Image source: The Motley Fool.

DATE

Thursday, May 21, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Strauss H. Zelnick
• President — Karl Slatoff
• Chief Financial Officer — Lainie Goldstein

TAKEAWAYS

• Net Bookings (Q4) -- $1.58 billion, exceeding the high end of the $1.51 billion-$1.56 billion guidance range, primarily driven by Grand Theft Auto, strong mobile titles, and Red Dead Redemption series performance.
• Net Bookings (Full Year) -- $6.72 billion, surpassing guidance and reflecting recurrent consumer spending growth of 17%, which made up 78% of net bookings.
• Recurrent Consumer Spending (Q4) -- Increased 7%, representing 82% of net bookings, with mobile up 7% and Grand Theft Auto Online up 5%.
• NBA 2K Franchise (Full Year) -- Recorded over 30% growth in recurrent consumer spending; sold-in units for NBA 2K26 exceeded 10 million, up 5% over NBA 2K25.
• Mobile Performance -- Toon Blast grew 25%; Match Factory maintained positive trajectory; Empires & Puzzles grew 5%; Color Block Jam rose 15%, establishing a new record for Rollic; Top Eleven delivered its best quarter in 16 years.
• Grand Theft Auto Series (Cumulative) -- GTA V reached nearly 230 million units sold-in; GTA Plus contribution grew, supported by updates and the addition of NBA 2K26 to its game library.
• Red Dead Redemption 2 (Cumulative) -- Achieved over 85 million units sold-in with highest annual unit sales since launch year.
• Operating Cash Flow (Full Year) -- $624 million, outpacing the initial $450 million forecast, driven by the strong fourth quarter.
• Fiscal year 2027 outlook (period ending March 31, 2027) -- Projected net bookings between $8 billion-$8.2 billion, with approximately 20% growth expected, led by the Grand Theft Auto VI release on November 19.
• Label Contribution (fiscal year 2027 forecast) -- Net bookings contribution breakdown projected at 36% Rockstar Games, 35% Zynga, and 29% 2K.
• Recurrent Consumer Spending (fiscal year 2027 guidance) -- Expected to be flat compared to the prior year and forecasted at 65% of overall net bookings, with NBA 2K up high single digits, Grand Theft Auto up, and mobile down due to moderating trends in Zynga's mature titles.
• Operating Expenses (Q4 YoY) -- Decreased to $928 million from $3.6 billion a year earlier due to impairment charges; management basis expenses declined 2% year over year, reflecting lower marketing spend.
• GAAP Net Revenue (Q4) -- Rose 6% to $1.68 billion; cost of revenue declined 5% to $741 million.
• Planned Releases (fiscal year 2027 and beyond) -- Six planned launches in fiscal year 2027: two mobile, three sports (NBA 2K27, PGA Tour 2K27, WWE 2K27), one platform extension; 22 more titles planned for fiscal years 2028-2029.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

• Chief Financial Officer Goldstein stated, "We project net bookings to range from $1.32 billion to $1.37 billion compared to $1.42 billion in the first quarter last year," indicating a Q1 net bookings decline and lower recurrent consumer spending driven by declines in mobile and Grand Theft Auto series.
• Management forecasts, "recurrent consumer spending to be flat to fiscal year 2026 and to represent 65% of net bookings," reflecting an anticipated year-over-year deceleration in this critical segment.
• Goldstein noted, "Our recurring consumer spending forecast assumes NBA 2K is up high single digits, the Grand Theft Auto series is up, and mobile is down," attributing the mobile decline to the prior year's strong performance and expected moderation in several mature Zynga titles.

SUMMARY

Take-Two Interactive Software (TTWO +0.62%) reported quarterly and full-year results that both surpassed guidance, with Q4 net bookings of $1.58 billion and annual net bookings of $6.72 billion, driven by above-expected contributions across franchises and mobile. Management announced the highly anticipated launch of Grand Theft Auto VI on November 19, which is expected to lift fiscal year 2027 net bookings to a record $8 billion-$8.2 billion. Guidance calls for recurrent consumer spending as a percentage of net bookings to decrease year over year, as mobile faces headwinds while NBA 2K and Grand Theft Auto show strength.

• Direct-to-consumer (DTC) distribution continues to expand, yielding improvements in conversion and customer loyalty, with cost and regulatory benefits cited as advantageous for sustaining the business model.
• Operating expenses for the upcoming year are expected at $4.18 billion-$4.2 billion, with roughly half of the management-basis increase allocated to selling and marketing, principally supporting the Grand Theft Auto VI launch and select mobile titles.
• Chairman Zelnick stressed capital deployment priorities remain unchanged: organic growth, selective and accretive M&A such as the recent Gearbox and Zynga deals, and opportunistic share buybacks executed at "deep value" levels.
• Rockstar will commence Grand Theft Auto VI marketing in summer, while the broader release pipeline is set at 29 titles through 2029, including core new IPs and remasters, exemplifying long-term focus on portfolio growth and franchise extensions.

INDUSTRY GLOSSARY

• Net Bookings: The net amount of products and services sold digitally or physically, recognized at the time of delivery, excluding deferrals.
• Recurrent Consumer Spending (RCS): Ongoing digital consumer purchases such as add-on content, in-game purchases, microtransactions, and virtual currency.
• Sold-in: Units that have been shipped to retailers or sold through digital platforms, as opposed to directly sold to end consumers.
• Direct-to-Consumer (DTC): Sales and digital distribution channels where the company sells products directly to customers, bypassing third-party retailers.
• Label: Distinct publishing divisions within Take-Two, such as Rockstar Games, Zynga, and 2K, each responsible for their own franchises and portfolio.

Full Conference Call Transcript

Strauss Zelnick, Take-2'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 would 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 quarterly report on Form 10 Q, including the risks summarized in the section entitled Risk Factors. I would 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 will turn the call over to Strauss. Thanks, Nicole.

Strauss H. Zelnick: Good afternoon, and thank you for joining us today. I am pleased to report that we concluded fiscal year 26 with excellent results. Including fourth quarter net bookings of $1.58 billion which was above the high end of our guidance range. Net bookings for the full fiscal year were $6.7 billion which was approximately $750 million above the initial guidance we provided last May. NBA 2K's delivered record net bookings in recurrent consumer spending, Zynga achieved its highest level of net bookings since we acquired the business in 2022, and the Grand Theft Auto series once again exceeded our expectations and continued to drive significant net bookings and deep engagement with its passionate community of players.

Fiscal 27 is poised to be a breakout year for Take-2, led by the November 19 release of Grand Theft Auto VI arguably the most anticipated entertainment property of all time, and we are excited that Rockstar Games will start their marketing campaign this summer. Our initial financial outlook for fiscal 27 includes record net bookings of $8 to $8.2 billion. Reflects meaningful growth over last year, led by the launch of Grand Theft Auto VI, along with the successful execution across our entire portfolio.

We expect to sustain this higher level of scale and generate strong cash flows well into the future as we release our robust long term development pipeline and capitalize on new opportunities across our highly established multifaceted business. Turning to highlights from the quarter, I will begin with our fantastic mobile performance. Toon Blast grew approximately 25% year-over-year, as Peak introduced new events and features, including Temple Guardians, deep quest, and refined level experiences. Match Factory continued to perform with players' responding positively to its live service execution and a continuous pipeline of player-friendly features, such as the collectible album.

Empires and Puzzles outpaced our forecast and grew 5% over last year, driven by a robust slate of in game events celebrating the title's ninth anniversary. Color Block Jam grew 15% year-over-year, remains the highest grossing title in Rollic history. Top 11 delivered its strongest quarter ever after 16 years in market, driven by superb performance of the Bundesliga and live operations innovation. 2 k's mobile offerings posted another solid quarter.

With WWE SuperCard reaching nearly 39 million lifetime downloads, NBA 2 k mobile continuing to expand its audience, NBA 2 k 26 arcade edition maintaining its top 5 position on the Apple Arcade charts, and NBA 2 k All Star in China growing to nearly 10 million registered users after just 1 year in market. Our direct-to-consumer channel continues to drive net bookings and margin growth as we integrate additional mobile titles from our portfolio and deepen our relationships with players by reducing payment friction, enhancing the end to end user experience, which is generating improvements in conversion and customer loyalty.

As the regulatory landscape continues to evolve, we are even more confident in the sustainability and growth profile of this platform. The Grand Theft Auto series continues to outpace expectations significantly, demonstrating incredible momentum leading up to the launch of Grand Theft Auto VI on November 19. Recurrent consumer spending grew 5% year-over-year, with strong engagement in GTA Online driven by a safe house in the hills, 1 of the best performing updates in its history.

This content offering provided a wide range of community-requested, including mansion properties, the return of Michael DeSanta from Grand Theft Auto 5, all new missions, vehicles, exclusive GTA plus benefits, the powerful new Rockstar Mission Creator that allows content creators to make their own GTA experiences. Sales of Grand Theft Auto V advance further, with nearly 230 million units sold-in to-date. GTA plus continues to see significant growth year over year, led by the holiday update and highly attractive monthly benefits such as the inclusion of NBA 2 k 26 in its games library. In addition, Rockstar Games' Red Dead Redemption 2 achieved its highest level of annual unit sales since its launch year.

With over 85 million units sold-in to-date. During the quarter, our sports offerings also performed well. NBA 2 k 26 continued to expand its audience, To date, the title has sold-in over 10 million units, representing a 5% increase over MBA 2 k 25. Recurrent consumer spending grew 10% as we benefited from higher daily active users and games played per user. In keeping with our strategic focus on innovation, Visual Concepts launched season 5 for NBA 2 k 26. Their first ever college themed offering. Featuring 16 iconic universities, was welcomed by MBA 2 k's vast community and provided a glimpse of what is to come in college basketball for next year and beyond.

I would like to thank our partners at the NBA, and the NBA Players Association for their continued engagement and support in our collective mission. On March 13, 2 k and Visual Concepts launched WWE 2 k 26 which was well received by critics and consumers alike. Engagement has been excellent with recurrent consumer spending up 20% year-over-year, more than 85 million matches played, an increase of 7% compared to WWE 2K25. 2 k is supporting the title with multiple updates through its ringside pass. I would like to thank Nick Khan and his team at TKO for their unwavering support and partnership as we continue to evolve this series further for fans of the game.

PGA Tour 2 k 25 enjoyed a fantastic resurgence. 2 k captured an influx of new players and drove strong organic interest by aligning season 5 with the start of the PGA Tour season in January and including the title in PlayStation Plus. During the quarter, our consumers played 60 million rounds of golf, representing a 110% increase over the third quarter. 2K will support the franchise throughout the year with several more content updates. In closing, we are incredibly excited by the promise of our future. For our players, our organization, and our shareholders. This year has the opportunity to be a major inflection point for our company.

Defined by groundbreaking entertainment experiences creative and operational excellence, and record net bookings. With our flexible balance sheet, our strong cash position, our expectation that we will generate over $1 billion in operating cash flow this fiscal year, we believe that we are extraordinarily well positioned to take measured creative risks, pursue accretive M&A, and to invest in technology that will unlock greater creative capabilities and operational efficiencies across our organization. I am immensely proud of our teams and exceedingly optimistic that we will continue to drive greater success and shareholder value for the long term. I will now turn the call over to Karl.

Karl Slatoff: Thanks, Strauss. I would like to thank our teams for another strong quarter for laying the groundwork for an exciting chapter in our company's history. We are extremely optimistic about our upcoming pipeline, which includes 20-9 titles through fiscal 2 thousand 29. In the interest of precision, we are now only counting mobile games in our pipeline that have been specifically scheduled for worldwide launch within the 3 year window. Our teams continue to develop and test many new titles not reflected in this outlook, some of which may be added to our multiyear count. Fiscal 2 thousand 27 is set to be a milestone year led by the launch of Grand Theft Auto VI on November 19.

We plan to release 6 additional titles during the fiscal year including 2 mobile titles, 3 sports titles, which are NBA 2K27, PGA Tour 2 k 27, and WWE 2K27, and 1 platform extension. Our labels will also continue to provide new content and experiences that drive engagement and recurring consumer spending across many of our previously released titles. Looking ahead, we currently expect to deliver 22 titles throughout fiscal 2 thousand 28 and 2029, including 1 mobile title, 5 sports titles, 3 core new IPs, and 13 core existing IPs, which includes 7 sequels and 6 remixes, remasters, and platform extensions.

We look forward to sharing more about our ground groundbreaking pipeline, which we believe will drive a new period of growth and long term returns for our shareholders. I will now turn the call over to Lainie.

Lainie Goldstein: Thanks, Karl and good afternoon, everyone. Fiscal 2026 was an exceptional year for Take 2. As we achieved record net bookings and operating performance. Each of our labels significantly outperformed the initial forecast we provided last May. As our teams maintained their focus on product innovation, delivering the highest levels of quality and value. I would like to thank our teams for their passion and dedication as we embark on this milestone year marked by a highly anticipated release of Grand Theft Auto VI and strength across our core businesses.

Turning to our results, we delivered fourth quarter net bookings of $1.58 billion which was above the high end of our guidance range of $1.51 billion to $1.56 billion This reflected better than expected performance from the Grand Theft Auto series, several mobile titles, and the Red Dead Redemption series. Recurring consumer spending growth was strong, increasing 7% over last year, and accounting for 82% of net bookings. This included 7% growth for mobile, and 5% growth for Grand Theft Auto Online, both of which surpassed our expectations. NBA 2K increased 10% which represented 1 of the strongest fourth quarters in franchise history.

But was softer than anticipated as trends moderated from the extreme growth we achieved during the second and third quarters of the year. During the quarter, we launched Sid Meier's Civilization VII for Apple Arcade, PGA Tour 2K25 for Switch 2 and WWE 2K26. GAAP net revenue increased 6% to $1.68 billion while cost of revenue declined 5% to $741 million. Operating expenses decreased significantly to $928 million as last year included a $3.6 billion impairment expense related to goodwill and acquired intangible assets. On a management basis, operating expenses declined 2% year-over-year. Which was favorable to our guidance due to lower marketing expenditures, some of which shifted out of the period.

Fiscal 26, we achieved net bookings of $6.72 billion which was above the high end of our guidance range of $6.65 billion to $6.7 billion The current consumer spending grew 17% and accounted for 78% of net bookings. NBA 2K grew over 30%, mobile increased 13%, and Grand Theft Auto Online increased 6%, all sharply exceeding our initial May guidance. Operating cash flow of $624 million compared to our forecast of $450 million reflecting our fantastic fourth quarter. We spent approximately $163 million in capital expenditures, which due to timing, is favorable to our forecast.

GAAP net revenue rose 18% to $6.65 billion and cost of revenue increased 11% to $2.8 billion Operating expenses decreased significantly to $3.9 billion due to the impairment charges that I mentioned previously from last year's fourth quarter. On a management basis, operating expenses rose 7% year-over-year, which represented strong leverage over the prior year. Today, we are providing our initial outlook for Fiscal 2027. We project net bookings to range from $8 billion to $8.2 billion which reflects approximately 20% growth over fiscal 26 primarily due to the launch of Grand Theft Auto VI on November 19, along with successful execution across our entire portfolio.

The largest contributors to net bookings are expected to be the Grand Theft Auto series, NBA 2K, Toon Blast, Match Factory, Empires and Puzzles, the Red Dead Redemption series, Words With Friends, Color Block Jam, and Zynga Poker. We expect recurrent consumer spending to be flat to Fiscal 2026 and to represent 65% of net bookings. Our recurring consumer spending forecast assumes NBA 2K is up high single digits, the Grand Theft Auto series is up, and mobile is down. Due to last year's success of Color Block Jam and our assumption that trends will moderate on several of Zynga's mature mobile titles.

We expect the net bookings breakdown from our labels to be roughly 36% Rockstar Games, 35% Zynga, and 29% 2K. We are forecasting operating cash flow in excess of $1 billion and we expect to be in a net cash position by the end of the fiscal year. We plan to deploy approximately $200 million of capital expenditures for game technology and office build outs. We expect GAAP net revenue to range from $7.9 billion to $8.1 billion and cost of revenue to range from $3.5 billion to $3.62 billion Our total operating expenses are expected to range from $4.18 billion to $4.2 billion On a management basis, we expect operating expense growth of approximately 8% year-over-year.

Which represents significant leverage over fiscal 26. This growth is largely due to higher marketing expenses for the launch of Grand Theft Auto VI and our new mobile releases. As well as higher R&D costs. Now moving on to our guidance for the fiscal first quarter. We project net bookings to range from $1.32 billion to $1.37 billion compared to $1.42 billion in the first quarter last year. The largest contributors to net bookings are expected to be NBA 2K, the Grand Theft Auto series, Toon Blast, Match Factory, Empires and Puzzles, the Red Dead Redemption series, Color Block Jam, Words With Friends, and Zynga Poker.

We project recurrent consumer spending to decline by approximately 3%, which assumes high single digit growth for NBA 2K and declines for mobile the Grand Theft Auto series. We expect GAAP net revenue to range from $1.45 billion to $1.5 billion cost of revenue to range from $578 million to $594 million Operating expenses are planned to range from $926 million to $936 million On a management basis, operating expenses are expected to grow by approximately 3% year-over-year. Primarily driven by a modest increase in personnel costs. In closing, fiscal 27 will introduce a new level of operating performance, which we expect to sustain well into the future. Driven by a robust pipeline expansion opportunities across our core franchises.

Where we are focused on incorporating new technologies and tools we feel confident in our ability to scale our business generate operational efficiencies and leverage the power of our balance sheet, which we believe will drive long term shareholder returns. Thank you. I will now turn the call back to Strauss.

Strauss H. Zelnick: Thanks, Lainie and Karl. On behalf of our entire management team, I would like to thank our colleagues around the world for their commitment to excellence to our strategy of being the most creative, the most innovative, and the most efficient company in the entertainment industry. To our shareholders, I want to express our appreciation for your continued support. We will now take your questions. Operator?

Operator: At this time, if you would like to ask a question, press star. Then the number 1 on your telephone keypad. To withdraw your question, simply press star 1 again. Your first question comes from the line of Eric Handler with ROTH Capital Partners. Please go ahead.

Analyst (Eric Handler): Good afternoon. Thanks for the question. Lainie, just a couple of things within guidance. Looks like, at least on a non GAAP basis, your operating expenses are looking, let's call it, for round number purposes, about $3.8 billion. that is a $300 million incremental increase on a year over year basis. How much of that is due to marketing? And when you look at sort of, like, the trend for the next couple years, for G&A and R&D, what do those trajectories look like? Assume they will be much smaller than revenue growth.

Lainie Goldstein: Yes. that is correct. So we expect to have a lot of leverage over the next couple of years. We continue to scale the business. And for the $300 million higher for this coming year, about half of that is for selling and marketing expenses for the entire company. As we have significant marketing for our entire pipeline of titles that are coming out this year. Okay.

Analyst (Eric Handler): that is helpful. And then as a follow-up, how should we think about RCS You know? And once GTA 6 comes out, how are you sort of thinking about the trajectory of GTA Online when that game is launched?

Strauss H. Zelnick: Rockstar will provide more details on the GTA series when they are ready to talk about that. Yeah. I think you are asking, though, to what do we will happen with the recurrent consumer spending regarding GTA online. And I think I think to say that everyone has been pleased by the ongoing trajectory of GTA Online, Red Dead Online, sales of GTA 5, the sales of Red Dead, would be a great understatement.

These titles have proven to be vastly more resilient than anyone expected, and I think it is a reflection of the quality of the work that Rockstar has done despite the fact that Grand Theft Auto 5 is now has been in market for 3 console generations. It continues to sell. it is now up 230 million units. Red Dead is up to 85 million units. So you know, we are we are so extraordinarily pleased with how Rockstar's titles have performed. Difficult to know exactly how Grand Theft Auto Online will do after the release of Grand Theft Auto VI, but certainly, it will stay in market. And certainly, there are many, many consumers who love the title.

Analyst (Eric Handler): Thank you. Very helpful.

Operator: Your next question comes from the line of Colin Sebastian with Baird. Please go ahead.

Analyst (Colin Sebastian): Thanks. Congratulations on the year. I have a couple of questions as well. I guess, first off, as cash flow influx in the for the guidance for the coming fiscal year, how are you guys thinking about capital allocation between returning to shareholders versus other uses? And I have a follow-up.

Strauss H. Zelnick: So, you know, this will sound boringly consistent with our answer to this question. it is the same as it has been for as long as we have been in the position of having positive cash flow and positive cash balances. There are 3 uses of our capital here. First, to support organic growth. This company's story has largely been an organic growth story, and certainly have expectations for organic growth in fiscal 27. And we believe that fiscal 27 is setting a new a new benchmark, a new standard for this company going forward. that is all organic.

But as you can see from our numbers, we have to invest to be in a position where we can grow in that way. And our balance sheet and our p and l allows us to do just that. Well, that will continue. The second use of our capital is very selectively when it strategic sense, and let me emphasize this, it is accretive, we are willing to engage in inorganic opportunities, the most recent meaningful 1, was, of course, the acquisition of Zynga in 2022 for $9.7 billion in cash and stock, and then more recently, the acquisition of Gearbox.

And so, you know, I am I am proud to say that all of our acquisitions have turned out to be accretive and successful over know, nearly 2 decade period. that is pretty breathtaking for corporations, not generally the case. I think that is because we are immensely disciplined. You are you are not gonna see us doing deals hand over fist. But assuming our balance sheet continues to improve I think you could imagine more inorganic growth in the future as well. And we have already said in this release today that we expect to be in the net cash position by the end of fiscal year. And finally, return capital to the shareholders when it makes sense.

So far, we have done that through share buybacks, and they are opportunistic And we believe that share buybacks make sense for our shareholders when they are executed at deep value. Our last buyback was done at $158 a share. We will see how the stock opens tomorrow, but I think no matter what, that is that was pretty good plan on our side. So like all stocks, they move around different price points. Our stock traded down as low as, I think, $1.95 in the last 6 weeks. And you know, there is an opportunity to return capital to the shareholders when it makes sense.

Analyst (Colin Sebastian): Thanks for the reminder on those, Strauss. I guess maybe as a follow-up, and maybe some of the structural issues in the industry, including sales of current gen consoles. I am just curious how that impacts your thinking or assumptions in terms of establishing price and preorder expectations for titles like GTA 6 in the coming year? Thank you. I am sorry. What would the relationship date from your point of view? The number of the installed base of hardware may not be as high in the in this current generation, as it might otherwise have been. You know, certainly, value price points for certain titles have done well versus premium pricing. So those considerations.

Strauss H. Zelnick: Look. When we look at pricing, I would not say we look at it in the context of the install base. We absolutely look at pricing in the context of the property itself. And so, what we wanna do in every situation, whether that is console, mobile, PC, frontline, or catalog, is delivered to the consumer vastly more entertainment value than what we charge. We want the consumer to have a great experience, and we think a consumer experience is the intersection of what you get and what you pay for it. And probably a great example of that is mafia, the old country. Which is a terrific title.

It but it is not, you know, it is not a 100-hour experience. it is not a 50-hour experience. And so we priced the title at $50, and consumers were thrilled. And we had a massive hit on our hands. I suspect we could have priced at a higher level, We wanted to make sure that consumers loved it, and part of loving something is feeling good what you pay for.

Operator: Your next question comes from the line of Doug Creutz with TD Cowen.

Analyst (Doug Creutz): Hey. Thank you. I wanted to ask in the context of your guidance at mobile you are you are assuming is down this year. Based on some attenuation in the performance of older games. Is that based on anything you are you are seeing in the year to date? Or is that more of a hey. These are older titles. Let's be prudent in our outlook You know, similar to, I think, for many years, you guys sort of said we expect GTA Online to be down because it is a many year old live service game and then we typically do better. Can just give some context around that?

And then also, you might be assuming for your 2 new mobile launches within that guide. Thank you.

Strauss H. Zelnick: So it is a very fair question. We had a great year at Zynga. And I think it is more the way you characterized it, which is we are not prepared to guide to you know, continually beating expectations materially at any business unit. So we do guide as we see it. Know, and this is how we see it. However, as you said, it is a reflection of fact that some titles that were newer last year are older this year. Now all that said, you know, Toon Blast was up 25% and is a very old title. So we do have opportunities to exceed our expectations now and then.

But, you know, this is our best estimate sitting here today. As far as our expectations around new launches, you know, we in the mobile side, particularly, we never anticipate huge numbers because it is just impossible to do so. Hit ratios are just too low. So our guidance would typically reflect our expectations around the marketing spend in the year. Because we do not we could never guide around doing something silly You know, in the mobile business, if you are if you are getting bad immediate results from a marketing spend, you stop doing it. And our dev costs are pretty manageable in the mobile world.

So I would say, unlike, say, console where know, you have a big release go through, I not gonna give you the example you want. So we have basketball coming up. Like, you know, we know how many units sold so far. 10 million units sold in today. We know the prior year, the year before that, we have a sense the market, like, we can estimate that pretty well within a band. But with mobile, we just do not have the ability to do that. So I think it is you are you are correctly intuitive that our mobile numbers would not include an for some massive new release yet. Very helpful. Thank you.

Operator: Your next question comes from the line of Cory Carpenter with JPMorgan. Please go ahead.

Analyst: Good afternoon. I have 2 questions on NBA 2 k. Clearly, you know, I think record year for the franchise this year. But hoping you could expand a bit on the trends you saw in the quarter think they moderated, you said in the prepared remarks, a little more than you expected. So what did you see there? And then and, Karl, maybe could you talk a bit about the engagement that you saw with the initial college basketball rollout? Thank you.

Lainie Goldstein: So for MBA, is 1 of our strongest quarters for Q4 in the franchise history. In terms of looking at our expectations, this reflects the extreme growth of Q2 and Q3, where we saw a high concentration of spending from our most engaged players, early in the year. Left less upside opportunity heading into Q4. So that is really what we saw in Q4 this year.

Karl Slatoff: And on the on the college piece, yeah, we are very excited about our college release for season 5. I would describe it at this point as it is a taste of what is to come. We did a deal with CIX to feature 16 universities. it is basically validated our expectations and the opportunity that we think would be very meaningful for us going forward. So the short answer is stay tuned. it is very exciting for us, and we are very happy how things have turned out so far.

Analyst: And maybe as a follow-up, Strauss, on the last earnings call, Google Genie had just launched in beta. You know, there is been some conversations more recently around the ability for AI to perhaps create GTA 6 in a couple of months. You know, I know this is a bit of a generic high level question you have touched on before, but just given remains a pretty big debate among investors, it would helpful to hear your latest views just around what you are seeing in AI and how you expect it to, you know, change the gaming industry in Take 2 in particular. Thanks.

Strauss H. Zelnick: We remain enormously optimistic. Know, tech technology helped build this company. Video games are created largely in inside computers and always happen. When I started the video game business in 1.99 thousand we were making 32 bit games. And they certainly look anything like they do today, and that is all driven by tech. I think the sort of confusion surrounds a belief that somehow more efficient asset creation puts us at some disadvantage or creates a competitive advantage for someone else. And I do not just do not believe that is the case. To the extent that technology allows anyone to do a better job in creation, naturally, we will avail ourselves with the same technology.

If you take a look at tech end market that is currently licensed, for the creation of video games. it is licensed broadly. No 1 exclusively licenses technology for video games. So if a competitor has access to AI and that allows someone to do something better, quicker, cheaper, then we would have access to the same thing. The second point that I have made that I would you know, I would stand behind is that the asset creation is not same as hit creation. So, you know, the entire story around the Gemini release was, wow. You can create assets that look like video games more easily than you could before.

I hope that is true because that will benefit us naturally. No. We have 3 part strategy, be the most creative, be the most innovative, be the most efficient. Seems to me that even if it does not help with creativity, it certainly should help with efficiency and innovation. So that could that could be thrilling, but we do have to remind ourselves, asset creation is not the same as a creation. And the best example of that is, you know, there are thousands of new mobile releases a year. But there is a handful of new mobile hits a year, and we make some of them.

Despite the fact that everyone has access to the same tech because everyone license is exactly the same underlying technology. The creation of mobile titles as we do. Right? So I remain highly optimistic Now I will give you a real world example. I was visiting 1 of our studios, and they showed me some advertisements that they were putting together advertise their games. And these were live action ads and they were funny and cute. 15 to 30 second ad units that you have seen a zillion times. They were all created with AI. Licensed AI, legal AI, and the script was done in house for free. Well, 5, you know, people, colleagues who work company already.

And the software was used AI software was used in the entire cost of making the spot was zero, And previously, we hired third party companies to actually create those with human beings. Those spots could cost $25 thousand $50 thousand $100 thousand. Now please note we you know, not only were we not interested in reducing our heck to make this happen, we did not have the opportunity to reduce our headcount to make this happen. Entire marketing team at this particular studio is 2 people. They are doing a great job. But what is AI has allowed them to do is be more efficient, make great stuff, and do it cheaper.

And this is all a benefit to our company. Thank you.

Operator: Your next question comes from the line of Chris Schoell with UBS. Please go ahead.

Analyst (Chris Schoell): Great. Thank you. Strauss, I believe it was a few quarters ago you mentioned your expectations for GTA VI continued to increase. Any updates you can provide on your general expectations and levels of confidence for the franchise based on indicators you have at this point? And how do you expect that this title will perform relative to GTA V? And then Lainie, maybe I know there is a lot of noise to margins this year with the marketing and the software amort I believe I heard you said there is a lot of leverage over the next few years.

But can you just remind us how you are thinking about the ability to return to the historic margin levels that Take 2 used to see? Thank you.

Strauss H. Zelnick: You know, I do not recall the comment you alluded to. I am pretty much think I have always said the same thing, is, know, we are all how could we not be? We are all extraordinarily excited about what Rockstar Games is working on. We are all incredibly enthusiastic about the upcoming release. And, equally, you know, this is a management team that never claims success before it occurs. And I am pretty sure that every time we have had the luxury of having a conversation about upcoming release that look good, I have said, you know, we absolutely never opine on how high is up. We certainly work toward the best result and hope for the best result.

But know, that is out of our hands, which in the hands of Rockstar from a development point of view and a marketing point of view. Is trying to make the best entertainment property they possibly can and then bringing it effectively consumers all over the world. that is what we aim to do. We do feel really, really good about it.

Lainie Goldstein: Martin improvement remains a key priority in our financial strategy, but we recognize that margins will fluctuate over time based on a variety of factors. In fiscal 27, we are reaching a new level of operating performance, which we expect to sustain well into the future, driven by a robust pipeline and expansion opportunities across our core franchises. So as we operate at this new level and generate operational efficiencies, through reduction efforts and leveraging new technologies, including AI, we aim to enhance our margin profile over time. So if you think about our operating expense leverage, it represents our largest opportunity, which we believe we can achieve as we grow our scale both organically and inorganic.

We have mentioned previously that gross margins of many of our titles are affected by the increasing cost of development, So we have been making many structural improvements, including the driving efficiencies and reducing expenses. So you have seen some of that go coming through the p and l in the last couple of years and the leverage we have seen in the last year. Terms of our operating expenses. Also, the d 2 c efforts in mobile, that is also working towards improving our margins. So this was a year where we scaled the business meaningfully, and we achieved strong leverage on our expense structure. So we will continue to do that as we look into the future.

Thank you.

Operator: Your next question comes from the line of Andrew Marok with Raymond James. Please go ahead.

Analyst (Andrew Marok): Maybe 1 on the rock star Mission Creator. I know Strauss called that out in the in the prepared remarks as an interesting factor. I guess, are there any learnings from the early days of that and some of the recent missions that were created as you look to scale UGC and some of your rock star properties? And then I have a follow-up.

Strauss H. Zelnick: Look. We are trying to meet players where they are. And to the extent that people want to have a hand in creation, there are numerous opportunities for them to do so. So, you know, I just think it is incredibly exciting and our company embraces these advances. So, you know, we are not we are not precious about what we do here. We are open minded. An example another example of that is the 5 m business. Know, we are where this started as sort of a business that was outside of our 4 walls. And You know? And now it is a business that is inside our 4 walls. And, you we are thrilled that it is. Okay.

Analyst (Andrew Marok): Thank you. And then maybe 1 more on mobile, if I could. I know that there has been some kind of correlation between the mobile business and macroeconomic factors in the past? I guess, what level of conservatism might you be baking into the guide around general economic conditions as it relates to the mobile business? Thank you.

Strauss H. Zelnick: Well, look. We you know, we are not economists, although we are certainly in point of view about where economy is going. And that is 1 of the factors we consider when we build guides.

Operator: Next question comes from the line of Matthew Cost with Morgan Stanley. Please go ahead.

Analyst (Matthew Cost): Hi, everybody. Thanks for taking the question. Strauss, there is a comment you made in the prepared remarks about your expectation to sustain higher levels of scale going forward just given the potential for Grand Theft Auto's performance this year. You know, that is that is a high bar to clear going forward. So as investors think about the opportunity to sustain your scale off of that phase. How should they think about the mix between just an ongoing significant revenue contribution from Grand Theft Auto versus the pipeline that you went some good detail on the prepared remarks discussing? And then I have 1 follow-up. Thank you.

Strauss H. Zelnick: It reminds me of, my SATs. it is it is boxed d, all of the above. Okay.

Operator: Your next question comes from the line of James Heaney with Jefferies. Please go ahead.

Analyst (James Heaney): Yeah. Great. Maybe just diving in again on mobile. I mean, it is just been impressive to see continued growth of Toon Blast and Match Factory as kind of the biggest drivers. For the segment. I was just hoping you could go in some detail about the unique drivers across those franchises that you think have has sort of enabled them to continue growing, this far after the initial launch? Thanks. Well, actually, very different.

Strauss H. Zelnick: So Toon Blast has been around for a really long time. Match Factory is relatively new. So Match Factory last year was still in growth mode. And we have we have projected that it would moderate we will see what actually happens. Toon Blast is legacy title. And with regards to Toon Blast, what you are seeing is, you know, a title where the consumers who are involved are getting more and more involved. And that is a reflection of the content that Peak is putting into the game and offers that are made to consumers.

So, basically, with regard to legacy title, where you may not have a sharp growth curve on DAUs, you will have an effort to actually serve the consumers we have much more effectively. And I think that is what you are saying in Thumblast. Match factory is still in pretty steep early not that old a title. So it is very different. We need to have you know, we need to be muscular in both areas. We need to be able to you know, to run our live services businesses really well for a long, long time, and Zynga does a phenomenal job at that. But by the way, you know, so does Rockstar. Right?

GTA Online is a live services business. it is it is 13 years old, but that online is a, you know, legacy live services business. So MBA 2 k online is a live services business. We have to do everything well here. it is what makes this place an exciting place to work. You know, we have got a pipeline of frontline titles. We gotta turn them into hits. We do not always succeed, but we have to try. You know, we have a live services business that I just mentioned. We have to optimize those. Across both mobile console and PC. Then, of course, we have a catalog.

And when you add it all up and we do a good job across the board, you the kind of year that we got last year. And we now expect to make a meaningful step up obviously driven largely by the launch of GTA 6, but also driven by performance of the rest of the business. And then we expect to set that as a new base from which to grow, and that is a reflection of firing on all cylinders. Undoubtedly, we will have some lapses along the way. We do not know where the lapses will be. But, you know, if history is any guide, we will also have some titles that will meaningfully beat expectations going forward.

And part of our 3 part strategy of being the most creative and most innovative the most efficient is indeed to be the most innovative. And if you look at the history of the company, you know, we been a leader in innovations, whether that is cross developing development or marketing. And I have no doubt in the coming years, we will be able to innovate further and I do not know exactly what form that will take, but I would just, you know, note that company does not look anything like it did 19 years ago despite still being in the interactive entertainment. This is lots of what we do here. Did not even exist back then.

And this industry, never mind the company, is still on a sharp growth curve. Terms of its cohort of engaged consumers and the opportunities to do new things and bring those new things to people in new ways. Helpful context. Thank you.

Operator: Your next question comes from the line of Jason Bazinet with Citi. Please go ahead.

Analyst (Jason Bazinet): I just I just had a quick historical question. In the past, when you have been confronted with, you know, these big titles, like, I do not know, whether it is GTA 4 or 5 or the last 2 Red Deads. How accurate would you say your firm, your management team was in terms of predicting you know, how well these titles would do? Were there some that sort of disappointed or others that really beat, or were they sort of all within a pretty tight confidence interval in terms of your own internal expectation?

Strauss H. Zelnick: So with regards to the titles you mentioned, as it happened, they all better than we expected. We have had plenty of other titles that disappointed. Candidly. Thankfully, not of late. Okay. And they tend to be few and far between. But it would not be accurate to say that our expectations are always exceeded, not accurate in the least. And that is why know, we are, I think, appropriately humble around here. This is the entertainment business. It is unforgiving. We try our hardest. We do not always succeed.

Analyst (Jason Bazinet): Understood. You for that color.

Operator: Your next question comes from the line of Alec Brondolo with Wells Fargo. Please go ahead.

Analyst (Alec Brondolo): Yeah. Hey. Thanks so much for the question. I appreciate it. I think I think I wanna maybe try to ask Colin Sebastian's question in a little bit of a different way. I think that there is been a lot of conversations in the industry over the last several months about the growth of Roblox, the growth of lower priced games on Steam, the 10 to $20 price point. It seems like it is mostly driven by younger gamers. I mean, obviously, Take 2 does not participate meaningfully in those categories. You have, you know, a couple of lower priced games, the $50 range like Mafia.

I think the question is, like, what is the level of confidence that the newer cohort of gamers will graduate into more premium triple a experiences over time? Like, I think I think the question is, like, is the young person that is playing Roblox, are they gonna wanna play $80 Grand Theft Auto VI when they grow up, or might they be habituated onto lower fidelity titles? Any thoughts there would be helpful.

Strauss H. Zelnick: So, actually, it is the contrary. Entertainment properties are aimed at children, do not know if you have children. But right around the age of, like, 10 or 11, they do not wanna be children anymore. They wanna be teenagers. And so 1 of the issues, and this is not by way of being critical, of anyone else in the industry. But 1 of the issues with children's programming, whether that is linear entertainment or interactive entertainment, is that, you know, children reach a certain point they do not want to be engaged with kids programming anymore even if it is appealing to them.

So it is not that a certain kind of kids oriented interactive entertainment is necessarily a feeder to what we do in certain parts of this company. Remember, we also do make plenty of entertainment around here available for all audiences. With regard to our emigrated titles, it is not necessarily the case that something else is a feeder to it. it is it is a different business. It is a business that is only available if you are 17 or above.

And I think if you engage with interactive entertainment and you are 17 or above, it is very difficult for me to imagine that you would not be incredibly in our m rated titles specifically 1 that is coming up. Perfect. Thanks so much.

Operator: Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Analyst (Eric Sheridan): Thanks so much for taking the question. Maybe building on 2 of the topics we have talked about on the call so far with respect to mobile advertising and building additional optimization around user acquisition, How are you thinking about the signals as more mobile advertising becomes driven by AI and machine learning, with respect to either being able to deploy more dollars at a higher return on ad spend or possibly becoming more efficient with respect to advertising? And if possible, I have a quick follow-up.

Strauss H. Zelnick: Well, we certainly try to do that. When we work with AppLovin and we are trying to optimize of course, our return on ad spend. And sometimes things are going really well in the market. Other times, we are frustrated in the depending on what is going on. There have been moments, for example, when we really could not get out there and spend because, you know, we did not we could not find inventory at a price that made sense. Are other times when we can do that. That changes. it is our job to make sure that we understand the payback period on what we are spending, and we have very tight guidelines about that.

And but you have to be on top of it all the time because when you spend money immobilize as you know, you are you are spending it based on an expectation and you will earn it back over a period of time. That expectation is based on prior history, but prior history is not always dispositive with regard to what happened in the future. So we are constantly on a daily basis tuning up our models will inform how we spend money on user acquisition. As I said, sometimes it is greater, sometimes it gets lower.

We also have this weird anomaly, which I am sure you are aware of, which is we are out of the UA business for a period of time because we do not like it, of course, we make more money. Because there is no UA that is spent that comes back the same day, and it is entire. Sometimes you get a really quick payback periods, We have an experiences where the payback period has been as quick as 90 days. And I do not I do not think we talk publicly about our expectations around the payback period in general. But let's just say, I think we are more conservative than most.

To answer your question, are there new opportunities to be more efficient in this area? Yes. I believe so. And, of course, it is not lost on anyone that after Apple changed their attribution characteristics, the entire industry was challenged, but you can see from our own results with Zynga last year that we have surmounted those challenges, and we feel pretty good about how the business operates now.

Analyst (Eric Sheridan): Great. And if I could just ask 1 more. With respect to your approach to go to market with DTC, any new learnings about what the opportunity set might look like or the ceiling of that opportunity might be to grow, the percentage of mix from DTC over time? Thanks so much.

Strauss H. Zelnick: Look. I have been saying for a long time that I thought of sort of the competitive landscape and the regulatory landscape would be favorable with regard to our overall costing and taking as part of our overall distribution cost, our b to c cost, which is materially lower than third party cost, but multiplied by the share of market related to d t c. And we have said that know, that share has been growing. We have not talked about what percent it is or where it is going. We wanna make sure, though, is 2 things. Number 1, wanna be where the consumer is. The goal of this company is not to control distribution.

Goal of this company is to make hits and bring the to consumers wherever they are, however they want them, and, of course, to do so on economic terms. We value our third party retailers greatly. We especially value them when they provide marketing opportunities for us. And we understand that there is a value in the marketing that third party retailers can provide. And that would intersect with how much they charge us for access to their consumers.

So the more value a third party retailer provides to us from a marketing point of view, the more comfortable we are working with them At the same time, there is a role for direct to consumer opportunities For us, it is all of the above.

Operator: Your next comes from the line of Mike Hickey with Stonex. Please go ahead.

Analyst (Michael Hickey): Hey, Strauss, Karl, Lainie, Nicole. Congrats guys, on a great year and a great guide. Very exciting. Just 2 questions. Strauss. First, I think you referenced before being astonished by Rack's rock stars, marketing creativity. Clearly, they have they have got precedent there. Can you talk, I guess, philosophically about how Rockstar thinks about building anticipation for a game launch of this scale and how beneficial that marketing effort, can be in terms of sustaining or even building demand for around the current GTA ecosystem. And if that ancillary benefit is baked into your guidance. A follow-up.

Strauss H. Zelnick: Well, look. Thanks for the question. You know, I am obviously not gonna go into detail what we have said about marketing. GTA 6 is the marketing will start this summer. And as you know, know, any information around releases and marketing comes from our labels and that should not be news to you. That said, is there do we see in any release no matter how highly anticipated it is? Both the need to market the title and the opportunity in marketing the title We do. And, you know, I was I was asked about this earlier and I because I absolutely refuse to use a title of ours as an example. I use someone else's.

I said, so there is a, you know, a new release of Mission Impossible, and it is starring Tom Cruise. Like, we all know what that looks like, and I, for 1, am going to see that movie. Like, I am gonna see that movie. But Paramount still spends a whole lot of money to market that to make sure that people know it is out and it is great and it is worth seeing. I think that is the story of the entertainment business.

So know, I do not think there is any situation where 1 can expect to have a massive hit and not engage heavily in the marketing, And, you know, I think that will be true for this company across the board. And I think, again, across the board, actually, I think I think this company does spectacular marketing and, you know, whatever we did last year, we gotta do better this year. Whatever we do this year, we gotta do better next year. We demand it of ourselves. And frankly, the market demands it of us.

Analyst (Michael Hickey): Nice. The on AI, Strauss, not to be redundant, he gave a really thorough answer. But maybe just for clarification, you feel like at this point, you have got broad buy in from your studio leadership around the use of AI tools, not just in marketing, but in game development. And when you think about these tools over time, I know you are doing a lot in terms of investing in product tools related to AI. Do you think this will allow you and your studio teams to unlock, maybe some dormant franchise IT or even new IP that may not have been produced over the last decade plus due to resource constraints?

And if that is the case, would you look to build headcount into that opportunity? Thank you.

Strauss H. Zelnick: I think that everyone has bought into the possibilities of new technology. And I think there are times when some of my colleagues think I am too conservative on the topic, I have actually never been accused internally of, like, going too fast or doing crazy stuff. I think I probably air in the side of being a little more conservative. Think about it. You know, the people who are on the front lines of developing here are absolute experts in software, in art, and video games. The way they got the job to work at a company like this is because they were on the front lines. Because they were innovating and they were highly creative.

And because they were efficient, So you have to assume that they are gonna be the first people to embrace new technology that allows them to do a better job. That said, we are known for making these beautiful handcrafted titles around here. And any technology that we use, I think, will be in the hands of immensely creative people. And will take the form of handcrafting. Our art is created in computers. It always has been. But our art is created by human beings using computers. I believe that will continue to be the case. Thanks, guys.

Operator: Your next question comes from the line of Brian Pitz with BMO Capital Markets.

Analyst (Brian Pitz): Thanks for the questions. I will I will try a couple here. Any additional color you can provide on GTA 6 around your framework for the PC release as well as if the game know, has any chance of being cross platform? Also, you know, any best estimates on when we could see a presale launch for the game If not, perhaps you could at least provide your best estimate of timing on hearing more of these details. Thanks.

Strauss H. Zelnick: Yeah. As you know, look, the PC market's a great market, and it is it is growing for console type titles and its market we serve avidly. And virtually all of our hit titles end up on all over time. That said, Rockstar Games has announced GTA 6 for console only so far. And we are excited about our November 19. Release. Thank you.

Operator: Your next question comes from the line of Omar Dessouky with Bank of America. Please go ahead.

Analyst: Hey, guys. Thanks for the question. Just turning back to NBA. I know Laney talked about the fourth quarter, but as we look at fiscal 27 and lapping that 30% RCS growth, I guess is there anything you can, like, share or, like, breakdown on what gives you the line of sight to being able to sustain, like, the high single digits I guess I am really trying to get at, like, how you think about the stage of growth for monetization and engagement for the basketball franchise. Netting what Karl said about the state team comment. Thanks.

Lainie Goldstein: So we are incredibly proud of NBA 2 k's fiscal 2 thousand 26 record breaking results. And we are applying the successful learnings to our strategy for this year. Including within MBA 2K27. And while fiscal 26 set records, we have a consistent track record of delivering strong sustainable RCS growth and are confident in doing so in fiscal 2 thousand and 27. So, you know, when VC looks at the game each year, they just do not, you know, sort of rest on their laurels. They continue to make this game bigger and better every year. And we have seen that time and time again.

Operator: Your next question comes from the line of Martin Yang with Oppenheimer. Please go ahead.

Analyst (Martin Yang): Hi. Thank you for taking my question. I have 1 question on mobile. Zynga has meaningful presence in Turkey with Rolex and Peak. Can you maybe comment on whether those studios have benefited from the local government policy that favors developers that was released this year.

Karl Slatoff: So, obviously, we have had a lot of great success in the in the Turkish from a development perspective. Some of our biggest and best titles in our studios are in Turkey. We have a fantastic relationship with our developers there. And we love being in that environment. In terms of sort of the government influence, government opportunities, to the extent that any that there are opportunities available in any jurisdiction, where we operate, we would take advantage of those as much as we possibly can.

Local jurisdictions are very important business partners to us, and it is something that we take very seriously because it is an opportunity. it is it is not only good for us, but it is also good for the for the local markets. Thanks, Karl.

Operator: Your next question comes from the line of Omar Dessouky with Bank of America. Please go ahead.

Analyst (Omar Dessouky): So Strauss, I was I was in the audience at a conference spoke at recently. And you made a couple of comments that really caught my attention. So 1 comment was that you would price your games to reflect the value that they provide for consumers. And then, a second comment was that the retail price of video games has gone down in real terms over the years. So do your comments imply that you also believe a $70 price tag would be too low for GTA 6? Relative to its value to consumers. Because by that logic, a $70 price tag implies to me that the consumer value of GTA 6 will also go down.

Now if I have misheard your comments, I apologize, However, if my logic is flawed, then what would a $70 price tag imply about the consumer value of GTA 6 relative to its predecessor?

Strauss H. Zelnick: I think what I was trying to get at was on real terms Video games have become a better and better deal for consumers over a period of time. And that is a good thing. So I do not think the comments are in conflict. In other words, if you can give people something really great and you can offer it on really favorable economic terms, that is win. So I was really trying to make the point that even though I think the value has grown materially, certainly a video game you know, released today is vastly more exciting compelling, intriguing, and longer lasting entertainment than it was when was at Crystal Dynamics in 1.99 thousand.

But in real terms, frontline prices have declined. I was I was using that as a backdrop to point out that we think that the most important thing is to deliver the best entertainment on Earth. And then the second most important thing is to do it on really favorable economic terms. But I did not mean to guide in any way, you know, how you should think about our upcoming unannounced price on any release. You know, that will be 'll become clear to the market in the fullness of time. It is though, we wanted to represent enormous value to the consumer. Okay. Thanks a lot.

Operator: Your next question comes from the line of Clayton Griffin with MoffettNathanson LLC. Please go ahead.

Analyst (Clayton Griffin): Thanks. Good afternoon. You got you all had such success with, I think, you coined the phrase actually tethered free to play with GT online. You know, it helps you sell full game units. And full game unit sales help onboard people on the GTA Online. I know the industry has changed a lot over the years, but and you have not announced any pricing or packaging as it relates to this topic. But just curious if there are dynamics or evolutions in the industry that would that would make, that decision different. Than the decision you so successfully used with, GTA 5 and GTA Online, the tethered free to play strategy.

Strauss H. Zelnick: I think, of course, not having announced any online version for GTA 6 certainly would be premature to talk about you know, an upcoming business model for something that we have not talked about. I think conceptually, what we pride ourselves on here is being thoughtful and open minded. Trying to meet consumers where they are. Trying to optimize the entertainment or experience for those consumers. And that is where we have been talking about a lot on this call. You know, when it really comes down to what does this company think about? You know, 27, what do I think about? I think about making sure that this is an enterprise.

That more so than any other entertainment enterprise on earth focuses on making hit properties that excite and engage consumers. that is what we all think about. Right now, I am in a room with, you know, our staff. Right? We do not they are in this room. You know, we are we are staff executives. Right? The IR team, the finance team, the operations team, legal team. Our job, we do not make we do not make the titles here. We do not mark them, not in this room, not the room that is talking to you today. Our mission is to make great entertainment properties.

And if we get that right as an organization, all 14 thousand people full time colleagues and contractors. Associated with Take 2 and our affiliates, focused on making the best entertainment on earth then everything else will take care of itself. Naturally, we have to be the most thoughtful people, the most aggressive people with regard to marketing and By the way, legal activities, finance activities, accounting activities, tax activities, as well. that is our job. The mission of the organization is to make great entertainment. And having spent a long time in every entertainment business there is, I can tell you 1 thing. Hits cure all ills. Make great hits over and over and over again.

You are gonna have great enterprise. And we are so proud of everything this company does, and we are so proud of the culture in which we do it. But if we do not get up every day and make hits, none of that matters. So that is our job. that is what we focus on. And, frankly, the results that we are talking about today and the guidance that we gave you for tomorrow all of that is based on having made hits, having delivered hits, and an expectation that we are going to bless you in an expectation that we are gonna kin continue doing just that at a higher and higher level. Thank you. Yes, sir.

Operator: Your next question comes from the line of Drew Crum with B. Riley Securities. Please go ahead.

Analyst (Drew Crum): Okay. Thanks. Hey, guys. Good afternoon. So looking at your net bookings guidance, how if in any way is potential cannibalization from G GTA 6 influencing your view or range of outcomes you see for fiscal 2027? Thanks.

Strauss H. Zelnick: Look, cannibalization does not really apply to the entertainment business. In the entertainment business, you compete against everything. You compete against your competitors. You compete against yourselves. You compete against nothing. You know, choice to do nothing. So if you are in the grocery business, like, everyone needs to eat. So you are competing with the grocery store next door. With regard to entertainment, you know, if there is something that you want in the market and then there is something else that you want, you will you will try to buy both. And if there is nothing that you want, will not buy either. So there is no 1 to 1 cannibalization.

And in fact, history shows that when there is a big hit in the market, you know what it does? Energizes consumers around the entertainment market and they consume more. So I actually think if we are fortunate, enough to have the kind of year that we expect, maybe we will even do a little better than we expect, that is not just gonna be good for take 2 and our labels. Gonna be good for the industry as a whole. Thanks, Charles.

Operator: That concludes our question and session. I will now turn the call back to Strauss H. Zelnick for closing remarks.

Strauss H. Zelnick: Oh, I have spoken an awful lot today. And as you pointed out, I have been in a bunch conferences lately too, so maybe no 1 needs to hear any more than me. Nor more from me. I would like to say this, though. We delivered great results that we talked about today, and we set our guidance that reflects great results going forward. All of that comes from our colleagues around the world.

So I wanna take a minute to express this management team's enormous gratitude and my personal gratitude to our creative teams, our marketing teams, and our distribution teams and our finance teams, and our operations teams all over the world, more than 100+ offices around the world, if I am not mistaken. Who work incredibly hard in an incredibly dedicated way to support our collective mission. All of this all of this is because of their work. I just get to I get to organize the victory lap. So thank you to our team.

And then I would like to take a moment also to thank our shareholders and everyone who supports us and the people who attended this call. it is always nice to have a good news call, and we are really happy to share with you all.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.