand Theft Auto Online. So there's a lot of excitement there. So the answer is sort of all of the above.

Our next question is from David Karnovsky with JPMorgan.

Just to follow up on a GTA Trilogy question from earlier. I believe work for the game was largely outsourced. And I think you've noted for remaster support sometimes that that's from a resource standpoint. My question is, does the experience with Trilogy lead you to rethink this model at all? Or is this just an isolated case?

We've had precious few quality lapses at this company. So any time that we've fallen short from a quality point of view, it has been an isolated case, and we aim to keep it that way. However, we're not changing our business model.

Our next question is from Clay Griffin with MoffettNathanson LLC.

Strauss, on the Zynga M&A call, you noted kind of one of the key strategic benefits of the deal that now you can address a market that was previously not available to you, i.e. outside of kind of the console market, the high end kind of AAA gaming. I suppose like, how do you view that taking shape? I mean, obviously, that market has access to mobile games now. It seems like implicit in that assumption is that you feel that there's demand for kind of what we might call the core Take-Two game experience. But just curious if you view kind of the experiences and the gains that you're thinking about when you think about that market opportunity, if there's any kind of delineation between what you do now, obviously, with AAAs and mobile. Is there a white space kind of in between those 2 things where you think that's where the real opportunity is?

Clay, it's Karl. I think, look, we've been big supporters and big fans of the mobile market for quite some time. I think that's exhibited in our acquisition strategy over the past few years and obviously with our announced acquisition of Zynga. So it's actually -- it's really exciting for us. And it's not just about the casual space or the mid-core space or the core space. We actually think the mobile market has got room for all the above as it relates to that. It's becoming more sophisticated. The technology is getting better. There's more cross-platform opportunities. There are more examples of the market for mid-core and core franchises having success. Obviously, Call of Duty is a perfect example of that, Fortnite as well. So we really do think that there's an opportunity for us to play along the entire spectrum of mobile opportunities, which is hyper-casual, which we've never really been involved with that much, to casual to mid-core to even core experiences. And look, down the line, I mean one of the benefits of cloud, should that ever come about, which we do hope that it is, is that it does take some of the stress off of the remote device and allows a lot of the intelligence to be done in the cloud. And that enables folks to us to tap into that market all the more easier. In other words, you don't have to buy a console or a high-end PC in order to play sophisticated games. So we really don't think there's any limitation at all in the mobile space for any of our content, whether it be all the way from hyper-casual to our most core assets.

Makes sense. And do you think that, that takes shape primarily by the way in the way of live services games? Or do you feel like that there's obvious opportunity in kind of the Red Dead Redemption type games as well?

Yes. I don't -- look, obviously, most of the mobile space right now is more in the live services business. So there's clearly an opportunity there. But I wouldn't say that single-player story content doesn't have a role in mobile either. Again, I wouldn't count out either one of those categories.

We have reached the end of the question-and-answer session, and I will now turn the call over to Strauss Zelnick, Chairman and CEO, for closing remarks.

Thanks so much for joining today. We are really grateful to all of our colleagues for delivering another stellar quarter and for the great outlook going forward. Thank you to our shareholders for your continued support, and have a great evening.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.